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Timestamp: 2019-04-25 09:04:30+00:00

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§ 1347. THE tenth section of the first article (to which we are now to proceed) contains the prohibitions and restrictions upon the authority of the states. Some of these, and especially those, which regard the power of taxation, and the regulation of commerce, have already passed under consideration; and will, therefore, be here omitted. The others will be examined in the order of the text of the constitution.
§ 1349. The prohibition against treaties, alliances, and confederations, constituted a part of the articles of confederation,2 and was from thence transferred in substance into the constitution. The sound policy, nay, the necessity of it, for the preservation of any national government, is so obvious, as to strike the most careless mind. If every state were at liberty to enter into any treaties, alliances, or confederacies, with any foreign state, it would become utterly subversive of the power confided to the national government on the same subject. Engagements might be entered into by different states, utterly hostile to the interests of neighbouring or distant states; and thus the internal peace and harmony of the Union might be destroyed, or put in jeopardy. A foundation might thus be laid for preferences, and retaliatory systems, which would render the power of taxation, and the regulation of commerce, by the national government, utterly futile. Besides; the intimate dangers to the Union ought not to be overlooked, by thus nourishing within its own bosom a perpetual source of foreign corrupt influence, which in times of political excitement and war, might be wielded to the destruction of the independence of the country. This, indeed, was deemed, by the authors of the Federalist, too clear to require any illustration.3 The corresponding clauses in the confederation were still more strong, direct, and exact, in their language and import.
§ 1354. The states still continued to fail in complying with the requisitions of congress to pay taxes; and congress, notwithstanding their solemn declaration to the contrary, increased the issue of paper money, until it amounted to the enormous sum of upwards of three hundred millions.15 The idea was then abandoned of any redemption at par. In March, 1780, the states were required to bring in the bills at forty for one; and new bills were then to be issued in lieu of them, bearing an interest of five per cent, redeemable in six years, to be issued on the credit of the individual states, and guaranteed by the United States.16 This new scheme of finance was equally unavailing. Few of the old bills were brought in; and of course few of the new were issued. At last the continental bills became of so little value, that they ceased to circulate; and in the course of the year 1780, they quietly died in the hands of their possessors.17 Thus were redeemed the solemn pledges of the national government!18 Thus, was a paper currency, which was declared to be equal to gold and silver, suffered to perish in the hands of persons compelled to take it; and the very enormity of the wrong made the ground of an abandonment of every attempt to redress it!
§ 1355. Without doubt the melancholy shades of this picture were deepened by the urgent distresses of the revolutionary war, and the reluctance of the states to perform their proper duty. And some apology, if not some justification of the proceedings, may be found in the eventful transactions and sufferings of those times. But the history of paper money, without any adequate funds pledged to redeem it, and resting merely upon the pledge of the national faith, has been in all ages and in all nations the same. It has constantly become more and more depreciated; and in some instances has ceased from this cause to have any circulation whatsoever, whether issued by the irresistible edict of a despot, or by the more alluring order of a republican congress. There is an abundance of illustrative facts scattered over the history of those of the American colonies, who ventured upon this pernicious scheme of raising money to supply the public wants, during their subjection to the British crown; and in the several states, from the declaration of independence down to the present times. Even the United States, with almost inexhaustible resources, and with a population of 9,000,000 of inhabitants, exhibited during the late war with Great-Britain the humiliating spectacle of treasury notes, issued and payable in a year, remaining unredeemed, and sunk by depreciation to about half of their nominal value!
