Part 16

“I have to thank you for a copy of your Resolutions, and perhaps you will not deem me intrusive, if I wish you a hearty God-speed in the work you have undertaken,--a work the successful accomplishment of which is large enough to fill the measure of the highest ambition,--a work which will redeem the nation from its low estate, which asserts the nation’s sovereignty and self-existence, instead of ‘borrowing leave to be,’--which demands for the nation the paramount allegiance of every inhabitant of its territory, and sweeps away every institution which interposes itself between the nation and that allegiance,--which calls the Government from being the minister of oppression and the mere dispenser of patronage, to take upon itself the high purposes and duties for which ‘governments are instituted among men,’--which transmutes four millions of chattels into men.

“Allow me to suggest (although it has not, probably, escaped your notice), that the constitutional requirement, that every legislative, executive, and judicial officer in the States shall be sworn to the support of the Constitution of the United States, leaves the whole of the Rebel territory without a civil officer whom the Government can recognize, as every such pretended officer is just as much a usurper in the eye of the Constitution as Jefferson Davis himself.”

Henry Hoyt, publisher and bookseller, wrote from Boston:--

“I cannot sleep another night till I have thanked you from the bottom of my heart for your bill resolving Rebeldom into Territorial relations again. Of all measures ever introduced into Congress, nothing so completely meets the case of the present exigency of our country’s history, and _nothing but this_ can make the confederacy of the whole land stand in safety a single year. We may continue to win battles, but, so long as the ruins of Slavery exist in the body politic, we shall stand on a volcano.”

But the most important commentary on the Resolutions is found in the measures of Reconstruction subsequently adopted, all of which stand on the power of Congress over the Rebel States, which they positively assert, including especially the power and duty to guaranty a republican form of government.

The Report of the Joint Committee on Reconstruction, drawn up by its Chairman, Mr. Fessenden, asserted that the Rebel States “having voluntarily renounced the right to representation, and disqualified themselves by crime from participating in the Government, the burden now rests upon them, before claiming to be reinstated in their former condition, to show that they are qualified to resume Federal relations.” It then laid down the rule:--

“Having, by this treasonable withdrawal from Congress, and by flagrant rebellion and war, forfeited all civil and political rights and privileges under the Federal Constitution, they can only be restored thereto by the permission and authority of that constitutional power against which they rebelled, and by which they were subdued.”[167]

Here was the power of Congress asserted,--but very tardily, and after original denial.

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A calm observer has recently recorded his regret that the Resolutions were not adopted at once, and consistently acted upon. After saying that “the mover was overwhelmed with a tornado of denunciation and abuse,” and that the opposition “rendered any satisfactory reconstruction as nearly impracticable as can well be imagined,” the writer proceeds:--

“Time has fully vindicated the wisdom of Mr. Sumner’s course, and many of the Senators against the measure now admit their mistake,--while every man who comes here from the South says that their present miserable condition grows out of that great error.

“To the Democratic party the rejection of the Resolutions was a God-send. It made the continued existence of the Democratic party possible.”[168]

Such is the first chapter of Reconstruction.

TREASURY NOTES A LEGAL TENDER.

SPEECH IN THE SENATE, ON THE CLAUSE MAKING TREASURY NOTES A LEGAL TENDER, FEBRUARY 13, 1862.

February 13th, the Senate having under consideration a bill from the House of Representatives to authorize the issue of United States notes, and for the redemption or funding thereof, and for funding the floating debt of the United States, Mr. Collamer, of Vermont, moved to strike out the following words:--

“And such notes herein authorized, and the notes authorized by the Act of July 17, 1861, shall be receivable in payment of all public dues and demands of every description, and of all claims and demands against the United States of every kind whatsoever, except for interest upon bonds and notes, which shall be paid in coin, _and shall also be lawful money and a legal tender in payment of all debts, public and private, within the United States, except interest as aforesaid_.”

