“It is manifest that all these prohibitory clauses, as to coining money, emitting bills of credit, and tendering anything but gold and silver in payment of debts, are founded upon the same general policy, and result from the same general considerations. The policy is, to provide a fixed and uniform value throughout the United States, by which commercial and other dealings of the citizens, as well as the moneyed transactions of the Government, might be regulated.”[169]
Plainly, no inference adverse to the powers of the National Government can be drawn from these prohibitory clauses; for, whatever may be these powers, there will be a fixed and uniform value throughout the United States.
As we proceed, the case becomes more clear. The States are prohibited to issue “bills of credit”; but there is no such prohibition on the National Government, which may do in the premises what the States cannot do. The failure to prohibit is equivalent to a recognition of the power. In other words, the National Government may issue “bills of credit,” which have been characterized by no less a person than Chief-Justice Marshall, in pronouncing the opinion of the Supreme Court, when he said: “To ‘emit bills of credit’ conveys to the mind the idea of issuing paper intended to circulate through the community for its ordinary purposes as money, which paper is redeemable at a future day.” And then again the learned Chief Justice said: “The term has acquired an appropriate meaning; and ‘bills of credit’ signify a paper medium, intended to circulate between individuals, and between Government and individuals, for the ordinary purposes of society.”[170] This “money” and “paper medium” the States are prohibited from emitting; but there is no such prohibition on the National Government,—as there is not a single word to prohibit the National Government from determining what shall be a legal tender.
From the proceedings of the National Convention it appears that a clause in the first draught of the Constitution empowering Congress to “emit bills on the credit of the United States” was after discussion struck out. In the debate on this clause, Mr. Madison asked: “Will it not be sufficient to prohibit the making them a tender? This will remove the temptation to emit them with unjust views.” Mr. Mason said, “Though he had a mortal hatred to paper money, yet, as he could not foresee all emergencies, he was unwilling to tie the hands of the [National] Legislature. He observed, that the late war could not have been carried on, had such a prohibition existed.” Mr. Mercer was “opposed to a prohibition of it altogether. It will stamp suspicion on the Government to deny it a discretion on this point.” Mr. Butler remarked, that “paper was a legal tender in no country in Europe. He was urgent for disarming the Government of such a power.” Mr. Mason was “still averse to tying the hands of the Legislature altogether. If there was no example in Europe, as just remarked, it might be observed, on the other side, that there was none in which the Government was restrained on this head.” Mr. Gorham was “for striking out, without inserting any prohibition.” And this view finally prevailed.[171] Thus it appears that the suggestion was made to prohibit the making of bills a tender; but this suggestion was not acted on, and no such prohibition was ever moved. It is evident that the Convention was not prepared for a measure so positive. Less still was it prepared for a prohibition to emit bills. Such is the record. While all words expressly authorizing bills were struck out, nothing was introduced in restriction of the powers of Congress on this subject.
Thus was the whole question practically settled; and the usage of the Government has been in harmony with this settlement. Treasury notes were issued during the war of 1812, and in the monetary crisis of 1837, also during the war with Mexico, and constantly since, so that the power to issue them cannot be drawn into doubt. If there was any doubt originally, unquestioned practice, sanctioned by successive Congresses, has completely removed it. I do not stop to consider whether the power is derived primarily from the power “to borrow money,” or the power “to regulate commerce,” or from the unenumerated powers. It is sufficient that the power exists.
But I see not how to escape the conclusion, that, if Congress is empowered to issue Treasury notes, it may affix to these notes such character as shall seem safe and proper, declaring the conditions of their circulation and the dues for which they shall be received. Grant the first power, and the rest must follow. Careful you will be in the exercise of this power, but, if you choose to take the responsibility, I see no check in the Constitution.
The history of our country furnishes testimony, which has been gathered with extraordinary minuteness in an elaborate opinion by Mr. Justice Story.[172] I follow mainly his authority, when I set it forth.
It appears that the phrase “bills of credit” was familiarly used for bank-notes as early as 1683 in England, and also as early as 1714 in New England. But the first issue in America was in 1690, by the Colony of Massachusetts, and the occasion—identical with the present—was to pay soldiers, returning unexpectedly from an unsuccessful expedition against Canada. These notes were from two shillings to ten pounds, and were receivable for dues at the Treasury. Their form was as follows: “This indented bill of ten shillings, due from the Massachusetts Colony to the possessor, shall be in value equal to money, and shall be accordingly accepted by the Treasurer, and Receivers subordinate to him, in all public payments, and for any stock at any time in the Treasury.” Here followed the date, and the signatures of the Committee authorized to issue these notes.[173] Such was their depreciation, that these notes could not command money or commodities at money price, although the historian, Hutchinson, who has recorded these interesting facts, does not hesitate to say that they had better credit than King James’s leather money in Ireland only a short time before.[174] Being of small amount, they were soon absorbed in the payment of taxes. But this example did not stand alone.
The facility with which paper money is created renders it difficult to withstand the temptation, unless a Government is under the restraint of correct principles of finance, which at that early day were utterly unknown. An excuse for Massachusetts may be found in the general poverty at that time, the lack of precious metals, and the distance from marts of trade. In 1702 there was another issue of bills of credit, for £15,000, which, by a subsequent Act, in 1712, were made a tender for private debts. Under the continued cry of scarcity of money, bills of credit were again issued in 1716, to the amount of £150,000, to be lent, for a limited period, to inhabitants, whose lands were mortgaged as security. These were not made a tender; but they were receivable at the Treasury in discharge of taxes, and also of mortgage debts. Other bills were afterwards issued, so that paper money was common. The historian who has exposed this condition of things does not hesitate to liken this currency to pretended values stamped on leather or paper, and declared to be receivable in payment of taxes and in discharge of private debts. The natural consequence was a fatal depreciation, so that an ounce of silver, worth in 1702 six shillings and eight pence, in 1749 was equivalent to fifty shillings of this paper currency.[175] At the present moment I do not seek to exhibit the character of this currency, but simply the original association between bills of credit and the idea of a tender.
But Massachusetts was not alone. The neighboring colony of Rhode Island, as early as 1710, followed her example, and in 1720 made her bills a tender in payment of all debts, except certain debts specified. Connecticut issued bills at different periods, beginning with 1709, some of which were made a tender, and some not. New York began in the same year, substantially following Massachusetts; and her bills were generally made a tender. In 1722 Pennsylvania issued bills, secured on mortgage, and made a tender. In 1739 Delaware did likewise, making her bills a tender. So also did Maryland, in 1733, to the amount of £90,000; but other bills were issued by Maryland, in 1769, which were not made a tender.