chapter 54: prohibitions on the states

§ 1347. T HE tenth section of the first article (to which we are now to proceed) contains the prohibitions and restrictions upon the authority of the states. Some of these, and especially those, which regard the power of taxation, and the regulation of commerce, have already passed under consideration; and will, therefore, be here omitted. The others will be examined in the order of the text of the constitution.

§ 1348. The first clause is, "No state shall enter into any treaty, alliance, or confederation; grant letters of marque or reprisal; coin money; emit bills of credit; make any thing but gold and silver coin a tender in payment of debts; pass any bill of attainder, ex post facto law, or law impairing the obligation of contracts, or grant any title of nobility." 1

§ 1349. The prohibition against treaties, alliances, and confederations, constituted a part of the articles of confederation, 2 and was from thence transferred in substance into the constitution. The sound policy, nay, the necessity of it, for the preservation of any national government, is so obvious, as to strike the most careless mind. If every state were at liberty to enter into any treaties, alliances, or confederacies, with any foreign state, it would become utterly subversive of the power confided to the national government on the same subject. Engagements might be entered into by different states, utterly hostile to the interests of neighbouring or distant states; and thus the internal peace and harmony of the Union might be destroyed, or put in jeopardy. A foundation might thus be laid for preferences, and retaliatory systems, which would render the power of taxation, and the regulation of commerce, by the national government, utterly futile. Besides; the intimate dangers to the Union ought not to be overlooked, by thus nourishing within its own bosom a perpetual source of foreign corrupt influence, which in times of political excitement and war, might be wielded to the destruction of the independence of the country. This, indeed, was deemed, by the authors of the Federalist, too clear to require any illustration. 4 The corresponding clauses in the confederation were still more strong, direct, and exact, in their language and import.

§ 1350. The prohibition to grant letters of marque and reprisal stands upon the same general ground; for otherwise it would be in the power of a single state to involve the whole Union in war at its pleasure. It is true, that the granting of letters of marque and reprisal is not always a preliminary to war, or necessarily designed to provoke it. But in its essence, it is a hostile measure for unredressed grievances, real or supposed; and therefore is most generally the precursor of an appeal to arms by general hostilities. The security (as has been justly observed) of the whole Union ought not to be suffered to depend upon the petulance or precipitation of a single state. 5 Under the confederation there was a like prohibition in a more limited form. According to that instrument, no state could grant letters of marque and reprisal, until after a declaration of war by the congress of the United States. 6 In times of peace the power was exclusively confided to the general government. The constitution has wisely, both in peace and war, confided the whole subject to the general government. Uniformity is thus secured in all operations, which relate to foreign powers; and an immediate responsibility to the nation on the part of those, for whose conduct the nation is itself responsible. 7

§ 1351. The next prohibition is to coin money. We have already seen, that the power to coin money, and regulate the value thereof, is confided to the general government. Under the confederation a concurrent power was left in the states, with a restriction, that congress should have the exclusive power to regulate the alloy, and value of the coin struck by the states. 8 In this, as in many other cases, the constitution has made a great improvement upon the existing system. Whilst the alloy and value depended on the general government, a right of coinage in the several states could have no other effect, than to multiply expensive mints, and diversify the forms and weights of the circulating coins. The latter inconvenience would defeat one main purpose, for which the power is given to the general government, viz. uniformity of the currency; and the former might be as well accomplished by local mints established by the national government, if it should ever be found inconvenient to send bullion, or old coin for re-coinage to the central mint. 9 Such an event could scarcely occur, since the common course of commerce throughout the United States is so rapid and so free, that bullion can with a very slight expense be transported from one extremity of the Union to another. A single mint only has been established, which has hitherto been found quite adequate to all our wants. The truth is,that the prohibition had a higher motive, the danger of the circulation of base and spurious coin connived at for local purposes, or easily accomplished by the ingenuity of artificers, where the coins are very various in value and denomination, and issued from so many independent and unaccountable authorities. This subject has, however, been already enlarged on in another place. 10

