THESE were two suits; the first a writ of error to the Circuit Court for the Western District of Texas, the second an appeal from a decree in equity in the Supreme Judicial Court of Massachusetts.
The case in the FIRST one, Knox v. Lee, was thus:
Before the rebellion, Mrs. Lee, a loyal citizen of the United States, resident in Pennsylvania, owned a flock of sheep in Texas, which, on the outbreak of the rebellion, she left there in charge of their shepherd. In March, 1863, the Confederate authorities, under certain statutes which they had passed in aid of the rebellion, confiscated and sold the sheep as the property of an 'alien enemy,' one Knox purchasing them at $10.87 1/2 apiece, 'Confederate money;' then worth but the third part of a like sum in coin. The rebellion being suppressed, Mrs. Lee brought trespass below against Knox for damages (laid at $15,000) for taking and converting the sheep. Knox pleaded in bar the confiscation and sale by the Confederate government; a plea which the court overruled. The case then coming on to be tried, it was proved that the flock consisted of 608 sheep, of which 30, 40, or perhaps 50, were bucks, about 140 or 150 wethers, and about 300 ewes; the witnesses varying both as to the number of sheep and the proportion of bucks, wethers, and ewes. It was also proved that in 1860 and 1861 the flock was worth $8 per head for ewes, and about $4 per head for [79 U.S. 457, 458] wethers, and about from $20 to $25 per head for breeding bucks, in specie. The witnesses all testified that the sheep would not bring in March, 1863, the price that they would have brought in 1860 or 1861, though one witness testified that at the sale one party remarked, that if he could get a good title to the sheep he would give $10 or $12 a head for them. Whether he meant specie or Confederate paper was not testified to.
The ordinary money in use in the United States at the time of the sale and purchase being notes of the United States, commonly known as 'greenbacks'-notes whose issue was authorized by acts of Congress, and dated February 25th, 1862, July 11th, 1862, and March 3d, 1863,1 and which the said acts declared should be a legal tender in the payment of all debts-the plaintiffs offered to prove what was the difference in value between gold and silver and this United States currency known as greenbacks, for the purpose of showing that gold and silver had a greater value than greenbacks, and for the purpose of allowing the jury to estimate the difference between the two, to which evidence the defendant, at the time it was offered, objected, on the ground that the United States currency was made a legal tender by law, and that there was no difference in value in law between the two. The court sustained the objection, and excluded all evidence as to the difference in value between specie and legal tender notes of the nited States, and no evidence was allowed to go to the jury on this point.
After having ruled as above, the court, on its own motion, at the conclusion of its charge, said as follows:
The jury found, June, 1867, for the plaintiff, $7368, and [79 U.S. 457, 459] the defendant brought the case here, complaining, first, of the overruling of his plea, and second, of the above-quoted sentence in the charge; which he alleged had led the jury improperly to increase the damages.
There had been a previous trial, when, so far as the record showed, without any instruction of the sort complained of as increasing the damages, the jury found a verdict for $7376, an amount slightly greater than that given by the second verdict.
Messrs. Paschall, Sr. and Jr., for the plaintiff in error:
1. The plea was wrongly overruled. The Confederate government was a government de facto. It is easy now to say that it was not a government, but those who were within the scope of its action know that in point of fact it was a fearful reality. It had courts. It declared war; and long waged it. A title under its confiscations must therefore stand. Mauran v. The Insurance Company,2 covers our case.
2. If this point is well taken, the court need not consider our objection to the last sentence of the charge. But if it is not well taken, our objection to it remains. Our objection is this: that in view of the facts that were proved before the jury, what the judge said to the jury at the conclusion of his charge, was equivalent to saying--
Thus, in fact, while he recognized the principle that greenbacks might discharge the claim, he yet left the jury to infer that they can only be forced upon the creditor at the rate which they would bring in gold. This instruction was wrong, because, practically, it made a distinction between coin and paper tenders, in regard to a debt accruing after the passage of all the legal tender acts. Hepburn v. Griswold,3 [79 U.S. 457, 460] does not require this. There the cause of action accrued prior to the passage of any of the legal tender acts; here it accrued subsequently to them all. Indeed, in Hepburn v. Griswold the court say that the decision is not meant to control cases where the cause of action arises subsequently to the passage of the legal tender acts. Parties under that condition of things contract in reference to them.
Mr. Wills, contra:
1. Though the rebel government must, in some cases, be regarded as a government de facto, it is going too far to say that a purchase, by a rebel resident, of the property of banished loyal citizens, under its laws 'in aid of the rebellion,' can stand. Such a purchaser takes with full notice of his questionable title; Texas v. White4 is in point.
2. The argument of the opposing counsel proceeds upon a misapprehension of what the court meant in its charge. He would make it directly in the face of its ruling a few moments before. That it was so is not to be easily inferred. The charge must be interpreted reasonably. In the ruling, the court refused to receive evidence to show that greenbacks and coin had different values. The plaintiff had offered evidence of the difference between the two. Objection was made by the defendant, and the point was ruled against the pla ntiff. Nothing was more natural, therefore, than that the court in charging the jury should advert to its rulings on the point-a very important one to be considered by the jury in making up its verdict-made at the defendant's instance, and to tell the jury to recollect it. That is what the court did do. The charge therefore means just the opposite of what counsel on the other side suppose. It means that greenbacks would discharge the debt, and that in considering the evidence given of the worth in gold of the sheep, the jury was not to add a premium for paper. This direction involves the question whether an obligation arising after the passage of the legal tender laws can be discharged [79 U.S. 457, 461] in greenbacks; and the court charged that it could be. This may or may not have been within the ideas entertained by the court in Hepburn v. Griswold, but it certainly was favorable to the defendant. He cannot complain, and we do not.
