In the 1900 case of Mason v. Missouri, the U.S Supreme Court ruled on a dispute involving railroad bonds. The state of Missouri had issued bonds to aid in financing railroads and then levied taxes on counties where those railroads were located to repay bondholders. However, some counties refused to pay these taxes, arguing that they were unconstitutional under both federal and state law because they did not directly benefit their residents. The plaintiff was an investor who owned some of these bonds and sued for payment from one such county (Mason County). The defendant argued that it should not have been taxed as there was no direct benefit received by its citizens from the construction or operation of the railroad. The court held in favor of Missouri, ruling that while states cannot levy taxes for purely private purposes without providing any public benefits (which would be unconstitutional), this tax served a legitimate public purpose - promoting transportation infrastructure - even if all taxpayers did not directly use or benefit from it. Therefore, it upheld the constitutionality of taxing localities for statewide projects like building railroads.

In the dissenting opinion for Mason v. Missouri, 1900, Justice John Marshall Harlan argued that the majority's decision to uphold a state law allowing cities to issue bonds in order to fund private corporations was unconstitutional. He contended that such action violated the Fourteenth Amendment’s due process clause as it took property from taxpayers without their consent and used it for a purpose not related to public welfare or safety. Harlan believed this ruling gave too much power to local governments and opened up potential avenues of corruption by enabling them to use public funds for private interests. Furthermore, he expressed concern over how this could lead states into financial ruin if they were allowed unchecked authority in issuing bonds with no clear benefit or return on investment guaranteed back towards its citizens.