bond given in pursuance of a state law to secure a liquor license.[3]

[Footnote 1: _United States vs. Railroad Co._, 17 Wall., 322.]

[Footnote 2: _Collector v. Day_, 11 Wall., 113.]

[Footnote 3: _Ambrosini v. United States_, 185 U.S., 1.]

In the light of these decisions it is not apparent how Congress can tax
the franchises of those state corporations (and they are many and
important) which perform some public or quasi-public function. A state,
to carry out its purposes of internal improvement, charters an
intrastate railway or ferry company with power to charge tolls and
exercise the right of eminent domain. Is not the grant of corporate
existence and privileges to such a corporation one of the means or
instrumentalities employed by the state for carrying out its legitimate
functions, and is not a tax by the Federal Government upon the exercise
by such a corporation of its corporate powers an interference with such
means or instrumentalities?

In any discussion of the right of Congress to tax the agencies of or
franchises granted by a state, the distinction must be borne in mind
between a tax upon _property_ acquired by means of the franchise from
the state and a tax upon the exercise of the franchise itself. The
former tax may be perfectly valid where the latter would be
unconstitutional. Thus, the Supreme Court has upheld a tax by a state
upon the real and personal property (as distinct from the franchises) of
a railway company chartered by Congress for private gain, while
conceding that the state could not tax the franchises, because to do so
would be a direct obstruction to federal powers.[1]