That in point of fact there is no ground for the allegation that the jury were misled, or the damages exaggerated, appears by a short calculation. It was proved that the flock consisted of 608 sheep, of which number 30, 40, or perhaps 50, were bucks; about 140 or 150 wethers, and about 300 ewes. Add all these numbers, taking the highest estimates, 50, 150, and 300, and we have only 500 sheep accounted for; leaving 108 to be accounted for and valued, according to the different values of the different kinds of sheep. Now there was direct evidence fixing the average value of all the sheep per head in specie, in 1860 and 1861. Besides, it is well known that in Texas, as in California, coin is the standard of value in business, except when the contrary is stated. The depreciation of value at the sale, arising from the apprehended defect of title, which the event has shown to have been well grounded, must not be disregarded in arriving at the value of the sheep at that time. Accepting, therefore, this estimate of their average value, with a good title, the 608 sheep, at $ 10 per head, would be worth $6080 in specie. Adding four and one-third years' interest-that is, from March, 1863, till June, 1867-at 8 per cent. ( the rate in Texas), say 33 1/3 per cent. = $2026.66 2/3, and we have the aggregate amount of $8106.66 2/3, an amount larger than the verdict complained of, saying nothing, according to the ruling of the judge, about the difference between the value of the sheep, when estimated in gold and silver and when estimated in legal tender notes of the United States.
Moreover, on the first trial, where no such instruction as is here complained of was given, the verdict was for a greater amount than on the second.
The case in the SECOND suit, Parker v. Davis, arose on a bill in equity by Davis, to compel the specific performance [79 U.S. 457, 462] of a contract by Parker to convey a lot of land to Davis upon the payment of a given sum of money. This contract was dated and the suit brought upon it before the passage of any of the acts of Congress already referred to, as authorizing the issue of government notes, and making them a legal tender in payment of all 'debts.' The Supreme Court of Massachusetts in February, 1867 (after the passage of the acts), decreed that Davis should pay into court a certain sum of money, and that Parker should thereupon execute a deed to him of the and in question.
In pursuance of that decree Davis paid into court the sum named, in notes of the United States, known as 'greenbacks.' Parker refused to execute the deed required by the decree, upon the ground that he was entitled to have the sum paid into court in coin, and that the payment into court of greenbacks was not a compliance with the order of the court. Whereupon the court, upon hearing of the parties, changed the decree, and ordered that Parker should execute the deed required by his contract upon payment into court by Davis of a specific sum in notes of the United States. From that decree the case was brought here under the well-known 25th section of the udiciary Act.
Mr. B. F. Thomas, for the plaintiff in error, contended:
1. That the consideration or sum of money to be paid for the conveyance of the land, did not constitute a debt within the meaning of the acts of Congress, known as the legal tender laws.
2. That if a debt, it was contracted before the passage of the legal tender laws, and not affected by them; a point determined in Hepburn v. Griswold.
Mr. Benjamin F. Butler, contra, contended:
1. That Parker having refused to perform his contract, there was no debt due him from Davis until he performed the judgment of the court by the execution of the deed mentioned in the decree; that then, and not till then, he [79 U.S. 457, 463] had a claim upon or a debt due from Davis. Thus the case was not within Hepburn v. Griswold.
2. That the court below has decided that it was equitable that Parker should execute his deed in performance of his contract, upon receiving a given sum in United States Treasury notes; that it would not be doubted that it was competent for that court to do this, that is to say, to create an obligation upon Davis only sub modo, or, according to its terms, which were, to pay into court a certain amount in a specific currency (notes); that the order, therefore, created only that specific liability. If this was so, then the determination of the court below (the counsel contended) was not within the jurisdiction of this court to review, no law or statute of the United States being involved.
The cases being thus before the court, Mr. Clarkson Nott Potter, by whom the case of Hepburn v. Griswold,5 and the gold question,6 had been argued, stated to the court that he had been informed that it was asserted that these or some other cases before the court, involved the question of the power of Congress to make Treasury notes a legal tender between private individuals in discharge of pre-existing debts; and he asked the court, in case they should find that this question was involved in the decision of any of the cases, and should determine to reconsider it, to allow him to be heard upon it.
Subsequently, a majority of the court (four judges dissenting) made an order:
And the argument was had on the 18th of April, 1871.
Mr. Potter, in support of the negative:
That no power has been expressly conferred upon Congress [79 U.S. 457, 464] by the Constitution to make the Treasury notes of the government a legal tender between private individuals in discharge of pre-existing debts, must be admitted.
Can such a power, then, be implied from the authority given Congress 'to coin money and regulate the value thereof?' Or can it be regarded as one of the measures 'necessary and proper' to carry into effect either the power to 'borrow money,' to 'regulate commerce,' to 'raise and support armies,' to 'provide and maintain a navy,' to 'suppress insurrection,' to 'repel invasion,' or any other of the powers delegated to Congress?
