U.S. Supreme Court

Legal Tender Cases,110U.S. 421 (1884)Legal Tender Cases

Submitted January 22,1884

Decided March 3, 1884

110U.S. 421

IN ERROR TO THE CIRCUIT COURT OF THEUNITED

STATES FOR THE SOUTHERN DISTRICT OFNEW YORK

Syllabus

Congress has the constitutional power to make the Treasury notesof the United States a legal tender in payment of private debts, intime of peace as well as in time of war.

Under the Act of May 31, 1878, c. 146, which enacts that whenany United States legal tender notes may be redeemed or receivedinto the Treasury, and shall belong to the United States, theyshall be reissued and paid out again, and kept in circulation,notes so reissued are a legal tender.

Juilliard, a citizen of New York, brought an action againstGreenman, a citizen of Connecticut, in the Circuit Court of theUnited States for the Southern District of New York, alleging thatthe plaintiff sold and delivered to the defendant at his specialinstance and request, 100 bales of cotton, of the value and for theagreed price of $5,122.90, and that the defendant agreed to paythat sum in cash on the delivery of the cotton, and had not paidthe same or any part thereof, except that he had paid the sum of$22.90 on account, and was now justly indebted to the plaintifftherefor in the sum of $5,100, and demanding judgment for this sum,with interest and costs.

The defendant in his answer admitted the citizenship of theparties, the purchase and delivery of the cotton, and the agreementto pay therefor, as alleged, and averred that, after the deliveryof the cotton, he offered and tendered to the plaintiff, in fullpayment, $22.50 in gold coin of the United States, forty cents insilver coin of the United States, and two United States notes, oneof the denomination of $5,000 and the other of the denomination of$100, of the description known as United States legal tender notes,purporting by recital thereon to be

Page 110 U. S. 422

legal tender at their respective face values, for all debts,public and private, except duties on imports and interest on thepublic debt, and which, after having been presented for payment,and redeemed and paid in gold coin, since January 1, 1879, at theUnited States Sub-Treasury in New York, had been reissued and keptin circulation under and in pursuance of the Act of Congress of May31, 1878, c. 146; that at the time of offering and tendering thesenotes, and coin to the plaintiff the sum of $5,122.90 was theentire amount due and owing in payment for the cotton, but theplaintiff declined to receive the notes in payment of $5,100thereof, and that the defendant had ever since remained, and stillwas, ready and willing to pay to the plaintiff the sum of $5,100 inthese notes, and brought these notes into court, ready to be paidto the plaintiff, if he would accept them.

The plaintiff demurred to the answer upon the grounds that thedefense, consisting of new matter, was insufficient in law upon itsface, and that the facts stated in the answer did not constituteany defense to the cause of action alleged.

The circuit court overruled the demurrer and gave judgment forthe defendant, and the plaintiff sued out this writ of error.

Page 110 U. S. 435

MR. JUSTICE GRAY delivered the opinion of the Court.

Page 110 U. S. 436

The amount which the plaintiff seeks to recover, and which, ifthe tender pleaded is insufficient in law, he is entitled torecover, is $5,100. There can therefore be no doubt of thejurisdiction of this Court to revise the judgment of the circuitcourt. Act of February 16, 1875, c. 77, § 3, 18 Stat. 315.

The notes of the United States, tendered in payment of thedefendant's debt to the plaintiff, were originally issued under theActs of Congress of February 25, 1862, c. 33; July 11, 1862, c.142, and March 3, 1863, c. 73, passed during the war of therebellion, and enacting that these notes should "be lawful moneyand a legal tender in payment of all debts, public and private,within the United States," except for duties on imports andinterest on the public debt. 12 Stat. 345, 532, 709.

The provisions of the earlier acts of Congress, so far as it isnecessary for the understanding of the recent statutes to quotethem are reenacted in the following provisions of the RevisedStatutes:

"SEC. 3579. When any United States notes are returned to theTreasury, they may be reissued, from time to time, as theexigencies of the public interest may require."

"SEC. 3580. When any United States notes returned to theTreasury are so mutilated or otherwise injured as to be unfit foruse, the Secretary of the Treasury is authorized to replace thesame with others of the same character and amounts."

"SEC. 3581. Mutilated United States notes, when replacedaccording to law, and all other notes which by law are required tobe taken up and not reissued, when taken up shall be destroyed insuch manner and under such regulations as the Secretary of theTreasury may prescribe."

"SEC. 3582. The authority given to the Secretary of the Treasuryto make any reduction of the currency by retiring and cancelingUnited States notes is suspended."

"SEC. 3588. United States notes shall be lawful money, and alegal tender in payment of all debts, public and private, withinthe United States, except for duties on imports and interest on thepublic debt."

The Act of January 14, 1875, c. 15, "to provide for theresumption

Page 110 U. S. 437

of specie payments," enacted that on and after January 1,1879,

"the Secretary of the Treasury shall redeem in coin the UnitedStates legal tender notes then outstanding on their presentationfor redemption at the office of the Assistant Treasurer of theUnited States in the City of New York, in sums of not less thanfifty dollars,"

and authorized him to use for that purpose any surplus revenuesin the Treasury and the proceeds of the sales of certain bonds ofthe United States. 18 Stat. 296.

The Act of May 31, 1878, c. 146, under which the notes inquestion were reissued, is entitled "An act to forbid the furtherretirement of United States legal tender notes," and enacts asfollows:

"From and after the passage of this act, it shall not be lawfulfor the Secretary of the Treasury or other officer under him tocancel or retire any more of the United States legal tender notes.And when any of said notes may be redeemed or be received into theTreasury under any law, from any source whatever, and shall belongto the United States, they shall not be retired, cancelled, ordestroyed, but they shall be reissued and paid out again and keptin circulation,provided that nothing herein shallprohibit the cancellation and destruction of mutilated notes andthe issue of other notes of like denomination in their stead, asnow provided by law. All acts and parts of acts in conflictherewith are hereby repealed."

20 Stat. 87.

The manifest intention of this act is that the notes which itdirects, after having been redeemed, to be reissued and kept incirculation, shall retain their original quality of being a legaltender.

The single question therefore to be considered, and upon theanswer to which the judgment to be rendered between these partiesdepends, is whether notes of the United States, issued in time ofwar, under acts of Congress declaring them to be a legal tender inpayment of private debts, and afterwards in time of peace redeemedand paid in gold coin at the Treasury, and then reissued under theact of 1878, can, under the

Page 110 U. S. 438

Constitution of the United States, be a legal tender in paymentof such debts.

Upon full consideration of the case, the court is unanimously ofopinion that it cannot be distinguished in principle from the casesheretofore determined, reported under the names of theLegal TenderCases, 12 Wall. 457;Dooley v.Smith, 13 Wall. 604;RailroadCompany v. Johnson, 15 Wall. 195, andMaryland v. RailroadCompany, 22 Wall. 105, and all the judges, exceptMR. JUSTICE FIELD, who adheres to the views expressed in hisdissenting opinions in those cases, are of opinion that they wererightly decided.

The elaborate printed briefs submitted by counsel in this case,and the opinions delivered in theLegal Tender Cases, andin the earlier case ofHepburn v.Griswold, 8 Wall. 603, which those cases overruled,forcibly present the arguments on either side of the question ofthe power of Congress to make the notes of the United States alegal tender in payment of private debts. Without undertaking todeal with all those arguments, the court has though it fit that thegrounds of its judgment in the case at bar should be fullystated.

# No question of the scope and extent of the implied powers ofCongress under the Constitution can be satisfactorily discussedwithout repeating much of the reasoning of Chief Justice Marshallin the great judgment inMcCulloch v.Maryland, 4 Wheat. 316, by which the power ofCongress to incorporate a bank was demonstrated and affirmed,notwithstanding the Constitution does not enumerate, among thepowers granted, that of establishing a bank or creating acorporation.

