Nashville union and American. [volume] (Nashville, Tenn.) 1868-1875, 1870-02-09
LEGAL TENDERS.
Important Decision of the
Supreme Court of the
United States.
The Legal Tender Act Pro-
nOunced Constitutional, but
DOesnOt Apply to Contracts
Made Before it's Passage.
Greenbacks not a Legal Tender
in Such Cases.

livered to-day by Chief Justice Chase OIL
the legal tender question Is very long, ant
after an able review OF the case it says:
No one questions the general constitu
tionality, and not very many perhaps tn
general expediency of legislation by whiel
currency notes have been authorized in re
cent years, but doubt is expressed as t
the power to declare particular class o
these notes to be legal tenders in the pay
ment Of pre-existing debts. The only
ground upon which this power is ASSERTED
is not that the issue Of notes was an appro
pirate and plainly adopted means for carry
ing on the war, for that is admitted; bu
the making of them legal tender TO tn,
extent mentioned was such means
Now, we have seen that all the notes is
sued were not declared legal tenders, tina
they constituted a very large proportion
and that they circulated freely without dis
count. 1t may be said that this equality
In circulation and credit was due to the
provision made by law for the redemption
Of this paper in legal tender notes; but this
provision, if at Fall useful in this respect,
was of trifing importance compared with
that which made them receivable for Gov.
eminent dues. All modern history test.
ies that, in time of war especially, when
taxes areaugmented, large loansnegotiated,
and heavy disbursements made, notes is
sued by authority of government, and
made receivable for dues TO government,
always obtain at first a ready circulation,
and even when not redeemable by coin on
demand are as little, and usually less, sub
ject to depreciation than any other descrip-
| ton of notes for the redemption of which
no better provision is made; and the histo-
| ry of the legislation under consideration
is, that it was upon this quality of legal
| tenders that reliance of q circulation was
| originally placed for the receivabihty
| clause appears to have been in the original
draft of the bill, while the legal tender
clause seems to have been introduced at a
later stage of its progress. These facts Ger
/ tainly are not without weight as evidence
that all useful purposes of the notes would
have been fully answered without making
| them legal tenders for pre-existing debts.
1t is denied, indeed, by eminent writers,
| that the quality Of legal tender adds any
| thing at all to the credit or usefulness of
| the Government notes. They insist, on
the contrary, that it impairs both. How
| ever this may be, it must be remembered
| that it is as q means TO an end to be OBJ
| tanned by the action of the Government,
that implied power of making notes a
| legal tender in all payments is claimed IN
| der the Constitution. Now, how far is the
Government helped by Ihis means? Ger
tainly it cannot obtain new supplies or
| services at a cheaper rate, for no one will
| take notes for more than they are worth.
| At the time of new contract the price
will rise in the ratio Of the depreciation,
and this is all that could happenif the notes
were not made legal tender
| But it may be said that depreciation will
be less to him who takes them from the
Government. If the Government Will
| pledge to him its power to compel his
creditors to receive them at par in pay
ment Thisa is, as we have seen, by no
means certain If the quantity issued be
excessive and redemption uncertain and re-
mote, great depreciation will take place
| If, on the other hand, the quantity is only
| adequate to the demands of business and
| confidence in early redemption is strong
| the notes will circulate freely, whether
| made legal tender or not. But if it be
| admitted that some increase of availability
is derived from making the notes legal ten
| der under new contracts, it by no means
follows that any appreciable advantage is
| gained by compelling creditors to receive
them in satisfaction of pre-existiDg debts;
| and there is abundant evidence that what
| ever benefit is possible from that compul-
| sion to some individuals Is outweighed by
losses of property, arrangement of bust
| ness fluctuations Of currency and values,
| and increase Of prices to people and Gov
| ernment and the long train of evils which
| flow from the use of an irTedeemable paper
| currency. It Is true that these evils are
not to be attributed altogether to making it
a legal tender, bat this increases these
| evils. 1t certainly widens their extent and
| protracts their continuance.
We are unable to pursuade ourselves that
| any expedient of this sort is an appropriate
and plainly adapted means for the exercise
| ofpower to declare and carry on war If it
| adds nothing to the utility of notes it can
| not be upheld as means to the end in fur
| therance of which notes are issued. Nor
! can it in our Judgment be upheld as such
| if, while facilitating in some degree the
circulation of notes, it debases and injuries
| currency in its proper use to a much great
er degree. These considerations seem to
us equally applicable to power to regulate
| commerce and borrow money. Both pow
| ers necessarily involve the use of money by
the people and by Government, but neither
| as we think, carries with it, as an apprOpri-
ate and plainly adapted means TO its exer-
else, the power of making circulating notes
legal tenders in payment Of pre-eKisting
| debts.
But there is another view which seems to
us decisive To whatever express power
implied the power in question may be re-
ferred, in the rules stated by Chief Justice
Marshall the words appropriate, plainly
adapted and really calculated, are qualified
by the limitation that the means must be
not prohibited, but consistent with the let
ter and spirit of the Constitution. Nothing
| SO prohibited or inconsistent can,be re-
garded as appropriate or plainly adapted,
or really calculated as means to any end.
Let us inquire then, first, whether max
| ing bills of credit legal tender to the extent
! indicated is consistent with the spirit of the
Constitution. Among the great cardinal
! purposes of that instrument, no one is
more conspicuous or more venerable than
the establishment of justice, and what was
intended by the establishment Of justice in
the minds of people who ordained it is,
happily, not matter of disputatiOn. 1t is
| not left to inference Or conjecture, and es-
pecially in its relations to contracts. When
| the Constitution was undergoing discussion
| in the Convention, the Congress of the
confederation was engaged in the consider
alton of the ordinance for the government
of the territory northwest Of the Ohio, the
| only territory subject at that time to its
regulation and control. BY this ordinance,
| certain Fundamental articles of compact
were established between the original
States and the people of the States and
| Territories for the purpose, to use its own
| Language, Of extending the fundamental
| principles of civil and religious liberty
| among these Republics, az the States
| united under the confederation by their
| laws and Constitutions, were called
Among these fundamental principles was
| this, in Just preservation Of rights and
property: 1T is understood and declared
| that no law ought ever be made or have
| force in said territory that shall, in any
matter whatever, interfere with or affect
private contracts or engagements bona
| fide, without fraud, previously formed.
The same principles found a more con-
| densed expression in that most valuable
provision of the Constitution of the United
| States, ever recognized as n sufficient safe
| guard against intrigue, that no State shall
| pass any law impairing the obligation of
| contracts. II is true that this prohibition
| is not applied in terms to the Government
| of the United States. Congress has ex-
press powers to enact bankrupt laws, and
we do not say that law made in the execu-
ton of any other express power which in
cidentally impairs the obligation of con-
tract can be held to be unconstitutional
for that reason, but we think it clear that
those who framed, and those who adopted
the Constitution intended that the spirit of
this prohibition should pervade the entire