these safeguards against discrimination, taxes substantially on interstate business have been sustained. Thus the state may aim directly at gross or net receipts from interstate commerce, if it restrains itself from other shots at the same economic interest, or at net receipts if it aims equally at all receipts from all sources within the state. The law may be stated in this way with little or no fiction, word-juggling or logical inconsistency. Such a mode of statement has the further advantage that it throws the spotlight on the "practical lines" by which the limits of the practical conception of regulation are fixed, and which divide all factual regulations of interstate commerce into those that are, and those that are not, regulations of that commerce "in a constitutional sense."

The distinction set forth in the Galveston case and retroactively applied to the earlier cases acquits Mr. Justice Brewer of the charge of inconsistency. The gross-receipts tax of which he disapproved was in addition to another tax on the same business value; those which he favored were not. This distinction is the basis of the difference between the decisions in Meyer v. Wells, Fargo & Co.98 and United States Express Co. v. Minnesota,99 both of which were rendered on February 19, 1912. Both involved gross-receipts taxes on nonresident express companies. The Texas tax held invalid in the Meyer case was declared by the statute to be "in addition to the taxes levied and collected upon an ad valorem basis upon the property and assets of such corporation." 100 The Minnesota tax held rightfully exacted from the United States Express Company was "in lieu of all taxes upon its property. "101 Both decisions were

unanimous.

The greater part of the receipts taxed by Minnesota were held not to be from interstate commerce. These were from carriage between points within the state over a route which passed through a portion of another state. The state court had subtracted that portion of these receipts which the carriage in the intervening state bore to the total carriage. Whether such deduction was necessary the Supreme Court was not called upon to say. It sustained the balance on the authority of Lehigh Valley R. R. Co. v. Pennsyl

vania,102 on which the state court had relied.103 In the Lehigh case, Pennsylvania had confined itself to the receipts from that part of the transportation which took place within its borders, so that the decision does not affirm that it could not have used the receipts from the entire journey.104 Chief Justice Fuller stated that the

102 145 U. S. 192, 12 Sup. Ct. Rep. 806 (1892).

103 State v. United States Express Co., 114 Minn. 346, 349-50, 131 N. W. 489 (1911). Of the Lehigh case, Judge Bunn observed: "It perhaps does not appear as clearly as it might whether the recovery in that case was allowed for the entire earnings, or for a proportion thereof based upon the mileage within the state; but we interpret the decision as allowing a recovery of taxes upon that proportion of the earnings derived from the carriage wholly within the state. This seems to us the safer rule, and avoids any question of taxing interstate commerce, and we adopt and apply it to this case. Nine per cent of the taxes recovered on this class of earnings should be deducted from the amount of the recovery" (page 350).

Judge Bunn is warranted in finding the Lehigh case somewhat deficient in clarity. From the statement of facts it appears that the auditor-general of the state had "settled an account" with the company for its taxes on gross receipts, which account included, in addition to receipts from carriage entirely within the state and from carriage between two termini within the state passing en route through another state, five other classes of receipts all of which were from interstate commerce, with the possible exception of class three which was made up of receipts from "transportation by continuous carriage from points in a foreign state to other points in the same state passing through the state of Pennsylvania." The other receipts taken were from interstate commerce originating or ending in Pennsylvania, or passing through Pennsylvania between termini in two other states, or commerce not traversing Pennsylvania at all. In all instances the total receipts for the entire carriage were taken, and this amount was then reduced to a fraction which corresponded to the fraction of the company's total mileage which lay within the state. The state court relieved the company from any inclusion in the assessment of the last five classes enumerated. So far as appears, the state made no endeavor to amend the account so as to levy on all the receipts in the first two classes. Plainly there was no necessity that it should restrict itself to less than all of the receipts from commerce wholly within the state. Its use of the fraction was part of another plan which the state court frustrated. It is evident, however, it was only the fraction of the receipts from commerce between points in the state passing through the intervening state that came to the Supreme Court, for Chief Justice Fuller states that "the tax under consideration here was determined in respect of receipts for the proportion of the transportation within the State . . .” (145 U. S. 192, 201).

104 The natural inference from the opinion of Chief Justice Fuller is that the whole trip was an intra-state trip, so far as taxation is concerned, since he answers in the negative the question whether "the mere passage over another State renders that business foreign, which is domestic." Ewing v. Leavenworth, 226 U. S. 464, 33 Sup. Ct. Rep. 157 (1913), allowed a state to impose a flat fee on this kind of commerce. In New York ex rel. Cornell Steamboat Co. v. Sohmer, 235 U. S. 549, 35 Sup. Ct. Rep. 162 (1915), it was held that no deduction from receipts for transportation on the Hudson River between New York points was necessary because the route traversed water within the jurisdiction of New Jersey or because the tows which carried the com

question "is simply whether, in the carriage of freight and passengers between two points in one State, the mere passage over the soil of another State renders that business foreign, which is domestic,' "105 and he answered that, "we do not think such a view can reasonably be entertained." 106

The remaining receipts levied on by Minnesota, to which the United States Express Company objected, were from that part of interstate commerce which it carried on within Minnesota, including carriage to or from points within the state and carriage through the state between termini in other states. All this business was received by the complainant at a point within the state, either from the shipper or from connecting carriers in other states, and was delivered within the state either to the consignee or to a connecting carrier. For some reason Minnesota did not claim taxes upon such interstate receipts "where the same express company performs the transportation service both within and without the State." "107 That this self-denial was imposed by benevolence and merce were made up in New Jersey. Whether there was any distinction in this respect between transportation over water and that over land was not considered.