I. This power is not embraced in the authority given Congress to 'coin money.'
Money is used in the Constitution in two senses. In the second subdivision of the section relating to the powers of Congress, the Constitution speaks of the power 'to borrow money;' and there the word must be used in the larger sense of strict money, or of anything received instead. But in the fifth subdivision of that section, which gives Congress power 'to coin money and regulate the value thereof, and of foreign coins,' it must be evident that Congress referred only to metallic money.
From time immemorial, in all countries, in all ages of the world, the precious metals have been the medium of exchanges, and the strict mo eys. The value of these metals has been designated by a stamp upon them indicating their fineness and weight; that is, indicating the value at which the coins were rated. When the coins have possessed the value indicated, they have passed from hand to hand as of that value. When they have been found not to possess that value, they have, except within very narrow limits, failed to so pass.
It is true that, at certain periods in the history of some of the States, the skins of the beaver passing by tale; strings of shells, known as wampum, passing by measure; and packages of tobacco of defined weights were, in the absence of the precious metals, used as money, and were made the medium of exchanges. But none of these was a 'legal [79 U.S. 457, 465] tender' as money,7 or ever had anything but a local and limited circulation, or ever was used as a substitute for money, after money was introduced. While in all ages of the world, in all countries, the precious metals, when stamped with a designated value, have been known as moneys; and (with representatives of such moneys) have always been the great and universal medium of exchanges.
Not only has 'money' meant metallic money, but, upon looking at the public history of the times (which this court has established as a proper guide to the construction of the Constitution),8 we find that in the history of the country there was no period in which 'money' was more distinctly understood and meant to be hard money than at the period when the Constitution was framed and adopted. 'Its framers had just passed through all the horrors of an unredeemed paper currency.' 'The history of that currency had been, within the view of those who staked their property on the public faith, always freely given and grossly violated.' 9 'The mischiefs of the various experiments that had been made were fresh in the bublic mind, and had excited general disgust.' 10 With the bills of the government unredeemed-indeed, become at last so hopelessly beyond redemption as to be entirely given up as worthless,11-the country had returned for circulation to a specie currency, to absolute money having an intrinsic value; and neither had nor wished any other currency.
But the context as well as the word itself shows that the power is confined to metals. This grant is not a grant to create money, but simply 'to coin money'-a power that can be exercised only on money that admits of being coined; that is, a bare power to 'strike coin,' which was the phrase used in the Articles of Confederation as the equivalent of 'to coin money.' It was from those Articles that the power to coin money and regulate the value thereof was transferred to the existing Constitution. And that this provision only [79 U.S. 457, 466] gave Congress power to strike coin and regulate its alloy and value, was declared at the time, and undisputed. The Federalist, No. 43, tells us:
Indeed, the very next clause of the Constitution (subdivision 6) which gives Congress power to punish the 'counterfeiting of the securities and current coin of the United States,' expressly distinguishes between the coins and the obligations of the government.
If, however, Congress could take the power of stamping leather, or paper, under this clause, and the leather or the paper so stamped could be considered as coined money,' the value whereof could be regulated by Congress, even that would not support the legal tender provision of the Treasury notes. With such a power, Congress might, indeed, stamp a lump of leather, or a ream of paper, so that they should circulate as current money; that, however, would not make these notes such stamped paper, nor current money.
Treasury notes have, as substance, no appreciable value. They are not declared to be, and do not purport to be, of any value as substance. They are not stamped with any intrinsic value. They are not, so far as they possess value, things at all, but only things in action. The material holds the evidence of the promise; but it is the promise, and the promise alone, which is, and which purports to be, of value. One dash of the pen across the signature of the Treasurer of the United States at their foot, and the note is not a Treasury note; not a thing in action; not a matter which bears the government stamp of value; not ten dollars at all, but a worthless rag of paper, once used to hold a promise, [79 U.S. 457, 467] now cancelled. If, therefore, 'money,' in the phrase 'to coin money,' could be considered as embracing other substances beside those precious metals, alone in use throughout all the world as coin, none the less would it remain that to utter promises to pay money would not be 'coining,' or 'to coin money.'
I cannot find that before the passage of this legal-tender act it had ever been supposed by any court, or by any judge of any court, or by any commentator or statesman, that this power 'to coin money' had reference to anything but a metallic currency. Indeed, of all the judges who have given opinions, as well in the support of as against the legality of this law, I find hardly any who do not concede that to 'coin money' was a grant of power relating to the coining of the precious metals. Nevertheless, although the power to coin money has not sufficed to support the right to make these Treasury notes a legal tender, the power to 'regulate the value thereof,' that is, of coined money, has been taken as one of the most effective arguments to support this law.
If, under this power to regulate the value of coined moneys, Congress may debase the coinage; if it may put upon the coined moneys any other than their true intrinsic value; if it may declare that one-half or three- fourths of a dollar, when stamped by it as a dollar, shall be taken to be equal to a whole dollar, and may thus impair the obligation of contracts and transfer one man's property to another; why, it is asked, under the constitutional power to borrow money, and other delegated powers, and the powers necessary and proper to enable it to exercise the delegated powers, may Congress not do a like thing to produce a better result with these Treasury notes? To this I answer:
II. This power cannot be implied from the power to regulate the value of money.
For, 1st. Congress has no power given it to regulate the value of the money it borrows, but only of the money it coins, and of foreign coins. The analogy claimed would exist if the Constitution gave Congress power to borrow [79 U.S. 457, 468] money and regulate the value thereof. But that it does not give.
