court now demands that behind that declaration there must be something more substantial than words. The verbal distinction on which Maine v. Grand Trunk Railway Co.154 originally rested has been replaced by substance. The Ficklen case, which leaned strongly on the Maine case for support, must be similarly reinterpreted before its foundations are solid, unless the court is willing to preserve an anomaly out of respect for stare decisis.

The only possible reinterpretation of the Ficklen case which can make it applicable to all kinds of interstate commerce is one which treats it as sanctioning the use of gross receipts to measure the "intangible property" of the taxpayer and thus to estimate values not reached by any other tax. This possibility finds some recognition in Mr. Justice Pitney's comment on the Pennsylvania tax to the effect that "it bears no semblance of a property tax, or a franchise tax in the proper sense; nor is it an occupation tax except as it is imposed upon the very carrying on of the business of exporting merchandise." 155 The Shelby County tax was not one that could be regarded as "on" a franchise or "on" property, property, unless a gainful occupation is to be deemed "intangible property." This notion of "intangible property" has not been entertained by the court except where the intangible has inhered in or been conceptually fused with something that was tangible. If pushed further and applied where nothing tangible is present, the so-called "intangible property" becomes so patently nothing but the value of an occupation or business that the court must inevitably recognize it as such.

Such recognition still leaves a loophole for the Ficklen case. It might conceivably squeeze through the opening left by the statement in the Crew Levick case that the tax there in issue is not "an occupation tax except as it is imposed upon the very carrying on of the business of exporting merchandise." 156 This leaves room for the notion that an occupation tax imposed on carrying on local business might be measured by receipts from all business, subject to the restriction that the expedient taxes but once and without discrimination the values contributed by interstate commerce. There is no reason, as we have seen, why such values should go com

154 Note 5, supra.

157

155 245 U. S. 292, 297, 38 Sup. Ct. Rep. 122 (1917).

156 Cited in note 155, supra.

pletely untaxed. Where they arise from business unconnected with any use of property, they do go untaxed unless some form of income tax is allowed. The question must be whether Shelby County's form of income tax should be approved, or whether the states should be driven to adopt some other method less likely to invade the realm which the states must not enter.

The latest utterance of the Supreme Court indicates that the latter alternative is to be chosen. In sustaining the general income tax of Wisconsin, measured by net income, the opinion in United States Glue Co. v. Oak Creek 158 laid stress on the difference between gross receipts and net income. After contrasting the Crew Levick case with Peck & Co. v. Lowe, 159 which held that the federal income tax was not a tax on exports when measured by net income from an exporting business, Mr. Justice Pitney observed:

"The difference in effect between a tax measured by gross receipts and one measured by net income, recognized by our decisions, is manifest and substantial, and it affords a convenient and workable basis of distinction between a direct and immediate burden upon the business affected and a charge that is only indirect and incidental. A tax upon gross receipts affects each transaction in proportion to its magnitude and irrespective of whether it is profitable or otherwise. Conceivably it may be sufficient to make the difference between profit and loss, or so to diminish the profit as to impede or discourage the conduct of the commerce. A tax upon the net profits has not the same deterrent effect, since it does not arise at all unless a gain is shown over and above expenses and losses, and the tax cannot be heavy unless the profits are large." 160

Here is wisdom that cannot be gainsaid. It applies so palpably to any occupation tax measured in whole or part by gross receipts from interstate commerce that the Ficklen case can hardly hope to survive the menace to its last remaining strength. With permission to tax net income from all commerce by a general statewide income tax, the states can no longer complain that the death of the Ficklen case would compel them to confer a bounty on interstate commerce by exempting it from burdens which rest on local commerce. The gross-receipts taxes allowed in substitution

for ad valorem taxes on railroad cars and other property may be distinguished on the ground that they represent the degree of use of such property more closely than do other taxes, and that the degree of use bears a fairly close relation to the responsibilities and possible expense which such property causes or is likely to cause the taxing authority.

This subject will be adverted to again in the succeeding section dealing with taxes on net incomes "as such.”

(To be continued.)

COLUMBIA UNIVERSITY.

Thomas Reed Powell.

HARVARD LAW REVIEW

Published monthly, during the Academic Year, by Harvard Law Students

THE ESPIONAGE CASES. - Under Title I, Section 3, of the Espionage Act as amended May 16, 1918, there seems but little room for any public discussion adverse to the war policies of the national government. The question of constitutionality seems alone to remain, and if the amended act is held to be constitutional, the power of Congress to abridge the time-honored right of freedom of speech will seem well established.