The people of the United States by the Constitution establisheda national government, with sovereign powers, legislative,executive, and judicial. "The government of the Union," said ChiefJustice Marshall,

"though limited in its powers, is supreme within its sphere ofaction . . . and its laws, when made in pursuance of theConstitution, form the supreme law of the land. . . . Among theenumerated powers of government, we find the great powers to layand collect taxes; to borrow money; to regulate commerce; todeclare and conduct a war, and to raise and support armies andnavies. The sword and

Page 110 U. S. 439

the purse, all the external relations, and no inconsiderableportion of the industry of the nation, are entrusted to itsgovernment."

4 Wheat.17 U. S.405-407.

A Constitution, establishing a frame of government, declaringfundamental principles, and creating a national sovereignty, andintended to endure for ages, and to be adapted to the variouscrises of human affairs, is not to be interpreted with thestrictness of a private contract. The Constitution of the UnitedStates, by apt words of designation or general description, marksthe outlines of the powers granted to the national legislature; butit does not undertake, with the precision and detail of a code oflaws, to enumerate the subdivisions of those powers, or to specifyall the means by which they may be carried into execution. ChiefJustice Marshall, after dwelling upon this view, as required by thevery nature of the Constitution, by the language in which it isframed, by the limitations upon the general powers of Congressintroduced in the ninth section of the first article, and by theomission to use any restrictive term which might prevent itsreceiving a fair and just interpretation, added these emphaticwords: "In considering this question, then, we must never forgetthat it is aconstitution we are expounding." 4 Wheat.17 U. S. 407.See also page17 U. S.415.

The breadth and comprehensiveness of the words of theConstitution are nowhere more strikingly exhibited than in regardto the powers over the subjects of revenue, finance, and currency,of which there is no other express grant than may be found in thesefew brief clauses:

"The Congress shall have power:"

"To lay and collect taxes, duties, imposts, and excises, to paythe debts and provide for the common defense and general welfare ofthe United States; but all duties, imposts, and excises shall beuniform throughout the United States."

"To borrow money on the credit of the United States."

"To regulate commerce with foreign nations and among the severalstates and with the Indian tribes."

"To coin money, regulate the value thereof, and of foreign coin,and fix the standard of weights and measures. "

Page 110 U. S. 440

The section which contains the grant of these and otherprincipal legislative powers concludes by declaring that theCongress shall have power

"To make all laws which shall be necessary and proper forcarrying into execution the foregoing powers, and all other powersvested by this Constitution in the government of the United States,or in any department or officer thereof."

By the settled construction and the only reasonableinterpretation of this clause, the words "necessary and proper" arenot limited to such measures as are absolutely and indispensablynecessary, without which the powers granted must fail of execution,but they include all appropriate means which are conducive oradapted to the end to be accomplished, and which, in the judgmentof Congress, will most advantageously effect it.

That clause of the Constitution which declares that

"The Congress shall have power to lay and collect taxes, duties,imposts, and excises, to pay the debts and provide for the commondefense and general welfare of the United States"

either embodies a grant of power to pay the debts of the UnitedStates or presupposes and assumes that power as inherent in theUnited States as a sovereign government. But in whichever aspect itbe considered, neither this nor any other clause of theConstitution makes any mention of priority or preference of theUnited States as a creditor over other creditors of an individualdebtor. Yet this Court, in the early case ofUnitedStates v. Fisher, 2 Cranch 358, held that under thepower to pay the debts of the United States, Congress had the powerto enact that debts due to the United States should have thatpriority of payment out of the estate of an insolvent debtor whichthe law of England gave to debts due to the Crown.

In delivering judgment in that case, Chief Justice Marshallexpounded the clause giving Congress power to make all necessaryand proper laws as follows:

"In construing this clause, it would be incorrect and wouldproduce endless difficulties if the opinion should be maintainedthat no law was authorized

Page 110 U. S. 441

which was not indispensably necessary to give effect to aspecified power. Where various systems might be adopted for thatpurpose, it might be said with respect to each that it was notnecessary, because the end might be obtained by other means.Congress must possess the choice of means, and must be empowered touse any means which are in fact conducive to the exercise of apower granted by the Constitution. The government is to pay thedebt of the Union, and must be authorized to use the means whichappear to itself the most eligible to effect that object."

2 Cranch6 U. S. 396.

InMcCulloch v. Maryland, he more fully developed thesame view, concluding thus:

"We admit, as all must admit, that the powers of the governmentare limited, and that its limits are not to be transcended. But wethink the sound construction of the Constitution must allow to thenational legislature that discretion, with respect to the means bywhich the powers it confers are to be carried into execution, whichwill enable that body to perform the high duties assigned to it inthe manner most beneficial to the people. Let the end belegitimate, let it be within the scope of the Constitution and allmeans which are appropriate, which are plainly adapted to that end,which are not prohibited, but consist with the letter and spirit ofthe Constitution, are constitutional."

4 Wheat.17 U. S.421.

The rule of interpretation thus laid down has been constantlyadhered to and acted on by this Court, and was accepted asexpressing the true test by all the judges who took part in theformer discussions of the power of Congress to make the Treasurynotes of the United States a legal tender in payment of privatedebts. The other judgments delivered by Chief Justice Marshallcontain nothing adverse to the power of Congress to issue legaltender notes.

By the Articles of Confederation of 1777, the United States, inCongress assembled, were authorized "to borrow money or emit billson the credit of the United States;" but it was declared that

"Each state retains its sovereignty, freedom, and independence,and every power, jurisdiction, and right which is

Page 110 U. S. 442

not by this confederation expressly delegated to the UnitedStates in Congress assembled."

Art. 2; art. 9, § 5; 1 Stat. 4, 7. Yet, upon the questionwhether, under those articles, Congress, by virtue of the power toemit bills on the credit of the United States, had the power tomake bills so emitted a legal tender, Chief Justice Marshall spokevery guardedly, saying: "Congress emitted bills of credit to alarge amount, and did not -- perhaps could not -- make them a legaltender. This power resided in the states."Craig v.Missouri, 4 Pet. 410,29 U. S. 435.But in the Constitution, as he had before observed inMcCullochv. Maryland,

"there is no phrase which, like the Articles of Confederation,excludes incidental or implied powers and which requires thateverything granted shall be expressly and minutely described. Eventhe Tenth Amendment, which was framed for the purpose of quietingthe excessive jealousies which had been excited, omits the word'expressly' and declares only that the powers 'not delegated to theUnited States nor prohibited to the states are reserved to thestates or to the people,' thus leaving the question whether theparticular power which may become the subject of contest has beendelegated to the one government or prohibited to the other todepend on a fair construction of the whole instrument. The men whodrew and adopted this amendment had experienced the embarrassmentsresulting from the insertion of this word in the Articles ofConfederation, and probably omitted it to avoid thoseembarrassments."

4 Wheat.17 U. S.405-406. The sentence sometimes quoted from his opinioninSturges v. Crowninshield had exclusive relation to therestrictions imposed by the Constitution on the powers of thestates, and especial reference to the effect of the clauseprohibiting the states from passing laws impairing the obligationof contracts, as will clearly appear by quoting the wholeparagraph:

"Was this general prohibition intended to prevent paper money?We are not allowed to say so, because it is expressly provided thatno state shall 'emit bills of credit;' neither could these words beintended to restrain the states from enabling debtors to dischargetheir debts by the tender of property of no real value to thecreditor, because for that subject also particular provision

Page 110 U. S. 443

is made. Nothing but gold and silver coin can be made a tenderin payment of debts."

4 Wheat.17 U. S. 122,17 U. S.204.

Such reports as have come down to us of the debates in theconvention that framed the Constitution afford no proof of anygeneral concurrence of opinion upon the subject before us. Theadoption of the motion to strike out the words "and emit bills"from the clause "to borrow money and emit bills on the credit ofthe United States" is quite inconclusive. The philippic deliveredbefore the Assembly of Maryland by Mr. Martin, one of the delegatesfrom that state, who voted against the motion and who declined tosign the Constitution, can hardly be accepted as satisfactoryevidence of the reasons or the motives of the majority of theconvention.See 1 Elliot's Debates 345, 370, 376. Some ofthe members of the convention, indeed, as appears by Mr. Madison'sminutes of the debates, expressed the strongest opposition to papermoney. And Mr. Madison has disclosed the grounds of his own actionby recording that

"this vote in the affirmative by Virginia was occasioned by theacquiescence of Mr. Madison, who became satisfied that striking outthe words would not disable the government from the use of publicnotes, so far as they could be safe and proper, and would only cutoff the pretext for a paper currency, and particularly for makingthe bills a tender, either for public or private debts."