And, 2d. Congress has no power to even materially debase the coin. A power to regulate is not a power to destroy.
I quite agree that 'a uniform course of action involving the right to the exercise of an important power for half a century, and this almost without question, is no unsatisfactory evidence that the power is rightfully exercised.' 12 But a careful review of the legislation of Congress on this subject, will show not only that Congress has not (as the Court of Appeals in New York,13 and the other tribunals which have affirmed the validity of this law have assumed) exercised plenary power over the subject of currency and the legal tender laws, but that, on the contrary, the legislation of Congress from first to last has been strictly confined to designating the value of coined money, and to discrimina ing with reference to its real value.
Let us review the legislation on coinage. From the establishment of the government to the passage of the act authorizing Treasury notes, the legal tender coin has been three times debased, and three times only. Once, in June, 1834, when the gold coinage was reduced about 6 per cent. in value; once, in 1851, when the three-cent pieces were first coined; and once, in 1853, when the fractional silver coinage was reduced some 6 per cent. in value. But the pieces of these latter coinages were restricted as legal tender within such very narrow limits, and for such fractional and special uses, that, practically, these laws did not operate as debasements of the coin at all.
From the first issue of coin by this government to this time, the unit of calculation and of coinage, the silver dollar, has remained the same. It remains still of the same intrinsic value as when first coined; whatever changes have been made, have been made to bring the other coin into more actual and just relation to it.
When the subject of coinage was first considered by the [79 U.S. 457, 469] Confederation, it was proposed to have a unit of account and of coinage much smaller than the dollar, and to employ the decimal system. Jefferson, while recommending the adoption of the decimal system, suggested a coin equal to the then existing Spanish milled dollar as the unit of value. His recommendation was adopted, and the dollar has ever since remained the same. 14
The first coinage was under the act of April 2, 1792,15 and that act provided ( 11) that the coinage should be of both gold and silver, and that the relative value of the two metals should be as fifteen to one, that is, that 1 ounce of gold should be taken as the equal in value of 15 ounces of silver. By that act ( 9) 'dollars or units,' as they were styled, were each to contain 371 4/16 grains of pure silver, and to weigh 416 grains according to the then standard, which was, for silver, ( 13), 1485 parts pure or 'fine' to 179 parts alloy; and eagles ( 9), 'each to be of the value of 10 dollars or units,' and to contain 247 4/8 grains of pure gold, and to weigh 270 grains, according to the then standard for gold, which was ( 12) 11 parts pure to 1 part alloy.
Both of these precious metals were, after that, coined as money; both became lawful money, and therefore, ex necessitate, a tender in payment of debts due in money, even if not so declared by law; just as coals of the specified kind are a lawful tender in discharge of a contract for coal, and cotton, of a contract calling for cotton. But in the lapse of years, the relation in value existing and established by Congress in this act of 1792, between the two precious metals, was lost. Owing to the increased produce of silver, and perhaps to the increased demand by the commerce of the world for gold, their relative value had so materially altered that, by 1823, the Secretary of the Treasury called the attention of Congress to the fact that gold had relatively appreciated in value, so that their true relation was then as 16 to 1, and to the evils resulting from the erroneous standard maintained. 16 [79 U.S. 457, 470] For as soon as gold had advanced or silver declined in relative value so that they really bore to each other the relation of 16 to 1 in value, instead of 15 to 1, as they were valued by the law, every person who could secure an ounce of our gold coinage for 15 ounces of silver secured what was intrinsically worth 16 silver ounces; that is, made a profit of about 6 per cent. It followed, of course, that all the gold was taken up as fast as coined and sent out of the country to be recoined, and that the country retained, instead, only silver, and the gold coins of those countries whose go d coinage bore a true relation to the existing value of gold and silver. In fact, our gold coin went regularly directly from the mint as fast as coined to the foreign packet; and, out of some $12,000,000 of gold which had been coined, it was computed there was hardly a gold piece to be found in the whole United States. As was said in Congress:17 'Hitherto, like the tracks to the lion's den, the coins have gone all one way-to Europe; and not one solitary eagle has ever made good its cisatlantic flight.' This evil led at last to the introduction into Congress of a bill to regulate the value of the gold coinage of the country, by adjusting the rate for gold coin to its true relation to the existing and continuing silver coin. 18 The debate upon the bill,19 shows how anxious Congress was to get at the true relative value of the two precious metals, and to fix the coinage accordingly. Opinions as to the relative values of gold and silver ranged from 15.60 to 1, to 16 to 1. The majority of those best qualified from their pursuits to understand the subject, including the New York banks, regarded the true ratio to be as 15.62 to 1, although for the previous few years it had averaged 15.80 to 1. But Congress, at the instance of the friends of metallic money, determined to adopt 16 to 1 as the relative value; partly because that seemed to be the ratio which had proved practically the most correct in the nations which had adopted it; partly because the [79 U.S. 457, 471] variation from the true relation was, if any, so small it might safely be disregarded; and partly because it was believed that the relative appreciation of gold which had been so long going on would continue, and that the slight over-valuation of it, if any there was, would be thus in time corrected. 20 By that act ( 1) the eagle was reduced from 247 4/8 grains of pure gold, as required by 9 of the said act of 1792, to 232 grains of pure gold, or about six per cent. in intrinsic value. But, so far from Congress assuming any power to materially depreciate the coinage or impair the rights of creditors, the power of Congress to make depreciated coin a legal tender was expressly disclaimed in the debate. 21 And the statesman at whose instance, and by whose will, this bill was mainly carried through was, of all men who ever had part in the government of this country, the last to be quoted on the side of the power of Congress to make promissory notes a legal tender in payment of private debts,-Thomas Hart Benton.