§ 1352. The prohibition to "emit bills of credit" cannot, perhaps, be more forcibly vindicated, than by quoting the glowing language of the Federalist, a language justified by that of almost every contemporary writer, and attested in its truth by facts, from which the mind involuntarily turns away at once with disgust and indignation. "This prohibition," says the Federalist, "must give pleasure to every citizen in proportion to his love of justice, and his knowledge of the true springs of public prosperity. The loss, which America has sustained since the peace from the pestilent effects of paper money on the necessary confidence between man and man; on the necessary confidence in the public councils; on the industry and morals of the people; and on the character of republican government, constitutes an enormous debt against the states,chargeable with this unadvised measure, which must long remain unsatisfied; or rather an accumulation of guilt, which can be expiated no otherwise, than by a voluntary sacrifice on the altar of justice of the power, which has been the instrument of it. In addition to these persuasive considerations, it may be observed, that the same reasons, which show the necessity of denying to the states the power of regulating coin, prove with equal force, that they ought not to be at liberty to substitute a paper medium, instead of coin . Had every state a right to regulate the value of its coin, there might be as many different currencies, as states; and thus the intercourse among them would be impeded. Retrospective alterations in its value might be made; and thus the citizens of other states be injured, and animosities be kindled among the states themselves. The subjects of foreign powers might suffer from the same cause; and hence the Union be discredited and embroiled by the indiscretion of a single member. No one of these mischiefs is less incident to a power in the states to emit paper money, than to coin gold or silver." 11

§ 1353. The evils attendant upon the issue of paper money by the states after the peace of 1783, here spoken of, are equally applicable, and perhaps apply with even increased force to the paper issues of the states and the Union during the revolutionary war. Public, as well as private credit, was utterly prostrated. 12 The fortunes of many individuals were destroyed; and those of all persons were greatly impaired by the rapid and unparalleled depreciation of the paper currency during this period. In truth, the history of the paper currency, which during the revolution was issued by congress alone, is full of melancholy instruction. It is at once humiliating to our pride, and disreputable to our national justice. Congress at an early period (November, 1775,) directed an emission of bills of credit to the amount of three millions of dollars; and declared on the face of them, that "this bill entitles the bearer to receive — Spanish milled dollars, or the value thereof in gold or silver, according to a resolution of congress, passed at Philadelphia, November 29th, 1775." And they apportioned a tax of three millions on the states, in order to pay these bills, to be raised by the states according to their quotas at future designated periods. The bills were directed to be receivable in payment of the taxes; and the thirteen colonies were pledged for their redemption. 13 Other emissions were subsequently made. The depreciation was a natural, and indeed a necessary consequence of the fact, that there was no fund to redeem them. Congress endeavoured to give them additional credit by declaring, that they ought to be a tender in payment of all private and public debts; and that a refusal to receive the tender ought to be an extinguishment of the debt, and recommending the states to pass such tender laws. They went even farther, and thought proper to declare, that whoever should refuse to receive this paper in exchange for any property, as gold and silver, should be deemed "an enemy to the liberties of these United States." 14 This course of violence and terror, so far from aiding the circulation of the paper, led on to still farther depreciation. New issues continued to be made, until in September, 1779, the whole emission exceeded one hundred and sixty millions of dollars. At this time congress thought it necessary to declare, that the issues on no account should exceed two hundred millions; and still held out to the public the delusive hope of an ultimate redemption of the whole at par. They indignantly repelled the idea, in a circular address, that there could be any violation of the public faith, pledged for their redemption; or that there did not exist ample funds to redeem them. They indulged in still more extraordinary delusions, and ventured to recommend paper money, as of peculiar value. "Let it be remembered," said they, "that paper money is the only kind of money, which cannot make to itself wings and fly away." 15

§ 1354. The states still continued to fail in complying with the requisitions of congress to pay taxes; and congress, notwithstanding their solemn declaration to the contrary, increased the issue of paper money, until it amounted to the enormous sum of upwards of three hundred millions. 16 The idea was then abandoned of any redemption at par. In March, 1780, the states were required to bring in the bills at forty for one ; and new bills were then to be issued in lieu of them, bearing an interest of five per cent, redeemable in six years, to be issued on the credit of the individual states, and guaranteed by the United States. 17 This new scheme of finance was equally unavailing. Few of the old bills were brought in; and of course few of the new were issued. At last the continental bills became of so little value, that they ceased to circulate; and in the course of the year 1780, they quietly died in the hands of their possessors. 18 Thus were redeemed the solemn pledges of the national government! 19 Thus, was a paper currency, which was declared to be equal to gold and silver, suffered to perish in the hands of persons compelled to take it; and the very enormity of the wrong made the ground of an abandonment of every attempt to redress it!