Mr. Collamer stated that some desired him to try the sense of the Senate on the question of private debts, but he preferred the above amendment, “that these notes shall not be tenderable upon any debts due by the Government or by individuals.” On this proposition he had already made an elaborate speech.

Mr. Fessenden also spoke elaborately upon the whole bill; but he characterized the legal tender clause as “the main question.” Here he said:--

“The question, then, is, Does the necessity exist?… If the necessity exists, I have no hesitation upon the subject, and shall have none. If there is nothing left for us to do but that, and that will effect the object, I am perfectly willing to do that.”

Mr. Sumner spoke last in the debate, and at least one Senator acknowledged that on the question of constitutional power he had been changed by this speech. The vote was then taken on the amendment, and resulted, yeas 17, nays 22.

So the motion to strike out the legal tender clause was rejected.

Mr. Doolittle moved an amendment so as to make the notes “a legal tender in payment of all public debts, and all private debts hereafter contracted within the United States,” which was rejected without a division.

Mr. King also moved a comprehensive amendment, which likewise struck out the legal tender clause; but it was rejected without a division.

The bill was then passed, yeas 30, nays 7.

MR. PRESIDENT,--I am sorry to ask the attention of the Senate at this late hour; but the importance of the question must be my apology.

In what I say I shall confine myself exclusively to a single feature of the present bill. Others may regret that the exigencies of the country were not promptly met by taxation,--or that at the beginning a different system was not organized by the Treasury, through which the national securities might have found a readier market,--or that the national credit was not sustained, at the period of bank suspension, by the resolute redemption of the Government securities in coin at any present sacrifice. But it is useless to discuss these questions. The time for such discussion has passed. The Tax Bill is not yet matured. The system adopted by the Treasury cannot be changed at once, if it were desirable. It is too late to organize the redemption of the national securities in coin on the daily application of holders. Meanwhile the exigencies of Government have become imperative. Money must be had.

And we are told that the credit of Government can be saved only by an act that seems like a forfeiture of credit. Paper promises are to be made a legal tender, like gold and silver; and this provision is to be ingrafted on the present bill authorizing the issue of Treasury notes to the amount of $150,000,000.

All confess that they vote for this proposition with reluctance, while to many it seems positively unconstitutional. Of course, if unconstitutional, there is an end of it, and all discussion of its character is superfluous. I am compelled by candor to declare that the doubts which perplex me do not proceed from the Constitution. If the question of constitutionality were in all respects novel, or, as lawyers phrase it, of first impression, then I might join with friends in their doubts. But it seems to me that the constitutional power of Congress to make Treasury notes a legal tender was settled as long ago as when it was settled that Congress might authorize the issue of Treasury notes; for from time immemorial the two have gone together, one as incident of the other, and, unless expressly severed, they naturally go together.

It is true that in the Constitution there are no words expressly conferring upon Congress the power to make Treasury notes a legal tender; but there are no words expressly conferring upon Congress the power to issue Treasury notes. If we consult the text, we find it as silent with regard to one as with regard to the other. There is no silence with regard to the States, which are expressly prohibited to “emit bills of credit,” or “make anything but gold and silver coin a tender in payment of debts.” Treasury notes are “bills of credit”; and this prohibition is imperative on the States. The inference is just, that this prohibition, expressly addressed to the States, was not intended to embrace Congress indirectly, as it obviously does not embrace it directly. The presence of the prohibition, however, shows that the subject was in the minds of the framers of the Constitution. If they failed to extend it still further, it is reasonable to conclude that they left the whole subject in all its bearings to the sound discretion of Congress, under the ample powers intrusted to it.

The stress so constantly put upon the prohibitions addressed to the States will justify me in introducing the opinion of Mr. Justice Story, in his Commentaries.

“It is manifest that all these prohibitory clauses, as to coining money, emitting bills of credit, and tendering anything 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 moneyed transactions of the Government, might be regulated.”[169]

Plainly, no inference adverse to the powers of the National Government can be drawn from these prohibitory clauses; for, whatever may be these powers, there will be a fixed and uniform value throughout the United States.