The court will thus see that while Congress did indeed reduce the standard and value of gold coinage, so that $100 of the new gold coins were hardly equal in intrinsic value to $94 of the former gold coinage, yet that in fact Congress did absolutely nothing to impair the obligation of contracts or to destroy the rights of the creditor. For, from the beginning, the debtor had the right to pay in the coinage of either of the precious metals. At first these were of equal value, and payment in either was indifferent. Gradually the gold appreciated or the silver depreciated, and then, of course, the debtor, as he had the option, paid in silver; so that, in 1834, the debtor who owed $1000, and had $940 of the then gold coinage, could exchange his gold for $1000 in silver coin, and discharge with these his debt of $1000.
Therefore, although Congress did reduce the value of the gold coinage in 1834, the debtor, after 1834, could no more pay his $1000 with money of less intrinsic value than he [79 U.S. 457, 472] could before. True, he could take $940 in gold of the old coinage, and get with it $1000 in gold of the new, with which to pay his debt. But so, before the law, he could take this same $940 of gold coinage, and purchase $ 1000 of the then, and sti l, equivalent silver coinage, with which to pay the debt. Indeed, that law, so far from taking 1/16 of the debt from the creditor and giving it to the debtor, as at first appears, actually gave the debtor no new privilege, and deprived the creditor of no property. It remained optional with the debtor, after the law as before, to pay in the gold pieces of the old coinage. True, it became possible, after the law, for the debtor to pay in the new gold coinage; but it had been optional with him before the law to pay in the constant silver coinage equivalent in value to the new gold coinage. The law was, in fact, but an adjustment and recognition of the true relation between the values of the two metals, the selection of which had always remained optional to debtors, and, so far from being an attempt by Congress to regulate money without reference to or differing from its intrinsic value, it was, on the contrary, a most careful and earnest effort to bring the recognizable value of its money more closely to its intrinsic value. 22
Following this act of June 28, 1834, Congress passed an act on the same day, conforming the value at which foreign coins were to be rated to their true intrinsie value. 23
In 1837,24 Congress fixed the standard of both gold and silver coin at 9/10ths fine; that is 9 parts of pure metal to 1 of alloy. By this change the gross weight of the dollar was reduced to 412 1/2 grains ( 9), but the fineness was correspondingly increased, and the dollar therefore continued to contain 9/10ths of 412 1/2 = 371 4/16 grains of pure silver, as provided for the dollar when first coined, and to remain therefore of the same intrinsic value as before. And the gross weight of the eagle was, by the same act, somewhat increased, but it continued [79 U.S. 457, 473] to contain, however ( 10), 232 grains of pure gold, as provided by the act of 1834.
This change in the gross weight of the silver coinage has led to the idea it was then debased, the corresponding increase in its fineness having been overlooked.
Let us refer to later changes in the silver coinage? For nearly twenty years after the passage of these laws of 1834, the relations between the precious metals remained undisturbed, so that no action by Congress was required. But the unlooked for discoveries of gold in California disturbed again, and in a reverse direction, the relation between the two metals, and thereafter silver advanced and gold declined in relative values; so that, by 1853, silver attained a marked premium over the gold coined since the act of 1834, and a scarcity in silver coin had been felt. Congress, however, did not thereupon generally depreciate the silver coinage. It was, indeed, urged upon Congress to appreciate the gold coinage. 25 Instead, however, of doing this, thinking, probably, that this gold harvest was to be of short duration, and its disturbance of the relation, then so long subsisting between the two metals, not likely to continue; and striving to meet the evil of small notes issued by every kind of corporation and of paper tokens for change, then pressing-Congress did depreciate the silver coin, for parts of dollars only, about 6 per cent. (so that two half-dollars or four quarter-dollars are no longer equal to one dollar piece). But these depreciated coins were restricted from being legal tender for any sum greater than $5 in all, although the smaller silver coin of the earlier coinage remained a tender for any amount.
Prior to this, in 1851, Congress had directed the coinage of three- cent pieces of a fineness and weight which gave them a value of only 80 cents on the nominal dollar of these pieces (i. e., 33 pieces of three- cent coinage were worth intrinsically only 80/100 of one silver dollar); but these pieces were only made tender to the extent of 30 cents in the aggregate, [79 U.S. 457, 474] and their issue was very limited and was shortly stopped, and by the act of 1853 their intrinsic value was raised to the standard of that of the other fractions of the dollar. 26
Then as to change in the copper coinage. Congress, also, in 1793 and 1796, reduced the weight and the intrinsic value of the cent to accord with the increased value of copper, the planchets for which government had to import. 27 These cents, however, were not made a legal tender.