§ 1355. Without doubt the melancholy shades of this picture were deepened by the urgent distresses of the revolutionary war, and the reluctance of the states to perform their proper duty. And some apology, if not some justification of the proceedings, may be found in the eventful transactions and sufferings of those times. But the history of paper money, without any adequate funds pledged to redeem it, and resting merely upon the pledge of the national faith, has been in all ages and in all nations the same. It has constantly become more and more depreciated; and in some instances has ceased from this cause to have any circulation whatsoever, whether issued by the irresistible edict of a despot, or by the more alluring order of a republican congress. There is an abundance of illustrative facts scattered over the history of those of the American colonies, who ventured upon this pernicious scheme of raising money to supply the public wants, during their subjection to the British crown; and in the several states, from the declaration of independence down to the present times. Even the United States, with almost inexhaustible resources, and with a population of 9,000,000 of inhabitants, exhibited during the late war with Great-Britain the humiliating spectacle of treasury notes, issued and payable in a year, remaining unredeemed, and sunk by depreciation to about half of their nominal value!

§ 1356. It has been stated by a very intelligent historian, that the first case of any issue of bills of credit in any of the American colonies, as a substitute for money, was by Massachusetts to pay the soldiers, who returned unexpectedly from an unsuccessful expedition against Canada, in 1690. The debt, thus due to the soldiers, was paid by paper notes from two shillings to ten pounds denomination, which notes were to be received for payment of the tax, which was to be levied, and all other payments into the treasury. 20 It is added, that they had better credit than King James's leather money in Ireland about the same time. But the notes could not command money, nor any commodities at money price. 21 Being of small amount, they were soon absorbed in the discharge of taxes. At subsequent periods the government resorted to similar expedients. In 1714, there being a cry of a scarcity of money, the government caused £50,000 to be issued in bills of credit, and in 1716, £100,000 to be lent to the inhabitants for a limited period, upon lands mortgaged by them, as security, and in the mean time to pass as money. 22 These bills were receivable into the treasury in discharge of taxes, and also of the mortgage debts so contracted. Other bills were afterwards issued; and, indeed, we are informed, that, for about forty years, the currency of the province was in much the same state, as if £100,000 sterling had been stamped on pieces of leather or paper, of various denominations, and declared to be the money of the government, receivable in payment of taxes, and in discharge of private debts. 23 The consequence was a very great depreciation, so that an ounce of silver, which, in 1702, was worth six shillings and eight pence, was, in 1749, equal to fifty shillings of this paper currency. 24 It seems, that all the other colonies, except Nova Scotia, at different times and for various purposes, authorized the issue of paper money. 25 There was a uniform tendency to depreciation, wherever it was persisted in. 26

§ 1357. It would seem to be obvious, that, as the states are expressly prohibited from coining money, the prohibition would be wholly ineffectual, if they might create a paper currency, and circulate it as money. But, as it might become necessary for the states to borrow money, the prohibition could not be intended to prevent such an exercise of power, on giving to the lender a certificate of the amount borrowed, and a promise to repay it.

