at a future day. This is the sense in which the terms have been always understood." And considering that the instruments in question, though calling themselves "certificates," were of the character above indicated, they were adjudged bills of credit and void.

4

§ 1718. That instruments bear interest does not render them the less bills of credit. In the same case, Mr. Justice Johnson dissenting, considered that a sufficient reason why the papers should not be regarded as bills of credit, was found in the fact that they bore interest, and consequently varied in value every moment of their existence. This, he said, "disqualifies them for the uses and purposes of a circulating medium, which the universal consent of mankind declares should be of a uniform and unchanging value, otherwise it must be the subject of exchange, and not the medium." The opinion of the court does not notice this argument; but it strikes us as without force indeed as self-destructive. The very object of the constitutional provision was to inhibit the issue of a paper currency which would vary in value every moment of its existence, and was not of a uniform and unchanging value. Hence, these very qualities made them all the more bills of credit.

§ 1719. It is not necessary that a bill of credit should be a legal tender. It was contended further, in the same case, that these certificates, although deemed bills of credit in the common acceptation of the term, were not so in the sense of the Constitution, because they were not made a legal tender But the prohibition is general. It extends to all bills of credit, not to bills of a particular description; and there is no just foundation for this distinction.5

§ 1720. It has been urged, upon the basis of more recent historical light on the subject, that no instrument is a bill of credit, within the meaning of the Federal Constitution, unless it be made a legal tender in payment of debts, and this was the opinion of as great a statesman as James Madison. It does not seem that this information was afforded in the cases decided by the Supreme Court of the United States, which take an adverse view; and it has been thought by that able publicist, R. M. T. Hunter, of Vir

4. Craig v. State of Missouri, 4 Pet. 438, 444, Thompson and McLean, JJ., dissenting.

5. Craig v. State of Missouri, 4 Pet. 434.

ginia, that had it been supplied a different result might have been anticipated. Militating strongly against his opinion on the question is the fact that the very succeeding phrase of the Constitution contains an express prohibition against the States making anything but "gold and silver coin" a legal tender, which would alone be sufficient to interdict bills of credit, if Mr. Madison's and Mr. Hunter's conceptions are correct. This subject is of such extended interest that we append extracts from a recent report of Mr. Hunter, as treasurer of Virginia, submitting a financial scheme with arguments in support of it.

6. In one of the documents accompanying the annual message of the Governor of Virginia, made December 2, 1874, is published Mr. Hunter's "Plan of a Constitutional Currency," communicated to Governor Jas. L. Kemper. It is briefly this: "Let the State issue $3,000,000 in bills of the denomination of $1, $5, $10, $20, and in fractions of a dollar, with a provision that the holder may at pleasure convert these notes into bonds, in sums of $100, or multiples of $100, to draw interest from the State at the rate of 4 per cent. per annum, in specie. In addition to which the holder of this bond shall be allowed to reinvest into bills of the like denomination as at first; which bills shall bear no interest, but shall be convertible and reconvertible as originally provided. The interest on these bonds shall be paid semi-annually, unless the holder should convert them into currency, at a shorter period, when interest shall be paid for the period of its existence as a bond. Until the sum of $3,000,000 has been issued, any holder of Virginia State bonds shall be allowed to exchange them for these bills at the market price in Richmond when sold for legal tenders. And when once issued these bills may be received at par in payment for half the taxes of any person or corporation who may owe the State for taxes." In the course of his argument Mr. Hunter says: "The privilege of paying half the taxes in these bills would add greatly to their credit, and consequently afford great relief to our people. Nor would the State run any risk if it should not exceed the limit of $3,000,000 for every bill thus issued a corresponding value, and possibly a much larger amount in State stock would be secured. In following the provisions of the law, no bill would be issued except in exchange for State stock at the market rate. It may be supposed that such an issue would subject the State to the tax of the United States upon the amount, but a reference to the law will show that the tax is imposed only upon the notes of any person, State bank, or State banking association, used for circulation. A description and enumeration of issues which does not include such an emission of bills by the State as is herein described. If it did, the United States would doubtless relieve the State from any tax upon such an issue designed to build up a sinking fund for a State so deeply indebted as Virginia, and one in which such an issue would perform so useful a function for currency purposes amongst a people so deeply depressed as ours. It has been objected that the provision herein proposed falls within the constitutional prohibition to the States to emit bills of credit. But a careful examination of the question, it is believed, will