The interference by government with the rights of creditors by regulations of the coin have, therefore, been:
1. By the acts of 1834, a possible, but disputed and doubtful depreciation, if of anything, of less than 1 per cent.
2. By the act of 1851, a depreciation of fractional silver coin (the three-cent piece) to an extent which could not, in the largest tender, exceed 6 cents; shortly, however, altered, so that it could not exceed in the aggregate 2 cents.
3. By the act of 1853, a depreciation of fractional silver coinage to an extent which could not exceed in the largest tender 30 cents.
Now, if these debasements of fractional coin be deemed merely such; nevertheless, from their minute and fractional nature, they would form no precedent for future material debasements of the coinage, or indicate any acquiescence by the people and the courts in an assumption by Congress of the right to put a false or arbitrary value upon its coined money. De minimis non curat lex.
But, indeed, these acts of 1851 and 1853 were practically not at all infringements upon the rights of creditors or debasements of the coinage below its value. As already remarked (page 464), when coins were struck with a value which they did not possess, they have, 'except within very narrow limits,' failed to pass at more than their true intrinsic worth. But there are limits within coins, somewhat depreciated below their true value, will circulate as [79 U.S. 457, 475] well as if they had not been depreciated. Those limits are when the payment is so small that the difference between the nominal and intrinsic values, does not leave it worth while to regard the difference, or when some particular convenience about the coin, such as its portability or denomination, overbalances the intrinsic depreciation; that is, the peculiar fitness for the fractional purpose required, will, in such cases, actually make good the depreciation, and carry the small coin, for all purposes of use, up to the stamped value.
All will recollect how often, in the days of the Spanish piece for 12 1/2 cents, we accepted 12 cents instead, and took Spanish quarters with holes drilled through them equally with perfect coin. Those who have been in England know that the sovereign has so depreciated by wear that a large majority of the coins in circulation in Great Britain are intrinsically worth less than the standard value-2d. per sovereign it is said-and yet, for all minor payments, they pass from hand to hand by tale equally as of full weight; while in large transactions they are always paid out by weight and not by tale. So with the depreciated three-cent pieces of 1851; within the very narrow limit at which they were legal tender, their portability and convenience made up what they wanted in intrinsic silver value.
And so, too, with the depreciated coinage of 1853. It was confined to fractions of a dollar, which were so slightly depreciated, and the convenience of which was such, that the trifling intrinsic loss was not to be regarded. But the depreciated coins were made a legal tender only to twice the amount of the lowest tenderable gold coin, Congress still keeping to its idea of a double money standard, and still holding to its unchanged unit of value, the silver dollar.
Now it is submitted that all these exercises of the powers of Congress to 'coin money and regulate the value thereof' were within the lett r and spirit of the Constitution. Congress has, indeed, established the value of certain foreign coins at one time and changed it at another; made them a tender, and deprived them of that quality; and changed [79 U.S. 457, 476] from time to time the standard of value of coin struck at its mint. But how has it done this? Without regard to the intrinsic value of the coin struck? By fixing upon it any arbitrary value, and making it a tender at anything but its true value, as all the courts which have supported the constitutionality of the provision we are considering have assumed? Not at all; but, on the contrary, by uniformly seeking to conform the stamp upon its coin to its true value, and by scrupulously limiting the departures from intrinsic value for special purposes within limits so narrow that the special usefulness of the coin within those limits has actually made good the trifling deficiency in weight.
In the same spirit, Congress has provided that its coin shall be a legal tender at its stamped valuation only when of full weight; if of light weight, only proportionately, according to its weight.
In fine, Congress, under a power to coin money and regulate the value thereof, has done only and exactly what those words in their plain signification imply; has struck metallic coins, and has regulated the value thereof and of foreign coins; and has done this on every occasion with careful regard to their true intrinsic value; manifesting as well by the particular purposes and narrow limits within which they have departed from intrinsic value, as by their general strict regard for such values, not their belief that they could strike any metal and stamp it with an arbitrary value, but that they could rightfully regulate the value of money only by truly declaring the value thereof. Not that they 'possess a magic power to give, by their omnipotent fiat, a precious value to inanimate and valueless things,' but that they possessed only power to regulate the coin stamped, by declaring its value according to the fact- according to the value stamped upon it when of full weight, and of only proportionate value when of light weight.
In the opinions which have been given in various legal tender cases, nothing has seemed to go so far toward supporting the authority of Congress to make treasury notes a legal tender as the assumption that Congress had been left [79 U.S. 457, 477] by the Constitution at liberty to impair private rights and the obligation of contracts by debasing the specie coinage, and that it had actually debased that coinage and impaired those rights to the extent of 1/16, without question or challenge. Had this been the action of Congress, it would not indeed have established its power or right to do this. One permitted invasion of an established right does not do away with the right. That Congress had debased the coinage 1/16th would not establish the right to further debase it; would, at most, indicate that the power to regulate it extended up to that limit, and would, of itself, furnish no justification for a more general or further invasion. Nevertheless, the assertion, in all the opinions, that government had assumed to debase the coinage to the extent of 1/16th, impairing to that degree the recovery of all creditors, and that this action had been submitted to without question, has seemed to me the strongest argument for the power of government to exercise plenary control over coined money. Indeed, it was through inquiry as to how it was possible that creditors could have submitted to so serious an infringement of their rights without contest in the courts that I learned that in fact nothing of the kind really took place. 28
On the contrary, we see that, so far from 'Congress having claimed and exercised unlimited power over legal tender,' so far from having assumed the power to make even coin a legal tender, without regard to its real intrinsic value, as all the decisions supporting this law assume, its legislation [79 U.S. 457, 478] shows that for seventy-five years, from the beginning of the government down to the act authorizing these legal tender notes, through all the most pressing exigencies of peace and war, Congress-not only by its direct efforts to regulate the coinage from time to time, according to its intrinsic value, but also by the narrow limitation it imposed on the right of legal tender when diverging slightly from intrinsic value for special and temporary purposes-has shown a determination, as uniform as just, to keep the stamp upon the government coins a true index to their value, and to so regulate these coins as that they should have and express their actual values. Nay, by reference to the debates in Congress, it will be seen that the right of Congress to debase the coin and make the debased coin legal tender, in such wise as to materially affect the rights of the creditor or debtor, was not only never professed or asserted, but that, so far as the question has arisen, the right has been directly repudiated.
