If it shall become necessary or proper that the book be rebound, it is not thereby made a new book but remains the same book, the one that was printed and originally bound in the United States as required by the statute.

I am of the opinion, therefore, that the rebinding abroad of a book copyrighted in the United States does not operate to exclude such book from reimportation.

This conclusion renders it unnecessary to discuss the second proposition.

Respectfully,

GEORGE W. WICKERSHAM.

The SECRETARY OF THE TREASURY.

CORPORATION

TAX-FOREIGN STEAMSHIP COMPANIES WHOSE VESSELS PLY BETWEEN AMERICAN AND FOREIGN PORTS.

Foreign steamship companies engaged in the business of transporting passengers, goods, and merchandise between ports in this country and foreign ports, and maintaining passenger and freight agencies in this country, are corporations subject to the special excise tax created by section 38 of the act of August 5, 1909 (36 Stat. 112).

A tax imposed upon an exporter of merchandise as an incident to his business is not a tax upon the exported article, as an export, and hence is not violative of section 9, Article I, of the Constitution.

Passengers are not exports within the meaning of the above cited provision of the Constitution.

DEPARTMENT OF JUSTICE,

March 9, 1910.

SIR: I have the honor to acknowledge receipt of your communication of January 28, 1910, in which you inquire whether, in my opinion, foreign steamship companies engaged in the business of ocean transportation of passengers, freight, and mails in ships owned by them, plying between American and foreign ports, which companies. maintain agencies in this country where passenger tickets may be bought and freight received for transportation, are corporations subject to the special excise tax provided by the act of August 5, 1909 (36 Stat. 112).

The act in question is, by its provisions, made applicable to all corporations organized under the laws of any foreign

country, which receive an income from business transacted and capital invested within the United States. But it is first insisted upon the part of these steamship companies that, inasmuch as the receiving and discharging of cargoes and passengers is a mere incident to the principal service rendered by them, which consists in the transportation of their cargoes and passengers over the high seas, they have no income derived from business transacted in the United States.

I am of the opinion that this contention can not be maintained. These companies have a large amount of capital invested in wharves, warehouses, and other facilities essential to carrying on their business in this country. Their business consists entirely in transporting passengers and goods and merchandise between ports in this country and those of foreign countries, and receiving and discharging the same. Through agents located here all contracts and arrangements incident to such a business at this end of their lines are made, and all exports are delivered to their warehouses and are loaded upon their vessels, and the passengers embark, while they are within the limits of the United States; and likewise while here their imports are unloaded and passengers from foreign ports disembark. If these companies do not transact business in the United States they transact no business in any foreign port, and their entire business is carried on upon the high seas. To such a conclusion I am unable to give assent.

It is next insisted that, inasmuch as they are engaged in the transportation of exports, the tax in question is a tax upon exports, and that the legislation is void as to them under that clause of section 9, Article I, of the Constitution, which provides that "No tax or duty shall be laid on articles exported from any State." In support of this contention the following cases are cited:

Brown v. Maryland (12 Wheat. 419), wherein the Supreme Court had under consideration a section of an act passed by the legislature of Maryland, which provided

"That all importers of foreign articles or commodities, of dry goods, wares or merchandise, by bale or package, or of wine, rum, brandy, whisky and other distilled spirituous liquors, &c., and other persons selling the same by

wholesale, bale or package, hogshead, barrel or tierce, shall, before they are authorized to sell, take out a license as by the original act is directed, for which they shall pay fifty dollars."

The court held that this section, in so far as it applied to importers, was invalid, because it was in effect a tax levied by the State upon imports, which, under the Constitution, was prohibited.

Almy v. California (24 How. 169), wherein it was held that an act passed to provide revenue from a stamp tax on bills of lading for the transportation from any point or place in that State to any point or place without the State, of gold or silver coin, gold dust, or gold or silver in bars or other form, and which required that such stamp be attached to every such bill of lading or stamped thereon was invalid because it was the imposition of a tax upon exports.

Fairbank v. United States (181 U. S. 283), wherein it was held that the stamp tax on a foreign bill of lading provided for by the act of June 13, 1898 (30 Stat. 459), was equivalent to a tax on the articles for which the bills were given, and was violative of the above-quoted provision of the Constitution.