§ 1358. What, then, is the true meaning of the phrase "bills of credit" in the constitution? In its enlarged, and perhaps in its literal sense, it may comprehend any instrument, by which a state engages to pay money at a future day (and of course, for which it obtains a present credit;) and thus it would include a certificate given for money borrowed. But the language of the constitution itself, and the mischief to be prevented, which we know from the history of our country, equally limit the interpretation of the terms. The word "emit" is never employed in describing those contracts, by which a state binds itself to pay money at a future day for services actually received, or for money borrowed for present use. Nor are instruments, executed for such purposes, in common language denominated "bills of credit." To emit bills of credit conveys to the mind the idea of issuing 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 of the constitution have been generally understood. 27 The phrase (as we have seen) was well known, and generally used to indicate the paper currency, issued by the states during their colonial dependence. During the war of our revolution the paper currency issued by congress was constantly denominated, in the acts of that body, bills of credit; and the like appellation was applied to similar currency issued by the states. The phrase had thus acquired a determinate and appropriate meaning. At the time of the adoption of the constitution, bills of credit were universally understood to signify a paper medium intended to circulate between individuals, and between government and individuals, for the ordinary purposes of society. Such a medium has always been liable to considerable fluctuation. Its value is continually changing; and these changes, often great and sudden, expose individuals to immense losses, are the sources of ruinous speculations, and destroy all proper confidence between man and man. 28 In no country, more than our own, had these truths been felt in all their force. In none had more intense suffering, or more wide spreading ruin accompanied the system. It was, therefore, the object of the prohibition to cut up the whole mischief by the roots, because it had been deeply felt throughout all the states, and had deeply affected the prosperity of all. The object of the prohibition was not to prohibit the thing, when it bore a particular name; but to prohibit the thing, whatever form or name it might assume. If the words are not merely empty sounds, the prohibition must comprehend the emission of any paper medium by a state government for the purposes of common circulation. 29 It would be preposterous to suppose, that the constitution meant solemnly to prohibit an issue under one denomination, leaving the power complete to issue the same thing under another. It can never be seriously contended, that the constitution means to prohibit names, and not things; to deal with shadows, and to leave substances. What would be the consequence of such a construction? That a very important act, big with great and ruinous mischief, and on that account forbidden by words the most appropriate for its description, might yet be performed by the substitution of a name. That the constitution, even in one of its vital provisions, might be openly evaded by giving a new name to an old thing. Call the thing a bill of credit, and it is prohibited. Call the same thing a certificate, and it is constitutional. 30

§ 1359. But it has been contended recently, that a bill of credit, in the sense of the constitution, must be such a one, as is, by the law of the state, made a legal tender. But the constitution itself furnishes no countenance to this distinction. The prohibition is general; it extends to all bills of credit, not to bills of a particular description. And surely no one in such a case is at liberty to interpose a restriction, which the words neither require, nor justify. Such a construction is the less admissible, because there is in the same clause an express and substantive prohibition of the enactment of tender laws. If, therefore, the construction were admissible, the constitution would be chargeable with the folly of providing against the emission of bills of credit, which could not, in consequence of another prohibition, have any legal existence. The Constitution considers the emission of bills of credit, and the enactment of tender laws, as distinct operations, independent of each other, which may be frequently performed. Both are forbidden. To sustain the one, because it is not also the other; to say, that bills of credit may be emitted, if they are not made a tender in payment of debts, is, in effect, to expunge that distinct, independent prohibition, and to read the clause, as if it had been entirely omitted. 31 No principle of interpretation can justify such a course.

§ 1360. The history of paper money in the American colonies and states is often referred to for the purpose of showing, that one of its great mischiefs was its being made a legal tender in the discharge of debts; and hence the conclusion is attempted to be adduced, that the words of the constitution may be restrained to this particular intent. But, if it were true, that the evils of paper money resulted solely from its being made a tender, it would be wholly unjustifiable on this account to narrow down the words of the constitution, upon a mere conjecture of intent, not derivable from those words. A particular evil may have induced a legislature to enact a law; but no one would imagine, that its language, if general, ought to be confined to that single case. The leading motive for a constitutional provision may have been a particular mischief; but it may yet have been intended to cut down all others of a like nature, leading more or less directly to the same general injury to the country. That the making of bills of credit a tender was the most pernicious of their characteristics, will not authorize us to convert a general prohibition into a particular one. 32

§ 1361. But the argument itself is not borne out by the facts. The history of our country does not prove, that it was an essential quality of bills of credit, that they should be a tender in payment of debts; or that this was the only mischief resulting from them. Bills of credit were often issued by the colonies, and by the several states afterwards, which were not made a legal tender; but were made current, and simply receivable in discharge of taxes and other dues to the public. 33 None of the bills of credit, issued by congress during the whole period of the revolution, were made a legal tender; and indeed it is questionable, if that body possessed the constitutional authority to make them such. At all events they never did attempt it; but recommended, (as has been seen,) that the states should make them a tender. 34 The act of parliament of 24 Geo. 2, ch. 53, is equally strong on this point. It prohibited any of the New-England colonies from issuing any new paper bills, or "bills of credit," except upon the emergencies pointed out in the act; and required those colonies to call in, and redeem all the outstanding bills. It then proceeded to declare, that after September, 1751, no "paper currency or bills of credit," issued, or created in any of those colonies, should be a legal tender, with a proviso, that nothing therein contained should be construed to extend to make any of the bills, then subsisting, a legal tender.