In the case of land transportation, the state of termini has been forbidden to regulate the rates of carriage which traverses an intervening state. Hanley v. Kansas, etc. Ry., 187 U. S. 617, 23 Sup. Ct. Rep. 214 (1903). The state is also forbidden to direct that a carrier shall ship between two points in the state by a route which is wholly within the state rather than by one which dips into another state. Northern Pacific Ry. Co. v. Solum, 247 U. S. 477, 38 Sup. Ct. Rep. 550 (1918). On the other hand, California was allowed to regulate rates for carriage between two points in the state traversing the high seas en route. Wilmington Transportation Co. v. Railroad Commission, 236 U. S. 151, 35 Sup. Ct. Rep. 276 (1915). See editorial notes in 27 HARV. L. REV. 686, and 28 HARV. L. REV. 634. Here of course there was no intervening state whose jurisdiction was in any way interfered with.

The Cornell Steamboat case, supra, if applicable to land transportation, would allow a state to extract revenue from receipts from transit which is not within its own police protection and which is likely to cause expense to its neighbor within whose borders it takes place. In the Lehigh Valley case, Chief Justice Fuller thought it important to say that "it should be remembered that the question does not arise as to the power of any other State than the State of the termini" (page 202). This carries the possible implication that the transit in the intervening state is interstate commerce, so far as its powers of taxation are concerned. Quite aside from the commerce clause, a grave question arises whether a state should tax receipts from extra-territorial transit. The difference between land and water transportation seems sufficient to warrant the restriction of the Cornell Steamboat case to the particular kind of transportation there before the court.

105 145 U. S. 192, 202, 12 Sup. Ct. Rep. 806 (1892). 106 Ibid., 202.

107 223 U. S. 335, 341, 32 Sup. Ct. Rep. 211 (1912).

not by the Constitution is evident from Cudahy Packing Co. v. Minnesota,108 decided last April, in which the Supreme Court sustained a similar gross-receipts tax imposed by the same state on receipts earned within its borders from refrigerator cars which ran in and out of the state.

The packing company which owned the cars received a "compensation or rental" 109 of one cent a mile from the railroads which transported them, and paid the railroads the usual tariff rates for the transportation of its own products, allowing the roads to carry the products of others on the return trip. Mr. Justice Van Devanter concluded his opinion by saying that, "we think the tax is not distinguishable from that sustained in United States Express Co. v. Minnesota," 110 without referring to the fact that in that case "the transportation in connection with such shipments outside of the state of Minnesota was performed by connecting companies other than the defendant." Nor did the opinion refer to the possibility of applying the point made in Erie Railroad v. Pennsylvania 112 and Henderson Bridge Co. v. Kentucky 113 that the receipts were from rental of property rather than from interstate carriage. It stated, however, that if the tax "is laid on the earnings as such, they being derived largely from interstate commerce, it is an unconstitutional restraint or burden on such commerce and void," 114 thus abandoning the doctrine of the earlier cases without noticing that it had done so.

111

Both of these Minnesota taxes were treated as property taxes measured by gross receipts. It appears, however, that from all receipts for business done within the State by such company in connection with other companies" the United States Express Company was allowed to deduct "the amounts paid for transportation to railroads within the State." 115 No mention of this concession was made in Mr. Justice Day's opinion. From the Cudahy Packing case it appears that the railroads were allowed to deduct their

payments for the use of the cars from their "gross earnings" used as the measure of another tax not before the court. This was referred to as disclosing "a purpose to avoid taxing the same property twice or at more than its value, measured by what it earns." 116 The Cudahy people contended that the cars were taxed twice because the railroad paid on their earnings to them less the one cent a mile paid as rental, but Mr. Justice Van Devanter answered:

"The contention apparently assumes that the receipts from such shipments arise solely from the use of these cars, whereas they arise in part from the use of the tracks, locomotives, fuel, labor and the like provided by the railroads. Not improbably only a minor part is fairly attributable to the use of cars. In any event, the company has an interest in the car line which yields it a rental of one cent for each mile of travel. This interest is taxable and the State values it for that purpose by the rental received." 117

It is obvious that a gross-receipts tax on selected kinds of property may be used as a device to tax property employed in interstate commerce more heavily than the great bulk of property which is assessed by the ad valorem method. Unless some curb is set to the rate of assessment on the gross receipts, a state may easily extract from interstate commerce more than its proportional contribution to the public revenues. The court has appreciated this danger. In the United States Express case Mr. Justice Day quotes from the opinion in Postal Telegraph Cable Co. v. Adams 118 as follows:

"Doubtless, no State could add to the taxation of property according to the rule of ordinary property taxation, the burden of a license tax on the privilege of using, constructing, or operating an instrumentality of interstate or international commerce, or for the carrying on of such commerce; but the value of property results from the use to which it is put, and varies with the profitableness of that use, and by whatever name the exaction may be called, if it amounts to no more than the ordinary tax upon property or a just equivalent therefor, ascertained by reference thereto, it is not open to attack as inconsistent with the Constitution." 119

116 246 U. S. 450, 456, 38 Sup. Ct. Rep. 373 (1918).

117 Ibid., 456.

118 Note 69, supra.

119 155 U. S. 688, 697-98, 15 Sup. Ct. Rep. 268 (1895); quoted in 223 U. S. 335, 347-48, 32 Sup. Ct. Rep. 211 (1912). Italics are writer's. Another portion of Chief Justice Fuller's opinion in the Postal Telegraph case (not referred to by Mr. Justice