§ 1357. It would seem to be obvious, that, as the states are expressly prohibited from coining money, the prohibition would be wholly ineffectual, if they might create a paper currency, and circulate it as money. But, as it might become necessary for the states to borrow money, the prohibition could not be intended to prevent such an exercise of power, on giving to the lender a certificate of the amount borrowed, and a promise to repay it.
§ 1359. But it has been contended recently, that a bill of credit, in the sense of the constitution, must be such a one, as is, by the law of the state, made a legal tender. But the constitution itself furnishes no countenance to this distinction. The prohibition is general; it extends to all bills of credit, not to bills of a particular description. And surely no one in such a case is at liberty to interpose a restriction, which the words neither require, nor justify. Such a construction is the less admissible, because there is in the same clause an express and substantive prohibition of the enactment of tender laws. If, therefore, the construction were admissible, the constitution would be chargeable with the folly of providing against the emission of bills of credit, which could not, in consequence of another prohibition, have any legal existence. The Constitution considers the emission of bills of credit, and the enactment of tender laws, as distinct operations, independent of each other, which may be frequently performed. Both are forbidden. To sustain the one, because it is not also the other; to say, that bills of credit may be emitted, if they are not made a tender in payment of debts, is, in effect, to expunge that distinct, independent prohibition, and to read the clause, as if it had been entirely omitted.30 No principle of interpretation can justify such a course.
§ 1361. But the argument itself is not borne out by the facts. The history of our country does not prove, that it was an essential quality of bills of credit, that they should be a tender in payment of debts; or that this was the only mischief resulting from them. Bills of credit were often issued by the colonies, and by the several states afterwards, which were not made a legal tender; but were made current, and simply receivable in discharge of taxes and other dues to the public.32 None of the bills of credit, issued by congress during the whole period of the revolution, were made a legal tender; and indeed it is questionable, if that body possessed the constitutional authority to make them such. At all events they never did attempt it; but recommended, (as has been seen,) that the states should make them a tender.33 The act of parliament of 24 Geo. 2, ch. 53, is equally strong on this point. It prohibited any of the New-England colonies from issuing any new paper bills, or “bills of credit,” except upon the emergencies pointed out in the act; and required those colonies to call in, and redeem all the outstanding bills. It then proceeded to declare, that after September, 1751, no “paper currency or bills of credit,” issued, or created in any of those colonies, should be a legal tender, with a proviso, that nothing therein contained should be construed to extend to make any of the bills, then subsisting, a legal tender.
§ 1363. This subject underwent an ample discussion in a late case. The state of Missouri, with a view to relieve the supposed necessities of the times, authorized the establishment of certain loan-offices to loan certain sums to the citizens of that state, for which the borrowers were to give security by mortgage of real estate, or personal property, redeemable in a limited period by instalments. The loans were to be made in certificates, issued by the auditor and treasurer of the state, of various denominations, between ten dollars and fifty cents, all of which, on their face, purported to be receivable at the treasury, or any of the loan offices of the state, in the discharge of taxes or debts due to the state for the sum of  with interest for the same at two per centum per annum. These certificates were also made receivable in payment of all salt at the salt springs; and by all public officers, civil and military, in discharge of their salaries and fees of office. And it was declared, that the proceeds of the salt springs, the interest accruing to the state, and all estates purchased under the same act, and all debts due to the state, should be constituted a fund for the redemption of them. The question made was, whether they were “bills of credit,” within the meaning of the constitution. It was contended, that they were not; they were not made a legal tender, nor directed to pass as money, or currency. They were mere evidences of loans made to the state, for the payment of which specific and available funds were pledged. They were merely made receivable in payment of taxes, or other debts due to the state.