But he has not explained why he thought that striking out thewords "and emit bills" would leave the power to emit bills, anddeny the power to make them a tender in payment of debts. And itcannot be known how many of the other delegates, by whose vote themotion was adopted, intended neither to proclaim nor to deny thepower to emit paper money, and were influenced by the argument ofMr. Gorham, who "was for striking out, without inserting anyprohibition," and who said: "If the words stand, they may suggestand lead to the emission." "The power, so far as it will benecessary or safe, will be involved in that of borrowing." 5Elliot's Debates 434, 435, and note. And after the first clause ofthe tenth section of the first article had been reported in theform in which it now stands, forbidding the states to make anythingbut gold or silver coin a tender in payment of debts or to pass

Page 110 U. S. 444

any law impairing the obligation of contracts, when Mr. Gerry,as reported by Mr. Madison,

"entered into observations inculcating the importance of publicfaith, and the propriety of the restraint put on the states fromimpairing the obligation of contracts, alleging that Congress oughtto be laid under the like prohibitions,"

and made a motion to that effect, he was not seconded.Ib., 546. As an illustration of the danger of giving toomuch weight upon such a question to the debates and the votes inthe convention, it may also be observed that propositions toauthorize Congress to grant charters of incorporation for nationalobjects were strongly opposed, especially as regarded banks, anddefeated.Ib., 440, 543-544. The power of Congress to emitbills of credit as well as to incorporate national banks is nowclearly established by decisions to which we shall presentlyrefer.

The words "to borrow money," as used in the Constitution todesignate a power vested in the national government for the safetyand welfare of the whole people, are not to receive that limitedand restricted interpretation and meaning which they would have ina penal statute, or in an authority conferred, by law or bycontract, upon trustees or agents for private purposes. The power"to borrow money on the credit of the United States" is the powerto raise money for the public use on a pledge of the public credit,and may be exercised to meet either present or anticipated expensesand liabilities of the government. It includes the power to issue,in return for the money borrowed, the obligations of the UnitedStates in any appropriate form, of stock, bonds, bills or notes,and in whatever form they are issued, being instruments of thenational government, they are exempt from taxation by thegovernments of the several states.Weston v.Charleston City Council, 2 Pet. 449;Banks v. Mayor,7 Wall. 16;Bank v.Supervisors, 7 Wall. 26. Congress has authority toissue these obligations in a form adapted to circulation from handto hand in the ordinary transactions of commerce and business. Inorder to promote and facilitate such circulation, to adapt them touse as currency, and to make them more current in the market, itmay

Page 110 U. S. 445

provide for their redemption in coin or bonds and may make themreceivable in payment of debts to the government. So much issettled beyond doubt, and was asserted or distinctly admitted bythe judges who dissented from the decision in theLegal TenderCases as well as by those who concurred in that decision.Veazie Bank v.Fenno, 8 Wall. 533,75 U. S. 548;Hepburn v.Griswold, 8 Wall. 616,75 U. S. 636;Legal TenderCases, 12 Wall. 543,79 U. S. 544,79 U. S. 560,79 U. S. 582,79 U. S. 610,79 U. S. 613,79 U. S.637.

It is equally well settled that Congress has the power toincorporate national banks, with the capacity, for their own profitas well as for the use of the government in its money transactions,of issuing bills which, under ordinary circumstances, pass fromhand to hand as money at their nominal value, and which, when socurrent, the law has always recognized as a good tender in paymentof money debts unless specifically objected to at the time of thetender.United States Bank v. Bank ofGeorgia, 10 Wheat. 333,23 U. S. 347;Ward v. Smith,7 Wall. 447,74 U. S. 451.The power of Congress to charter a bank was maintained inMcCulloch v.Maryland, 4 Wheat. 316, and inOsborn v.United States Bank, 9 Wheat. 738, chiefly upon theground that it was an appropriate means for carrying on the moneytransactions of the government. But Chief Justice Marshallsaid:

"The currency which it circulates, by means of its trade withindividuals, is believed to make it a more fit instrument for thepurposes of government than it could otherwise be, and if this betrue, the capacity to carry on this trade is a facultyindispensable to the character and objects of the institution."

9 Wheat.22 U. S. 864.And Mr. Justice Johnson, who concurred with the rest of the Courtin upholding the power to incorporate a bank, gave the furtherreason that it tended to give effect to "that power over thecurrency of the country which the framers of the Constitutionevidently intended to give to Congress alone."Ib.,22 U. S.873.

The constitutional authority of Congress to provide a currencyfor the whole country is now firmly established. InVeazie Bank v.Fenno, 8 Wall. 533,75 U. S. 548,Chief Justice Chase, in delivering the opinion of the Court,said:

"It cannot be doubted that under the Constitution the power toprovide a

Page 110 U. S. 446

circulation of coin is given to Congress. And it is settled bythe uniform practice of the government, and by repeated decisions,that Congress may constitutionally authorize the emission of billsof credit."

Congress, having undertaken to supply a national currency,consisting of coin, of Treasury notes of the United States, and ofthe bills of national banks, is authorized to impose on all statebanks, or national banks, or private bankers, paying out the notesof individuals or of state banks, a tax of ten percent upon theamount of such notes so paid out.Veazie Bank v. Fenno, supra;National Bank v. United States,101 U. S.1. The reason for this conclusion was stated by ChiefJustice Chase and repeated by the present CHIEF JUSTICE, in thesewords:

"Having thus, in the exercise of undisputed constitutionalpowers, undertaken to provide a currency for the whole country, itcannot be questioned that Congress may, constitutionally, securethe benefit of it to the people by appropriate legislation. To thisend, Congress has denied the quality of legal tender to foreigncoins, and has provided by law against the imposition ofcounterfeit and base coin on the community. To the same end,Congress may restrain by suitable enactments the circulation asmoney of any notes not issued under its own authority. Without thispower, indeed, its attempts to secure a sound and uniform currencyfor the country must be futile."

8 Wall.75 U. S. 549;101 U.S.101 U. S. 6.

By the Constitution of the United States, the several states areprohibited from coining money, emitting bills of credit, or makinganything but gold and silver coin a tender in payment of debts. Butno intention can be inferred from this to deny to Congress eitherof these powers. Most of the powers granted to Congress aredescribed in the eighth section of the first article; thelimitations intended to be set to its powers, so as to excludecertain things which might otherwise be taken to be included in thegeneral grant, are defined in the ninth section; the tenth sectionis addressed to the states only. This section prohibits the statesfrom doing some things which the United States are expresslyprohibited from doing, as well as from doing some things which theUnited States are expressly authorized to do, and from doing somethings which are

Page 110 U. S. 447

neither expressly granted nor expressly denied to the UnitedStates. Congress and the states equally are expressly prohibitedfrom passing any bill of attainder orex post facto law orgranting any title of nobility. The states are forbidden, while thePresident and Senate are expressly authorized, to make thetreaties. The states are forbidden, but Congress is expresslyauthorized, to coin money. The states are prohibited from emittingbills of credit, but Congress, which is neither expresslyauthorized nor expressly forbidden to do so, has, as we havealready seen, been held to have the power of emitting bills ofcredit, and of making every provision for their circulation ascurrency short of giving them the quality of legal tender forprivate debts, even by those who have denied its authority to givethem this quality.