As we proceed, the case becomes more clear. The States are prohibited to issue “bills of credit”; but there is no such prohibition on the National Government, which may do in the premises what the States cannot do. The failure to prohibit is equivalent to a recognition of the power. In other words, the National Government may issue “bills of credit,” which have been characterized by no less a person than Chief-Justice Marshall, in pronouncing the opinion of the Supreme Court, when he said: “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.” And then again the learned Chief Justice said: “The term has acquired an appropriate meaning; and ‘bills of credit’ signify _a paper medium_, intended to circulate between individuals, and between Government and individuals, for the ordinary purposes of society.”[170] This “money” and “paper medium” the States are prohibited from emitting; but there is no such prohibition on the National Government,--as there is not a single word to prohibit the National Government from determining what shall be a legal tender.

From the proceedings of the National Convention it appears that a clause in the first draught of the Constitution empowering Congress to “emit bills on the credit of the United States” was after discussion struck out. In the debate on this clause, Mr. Madison asked: “Will it not be sufficient to prohibit the making them _a tender_? This will remove the temptation to emit them with unjust views.” Mr. Mason said, “Though he had a mortal hatred to paper money, yet, as he could not foresee all emergencies, he was unwilling to tie the hands of the [National] Legislature. He observed, that the late war could not have been carried on, had such a prohibition existed.” Mr. Mercer was “opposed to a prohibition of it altogether. It will stamp suspicion on the Government to deny it a discretion on this point.” Mr. Butler remarked, that “paper was a legal tender in no country in Europe. He was urgent for disarming the Government of such a power.” Mr. Mason was “still averse to tying the hands of the Legislature _altogether_. If there was no example in Europe, as just remarked, it might be observed, on the other side, that there was none in which the Government was restrained on this head.” Mr. Gorham was “for striking out, without inserting any prohibition.” And this view finally prevailed.[171] Thus it appears that the suggestion was made to prohibit the making of bills a tender; but this suggestion was not acted on, and no such prohibition was ever moved. It is evident that the Convention was not prepared for a measure so positive. Less still was it prepared for a prohibition to emit bills. Such is the record. While all words expressly authorizing bills were struck out, nothing was introduced in restriction of the powers of Congress on this subject.

Thus was the whole question practically settled; and the usage of the Government has been in harmony with this settlement. Treasury notes were issued during the war of 1812, and in the monetary crisis of 1837, also during the war with Mexico, and constantly since, so that the power to issue them cannot be drawn into doubt. If there was any doubt originally, unquestioned practice, sanctioned by successive Congresses, has completely removed it. I do not stop to consider whether the power is derived primarily from the power “to borrow money,” or the power “to regulate commerce,” or from the unenumerated powers. It is sufficient that the power exists.

But I see not how to escape the conclusion, that, if Congress is empowered to issue Treasury notes, it may affix to these notes such character as shall seem safe and proper, declaring the conditions of their circulation and the dues for which they shall be received. Grant the first power, and the rest must follow. Careful you will be in the exercise of this power, but, if you choose to take the responsibility, I see no check in the Constitution.

The history of our country furnishes testimony, which has been gathered with extraordinary minuteness in an elaborate opinion by Mr. Justice Story.[172] I follow mainly his authority, when I set it forth.

It appears that the phrase “bills of credit” was familiarly used for bank-notes as early as 1683 in England, and also as early as 1714 in New England. But the first issue in America was in 1690, by the Colony of Massachusetts, and the occasion--identical with the present--was to pay soldiers, returning unexpectedly from an unsuccessful expedition against Canada. These notes were from two shillings to ten pounds, and were receivable for dues at the Treasury. Their form was as follows: “This indented bill of ten shillings, due from the Massachusetts Colony to the possessor, shall be in value equal to money, and shall be accordingly accepted by the Treasurer, and Receivers subordinate to him, in all public payments, and for any stock at any time in the Treasury.” Here followed the date, and the signatures of the Committee authorized to issue these notes.[173] Such was their depreciation, that these notes could not command money or commodities at money price, although the historian, Hutchinson, who has recorded these interesting facts, does not hesitate to say that they had better credit than King James’s leather money in Ireland only a short time before.[174] Being of small amount, they were soon absorbed in the payment of taxes. But this example did not stand alone.

