our dual
system of government and formulated in decisions of the Supreme Court.

The founders of this republic established a form of government wherein
the states, though subordinate to the Federal Government in all matters
within its jurisdiction, nevertheless remained distinct bodies politic,
each one supreme in its own sphere. In the famous phrase of Salmon P.
Chase, pronouncing judgment as Chief Justice of the Supreme Court[1]:

The Constitution in all its provisions looks to an
indestructible Union, composed of indestructible states.

[Footnote 1: _Texas v. White_, 7 Wall., 700, 725.]

In a later case[1] another eminent justice (Samuel Nelson of New York)
put the matter thus:

The General Government, and the states, although both exist
within the same territorial limits, are separate and distinct
sovereignties, acting separately and independently of each
other, within their respective spheres. The former, in its
appropriate sphere, is supreme; but the states within the
limits of their powers not granted, or, in the language of the
10th Amendment, "reserved", are as independent of the General
Government as that government within its sphere is independent
of the states.

[Footnote 1: _The Collector v. Day_, 11 Wall., 113, 124.]

It follows that the two governments, national and state, must each
exercise its powers so as not to interfere with the free and full
exercise by the other of its powers. To do otherwise would be contrary
to the fundamental compact embodied in the Constitution--in other words,
it would be _unconstitutional_.

This proposition was affirmed at an early day by Chief Justice John
Marshall in the great case of _McCulloch vs. The State of Maryland_,[1]
which involved the attempt of a state to tax the operations of a
national bank. That case is one of the landmarks of American
constitutional law. While it did not expressly decide that the Federal
Government could not tax a state instrumentality but only the converse,
i.e., that a state could not tax an instrumentality of the nation, the
Court has held in many subsequent decisions that the proposition
enunciated by the great Chief Justice works both ways. For example, it
has declared that a state cannot tax the obligations of the United
States because such a tax operates upon the power of the Federal
Government to borrow money[2] and conversely, that Congress cannot tax
the obligations o