It appears to us to follow as a logical and necessaryconsequence that Congress has the power to issue the obligations ofthe United States in such form, and to impress upon them suchqualities as currency for the purchase of merchandise and thepayment of debts, as accord with the usage of sovereigngovernments. The power, as incident to the power of borrowingmoney, and issuing bills or notes of the government for moneyborrowed, of impressing upon those bills or notes the quality ofbeing a legal tender for the payment of private debts was a poweruniversally understood to belong to sovereignty, in Europe andAmerica at the time of the framing and adopting of the Constitutionof the United States. The governments of Europe, acting through themonarch or the legislature, according to the distribution of powersunder their respective constitutions, had and have as sovereign apower of issuing paper money as of stamping coin. This power hasbeen distinctly recognized in an important modern case, ably arguedand fully considered, in which the Emperor of Austria, as King ofHungary, obtained from the English Court of Chancery an injunctionagainst the issue in England, without his license, of notespurporting to be public paper money of Hungary.Austria v.Day, 2 Giff. 628, and 3 D. F. & J. 217. The power ofissuing bills of credit, and making them at the discretion of thelegislature, a tender in payment of private debts, had long beenexercised in this country

Page 110 U. S. 448

by the several colonies and states, and during the RevolutionaryWar, the states, upon the recommendation of the Congress of theConfederation, had made the bills issued by Congress a legaltender.SeeCraig v.Missouri, 4 Pet. 435,29 U. S. 453;Briscoe v. Bank ofKentucky, 11 Pet. 257,36 U. S. 313,36 U. S.334-336;Legal TenderCases, 12 Wall. 557,79 U. S. 558,79 U. S. 622;Phillipps on American Paper Currency,passim. The exerciseof this power not being prohibited to Congress by the Constitution,it is included in the power expressly granted to borrow money onthe credit of the United States.

This position is fortified by the fact that Congress is vestedwith the exclusive exercise of the analogous power of coining moneyand regulating the value of domestic and foreign coin, and alsowith the paramount power of regulating foreign and interstatecommerce. Under the power to borrow money on the credit of theUnited States and to issue circulating notes for the moneyborrowed, its power to define the quality and force of those notesas currency is as broad as the like power over a metallic currencyunder the power to coin money and to regulate the value thereof.Under the two powers, taken together, Congress is authorized toestablish a national currency, either in coin or in paper, and tomake that currency lawful money for all purposes, as regards thenation government or private individuals.

The power of making the notes of the United States a legaltender in payment of private debts, being included in the power toborrow money and to provide a national currency, is not defeated orrestricted by the fact that its exercise may affect the value ofprivate contracts. If, upon a just and fair interpretation of thewhole Constitution, a particular power or authority appears to bevested in Congress, it is no constitutional objection to itsexistence, or to its exercise, that the property or the contractsof individuals may be incidentally affected. The decisions of thisCourt, already cited, afford several examples of this.

Upon the issue of stock, bonds, bills, or notes of the UnitedStates, the states are deprived of their power of taxation to theextent of the property invested by individuals in suchobligations,

Page 110 U. S. 449

and the burden of state taxation upon other private property iscorrespondingly increased. The ten percent tax, imposed by Congresson notes of state banks and of private bankers, not only lessensthe value of such notes, but tends to drive them and all statebanks of issue out of existence. The priority given to debts due tothe United States over the private debts of an insolvent debtordiminishes the value of these debts, and the amount which theirholders may receive out of the debtor's estate.

So, under the power to coin money and to regulate its value,Congress may (as it did with regard to gold by the Act of June 28,1834, c. 95, and with regard to silver by the Act of February 28,1878, c. 20) issue coins of the same denominations as those alreadycurrent by law, but of less intrinsic value than those by reason ofcontaining a less weight of the precious metals, and thereby enabledebtors to discharge their debts by the payment of coins of theless real value. A contract to pay a certain sum in money, withoutany stipulation as to the kind of money in which it shall be paid,may always be satisfied by payment of that sum in any currencywhich is lawful money at the place and time at which payment is tobe made. 1 Hale, P.C. 192-194; Bac.Abr. "Tender, B. 2;" Pothier,Contract of Sale, No. 416; Pardessus Droit Commercial, Nos. 204,205;Searight v. Calbraith, 4 Dall. 324 [omitted]. Asobserved by Mr. Justice Strong in delivering the opinion of theCourt in theLegal Tender Cases,

"Every contract for the payment of money simply is necessarilysubject to the constitutional power of the government over thecurrency, whatever that power may be, and the obligation of theparties is therefore assumed with reference to that power."

12 Wall.79 U. S.549.

Congress, as the legislature of a sovereign nation, beingexpressly empowered by the Constitution "to lay and collect taxes,to pay the debts and provide for the common defense and generalwelfare of the United States," and "to borrow money on the creditof the United States," and "to coin money and regulate the valuethereof and of foreign coin," and being clearly authorized, asincidental to the exercise of those great powers, to emit bills ofcredit to charter national banks and

Page 110 U. S. 450

to provide a national currency for the whole people in the formof coin, Treasury notes, and national bank bills, and the power tomake the notes of the government a legal tender in payment ofprivate debts being one of the powers belonging to sovereignty inother civilized nations, and not expressly withheld from Congressby the Constitution; we are irresistibly impelled to the conclusionthat the impressing upon the Treasury notes of the United Statesthe quality of being a legal tender in payment of private debts isan appropriate means, conducive and plainly adapted to theexecution of the undoubted powers of Congress, consistent with theletter and spirit of the Constitution, and therefore within themeaning of that instrument, "necessary and proper for carrying intoexecution the powers vested by this Constitution in the governmentof the United States."

Such being our conclusion in matter of law, the question whetherat any particular time, in war or in peace, the exigency is such,by reason of unusual and pressing demands on the resources of thegovernment or of the inadequacy of the supply of gold and silvercoin to furnish the currency needed for the uses of the governmentand of the people, that it is as matter of fact wise and expedientto resort to this means is a political question, to be determinedby Congress when the question of exigency arises, and not ajudicial question, to be afterwards passed upon by the courts. Toquote once more from the judgment inMcCulloch v.Maryland:

"Where the law is not prohibited, and is really calculated toeffect any of the objects entrusted to the government, to undertakehere to inquire into the degree of its necessity would be to passthe line which circumscribes the judicial department, and to treadon legislative ground."

4 Wheat.17 U. S.423.

It follows that the Act of May 31, 1878, c. 146, isconstitutional and valid, and that the circuit court rightly heldthat the tender in Treasury notes, reissued and kept in circulationunder that act, was a tender of lawful money in payment of thedefendant's debt to the plaintiff.

Judgment affirmed.

Page 110 U. S. 451

MR. JUSTICE FIELD, dissenting.

From the judgment of the Court in this case and from all thepositions advanced in its support I dissent. The question of thepower of Congress to impart the quality of legal tender to thenotes of the United States, and thus make them money and a standardof value, is not new here. Unfortunately, it has been toofrequently before the Court, and its latest decision previous tothis one has never been entirely accepted and approved by thecountry. Nor should this excite surprise, for whenever it isdeclared that this government, ordained to establish justice, hasthe power to alter the condition of contracts between privateparties and authorize their payment or discharge in somethingdifferent from that which the parties stipulated, thus disturbingthe relations of commerce and the business of the communitygenerally, the doctrine will not and ought not to be readilyaccepted. There will be many who will adhere to the teachings andabide by the faith of their fathers. So the question has comeagain, and will continue to come until it is settled so as touphold, and not impair, the contracts of parties, to promote andnot defeat justice.

If there be anything in the history of the Constitution whichcan be established with moral certainty, it is that the framers ofthat instrument intended to prohibit the issue of legal tendernotes both by the general government and by the states, and thusprevent interference with the contracts of private parties. Duringthe Revolution and the period of the old Confederation, theContinental Congress issued bills of credit, and upon itsrecommendation the states made them a legal tender, and the refusalto receive them an extinguishment of the debts for which they wereoffered. They also enacted severe penalties against those whorefused to accept them at their nominal value, as equal to coin, inexchange for commodities. And previously, as early as January,1776, Congress had declared that if any person should be "so lostto all virtue and regard for his country" as to refuse to receivein payment the bills then issued, he should, on conviction thereof,be "deemed, published, and treated as an enemy of his county, andprecluded

Page 110 U. S. 452

from all trade and intercourse with the inhabitants of thecolonies."