§ 1367. The next prohibition is, that no state shall “pass any bill of attainder, ex post facto law, or law inpairing the obligation of contracts.” The two former require no commentary, beyond what has been already offered, under a similar prohibitory clause applied to the government of the United States. The same policy and principles apply to each.42 It would have been utterly useless, if not absurd, to deny a power to the Union, which might at the same time be applied by the states, to purposes equally mischievous, and tyrannical; and which might, when applied by the states, be for the very purpose of subverting the Union. Before the constitution of the United States was adopted, every state, unless prohibited by its own constitution, might pass a bill of attainder, or ex post facto law, as a general result of its sovereign legislative power. And such a prohibition would not be implied from a constitutional provision, that the legislative, executive, and judiciary departments shall be separate, and distinct; that crimes shall be tried in the county, where they are committed; or that the trial by jury shall remain inviolate. The power to pass such laws would still remain, at least so far as respects crimes committed without the state.43 During the revolutionary war, bills of attainder, and ex post facto acts of confiscation, were passed to a wide extent; and the evils resulting therefrom were supposed, in times of more cool reflection, to have far outweighed any imagined good.
a. Journal of Convention, p. 227, 302, 377, 379.
3. The Federalist, No. 44.
4. 1 Tucker’s Black. Comm. App. 310, 311.
6. The Federalist, No. 44; Rawle on Constitution, ch. 10, p. 136.
8. The Federalist, No. 44.
9. 1 Tuck. Black. Comm. App. 311, 312; Id. 261. Ante, Vol. 3, p. 16 to 20.
10. The Federalist, No. 44; 2 Elliot’s Debates, 83.  See in Mr. Webster’s Speeches on the Bank of United States, in Senate, 25th and 28th of May, 1832, some cogent remarks on the same subject. See also Mr. Madison’s Letter to Mr. C.J. Ingersoll, 2d of February, 1811.
11. See Sturgis v. Crowninshield, 4 Wheat. R. 204, 205.
12. 1 Journal of Congress, 1775, p. 186, 280, 304.
13. 2 Journal of Congress, 11th January, 1776, p. 21; 14th January, 1777; 3 Journal of Congress, p. 19, 20; 2 Pitk. Hist. ch. 16, p. 155, 156.
14. See 4 Journal of Congress, 9th Dec. 1778, p. 742, and 5 Journal or Congress, 13th Sept. 1779, p. 341 to 353; 2 Pitk. Hist. ch. 16, p. 156, 157.
15. In the American Almanac for 1830, p. 183, the aggregate amount is given at 357,000,000 of the old emission, and 2,000,000 of the new emission; upon which the writer adds, “there was an average depreciation of two thirds of its original value.” Mr. Jefferson has given an interesting account of the history of paper money during the revolution, in an article written for the Encyclopédia Méthodique. 1 Jefferson’s Corresp. 398, 401, 411, 412.
16. 6 Journal of Convention, 18th March, 1780, p. 45 to 48.
17. 2 Pitkin’s Hist. ch. 16, p. 156, 157; 1 Jefferson’s Corresp. 401, 402, 411, 412.
18. The twelfth article of the confederation declare, “that all bills of credit emitted, etc. by or under the authority of congress, etc. shall be deemed and considered, as a charge against the United States, for payment and satisfaction whereof the said United States and the public faith are hereby solemnly pledged.” When was this pledge redeemed? The act of congress of 1790, ch. 61, for the liquidation of the public debt, directs bills of credit to be estimated at the rate of one hundred dollars for one dollar in specie. In Mr. Secretary Hamilton’s Report on the public debt and credit in January, 1790, the unliquidated part of the public debt, consisting chiefly of continental bills of credit, was estimated at two millions of dollars. What was the nominal amount of the bills of credit, which this sum of two millions was designed to cover at its specie value, does not appear in the Report. But in the debates in congress, upon the bill founded on it, it was asserted, that it was calculated, that there were about 78 or 80 millions of paper money then outstanding, valued at a depreciation of 40 for 1. 3 Lloyd’s Deb. 282, 283, 288.
