Reports having shown that Vermont capital for investment purposes was, due to the existing tax system, being driven out of the state, and that it was difficult to obtain capital from outside at low rates, a statute was enacted which was expected to remedy the difficulties by providing that interest up to five per cent on loans made within the state should be exempt from taxation while income from loans made outside the state should be taxed at a set rate. In a proceeding to test the validity of the measure, the state court upheld the tax, but on appeal to the United States Supreme Court it was held (Justices Stone, Brandeis and Cardozo dissenting) that the classification in the statute was arbitrary and bore no substantial relation to the object of the legislation, and therefore it violated the equal protection clause; but that quite apart from this clause the statute violated the privileges and immunities clause of the Fourteenth Amendment because it denied the plaintiff the right, as a citizen of the United States, to make lawful loans of money in other states. Colgate v. Harvey, 296 U. S. 404, 56 S. Ct. 252 (1935).