Yet this legislation proved ineffectual; the universal law ofcurrency prevailed which makes promises of money valuable only asthey are convertible into coin. The notes depreciated until theybecame valueless in the hands of their possessors. So it alwayswill be; legislative declaration cannot make the promise of a thingthe equivalent of the thing itself.

The legislation to which the states were thus induced to resortwas not confined to the attempt to make paper money a legal tenderfor debts, but the principle that private contracts could belegally impaired and their obligation disregarded being onceestablished, other measures equally dishonest and destructive ofgood faith between parties were adopted. What followed is thusstated by Mr. Justice Story in his Commentaries:

"The history, indeed," he says,

"of the various laws which were passed by the states, in theircolonial and independent character, upon this subject is startlingat once to our morals, to our patriotism, and to our sense ofjustice. Not only was paper money issued and declared to be atender in payment of debts, but laws of another character, wellknown under the appellation of tender laws, appraisement laws,installment laws, and suspension laws, were from time to timeenacted, which prostrated all private credit and all privatemorals. By some of these laws the due payment of debts wassuspended; debts were, in violation of the very terms of thecontract, authorized to be paid by installments at differentperiods; property of any sort, however worthless, either real orpersonal, might be tendered by the debtor in payment of his debts,and the creditor was compelled to take the property of the debtor,which he might seize on execution at an appraisement whollydisproportionate to its known value. Such grievances andoppressions and others of a like nature were the ordinary resultsof legislation during the Revolutionary War and the intermediateperiod down to the formation of the Constitution. They entailed themost enormous evils on the country, and introduced a system offraud, chicanery, and profligacy which destroyed all privateconfidence and all industry and enterprise."

2 Story on the Constitution § 1371.

Page 110 U. S. 453

To put an end to this vicious system of legislation which onlyencouraged fraud, thus graphically described by Story, the clauseswhich forbid the states from emitting bills of credit or makinganything but gold and silver a tender in payment of debts, orpassing any law impairing the obligation of contracts, wereinserted in the Constitution.

"The attention of the convention therefore" says Chief JusticeMarshall,

"was particularly directed to paper money and to acts whichenable the debtor to discharge his debt otherwise than wasstipulated in the contract. Had nothing more been intended, nothingmore would have been expressed, but, in the opinion of theconvention, much more remained to be done. The same mischief mightbe effected by other means. To restore public confidencecompletely, it was necessary not only to prohibit the use ofparticular means by which it might be effected, but to prohibit theuse of any means by which the same mischief might be produced. Theconvention appears to have intended to establish a great principlethat contracts should be inviolable."

Sturges v.Crowninshield, 4 Wheat. 122,17 U. S. 206.It would be difficult to believe even in the absence of thehistorical evidence we have on the subject that the framers of theConstitution, profoundly impressed by the evils resulting from thiskind of legislation, ever intended that the new government,ordained to establish justice, should possess the power of makingits bills a legal tender, which they were unwilling should remainwith the states, and in which the past had proved so dangerous tothe peace of the community, so disturbing to the business of thepeople and so destructive of their morality.

The great historian of our country has recently given to theworld a history of the convention, the result of years of labor inthe examination of all public documents relating to its formationand of the recorded opinions of its framers, and thus hewrites:

"With the full recollection of the need or seeming need of papermoney in the Revolution, with the menace of danger in future timeof war from its prohibition, authority to issue bills of

Page 110 U. S. 454

credit that should be legal tender was refused to the generalgovernment by the vote of nine states against New Jersey andMaryland. It was Madison who decided the vote of Virginia, and hehas left his testimony that 'the pretext for paper currency, andparticularly for making the bills a tender either for public orprivate debts, was cut off.' This is the interpretation of theclause made at the time of its adoption, alike by its authors andby its opponents, accepted by all the statesmen of that age, notopen to dispute because too clear for argument, and never disputedso long as anyone man who took part in framing the Constitutionremained alive. History cannot name a man who has gained enduringhonor by causing the issue of paper money. Wherever such paper hasbeen employed it has in every case thrown upon its authors theburden of exculpation under the plea of pressing necessity."

Bancroft's History of the formation of the Constitution of theUnited States, vol. 2, p. 134.

And when the convention came to the prohibition upon the states,the historian says that the clause "No state shall make anythingbut gold and silver a tender in payment of debts" was acceptedwithout a dissentient state. "So the adoption of the Constitution,"he adds,

"is to be the end forever of paper money, whether issued by theseveral states or by the United States, if the Constitution shallbe rightly interpreted and honestly obeyed."

Id., 137.

For nearly three-quarters of a century after the adoption of theConstitution and until the legislation during the recent civil war,no jurist and no statesman of any position in the country everpretended that a power to impart the quality of legal tender to itsnotes was vested in the general government. There is no recordedword of even one in favor of its possessing the power. Allconceded, as an axiom of constitutional law, that the power did notexist.

Mr. Webster, from his first entrance into public life in 1812,gave great consideration to the subject of the currency, and in anelaborate speech on that subject, made in the Senate in 1836, thensitting in this room, he said:

Page 110 U. S. 455

"Currency, in a large and perhaps just sense, includes not onlygold and silver and bank bills, but bills of exchange also. It mayinclude all that adjusts exchanges and settles balances in theoperations of trade and business; but if we understand by currencythe legal money of the country, and that which constitutes a legaltender for debts, and is the standard measure of value, thenundoubtedly nothing is included but gold and silver. Mostunquestionably there is no legal tender, and there can be no legaltender in this country, under the authority of this government orany other, but gold and silver, either the coinage of our own mintsor foreign coins at rates regulated by Congress. This is aconstitutional principle, perfectly plain and of the highestimportance. The states are expressly prohibited from makinganything but gold and silver a legal tender in payment of debts,and although no such express prohibition is applied to Congress,yet as Congress has no power granted to it in this respect but tocoin money and to regulate the value of foreign coins, it clearlyhas no power to substitute paper or anything else for coin as atender in payment of debts and in discharge of contracts. Congresshas exercised this power fully in both its branches; it has coinedmoney and still coins it; it has regulated the value of foreigncoins, and still regulates their value. The legal tender,therefore, the constitutional standard of value, is established andcannot be overthrown. To overthrow it would shake the wholesystem."

4 Webster's Works 271.

When the idea of imparting the legal tender quality to the notesof the United States, issued under the first act of 1862, was firstbroached, the advocates of the measure rested their support of iton the ground that it was a war measure, to which the country wascompelled to resort by the exigencies of its condition, being thensorely pressed by the Confederate forces, and requiring the dailyexpenditure of enormous sums to maintain its army and navy and tocarry on the government. The representative who introduced the billin the House declared that it was a measure of that nature, "one ofnecessity and not of choice;" that the times were extraordinary,and that extraordinary measures must be resorted to in order tosave our government and preserve our nationality. Speech ofSpaulding

Page 110 U. S. 456

of New York; Cong.Globe, 1861-62, pt. 1, 523. Other members ofthe house frankly confessed their doubt as to itsconstitutionality, but yielded their support of it under thepressure of this supposed necessity.

In the Senate also, the measure was pressed for the samereasons. When the act was reported by the committee on finance, itschairman, while opposing the legal tender provision, said:

"It is put on the ground of absolute overwhelming necessity;that the government has now arrived at that point when it must havefunds, and those funds are not to be obtained from ordinarysources, or from any of the expedients to which we have heretoforehad recourse, and therefore this new, anomalous, and remarkableprovision must be resorted to in order to enable the government topay off the debt that it now owes and afford circulation which willbe available for other purposes."

Cong.Globe, 1861-62, pt. 1, 764.