So, therefore, the difficulty, judges and other persons have had in perceiving why, if Congress, under this power to coin money, could coin any metallic substance and stamp it with an arbitrary value, it would not have equally the power to declare its treasury notes a legal tender without reference to their intrinsic value-is a difficulty that this court is freed from, and that should never have existed. Indeed, I look in vain to-day for the production of the declaration, prior to these legal tender days, of one judge, one statesman, one commentator, that Congress, by the power 'to coin money and regulate the value thereof,' possessed the right of striking even metals with false and arbitrary values. The right, therefore, to make a promises to pay-a promise not expected to be kept at the time for which it was made, nor at any other certain or definite time- the substitute for the thing promised, and to oblige every creditor to accept this of his debtor instead of the thing promised, is not only not within the provisions of this grant to Congress 'to coin money and regulate the value thereof,' but we have seen that no kindred power in fixing the value of even [79 U.S. 457, 479] coined moneys has ever been claimed or attempted under that grant.
We are driven, therefore, to seek in other parts of the Constitution this power to make treasury notes a legal tender between private parties at their nominal value for preexisting debts.
But it has been asserted that the power of thus making the bills of the government legal tender is a power 'necessary and proper'-in the sense in which those words are settled to have been used-to carry into effect some one or more of the powers delegated to Congress by the Constitution. I say 'necessary and proper' in the sense in which those words have been settled to have been used, because I admit that this court has decided that they are not to be construed according to their literal and precise meaning.
Those judges of this court who stated in the dissentient opinion in Hepburn v. Griswold,29 that it was claimed that when an act of Congress is brought to the test of this clause of the Constitution, its necessity must be absolute and its adaptation to the conceded purpose unquestionable, were stating no claim of mine; and the discussion of that question, so fully pursued in that opinion, will not be necessary, since I shall adopt for these words the most liberal construction ever asserted by this court.
Indeed, whatever differences might exist as to the true construction of this clause of the Constitution, as a lawyer, addressing this supreme tribunal, I am bound to remember that its meaning was long since defined and settled here. In the very first Congress the meaning of this clause was greatly discussed. There were those who held, with Mr. Jefferson, that it authorized only those means without which the grant would be nugatory. Others took a more liberal view of its meaning. The latter prevailed in Congress. The discussion was then renewed in the Cabinet. Washington finally followed the opinion of Hamilton, who maintained [79 U.S. 457, 480] the more liberal view. Subsequently the discussion was from time to time renewed in Congress, until finally the meaning of this clause came, in 1819, to be decided by this court, in McCulloch v. Maryland,30 when Marshall, C. J., speaking for the whole court, gave as the result of their most careful consideration, that precise definition which opposing counsel admit was, by his intrinsic and perfect reasoning, wrought into the texture of our constitutional law. Nevertheless, the utmost that great chief justice, who extended the Federal authority to its farthest limits, then said, was:
We must inquire, therefore, to the exercise of which one of the powers delegated to government 'it is necessary and proper,' it is even 'appropriate and plainly adapted,' that treasury notes should be made a legal tender for antecedent debts. Is it appropriate and plainly adapted to the power to borrow money, to regulate commerce, to raise and support armies, to provide and maintain a navy, to suppress insurrections or repel invasions, or even to any of these powers united? For it is true that Congress had occasion to exercise every one of these powers at the time when these notes were issued.
III. The exercise of this legal tender power was not necessary, nor appropriate and plainly adapted to carrying into execution any of the powers expressly delegated.
No one can read the opinions of any of the courts which have held this law to be constitutional without finding their decisions distinctly put upon the importance of this provision to enable government to borrow money and carry on the war, and to maintain its very existence. But it is submitted, [79 U.S. 457, 481] especially after the experience of the past nine years, that no such necessity existed, and that no such advantage was gained by the provision. On the contrary, at no time before since the establishment of the government was the national wealth so great; at no time were private debts, in proportion to the means of the country, so reduced. The panic and suspension of 1857 had led to very general liquidation. The agitations of the succeeding years had tended to check men in forming new engagements, or entering upon speculative undertakings. At no time had so few new schemes for capitalists been proposed; had so few bubble corporations been projected; had so little general speculation prevailed. At no time were our traders so little extended, or had our people so few debts (excluding debts maturing at the end of long terms of years). The banks and the government had already suspended specie payments for months before the issue of these notes. The entire business of the country was being done in unredeemed bank paper and treasury notes, which were not a legal tender in payment of debts, but which, nevertheless, circulated everywhere, and never fell at the great centres of trade to any considerable depreciation. Finally, the government d termined upon an issue of legal tender notes.