19. 1 Hutch. Hist. ch. 3, p. 402.
21. 1 Hutch. Hist. ch. 3, p. 403, note; 2 Hutch. Hist. 208, 245, and note; Id. 380, 381, 403, 404.
22. 1 Hutch. Hist. ch. 3, p. 402, 403, and note ibid.
23. Ibid.  Hutchinson says, that, in 1747, the currency had sunk to sixty shillings for an ounce of silver. 2 Hutch. Hist. 438.
24. 1 Hutch. Hist. ch. 3, p. 402 403, and note ibid.
25. 4 Peters’s Sup. Ct. R. 435.
26. Craig v. State of Missouri, 4 Peters’s Sup. Ct. R. 410, 432.
27. Craig v. State of Missouri, 4 Peters’s Sup. Ct. R. 432, 441, 442.
28. Craig v. State of Missouri, 4 Peters’s Sup. Ct. R. 432, 441, 442.
29. Id. 432, 433, 441, 442, 443. An act of parliament was passed, (24 Geo. 2, ch. 53,) regulating and restraining the issues of paper money and bills of credit in the New-England colonies, in which the language used demonstrates, that bills of credit was a phrase constantly used and understood, as equivalent to paper money. The prohibitory clauses forbid the issue of “any paper bills, or bills of credit of any kind, or denomination whatsoever,” etc., and constantly speak of “paper bills or bills of credit,” as equivalents. See Deering v. Parker, 4 Dell. (July 1760,) p. xiii.
30. Craig v. State of Missouri, 4 Peters’s Sup. Ct. R. 433, 434.
31. Craig v. State of Missouri, 4 Peters’s Sup. Ct. R. 433, 434.
32. The bills of credit issued by Massachusetts in 1690 (the first ever issued in any colony) were in the following form: “No.  , 10s. 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, Boston, in New-England, Dec. the 10th, 1690. By order of the General Court: Peter Townsend, Adam Winthrop, Tim. Thornton, Committee.” So, that it was not, in any sense, a tender, except in discharge of public debts. 3 Mass. Hist. Collections, (2d series,) p. 260, 261. The bills of credit of Connecticut, passed before the revolution, were of the same general character and operation. They were not made a tender in payment of private debts. The emission of them was begun in 1709, and continued, at least, for nearly a half century. The acts, authorizing the emission, generally contained a clause for raising a tax to redeem them.
33. Craig v. State of Missouri, 4 Peters’s Sup. Ct. R. 434, 435, 436, 442, 443.
34. Craig v. State of Missouri, 4 Peters’s Sup. Ct. R. 447.
35. See 2 Hutch. Hist. 208, 381.
36. Craig v. The State of Missouri, 4 Peters’s Sup. Ct. R. 410, 425 to 438.
37. Some of these grounds apply equally to some of the “bills of credit,” issued by the colonies. In fact, these certificates seem to have differed in few, if any essential circumstances, from those issued by the Province of Massachusetts in 1714 and 1716, and had the same general objects in view by the same means, viz. to make temporary loans to the inhabitants to relieve their wants by an issue of paper money.b The bills of credit issued by congress in 1780 were payable with interest. So were the treasury notes issued by congress in the late war with Great Britain. Yet both circulated and were designed to circulate as currency. The bills of credit issued by congress in the revolution were not made a legal tender.c It has also been already seen, that the first bills of credit ever issued in America, in 1690, contained no promise of payment by the state, and were simply receivable in discharge of public dues.d Mr. Jefferson, in the first volume of his Correspondence, (p. 401, 402,) has given a succinct history of paper money in America, especially in the revolution. It is a sad but instructive account.
b. 1 Hutch. History, 402, 403, and note; 2 Hutch. History, 208.
d. 3 Mass. Hist. Collection, (2d series) 260, 261. Ante, § 1353, 1361. See 4 Mass. Hist. Coll. (2d series,) 99.
38. 3 Elliot’s Debates, 144.
39. See Sturgis v. Crowninshield, 4 Wheat. R. 204.
40. Ogden v. Saunders, 12 Wheat R. 265, per Washington J.
41. Ogden v. Saunders, 12 Wheat. R. 265, 269, 288, 289, 305, 306, 328, 335, 336, 339.
42. See The Federalist, No. 44, 84.
43. Cooper v. Telfair, 4 Dall R. 14; S. C. 1 Peters’s Cond. R. 211.

References: § 1349

§ 1354

§ 1355

§ 1357

§ 1359

§ 1361

§ 1363

§ 1367
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 § 1353
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