And upon that ground, the provision was adopted, some of thesenators stating that in the exigency then existing money must behad, and they therefore sustained the measure although theyapprehended danger from the experiment. "The medicine of theConstitution," said Senator Summer, "must not become its dailyfood."Id., 800. A similar necessity was urged upon thestate tribunals and this Court in justification of the measure whenits validity was questioned. The dissenting opinion inHepburnv. Griswold referred to the pressure that was upon thegovernment at the time to enable it to raise and support an army,and to provide and maintain a navy. Chief Justice Chase, who gavethe prevailing opinion in that case, also spoke of the existence ofthe feeling when the bill was passed that the provision wasnecessary. He favored the provision on that ground when Secretaryof the Treasury, although he had come to that conclusion withreluctance, and recommended its adoption by Congress. When thequestion as to its validity reached this Court, this expression offavor was referred to, and by many it was supposed that it wouldcontrol his judicial action. But after long pondering upon the

Page 110 U. S. 457

subject, after listening to repeated arguments by able counsel,he decided against the constitutionality of the provision and,holding in his hands the casting vote, he determined the judgmentof the Court. He thus preferred to preserve his integrity as ajudicial officer, rather than his consistency as a statesman. Inhis opinion, he thus referred to his previous views:

"It is not surprising that amid the tumult of the late civilwar, and under the influence of apprehensions for the safety of therepublic almost universal, different views, never beforeentertained by American statesmen or jurists, were adopted by many.The time was not favorable to considerate reflection upon theconstitutional limits of legislative or executive authority. Ifpower was assumed from patriotic motives, the assumption foundready justification in patriotic hearts. Many who doubted yieldedtheir doubts; many who did not doubt were silent. Some who werestrongly averse to making government notes a legal tender feltthemselves constrained to acquiesce in the views of the advocatesof the measure. Not a few who then insisted upon its necessity oracquiesced in that view have, since the return of peace and underthe influence of the calmer time, reconsidered their conclusions,and now concur in those which we have just announced. Theseconclusions seem to us to be fully sanctioned by the letter andspirit of the Constitution."

8 Wall.75 U. S.625.

It must be evident, however, upon reflection that if there wereany power in the government of the United States to impart thequality of legal tender to its promissory notes, it was forCongress to determine when the necessity for its exercise existed;that war merely increased the urgency for money; it did not add tothe powers of the government nor change their nature; that if thepower existed, it might be equally exercised when a loan was madeto meet ordinary expenses in time of peace, as when vast sums wereneeded to support an army or a navy in time of war. The wants ofthe government could never be the measure of its powers. But in theexcitement and apprehensions of the war, these considerations wereunheeded; the measure was passed as one of overruling

Page 110 U. S. 458

necessity in a perilous crisis of the country. Now it is nolonger advocated as one of necessity, but as one that may beadopted at any time. Never before was it contended by any jurist orcommentator on the Constitution that the government, in fullreceipt of ample income, with a Treasury overflowing, with moremoney on hand than it knows what to do with, could issue papermoney as a legal tender. What was in 1862 called the "medicine ofthe Constitution" has now become its daily bread. So it alwayshappens that whenever a wrong principle of conduct, political orpersonal, is adopted on a plea of necessity, it will be afterwardsfollowed on a plea of convenience.

The advocates of the measure have not been consistent in thedesignation of the power upon which they have supported itsvalidity, some placing it on the power to borrow money, some on thecoining power, and some have claimed it as an incident to thegeneral powers of the government. In the present case, it is placedby the Court upon the power to borrow money, and the allegedsovereignty of the United States over the currency. It is assumedthat this power, when exercised by the government, is somethingdifferent from what it is when exercised by corporations orindividuals, and that the government has, by the legal tenderprovision, the power to enforce loans of money because thesovereign governments of European countries have claimed andexercised such power.

The words "to borrow money," says the Court,

"are not to receive that limited and restricted interpretationand meaning which they would have in a penal statute or in anauthority conferred by law or by contract upon trustees or agentsfor private purposes."

And it adds that

"The power, as incident to the power of borrowing money andissuing bills or notes of the government for money borrowed, ofimpressing upon those bills or notes the quality of being a legaltender for the payment of private debts, was a power universallyunderstood to belong to sovereignty, in Europe and America at thetime of the framing and adoption of the Constitution of the UnitedStates. The governments

Page 110 U. S. 459

of Europe, acting through the monarch or the legislature,according to the distribution of powers under their respectiveconstitutions, had and have as sovereign a power of issuing papermoney as of stamping coin,"

and that

"the exercise of this power not being prohibited to Congress bythe Constitution, it is included in the power expressly granted toborrow money on the credit of the United States."

As to the terms "to borrow money," where, I would ask, does theCourt find any authority for giving to them a differentinterpretation in the Constitution from what they receive when usedin other instruments, as in the charters of municipal bodies or ofprivate corporations, or in the contracts of individuals? They arenot ambiguous; they have a well settled meaning in otherinstruments. If the Court may change that in the Constitution, soit may the meaning of all other clauses, and the powers which thegovernment may exercise will be found declared not by plain wordsin the organic law, but by words of a new significance resting inthe minds of the judges. Until some authority beyond the allegedclaim and practice of the sovereign governments of Europe beproduced, I must believe that the terms have the same meaning inall instruments, wherever they are used; that they mean a poweronly to contract for a loan of money upon considerations to beagreed between the parties. The conditions of the loan, or whetherany particular security shall be given to the lender, are mattersof arrangement between the parties; they do not concern anyoneelse. They do not imply that the borrower can give to his promiseto refund the money any security to the lender outside of propertyor rights which he possesses. The transaction is completed when thelender parts with his money and the borrower gives his promise topay at the time and in the manner and with the securities agreedupon. Whatever stipulations may be made to add to the value of thepromise or to secure its fulfillment must necessarily be limited tothe property, rights, and privileges, which the borrower possesses.Whether he can add to his promises any element which will induceothers

Page 110 U. S. 460

to receive them beyond the security which he gives for theirpayment depends upon his power to control such element. If he has aright to put a limitation upon the use of other persons' propertyor to enforce an exaction of some benefit from them, he may givesuch privilege to the lender; but if he has no right thus tointerfere with the property or possession of others, of course, hecan give none. It will hardly be pretended that the government ofthe United States has any power to enter into an engagement that,as security for its notes, the lender shall have special privilegeswith respect to the visible property of others, shall be able tooccupy a portion of their lands or their houses, and thus interferewith the possession and use of their property. If the governmentcannot do that, how can it step in and say, as a condition ofloaning money, that the lender shall have a right to interfere withcontracts between private parties? A large proportion of theproperty of the world exists in contracts, and the government hasno more right to deprive one of their value by legislationoperating directly upon them than it has a right to deprive one ofthe value of any visible and tangible property. No one, I think,will pretend that individuals or corporations possess the power toimpart to their evidences of indebtedness any quality by which theholder will be able to affect the contracts of other parties,strangers to the loan; nor would anyone pretend that Congresspossesses the power to impart any such quality to the notes of theUnited States, except from the clause authorizing it to make lawsnecessary and proper to the execution of its powers. That clause,however, does not enlarge the expressly designated powers; itmerely states what Congress could have done without its insertionin the Constitution. Without it, Congress could have adopted anyappropriate means to borrow, but that can only be appropriate forthat purpose which has some relation of fitness to the end, whichhas respect to the terms essential to the contract, or to thesecurities which the borrower may furnish for the repayment of theloan. The quality of legal tender does not touch the terms of thecontract; that is complete without it; nor does it stand as asecurity for the loan, for

Page 110 U. S. 461

a security is a thing pledged, over which the borrower has somecontrol, or in which he holds some interest.

The argument presented by the advocates of legal tender is insubstance this: the object of borrowing is to raise funds, theaddition of the quality of legal tender to the notes of thegovernment will induce parties to take them, and funds will therebybe more readily loaned. But the same thing may be said of theaddition of any other quality which would give to the holder of thenotes some advantage over the property of others -- as, forinstance, that the notes should serve as a pass on the publicconveyances of the country, or as a ticket to places of amusement,or should exempt his property from state and municipal taxation, orentitle him to the free use of the telegraph lines, or to apercentage from the revenues of private corporations. The sameconsequence -- a ready acceptance of the notes -- would follow, andyet no one would pretend that the addition of privileges of thiskind with respect to the property of others, over which theborrower has no control, would be in any sense an appropriatemeasure to the execution of the power to borrow.

