New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1904-03-14
A PRETTY HOW DYE DO.
III the Governments Income Gone,
If South Carolina Wins.
IFRoM THE TRIBUNE BUREAU


States Supreme Court decide against the gov
eminent in the case OF the State Of South Caro-
Ina against the United States. the governments
income from internal taxation might be totally
destroyed and tho revenue from customs duties
seriously impaired This suit was the outcome
OF the famous Gispensary system Of the Palmet-
TO State. which was instituted 20 prevent the
manufacture and sale Of intoxicating liquors as
beverage within the state. As the best means
Of reaching its end the state went into the
liquor business Itself, and $4,000 was appro-
pyl4ted 10 buy a stock OF liquors and q whole
sale warehouse established at Columbia Sub
sequenty retail dispeusaries were opened 81
various parts ot the State and their number
has constantly increased. The wholesale ware
house sold the liquors to the retail houses, which
disposed OF them 20 consumers under certain
restrictions OF the law.
The liquor was sold at profit and has been
source Of large income TO the State. materially
reducing direct taxation. OF the profits. one
half went 70 the State school fund. one-quartcr
TO the county and oae-quarter 10 the city.
Since the establishment Of these dispeusarles
the United States collector OF internal revenue
for the district Of South Carolina on the ground
that the dispensers were liquor dealers within
the meaning o. the United States internal rev
enue laws. has collected from the State dis
pensary commissioner 500 annually. and from
the retail dispensers So annually as a special
liquor tax.
About two years ago the South Carolina au-
tho-ities protested against the payment q these
taxes, and subsequently instituted a suit in the
Court Of Claims against the United States 20
recover the back taxes. Exemption was
claimed because the dispensary system was an
exercise OF the police power OF the state IN con
serving the health and morals Of its citizens.
and, therefore. a part OF the State govern
nent. was immune from taxation by the federal
government under the Constitution.
The government conceded, for tho sake of
argument that a State had a right under the
guise OF its police power. 10 take Up such an
enterprise, but contended that exemption from
federal taxation could not go beyond the IeEiti-
mate exercise Of the police power. strictly de-
fined. The government further commended that.
when South Carolina went into the business OF
selling whiskey at profit. 10 be consumed as q
beverage. Il had added 10 its police powers a
mercantile enterprise which. under the law was
liable to federal taxation.
The Court OF Claims dismissed the petition.
IN his opinion Chief Justice Mott % the Court
OF Claims said:
The State had united IN one undertaking OK
ness The exeTcise Of PoSe .'i bower Is m Ita eq
Ing and limiting the sale OF Intoxicating liquor, the
s vTbeheT he 5,ers5 r-,'; ss S5 g ~ troisa
be required 20 pay tho special license fee imposed
On dealers IN liquors by The internal revenue laws
Initted Il seems clear that the commercial char
acter OF the States undertaking is stamped
Inistakably upon tho system. The statute estab-
fishing II authorized profit Of 30 per cent and
IN which they should lie utilized ana jstIia
As a matter OF fact, the system has been a great
The national government does not interfere with
Tree r--f In
5Sf 10, g. Slq III me police power extends no
another.
From this decision an appeal has been taken
90 the United States Supreme Court. which :.
IS expected. VIII be heard at the next October
term. The arguments IN the case were rre-
pared by George II. German. Of the Department
OF Justice. Feearal and State officials conco5o
the vital and far-reaching consequences Of the
decision. because 81 the States contention were
upheld the result might be to destroy entirely
the revenue from Internal taxation and Ferl-
ouEly impair the revenue from customs duties
AS an illustration. suppose South Carolina,
under the gUise Of exercising its police power
should engage in the monopolistic sale Of Wits
key for profit, exempt from federal taxation Il
might also manufacture liquor under the same
pretence and deprive the federal government OF
the revenue from that source. Going further.
manufacture and sale OF tobacco. cigars
cigarettes. snuff and all other articles on which
there Is federal tax Not only that, but the
State might import its wines liquors ard for
elgn cordials exempt from customs duties, and
under the plea that the ready-maoe clothing
manufactured IN the swearshOps Of the great
cities was Injurious 10 the health of its citizens.
might even import its own wOolleDs and other
cloths free OF duty. and install under state
protection monopolistic clothing establish
ment
IN the judgment OF officials who have care
iully examined the possibilities OF this case,
should the governments contention be denied.
the field is practically linitless IL IS declared
that what South Carolina may DO along these
lines all other States Of the Union could do,
and thus the income Of the government from
internal taxation which at present amounts 70
about One-third OF the entire revenue OF the
government. would be totally destroyed, and
the revenue derived from customs duties would
be greatly decreased. The question would
necessarily arise as TO what steps 10 take 10
raise the money required TO operate the ma
chinery Of the government