The power to pay the debts of the United States is broad enough to include claims of citizens arising on obligations of right and justice.[299] The Court sustained an act of Congress which set apart for the use of the Philippine Islands, the revenue from a processing tax on coconut oil of Philippine production, as being in pursuance of a moral obligation to protect and promote the welfare of the people of the Islands.[300] Curiously enough, this power was first invoked to assist the United States to collect a debt due to it. In United States v. Fisher[301] the Supreme Court sustained a statute which gave the Federal Government priority in the distribution of the estates of its insolvent debtors. The debtor in that case was the endorser of a foreign bill of exchange which apparently had been purchased by the United States. Invoking the "necessary and proper" clause, Chief Justice Marshall deduced the power to collect a debt from the power to pay its obligations by the following reasoning: "The government is to pay the debt of the Union, and must be authorized to use the means which appear to itself most eligible to effect that object. It has, consequently, a right to make remittances by bills or otherwise, and to take those precautions which will render the transaction safe."[302]
Clause 2. The Congress shall have Power * * * To borrow Money on the credit of the United States.
The Borrowing Power
The original draft of the Constitution reported to the convention by its Committee of Detail empowered Congress "To borrow money and emit bills on the credit of the United States."[303] When this section was reached in the debates, Gouverneur Morris moved to strike out the clause "and emit bills on the credit of the United States." Madison suggested that it might be sufficient "to prohibit the making them a tender." After a spirited exchange of views on the subject of paper money the convention voted, nine States to two, to delete the words "and emit bills."[304] Nevertheless, in 1870, the Court relied in part upon this clause in holding that Congress had authority to issue treasury notes and to make them legal tender in satisfaction of antecedent debts.[305] When it borrows money "on the credit of the United States" Congress creates a binding obligation to pay the debt as stipulated and cannot thereafter vary the terms of its agreement. A law purporting to abrogate a clause in government bonds calling for payment in gold coin was held to contravene this clause, although the creditor was denied a remedy in the absence of a showing of actual damage.[306]
Clause 3. The Congress shall have power * * * To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.
Purpose of the Clause
This clause serves a two-fold purpose: it is the direct source of the most important powers which the National Government exercises in time of peace: and, except for the due process of law clause of Amendment XIV, it is the most important limitation imposed by the Constitution on the exercise of State power. The latter, or restrictive, operation of the clause was long the more important one from the point of view of Constitutional Law. Of the approximately 1400 cases which reached the Supreme Court under the clause prior to 1900, the overwhelming proportion stemmed from State legislation.[307] It resulted that, with an important exception to be noted in a moment, the guiding lines in construction of the clause were initially laid down from the point of view of its operation as a curb on State power, rather than of its operation as a source of national power; and the consequence of this was that the word "commerce," as designating the thing to be protected against State interference, came to dominate the clause, while the word "regulate" remained in the background.
Definition of Terms: Gibbons v. Ogden
"COMMERCE"