Undoubtedly the power to borrow includes the power to giveevidences of the loan in bonds, Treasury notes, or in such otherform as may be agreed between the parties. These may be issued insuch amounts as will fit them for circulation, and for that purposemay be made payable to bearer, and transferable by delivery.Experience has shown that the form best fitted to secure theirready acceptance is that of notes payable to bearer, in suchamounts as may suit the ability of the lender. The government, insubstance, says to parties with whom it deals: lend us your money,or furnish us with your products or your labor, and we willultimately pay you, and as evidence of it we will give you ournotes, in such form and amount as may suit your convenience, andenable you to transfer them; we will also receive them for certaindemands due to us. In all this matter there is only a dealingbetween the government and the individuals who trust it. Thetransaction concerns no others. The power which authorizes it is avery different one from a

Page 110 U. S. 462

power to deal between parties to private contracts in which thegovernment is not interested, and to compel the receipt of thesepromises to pay in place of the money for which the contractsstipulated. This latter power is not an incident to the former; itis a distinct and far greater power. There is no legal connectionbetween the two -- between the power to borrow from those willingto lend and the power to interfere with the independent contractsof others. The possession of this latter power would justify theinterference of the government with any rights of property of otherparties, under the pretense that its allowance to the holders ofthe notes would lead to their more ready acceptance, and thusfurnish the needed means.

The power vested in Congress to coin money does not, in myjudgment, fortify the position of the Court, as its opinionaffirms. So far from deducing from that power any authority toimpress the notes of the government with the quality of legaltender, its existence seems to me inconsistent with a power to makeanything but coin a legal tender. The meaning of the terms "to coinmoney" is not at all doubtful. It is to mould metallic substancesinto forms convenient for circulation and to stamp them with theimpress of the government authority indicating their value withreference to the unit of value established by law. Coins are piecesof metal of definite weight and value, stamped such by theauthority of the government. If any doubt could exist that thepower has reference to metallic substances only it would be removedby the language which immediately follows, authorizing Congress toregulate the value of money thus coined and of foreign coin, andalso by clauses making a distinction between coin and theobligations of the general government and of the states. Thus, inthe clause authorizing Congress "to provide for the punishment ofcounterfeiting the securities and current coin of the UnitedStates," a distinction is made between the obligations and the coinof the government.

Money is not only a medium of exchange, but it is a standard ofvalue. Nothing can be such standard which has not intrinsic

Page 110 U. S. 463

value, or which is subject to frequent changes in value. Fromthe earliest period in the history of civilized nations we findpieces of gold and silver used as money. These metals are scatteredover the world in small quantities; they are susceptible ofdivision, capable of easy impression, have more value in proportionto weight and size, and are less subject to loss by wear andabrasion than any other material possessing these qualities. Itrequires labor to obtain them; they are not dependent uponlegislation or the caprices of the multitude; they cannot bemanufactured or decreed into existence, and they do not perish bylapse of time. They have, therefore, naturally, if not necessarily,become throughout the world a standard of value. In exchange forpieces of them, products requiring an equal amount of labor arereadily given. When the product and the piece of metal representthe same labor, or an approximation to it, they are freelyexchanged. There can be no adequate substitute for these metals.Says Mr. Webster, in a speech made in the House of Representativesin 1815:

"The circulating medium of a commercial community must be thatwhich is also the circulating medium of other commercialcommunities, or must be capable of being converted into that mediumwithout loss. It must also be able not only to pass in payments andreceipts among individuals of the same society and nation, but toadjust and discharge the balance of exchanges between differentnations. It must be something which has a value abroad as well asat home, by which foreign as well as domestic debts can besatisfied. The precious metals alone answer these purposes. Theyalone therefore are money, and whatever else is to perform thefunctions of money must be their representative, and capable ofbeing turned into them at will. So long as bank paper retains thisquality it is a substitute for money; divested of this, nothing cangive it that character."

3 Webster's Works 41.

The clause to coin money must be read in connection with theprohibition upon the states to make anything but gold and silvercoin a tender in payment of debts. The two taken together

Page 110 U. S. 464

clearly show that the coins to be fabricated under the authorityof the general government, and as such to be a legal tender fordebts, are to be composed principally, if not entirely, of themetals of gold and silver. Coins of such metals are necessarily alegal tender to the amount of their respective values, without anylegislative enactment, and the statute of the United Statesproviding that they shall be such tender is only declaratory oftheir effect when offered in payment. When the Constitution says,therefore, that Congress shall have the power to coin money,interpreting that clause with the prohibition upon the states, itsays it shall have the power to make coins of the precious metals alegal tender, for that alone which is money can be a legal tender.If this be the true import of the language, nothing else can bemade a legal tender. We all know that the value of the notes of thegovernment in the market, and in the commercial world generally,depends upon their convertibility on demand into coin, and asconfidence in such convertibility increases or diminishes, so doesthe exchangeable value of the notes vary. So far from becomingthemselves standards of value by reason of the legislativedeclaration to that effect, their own value is measured by thefacility with which they can be exchanged into that which alone isregarded as money by the commercial world. They are promises ofmoney, but they are not money in the sense of the Constitution. Theterm "money" is used in that instrument in several clauses -- inthe one authorizing Congress "to borrow money;" in the oneauthorizing Congress "to coin money;" in the one declaring that "nomoney" shall be drawn from the Treasury, but in consequence ofappropriations made by law, and in the one declaring that no stateshall "coin money." And it is a settled rule of interpretation thatthe same term occurring in different parts of the same instrumentshall be taken in the same sense unless there is something in thecontext indicating that a different meaning was intended. Now tocoin money is, as I have said, to make coins out of metallicsubstances, and the only money the value of which Congress canregulate is coined money, either of our mints or of foreign

Page 110 U. S. 465

countries. It should seem, therefore, that to borrow money is toobtain a loan of coin money -- that is, money composed of theprecious metals, representing value in the purchase of property andpayment of debts. Between the promises of the government,designated as its securities, and this money the Constitution drawsa distinction which disappears in the opinion of the Court.

The opinion not only declares that it is in the power ofCongress to make the notes of the government a legal tender and astandard of value, but that under the power to coin money andregulate the value thereof, Congress may issue coins of the samedenominations as those now already current, but of less intrinsicvalue by reason of containing a less weight of the precious metals,and thereby enable debtors to discharge their debts by payment ofcoins of less real value. This doctrine is put forth as in some waya justification of the legislation authorizing the tender ofnominal money in place of real money in payment of debts.Undoubtedly Congress has power to alter the value of coins issued,either by increasing or diminishing the alloy they contain; so itmay alter at its pleasure, their denominations; it may hereaftercall a dollar an eagle, and it may call an eagle a dollar. But ifit be intended to assert that Congress can make the coins changedthe equivalent of those having a greater value in their previouscondition, and compel parties contracting for the latter to receivecoins with diminished value, I must be permitted to deny any suchauthority. Any such declaration on its part would be not onlyutterly inoperative in fact, but a shameful disregard of itsconstitutional duty. As I said on a former occasion:

"The power to coin money, as declared by this Court, is a greattrust devolved upon Congress, carrying with it the duty of creatingand maintaining a uniform standard of value throughout the Union,and it would be a manifest abuse of this trust to give to the coinsissued by its authority any other than their real value. Bydebasing the coins, when once the standard is fixed, is meantgiving to the coins by their form and impress a certificate oftheir having a relation to that standard different from that whichin truth

Page 110 U. S. 466

they possess -- in other words, giving to the coins a falsecertificate of their value. Arbitrary and profligate governmentshave often resorted to this miserable scheme of robbery, which Milldesignates as a shallow and impudent artifice, the"

"least covert of all modes of knavery, which consists in callinga shilling a pound, that a debt of one hundred pounds may becancelled by the payment of one hundred shillings."