I am of the opinion that the principles decided in these cases are not applicable to the statute now under consideration. The tax imposed by this act is, as declared therein, "a special excise tax with respect to the carrying on or doing business" by the corporation; and I held in an opinion transmitted to you on January 13, 1910 (ante, p. 138), that it is not a tax on the property owned by the corporation, or on the income from such property, but is in the strict and constitutional sense an excise tax; and that, for that reason, the income from the interest on United States bonds should be computed in the gross income of a corporation, and should not be excluded in ascertaining its net income. If I was right in that conclusion, then this tax is not imposed upon exports carried by these steamship companies, or even upon the income derived from the transportation of such exports.

But, aside from this, I think there is a very material distinction between the present act and those involved in the cases above cited. The passengers carried by these

companies are not exports within the meaning of this clause of the Constitution. (Crandall v. Nevada, 6 Wall. 35.) And Congress has express power to tax imports. Consequently the revenues of these companies are derived from different classes of business, the larger portion of which is subject to taxation. The act does not undertake in its terms to make any distinction between the different kinds of business in which these or any other corporations embraced therein are engaged, but the tax is imposed upon them all alike, not as exporters of merchandise, but as an incident to their entire business. Such were not the facts in either of the cases cited.

In Brown v. Maryland (12 Wheat. 419), but two classes of persons were mentioned in the act, one importers of the articles designated, and the other wholesale dealers in those articles; and under its provisions an importer was required to pay the tax before a sale of the imported articles could be made, regardless of the size of the article or the amount sold. The act therefore imposed the tax upon the importer as such, he being subjected thereto solely because he was the recipient for sale of imported articles. A careful analysis of the reasoning of the court will show that the decision was rested upon this fact. In support of the holding that the prohibition to tax the imported article does not cease the moment it lands, the court used the following illustrations:

"The United States have the same right to tax occupations which is possessed by the States. Now, suppose the United States should require every exporter to take out a license, for which he should pay such tax as Congress might think proper to impose; would government be permitted to shield itself from the just censure to which this attempt to evade the prohibitions of the constitution would expose it, by saying, that this was a tax on the person, not on the article, and that the legislature had a right to tax occupations? Or, suppose revenue cutters were to be stationed off the coast, for the purpose of levying a duty on all merchandise found in vessels which were leaving the United States for foreign countries; would it be received as an excuse for this outrage, were the government to say that exportation meant no more than carrying goods out

of the country, and as the prohibition to lay a tax on imports, or things imported, ceased the instant they were brought into the country, so the prohibition to tax articles exported ceased, when they were carried out of the country?" (Page 445.)

It will be observed that the first illustration deals with the exporter as such, while the second deals directly with the exported article while in transportation. But the distinction is more clearly drawn in answering the contention that if the act be invalid, then an importer could, without being subject to a tax imposed by the State, sell his goods either as a retailer or peddler; or that silver plate imported for his own use would not be subject to taxation. The court upon this subject said:

"This indictment is against the importer, for selling a package of dry goods, in the form in which it was imported, without a license. This state of things is changed, if he sells them, or otherwise mixes them with the general property of the State, by breaking up his packages, and traveling with them as an itinerant peddler. In the first case, the tax intercepts the import, as an import, in its way to become incorporated with the general mass of property, and denies it the privilege of becoming so incorporated, until it shall have contributed to the revenue of the State. It denies to the importer the right of using the privilege which he has purchased from the United States, until he shall have also purchased it from the State. In the last cases, the tax finds the article already incorporated with the mass of property, by the act of the importer. He has used the privilege he had purchased, and has himself mixed them up with the common mass, and the law may treat them as it finds them. The same observations apply to plate, or other furniture used by the importer. So, if he sells by auction." (Page 443.)

Therefore the same article in the hands of the same person may be taxable or not, according to whether it still retains the character of an import.

So, in the other cases cited, the stamp tax was attached to the bill of lading which accompanied the exported article, and was, by the language of the acts, made applicable to exports as such.