§ 1721. The name is immaterial. The chief justice, in answer to the argument that the instruments in Craig v. State of Missouri were certificates of debt, not bills, continued: "Had they been termed bills of credit' instead of certificates,' nothing would have been wanting to bring them within the prohibitory words of the Constitution. And can this make any real difference? Is the proposition to be maintained, that the Constitution meant to prohibit names and not things? That a very important act, big with great and ruinous mischief, which is expressly forbidden by words most appropriate for its description, may be performed by the substitution of a name? That the Constitution, in one of its most important provisions, may be openly evaded by giving a new remove this objection. It has been a matter of much difficulty to decide what is a bill of credit,' within the meaning of the Constitution. Judge Marshall, in the case of Craig v. The State of Missouri, 4 Pet. 431, 432, which was decided by four out of seven judges, said, that to 'emit bills of credit conveys to the mind the idea of issuing of paper intended to circulate through the community for its ordinary purposes as money, which paper is redeemable at a future day. This is the sense in which the terms have always been understood.' Judge McLean, in Briscoe v. Bank of Kentucky, 11 Pet. 314, says: The definition which does include all classes of bills of credit emitted by the colonies or States, is a paper issued by the sovereign power, containing a pledge of its faith, and designed to circulate as money.' Mr. Madison, in a letter hereafter to be quoted, says the Constitution meant such bills as were issued with a provision that they should be received as a legal tender. In the opinion of Marshall and McLean, the bills were not only to circulate as money, but to contain a pledge of the faith of the State to redeem them at some future time with money. Both attributes were necessary to lead to the mischiefs enumerated by Mr. Madison in the forty-fourth number, p. 207, of the Federalist,' and both must have existed to render the bills unconstitu tional. The last was especially necessary. It was not until there was an overissue of these bills, and the State became unable to pay them in money, or in some mode satisfactory to the holder, that the mischiefs began. Then, indeed, when the bills became irredeemable, they became worthless as a medium of exchange and a nuisance to society. Could the State have redeemed them in some satisfactory mode, no harm would have ensued. The plan here proposed is liable to no such objection, and does not come within the mischief sought to be prevented. There is no promise to pay this bill; the holder is to be allowed to fund it in a convertible bond of the State, which may always be done." Mr. Hunter appends Mr. Madison's letter, dated Montpelier, February 2, 1831, and found on page 210 of "Selections from Private Correspondence of James Madison, from 1813 to 1836," published by J. C. McGuire, exclusively for private circulation, wherein Mr. Madison "The evil which produced the prohibitory clause in the Constitution of the United States was the practice of the State in making bills of credit, and in some instances appraised property, a legal tender."

says:

name to an old thing? We cannot think so. We think the certificates emitted under the authority of this act are as entirely bills of credit as if they had been so denominated in the act itself."

§ 1722. It was contended also that these instruments were not bills of credit, because they were not promises to pay, but promises to receive. But they were made receivable for official salaries and fees, and were designed to be used as currency, and thus were bills of credit.

§ 1723. Being bottomed on a fund does not render the instrument any less a bill of credit. In the same case, Mr. Justice Thompson, dissenting, thought that the natural and literal meaning of the term "bills of credit" imported bills drawn on credit merely, and not bottomed upon any real or substantial fund for their redemption. But although secured by a fund, the bill is nevertheless issued upon, and received upon, the credit of the State the belief and faith that the State will pay them. Should the fund fail, or be diverted, the credit of the State would still be pledged to their redemption; and even if the fund were mainly the source of the creditor's reliance, he would still look to the State, and credit it, to make faithful appropriation. The circumstance, however, that a fund was appropriated to their redemption, has been adverted to, amongst others, in subsequent cases, as decisive of the question that such bills were not bills of credit.

8

In Louisiana, papers of the character indicated in the subjoined opinion of the court were adjudged bills of credit.9

7. Story on the Constitution, § 1368, vol. II.

8. Darrington v. Alabama, 13 How. 16.

9. In City Nat. Bank v. Mahan, 21 La. Ann. 753 (1869), Ludeling, C. J., said: "Section 1 of the Act of 1866 provides that it shall be the duty of the governor, and he is hereby empowered to issue, on behalf of the State, from time to time, for the purpose of paying the current expenses of the State, in accordance with appropriations therefor, according to law, a sum not exceeding two millions of dollars in certificates of indebtedness.'' they were issued on the faith of the State is apparent on the face of the certificates:

66 6

"That

'NEW ORLEANS, LOUISIANA, May 23, 1866. "It is hereby certified that five dollars is due by the State of Louisiana to bearer, and the State Treasurer is hereby directed to pay the same twelve months after date.

66

"Approved: ADAM GIFFEN, Treasurer.' “Indorsement.—This certificate is receivable in payment of all State dues and for sale of public lands, and is fundable, at the option of the holder, in

SECTION II.

WHAT ARE NOT BILLS OF CREDIT.

§ 1724. The States only prohibited from emitting them; corporations and private parties may do so. We have already defined bills of credit, as they are understood within the meaning of the Constitution. The inhibition contained in that instrument is limited to the States; and, although the bill may be designed to circulate as currency, if it be not emitted by a State, it is as free from impeachment, as in violation of the Constitution, as any other negotiable paper. A State may, therefore, grant acts of incorporation authorizing banks or other associations to issue that description of paper to answer the purposes of money, and it may be issued by private persons and partnerships. This was determined by the United States Supreme Court in a case involving an act of the Legislature of Kentucky, which incorporated the "Bank of the Commonwealth of Kentucky," in behalf of the Commonwealth, the president and directors of which were chosen by the Legislature.10 The bank was authorized to issue negotiable notes to the amount of three millions of dollars, which were declared to be receivable at the treasury and by public officers in payment of taxes, debts, and county levies, and in discharge of executions of fieri facias. They were in denominations of from one to one hundred dollars. It was contended that these notes were bills of credit emitted by the Commonwealth of Kentucky, State bonds bearing six per cent. interest per annum, payable semi-annually, in accordance with the provisions of an act of the legislature approved ninth February, 1866.'" "That they were designed to circulate as money is manifested by the act of the legislature as well as by the certificates themselves. The act aforesaid declares the certificates are to be issued for the purpose of paying the current expenses of the State.' Section two declares that the governor shall determine the denomination and form of the certificates; that they shall be printed and engraved under his direction and control, etc., and that they shall be receivable for all State taxes or other public dues, as well as for the sale of public lands.' They were issued in sums of five, ten, and twenty dollars, in the similitude of ordinary bank bills, and they were actually circulated as money. We are constrained, therefore, to declare that said certificates were bills of credit, and that the act number five of the General Assembly of the State of Louisiana, entitled 'An Act to authorize the issue of certificates of indebtedness and of bonds for the funding of the same,' is null and void, being a contravention of section ten of article one of the constitution of the United States."

10. Briscoe v. Bank of Kentucky, 11 Pet. 328, Story, J., dissenting.