No such debasement has ever been attempted in this country, andnone ever will be so long as any sentiment of honor influences thegoverning power of the nation. The changes from time to time in thequantity of alloy in the different coins has been made to preservethe proper relative value between gold and silver, or to preventexportation, and not with a view of debasing them. Whatever powermay be vested in the government of the United States, it has noneto perpetrate such monstrous iniquity. One of the great purposes ofits creation, as expressed in the preamble of the Constitution, wasthe establishment of justice, and not a line nor a word is found inthat instrument which sanctions any intentional wrong to thecitizen, either in war or in peace.

But beyond and above all the objections which I have stated tothe decision recognizing a power in Congress to impart the legaltender quality to the notes of the government is my objection tothe rule of construction, adopted by the Court to reach itsconclusions -- a rule which, fully carried out, would change thewhole nature of our Constitution and break down the barriers whichseparate a government of limited from one of unlimited powers. Whenthe Constitution came before the conventions of the several statesfor adoption, apprehension existed that other powers than thosedesignated might be claimed, and it led to the first tenamendments. When these were presented to the states, they werepreceded by a preamble stating that the conventions of a number ofthe states had at the time of adopting the Constitution, expresseda desire, "in order to prevent misconception or abuse of itspowers, that further declaratory and restrictive clauses should beadded." One of them is found in the Tenth Amendment, whichdeclares

Page 110 U. S. 467

that

"The powers not delegated to the United States by theConstitution, nor prohibited by it to the states, are reserved tothe states respectively, or to the people."

The framers of the Constitution, as I have said, were profoundlyimpressed with the evils which had resulted from the viciouslegislation of the states making notes a legal tender, and theydetermined that such a power should not exist any longer. Theytherefore prohibited the states from exercising it, and theyrefused to grant it to the new government which they created. Ofwhat purpose is it then to refer to the exercise of the power bythe absolute or the limited governments of Europe, or by the statesprevious to our constitution? Congress can exercise no power byvirtue of any supposed inherent sovereignty in the generalgovernment. Indeed it may be doubted whether the power can becorrectly said to appertain to sovereignty in any proper sense, asan attribute of an independent political community. The power tocommit violence, perpetrate injustice, take private property byforce without compensation to the owner, and compel the receipt ofpromises to pay in place of money, may be exercised, as it oftenhas been, by irresponsible authority, but it cannot be consideredas belonging to a government founded upon law. But be that as itmay, there is no such thing as a power of inherent sovereignty inthe government of the United States. It is a government ofdelegated powers, supreme within its prescribed sphere butpowerless outside of it. In this country, sovereignty resides inthe people, and Congress can exercise no power which they have not,by their Constitution, entrusted to it; all else is withheld. Itseems, however, to be supposed that as the power was taken from thestates, it could not have been intended that it should disappearentirely, and therefore it must in some way adhere to the generalgovernment notwithstanding the Tenth Amendment and the nature ofthe Constitution. The doctrine that a power not expressly forbiddenmay be exercised would, as I have observed, change the character ofour government. If I have read the Constitution aright, if there isany weight to be given to the uniform teachings of our greatjurists and of commentators

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previous to the late civil war, the true doctrine is the veryopposite of this. If the power is not in terms granted, and is notnecessary and proper for the exercise of a power which is thusgranted, it does not exist. And in determining what measures may beadopted in executing the powers granted, Chief Justice Marshalldeclares that they must be appropriate, plainly adapted to the end,not prohibited, andconsistent with the letter and spirit ofthe Constitution. Now all through that instrument we findlimitations upon the power both of the general government and thestate governments so as to prevent oppression and injustice. Nolegislation, therefore, tending to promote either can consist withthe letter and spirit of the Constitution. A law which interfereswith the contracts of others and compels one of the parties toreceive in satisfaction something different from that stipulated,without reference to its actual value in the market, necessarilyworks such injustice and wrong.

There is, it is true, no provision in the Constitution of theUnited States forbidding in direct terms the passing of laws byCongress impairing the obligation of contracts, and there are manyexpress powers conferred, such as the power to declare war, levyduties, and regulate commerce, the exercise of which affects moreor less the value of contracts. Thus, war necessarily suspendsintercourse between the citizens or subjects of belligerentnations, and the performance during its continuance of previouscontracts. The imposition of duties upon goods may affect theprices of articles imported or manufactured, so as to materiallyalter the value of previous contracts respecting them. But theseincidental consequences arising from the exercise of such powerswere contemplated in the grant of them. As there can be no solidobjection to legislation under them, no just complaint can be madeof such consequences. But far different is the case when theimpairment of the contract does not follow incidentally, but isdirectly and in terms allowed and enacted. Legislation operatingdirectly upon private contracts, changing their conditions, isforbidden to the states, and no power to alter the stipulations ofsuch contracts by direct legislation

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is conferred upon Congress. There are also many considerations,outside of the fact that there is no grant of the power, which showthat the framers of the Constitution never intended that such powershould be exercised. One of the great objects of the Constitution,as already observed, was to establish justice, and what was meantby that in its relations to contracts, as said by the late ChiefJustice in his opinion inHepburn v. Griswold, was notleft to interference or conjecture. And in support of thisstatement he refers to the fact that when the Constitution wasundergoing discussion in the convention, the Congress of theConfederation was engaged in framing the ordinance for thegovernment of the Northwest Territory, in which certain articles ofcompact were established between the people of the original statesand the people of the territory "for the purposes," as expressed inthe instrument,

"of extending the fundamental principles of civil and religiousliberty, whereon these republics [the states united under theConfederation], their laws and constitutions, are erected."

That Congress was also alive to the evils which the looselegislation of the states had created by interfering with theobligation of private contracts and making notes a legal tender fordebts, and the ordinance declared that in the just preservation ofrights and property, no law

"ought ever to be made or have force in the said territory thatshall in any manner whatever interfere with or affect privatecontracts or engagementsbona fide and without fraudpreviously formed."

This principle, said the Chief Justice, found more condensedexpression in the prohibition upon the states against impairing theobligation of contracts, which has always been recognized "as anefficient safeguard against injustice," and the Court was then ofopinion that

"It is clear that those who framed and those who adopted theConstitution intended that the spirit of this prohibition shouldpervade the entire body of legislation, and that the justice whichthe Constitution was ordained to establish was not thought by themto be compatible with legislation of an opposite tendency."

Soon after the Constitution was adopted, the case ofCalderv. Bull came before this Court, and it was

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there said that there were acts which the federal and statelegislatures could not do without exceeding their authority, andamong them was mentioned a law which punished a citizen for aninnocent act, and a law which destroyed or impaired the lawfulprivate contracts of citizens. "It is against all reason andjustice," it was added, "for a people to entrust a legislature withsuch powers, and therefore it cannot be presumed that they havedone it." 3 Dall.3 U. S. 388. AndMr. Madison, in one of the articles in the Federalist, declaredthat laws impairing the obligation of contracts were contrary tothe first principles of the social compact and to every principleof sound legislation. Yet this Court holds that a measure directlyoperating upon and necessarily impairing private contracts may beadopted in the execution of powers specifically granted for otherpurposes because it is not in terms prohibited, and that it isconsistent with the letter and spirit of the Constitution.

From the decision of the Court I see only evil likely to follow.There have been times within the memory of all of us when the legaltender notes of the United States were not exchangeable for morethan one-half of their nominal value. The possibility of suchdepreciation will always attend paper money. This inborn infirmityno mere legislative declaration can cure. If Congress has the powerto make the notes a legal tender and to pass as money or itsequivalent, why should not a sufficient amount be issued to pay thebonds of the United States as they nature? Why pay interest on themillions of dollars of bonds now due when Congress can in one daymake the money to pay the principal? And why should there be anyrestraint upon unlimited appropriations by the government for allimaginary schemes of public improvement if the printing press canfurnish the money that is needed for them?