INDIRECT ENCROACHMENT ON FEDERAL AUTHORITY 249 to its earnings includes the value of all the franchises that help to make the earnings possible. It now seemed to be firmly established that the state could tax receipts from interstate commerce, provided it did so by using those receipts as a measure of the value of property. But the battle royal was yet to come. Before considering the next phase, however, mention should be made of two decisions which have a bearing on later developments. Both were rendered in 1895. ^^'^ Railroad v. Pennsylvania ^^ allowed a state to tax a railroad on tolls received from other carriers for the use of its line, even though the lessee carrier used the road largely for interstate commerce. The tax was directly on the tolls, but the court held in substance that the tolls were received as rent and not for carriage, and cited for the constitu- tionality of the exaction the Maine case, the Indiana cases, and Postal Telegraph Co. v. Adams,^ decided four months earlier. The Postal case sustained a tax on an interstate telegraph com- pany assessed at one dollar for each mile of line, which tax was in lieu of all other state, county, and municipal taxes. The company insisted, and Justices Brewer and Harlan agreed with it, that the tax was on the privilege of doing business, and was therefore void as a regulation of interstate commerce and an interference with a federal instrumentality. But the majority of the court thought that the tax, though called a privilege tax, was in substance one on property, and as such was free from fault. "In marking the dis- tinction between the power over commerce and municipal power," observed Chief Justice Fuller, "literal adherence to particular nomenclature should not be allowed to control construction in arriving at the true intention and effect of state legislation." Since the charge, though in the form of a franchise tax, was "arrived at with reference to the value of its property within the State and in lieu of all other taxes," ^^ it was held not to amount to a regulation of interstate commerce. This case did not involve taxes measured by receipts and is therefore not pertinent to the problem of valuation. Its relevancy to the present discussion lies in its indication that taxes in lieu of property taxes will receive the ^ 158 U. S. 431, 15 Sup. Ct. Rep. 896 (189s). Mr. Justice Harlan alone dissented. » 15s U. S. 688, IS Sup. Ct. Rep. 268 (1895). » Ibid., 688, 700. « Ibid.