Prior to the amendment, the original Espionage Act of June 15, 1917, if properly interpreted, could well be held constitutional. But the decisions under the original act are, to say the least, unfortunate. The constitutionality of that act is not here in question. It is the construction and interpretation which the courts have put upon Title I, Section 31 to which our attention is directed. Freedom of speech, being a constitutional guaranty, cannot be abridged in times of stress and strain any more than when the country is at peace. And it is submitted that

1 This section provides: "Whoever, when the United States is at war, shall wilfully make or convey false reports or false statements with the intent to interfere with the operation or success of the military or naval forces of the United States or to promote the success of its enemies, and whoever, when the United States is at war, shall wilfully cause or attempt to cause insubordination, disloyalty, mutiny, or refusal of duty, in the military or naval forces of the United States, or shall wilfully obstruct the recruiting and enlistment service of the United States, to the injury of the service of the United States, shall be punished by a fine of not more than $10,000 or imprisonment for not more than twenty years, or both."

2 It is contended by some that the Constitution itself can be suspended during times of stringency. But the Constitution is not alone a peace document; it enumerates and restricts the powers of Congress in times of war as well as peace, and in exercising a power delegated to it by the Constitution Congress cannot so exercise that power as to violate some restrictive provision. See Ex parte Merryman, Taney's Reports, 246; Ex parte Milligan, 4 Wall. (U. S.) 2. Cf. United States v. Stokes, Dep't of Justice, Bulletin No. 106.

any statute which tends to limit liberty of expression ought to be construed in the light of the freedom-of-speech clause, so as not to restrict utterances any more than the actual words of the statute require.

Furthermore, the Espionage Act is a criminal statute, and it is a wellestablished rule of construction that criminal statutes be strictly construed. Yet some courts have included all men within the ages of 18 and 45 as part of "the military and naval forces of the United States." 3 Certainly the same courts would balk at holding such men, not actually in the military service, as subject to court-martial and military law and hence deprived of the right of trial by jury. So, too, the words "reIcruiting and enlistment service" have been construed to include conscription under the Selective Service Act.5 Congress was aware of the Draft Law at the time of the passage of the Espionage Act, and had it meant an interference therewith to be a crime under the Espionage Act, it should have said so.

The statute imposes a penalty for the wilful utterance of false statements. Such, it is submitted, means wilful false statements of facts. "This is a capitalists' war "6"The Government is for profiteers"7 "The Selective Service Act is unconstitutional "8. are clearly statements of opinions. The causes of the war cannot be proven as facts. Yet some courts seem to think so, for the President's address to Congress recommending a formal declaration of war for the reasons therein set forth, was admitted in evidence to prove the falsity of a defendant's utterances. To follow this to its logical conclusion would brand as seditious all utterances at variance with the statements of those in governmental positions and adverse to their war policies, and yet allow all criticisms, honest or vicious, in favor of waging a more vigorous

war.

The convictions under the Espionage Act have been for attempts to cause its violation; attempts by wilful false statements to interfere with the operation of the military or naval forces, or to cause insubordination or mutiny, or for attempting wilfully to obstruct the recruiting and enlistment service. Attempts, to be punishable, must come dangerously near success and yet fall short of it.10 The purchase of a gun or

3 United States v. Sugarman, Dep't of Justice, Bulletin No. 12; United States v. Kirchner, Ibid, Bulletin No. 69; United States v. Stokes, supra. Contra, United States v. Ves Hall, 248 Fed. 150; United States v. Frerichs, Dep't of Justice, Bulletin No. 85; United States v. Hitt, Ibid., Bulletin No. 53; United States v. Brinton, Ibid., Bulletin No. 132.

The fifth amendment of the federal Constitution guarantees trial by jury to all those not in the military or naval forces of the United States.

United States v. Hitt, supra; United States v. Stokes, supra; United States v. Waldron, Dep't of Justice, Bulletin No. 79. Contra, United States v. Brinton, supra. Cf. Babbitt v. United States, 16 Ct. Cl. 202, 213; Lanahan v. Birge, 30 Conn. 438, 443.

United States v. Pierce, Dep't of Justice, Bulletin No. 52.

7 United States v. Stokes, supra.

8 United States v. Kirchner, supra.

United States v. Stokes, supra.

10 See Joseph H. Beale, Jr., "Criminal Attempts," 16 HARV. L. REV. 491,