the Court to-day. Reasons why the Court is unable to prevent federal
encroachment. Attitude of Hamilton and Marshall toward state rights
misunderstood.

VIII. THE FEDERAL TAXING POWER AND THE INCOME TAX AMENDMENT 85

America's embarrassing position if the late war had come before adoption
of Income Tax Amendment. Limitations of federal taxing power under the
Constitution. Meaning of "uniformity." Apportionment of "direct taxes."
The Supreme Court decision in the Income Tax cases in 1894 a reversal of
long settled ideas. The Income Tax Amendment an example of recall of
judicial decisions. Implied limitations on federal taxing power
(compensation of federal judges, due process clause of the Constitution,
no power to tax property or governmental activities of the states).

IX. CAN CONGRESS TAX THE INCOME FROM STATE AND MUNICIPAL BONDS? 97

No express prohibition of such taxation; it lies in an implied
limitation inherent in our dual system of government. Discussion of
doctrine and its development by the Supreme Court. Effect of the Income
Tax Amendment. Present dissatisfaction with doctrine and efforts to
abolish it.

X. IS THE FEDERAL CORPORATION TAX CONSTITUTIONAL? 106

Nature of the tax. An interference with state power to grant corporate
franchises. Nature of our dual government and Supreme Court decisions on
the subject discussed. The debate in Congress.

XI. THE CORPORATION TAX DECISION 122

Importance of the decision likely to be overlooked. Criticism of the
Court's arguments. Effects of the decision.

XII. THE FEDERAL GOVERNMENT AND THE TRUSTS 129

Origin and history of Sherman Act. Its meaning now clear. Earlier
uncertainties owing chiefly to two questions--What is interstate trade
and Does the act enlarge the common-law rule as to what restraints were
unlawful? How these questions have been settled. Statement of the
common-law rule. Incompatibility between the law and present economic
conditions. Suggestions for legal reform. The holding company device,
its abuses and the possibility of abolishing it. Advantages of the
scheme of federal incorporation.

XIII. WHAT OF THE FUTURE? 143

Rapid progress and present extent of federal encroachment on state
power. Growth of federal bureaucracy. A reaction against centralization
inevitable sooner or later. Adequacy of Constitution to deal with
changing conditions. The railroads and the trusts. Dangerous assaults
upon Constitution in field of social welfare le