Licensing was often used simply to generate revenue as a tax or "impost" levied upon the privilege of selling. For instance, the License Tax Cases, 72 U.S. 462 (1866,) established that licenses imposed under the federal internal revenue act of 1864 on the retail sale of liquor and lottery tickets did not grant authority to conduct business within a State. The Court declared:
"If, therefore, the licenses under consideration must be regarded as giving authority to carry on the branches of business which they license, it might be difficult, if not impossible, to reconcile the granting of them with the Constitution.
"But it is not necessary to regard these laws as giving such authority. So far as they relate to trade within State limits, they give none, and can give none. They simply express the purpose of the government not to interfere by penal proceedings with the trade nominally licensed, if the required taxes are paid. The power to tax is not questioned, nor the power to impose penalties for non-payment of taxes. The granting of a license, therefore, must be regarded as nothing more than a mere form of imposing a tax, and of implying nothing except that the licensee shall be subject to no penalties under national law, if he pays it."
..."Congress, in framing the act of 1866, has carefully guarded against any misconstruction of the legislative intention by substituting throughout the term 'special tax' for the word 'license.' This judicious legislation has removed all future possibility of the error which has been common among persons engaged in particular branches of business, that they derived from the licenses they obtained under the internal revenue laws, an authority for carrying on the licensed business independently of State regulation and control."
The several cases known as the License Cases, 46 U.S. 504 (1847,) however, clarify the customary practice of licensing public trades such as "common innholders" and "common victuallers," ("common carriers," etc.) Similar to a franchise, licensing in "common" trades that provided public services necessary to the community, granted privileges to conduct business burdened by regulation in regard to specific public duties and the manner of conducting business.
"From the Revised Statutes of Massachusetts, Chap. 47:
Sect. 5. Every innholder shall at all times be furnished with suitable provisions and lodging for strangers and travellers, and with stable-room, hay, and provender for their horses and cattle; and if he shall not be at all times so provided, the county commissioners may revoke his license.
Sect. 6. Every common victualler shall have all the rights and privileges, and be subject to all the duties and obligations, of innholders, excepting that he shall not be required to furnish lodgings for travellers, nor stable-room, hay, and provender for horses and cattle.
Sect. 7. Every innholder and common victualler shall at all times have a board or sign affixed to his house, shop, cellar, or store, or in some conspicuous place near the same, with his name at large thereon, and the employment for which he is licensed, on pain of forfeiting twenty dollars.
Sect. 8. If any innholder shall, when requested, refuse to receive and make suitable provisions for strangers and travellers, and their horses and cattle, he shall, upon conviction thereof before the Court of Common Pleas, be punished by a fine not exceeding fifty dollars, and shall also, by order of the said court, be deprived of his license; and the court shall order the sheriff or his deputy forthwith to cause his sign to be taken down.
Sect. 14. When any person shall, by excessive drinking of spirituous liquors, so misspend, waste, or lessen his estate as thereby either to expose himself or his family to want or indigent circumstances, or the town to which he belongs to expense for the maintenance of him or his family, or shall so habitually indulge himself in the use of spirituous liquors as thereby greatly to injure his health or endanger the loss thereof, the selectmen of the town in which such spendthrift lives shall, in writing under their hands, forbid all licensed innholders, common victuallers, and retailers of the same town, to sell to him any spirituous or strong liquors aforesaid for the space of one year; and they may in like manner forbid the selling of any such liquors to the said spendthrift by the said licensed persons of any other town to which the spendthrift may resort for the same; and the city clerk of the city of Boston shall, under the direction of the mayor and aldermen thereof, issue a like prohibition as to any such spendthrift in the said city.
Sect. 17. The commissioners in the several counties may license, for the towns in their respective counties, as many persons to be innholders or retailers therein as they shall think the public good may require; and the mayor and aldermen of the city of Boston may, in like manner, license innholders and retailers in the said city; and the Court of Common Pleas in the county of Suffolk may, in like manner, license innholders and retailers in the town of Chelsea; and every license, either to an innholder or retailer, shall contain a specification of the street, lane, alley, or other place, and the number of the building, or some other particular description thereof, where such licensed person shall exercise his employment; and the license shall not protect any such person from the penalties provided in this chapter for exercising his employment in any other place than that which is specified in the license."