§ 1362. Another suggestion has been made; that paper currency, which has a fund assigned for its redemption by the state, which authorizes its issue, does not constitutionally fall within the description of "bills of credit." The latter words (it is said) appropriately import bills drawn on credit merely , and not bottomed upon any real or substantial fund for their redemption; and there is a material, and well known distinction between a bill drawn upon a fund, and one drawn upon credit only. 35 In confirmation of this reasoning, it has been said, that the emissions of paper money by the states, previous to the adoption of the constitution, were, properly speaking, bills of credit, not being bottomed upon any fund constituted for their redemption, but resting solely, for that purpose, upon the credit of the state issuing the same. But this argument has been deemed unsatisfactory in its own nature, and not sustained by historical facts. All bills issued by a state, whether special funds are assigned for the redemption of them or not, are in fact issued on the credit of the state. If these funds should from any cause fail, the bills would be still payable by the state. If these funds should be applied to other purposes, (as they may be by the state,) or withdrawn from the reach of the creditor, the state is not less liable for their payment. No exclusive credit is given, in any such case, to the fund. If a bill or check is drawn on a fund by a private person, it is drawn also on his credit, and if the bill is refused payment out of the fund, the drawer is still personally responsible. Congress has, under the constitution, power to borrow money on the credit of the United States. But it would not be less borrowing on that credit, that funds should be pledged for the re-payment of the loan; such, for instance, as the revenue from duties, or the proceeds of the public lands. If these funds should fail, or be diverted, the lender would still trust to the credit of the government. But, in point of fact, the bills of credit, issued by the colonies and states, were sometimes with a direct or implied pledge of funds for their redemption. The constitution itself points out no distinction between bills of the one sort or the other. And the act of 94 Geo. 2d. ch. 53 requires, that when bills of credit are issued by the colonies in the emergencies therein stated, an ample and sufficient fund shall, by the acts authorizing the issue, be established for the discharge of the same within five years at the farthest. So, that there is positive evidence, that the phrase, "bills of credit," was understood in the colonies to apply to all paper money, whether funds were provided for the repayment or not. 36

§ 1363. This subject underwent an ample discussion in a late case. The state of Missouri, with a view to relieve the supposed necessities of the times, authorized the establishment of certain loan-offices to loan certain sums to the citizens of that state, for which the borrowers were to give security by mortgage of real estate, or personal property, redeemable in a limited period by instalments. The loans were to be made in certificates, issued by the auditor and treasurer of the state, of various denominations, between ten dollars and fifty cents, all of which, on their face, purported to be receivable at the treasury, or any of the loan offices of the state, in the discharge of taxes or debts due to the state for the sum of — with interest for the same at two per centum per annum. These certificates were also made receivable in payment of all salt at the salt springs; and by all public officers, civil and military, in discharge of their salaries and fees of office. And it was declared, that the proceeds of the salt springs, the interest accruing to the state, and all estates purchased under the same act, and all debts due to the state, should be constituted a fund for the redemption of them. The question made was, whether they were "bills of credit," within the meaning of the constitution. It was contended, that they were not; they were not made a legal tender, nor directed to pass as money, or currency. They were mere evidences of loans made to the state, for the payment of which specific and available funds were pledged. They were merely made receivable in payment of taxes, or other debts due to the state.

