INDIRECT ENCROACBMENT ON FEDERAL AUTHORITY 239 "It is therefore obvious that, when you have ascertained the current cash value of the whole funded debt, and the current cash value of the entire number of shares, you have, by the action of those who above all others can best estimate it, ascertained the true value of the road, all its property, its capital stock and its franchises ; for these are all rep- resented by the value of its bonded debt and of the shares of its capital stock." 26 The State Railroad Tax Cases ^^ did not involve interstate com- merce,^^ since the complainants rested their objections wholly on other grounds. Not until twelve years later did the commerce question come again before the court. It was then decided in Western Union Telegraph Co. v. Massachusetts ^^ that it was not a regulation of interstate commerce to assess the property of an interstate telegraph company by taking that proportion of the assessable value of the total capital stock which the miles of line within the state bore to the total miles of line. Mr. Justice Miller distinctly stated that the tax was not one on the franchise of the company, which interpretation seemed to be necessary to save the tax from being one on a federal instrumentality. "The tax in the present case," he said, "though nominally upon the shares of the capital stock of the company, is in effect a tax upon that organiza- tion on account of property owned and used by it in the State of Massachusetts." ^° Inasmuch as the assessable value of the total capital stock was based on the market value of the outstanding shares, the assessment necessarily took account of earnings. This is evident from Massachusetts v. Western Union Telegraph Co.,^^ a later case between the same parties involving subsequent taxes levied under the same statute. For there it appeared that the company "admitted its liability to pay a tax on the actual value, as stated in its answer, of its real and personal property within the » 92 U.S. 60s (1876). " Note 23, supra.
- For other cases sustaining the application of the so-called "unit rule" or some
modification thereof, when interstate commerce was not involved, see Kentucky- Railroad Tax Cases, 115 U. S. 321, 6 Sup. Ct. Rep. 57 (1885), Marye v. Baltimore & Ohio R. Co., 127 U. S. 117, 8 Sup. Ct. Rep. 1037 (1888), Charlotte C. & A. R. Co. v. Gibbes, 142 U. S. 386, 12 Sup. Ct. Rep. 255 (1892), and Columbus Southern Ry. Co. V. Wright, 151 U. S. 470, 14 Sup. Ct. Rep. 396 (1894). " 125 U. S. 530, 8 Sup. Ct. Rep. 961 (1888). "o Ibid., 530, 552. n 141 U. S. 40, II Sup. Ct. Rep. 889 (1891).
