The Lancaster ledger. [volume] (Lancaster, S.C.) 1852-1905, 1902-11-29
.DiSpensary Suit Is
Far Reaching.
Claim tor Exemption From Inter
nal Revenue Taxes Sus-
tanned Will Mean Loss
of Millions to the
Federal Treasury.

Washington, Nov. "a. "A most
important and far reaching test
case, involving one aspect of the
old nulli6cation idea, is to be
tried in the Court of Claims, with
the State of South Carolina as
plaintiff and the United States as
defendant. 1t Is the suit of South
Carolina to recover the sums paid
for a series of years as far back as
1t is possible to 60 without en-
coantering the statute of limita-
tions, in internal revenue taxes on
the liquor traffic now conducted
by that State under it's dispensary
system.
As is well known, the federal
government makes no distinctions
between the persons who sell IL
quors, taxing alike those who are
engaged in the business lawfully
and unlawfully, and without re-
gard to any local taxation or 9th.
or conditions imposed by State or
municipal legislation. But it is
also true that the federal gov
ernment has no right under the
Constitution to tax the official
agencies of sovereign State,
when exercised in the perfor,
nance of the legitimate functions
of the State. 1t does not and
can not, for instance, tax State
bond, or the funds in the hands of
a State treasurer, Or the Office of
a Governor.
The State of South Carolina has
therefore hit upon the notion that
under its dispensary system,
every lawful shelter of liquor is a
police functionary, and that fed
eral tax upon the dispensary traf-
nc is tax upon the police power
of the State. Commissioners
Yerkes, of whom the demand for
the return of the money collected
in taxation was formal y made be-
fore suit was brought, searched
all the public literature he could
find on the subject, including the
official messages and reports of
the State officers, and found in.
them abundant and satisfactory
evidence that, whatever may haye
been the idea of the original au-
thor or authors Of the dispensary
idea, the purpose of conducting
the system is not nearly 80 much
a plan for restricting traffic in in
toxicants as for acquiring a re-
venue. Indeed, 1t may be said
that that is practically the only
purpose now, the other being
only incidental thereto, if any at
tention whatever is paid to, it.
The commissioner is therefore
eontesting the claim in entire con-
fidence that the State can not ,rer
cover. The first consequences of
the governments defeat would be
y seductlon, !, of. it's revenues by
EfFemso oaask69YaRqdlred 6Yaqdlred and fifty. to one
hainaYed SSA Sseyenty millions, a
Fyeat'M single stroke. If the
|dSpensafX bars of South, Caroli>
pAMfe declared legitimate State
agencies of the non-taxa6le class,
there will be nothing to prevent
the States going into the whole,
sale manufacture of liquors; and
what South Carolina can do in
that line other States-probably
all except few of the remaining
forty-four-will do also. The
tobacco industry will follow in
the same line as q matter of
course. and then the whole fa-
brio of internal taxation by the
federal government will 20 to
pieces like house of cards.
South Carolina has retained for
her counsel a very able lawyer,
Franklin H. Mackey. The At
torney General will probably give
his personal attention to the cons
duct Of the case, for the govern
iment. The litigation is attract
ing wide attention here among
members of Congress and fiscal