§ 1364. The majority of the Supreme Court were of opinion, that these certificates were bills of credit within the meaning of the constitution. Though not called bills of credit, they were so in fact. They were designed to circulate as currency, the certificates being to be issued in various denominations, not exceeding ten dollars, nor less than fifty cents. Under such circumstances, it was impossible to doubt their real character and object, as a paper currency. They were to be emitted by the government; and they were to be gradually withdrawn from circulation by an annual withdrawal of ten percent. It was wholly unnecessary, that they should be declared to be a legal tender. Indeed, so far as regarded the fees and salaries of public officers, they were so. 37 The minority were of a different opinion, upon various grounds. One was, that they were properly to be deemed a loan by the state, and not designed to be a circulating currency, and not declared to be so by the act. Another was, that they bore on their face an interest, and for that reason varied in value every moment of their existence, which disqualified them for the uses and purposes of a circulating medium. Another was, that all the bills of credit of the revolution contained a promise to pay, which these certificates did not, but were merely redeemable in discharge of taxes, &c. Another was, that they were not issued upon the mere credit of the state; but funds were pledged for their redemption. Another was, that they were not declared to be a legal tender. Another was, that their circulation was not enforced by statutory provisions. No creditor was under any obligation to receive them. In their nature and character, they were not calculated to produce any of the evils, which the paper money issued in the revolution did, and which the constitution intended to guard against. 38

§ 1365. The next prohibition is, that no state shall "make any thing but gold and silver coin, a tender in payment of debts." This clause was manifestly founded in the same general policy, which procured the adoption of the preceding clause. The history, indeed, of the various laws, which were passed by the states in their colonial and independent character upon this subject, is startling at once to our morals, to our patriotism, and to our sense of justice. Not only was paper money issued, and declared to be a tender in payment of debts; but laws of another character, well known under the appellation of tender laws, appraisement laws, instalment laws, and suspension laws, were from time to time enacted, which prostrated all private credit, and all private morals. By some of these laws, the due payment of debts was suspended; debts were, in violation of the very terms of the contract, authorized to be paid by instalments at different periods; property of any sort, however worthless, either real or personal, 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 wholly disproportionate to its known value. 42 Such grievances, and oppressions, and others of a like nature, were the ordinary results of legislation during the revolutionary war, and the intermediate period down to the formation of the constitution. They entailed the most enormous evils on the country; and introduced a system of fraud, chicanery, and profligacy, which destroyed all private confidence, and all industry and enterprise. 43

§ 1366. It is manifest, that all these prohibitory clauses, as to coining money, emitting bills of credit, and tendering any thing, but gold and silver, in payment of debts, are founded upon the same general policy, and result from the same general considerations. The policy is, to provide a fixed and uniform value throughout the United States, by which commercial and other dealings of the citizens, as well as the monied transactions of the government, might be regulated. For it may well be asked, why vest in congress the power to establish a uniform standard of value, if the states might use the same means, and thus defeat the uniformity of the standard, and consequently the standard itself? And why establish a standard at all for the government of the various contracts, which might be entered into, if those contracts might afterwards be discharged by a different standard, or by that, which is not money, under the authority of state tender laws? All these prohibitions are, therefore, entirely homogeneous, and are essential to the establishment of a uniform standard of value in the formation and discharge of contracts. For this reason, as well as others derived from the phraseology employed, the prohibition of state tender laws will admit of no construction confining it to state laws, which have a retrospective operation. 44 Accordingly, it has been uniformly held, that the prohibition applies to all future laws on the subject of tender; and therefore no state legislature can provide, that future pecuniary contracts may be discharged by any thing, but gold and silver coin. 45

§ 1367. The next prohibition is, that no state shall "pass any bill of attainder, ex post facto law, or law inpairing the obligation of contracts." The two former require no commentary, beyond what has been already offered, under a similar prohibitory clause applied to the government of the United States. The same policy and principles apply to each. 46 It would have been utterly useless, if not absurd, to deny a power to the Union, which might at the same time be applied by the states, to purposes equally mischievous, and tyrannical; and which might, when applied by the states, be for the very purpose ofsubverting the Union. Before the constitution of the United States was adopted, every state, unless prohibited by its own constitution, might pass a bill of attainder, or ex post facto law, as a general result of its sovereign legislative power. And such a prohibition would not be implied from a constitutional provision, that the legislative, executive, and judiciary departments shall be separate, and distinct; that crimes shall be tried in the county, where they are committed; or that the trial by jury shall remain inviolate. The power to pass such laws would still remain, at least so far as respects crimes committed without the state. 47 During the revolutionary war, bills of attainder, and ex post facto acts of confiscation, were passed to a wide extent; and the evils resulting therefrom were supposed, in times of more cool reflection, to have far outweighed any imagined good.