The security of the notes was not increased by the legal tender clause. Had they been issued without the clause they would have been equally secure. Without it, they still had, as fully as with it, whatever security the credit and faith of the government could give them. So, too, without that clause, they would have been equally as available and valuable as now, in all payments for taxes, public lands, or other dues to the government . The only value that clause did give the notes was the power it gave debtors to discharge pre-existing debts with them, equally as with real dollars. I say preexisting debts, because, as to subsequently contracted debts, the dealings of the country would have been in these notes, whether or not they had been made a legal tender. The country was, at the time of their issue, carrying on its dealings in the unredeemed paper money of the banks, styled [79 U.S. 457, 482] 'currency,' in which all ordinary transactions were measured, and payments made. This currency had not at that time depreciated more than 3 per cent. below the specie standard; and yet treasury notes, as soon as issued, at once fell to the same depreciated value. Their legal tender character never seems at any time to have made them better than the bills of any other solvent but suspended debtors not containing that clause.
It has indeed been urged that general insolvency and ruin would have followed, had not debtors been authorized to meet their demands with these notes. 31 But what really would have been the effect had these notes not been made a legal tender for pre-existing debts? Necessarily they would have been as well secured and as useful for payments of taxes and public dues as now. They would have been as valuable as now, for the purchasing of goods, and service, and labor. True, the debtor could not have discharged his debts of long standing in them; but what of that? In great part, the debts of the country consisted of commercial paper, even then payable in what was styled 'currency.' As to the debts of the country not already specially payable in 'currency,' the great bulk of the residue matured within a short time, so that, had the debtors not been able to have benefited by the slight depreciation in treasury notes which took place during such times, it would have caused no widespread disaster. For they would in no event have had to pay more than they received, nor was there, after these notes were issued, any such depreciation of property, even reckoned at its specie value, as would have made such payments generally disastrous. Specie payments have been suspended by the banks and the treasury in 1837, and 1857, and 1861, without producing any great ruin. Irredeemable paper circulated after the suspension of the banks in 1857 and 1861, as well as before. Indeed, the crisis was before the suspension of the banks, not afterwards.
Neither the bills of the old Confederation nor those issued [79 U.S. 457, 483] by the government in 1812 were ever made a legal tender at all, and yet circulated generally. So in England during all the great Napoleonic wars, the notes of the bank were never made a legal tender. They are by law a tender, everywhere except at the counter of the bank so long as the bank pays specie. In 1797, however, the government authorized the bank to suspend specie payments. The law provided32 that the bank might suspend specie payments; that if sued on its notes ( 1) it might apply to the courts and have proceedings against it stayed on such terms as might be just; and ( 7) that payments voluntarily received in the notes should be regarded as payments of cash. But the notes were not made a legal tender except for government dues and taxes. Nevertheless, they answered every purpose of our notes. 33
So those United States notes that were not a tender always rated equally high with those which were; and as matter of fact, capable of being proved by price currents of the day after the decision in Hepburn v. Griswold, that treasury notes were not constitutional as a discharge for pre-existing debts, they at once advanced in market value as compared with gold.
But, were it conceded that the quality of legal tender gave to these notes a material advantage which they would not have possessed without it, how can it be said that this provision was 'necessary and proper' or 'appropriate and plainly adapted' to the exercise of any of the powers expressly delegated to Congress?
It should be borne in mind that (except in the single aspect of a regulation of commerce, to which I shall presently refer) this legal tender provision has been maintained [79 U.S. 457, 484] as necessary or proper to the exercise of the delegated powers, and has been asserted to be appropriate and plainly adapted to their exercise, in no other way than that by this measure the government was made stronger. The effect of this provision is to take the property of the creditor and transfer it to the debtor to the extent to which these notes may be depreciated below their nominal value. To which one of the delegated powers is such a wrong 'appropriate and plainly adapted?' To all, as much as to one. For clearly this power has no relation whatever to the power to raise armies and maintain navies; to suppress insurrections; to borrow money; unless it is the relation which results from the mere fact that government was made stronger and more efficient by it. In no other sense is it appropriate, or adapted, or auxiliary at all to the exercise of any or of all the delegated powers.
I concede that if this provision of legal tender be a 'proper ancillary means,' to use the words of Strong, J., in the Pennsylvania cases,34 for executing the delegated powers singly or together, it is enough. Any means which is appropriate, and plainly adapted to carrying into effect two or more or all of the delegated powers, is not on that account less to be implied than if it has such relation to one only of the delegated powers. But the question remains, is the power sought to be implied appropriate, and plainly adapted to the exercise of delegated powers? To be appropriate, to be at all adapted to the exercise of powers, it must have some direct relation to such powers; some particular fitness for the exercise of those powers. As Mr. Clay felicitously said:
Referring to the first great debate on the powers of Congress under this clause, and remembering that one portion [79 U.S. 457, 485] of the men contemporaneous with the Constitution agreed with Mr. Jefferson, that the means to be authorized under this clause must be means without which the grant would be nugatory, it is instructive to note how even those who favored a more liberal construction of this clause regarded it.