The facility with which paper money is created renders it difficult to withstand the temptation, unless a Government is under the restraint of correct principles of finance, which at that early day were utterly unknown. An excuse for Massachusetts may be found in the general poverty at that time, the lack of precious metals, and the distance from marts of trade. In 1702 there was another issue of bills of credit, for £15,000, which, by a subsequent Act, in 1712, were made a tender for private debts. Under the continued cry of scarcity of money, bills of credit were again issued in 1716, to the amount of £150,000, to be lent, for a limited period, to inhabitants, whose lands were mortgaged as security. These were not made a tender; but they were receivable at the Treasury in discharge of taxes, and also of mortgage debts. Other bills were afterwards issued, so that paper money was common. The historian who has exposed this condition of things does not hesitate to liken this currency to pretended values stamped on leather or paper, and declared to be receivable in payment of taxes and in discharge of private debts. The natural consequence was a fatal depreciation, so that an ounce of silver, worth in 1702 six shillings and eight pence, in 1749 was equivalent to fifty shillings of this paper currency.[175] At the present moment I do not seek to exhibit the character of this currency, but simply the original association between bills of credit and the idea of a tender.

But Massachusetts was not alone. The neighboring colony of Rhode Island, as early as 1710, followed her example, and in 1720 made her bills a tender in payment of all debts, except certain debts specified. Connecticut issued bills at different periods, beginning with 1709, some of which were made a tender, and some not. New York began in the same year, substantially following Massachusetts; and her bills were generally made a tender. In 1722 Pennsylvania issued bills, secured on mortgage, and made a tender. In 1739 Delaware did likewise, making her bills a tender. So also did Maryland, in 1733, to the amount of £90,000; but other bills were issued by Maryland, in 1769, which were not made a tender.

The example of Virginia is more conspicuous, although not so early in time. The very term, “Treasury notes,” now used as the equivalent of “bills of credit,” first appears in her colonial legislation, when, in 1755, they were made a tender in payment of debts.[176] There were successive emissions in 1769, 1771, and 1773, which were not made a tender,--and then in 1778, and at other times afterwards, which were made a tender. That these “Treasury notes” were deemed “bills of credit” is demonstrated by the legislation of the State, especially by the Act of May, 1780, which, after reciting that the exigencies of the war require the further emission of paper money, authorizes new “Treasury notes,” and proceeds to punish with death any person who shall forge “any bill of credit _or_ Treasury note to be issued by virtue of this Act.”[177]

I find that North Carolina, as early as 1748, sent forth bills of credit which were made a tender, and many subsequent emissions were authorized. South Carolina began in 1703; but these bills, bearing interest at twelve per cent, do not seem to have been made a tender. Others issued by this colony, at different times afterwards, were made a tender. In 1760 Georgia authorized bills of credit on interest, and secured by mortgage of the property of the receivers, which were made a tender.

The extensive employment of paper money in New England aroused the jealousy of the Imperial Parliament, which, by the Act of 25th June, 1751,[178] expressly forbade the issue of any “paper bills, or bills of credit,” except for certain specific purposes, or upon certain specified emergencies. The Act constantly speaks of these two as equivalent expressions, thus seeming to show that “bills of credit,” in their true meaning, were what is familiarly called “paper money,” with the incidents of such money. But the Act proceeds to limit these incidents by declaring expressly that “no paper currency, or bills of credit,” issued under it, shall be a tender in payment of any private debts or contracts whatsoever, with a proviso that nothing therein contained should make any bills then subsisting a tender. That Parliament should deem it necessary, by special enactment, to take from bills of credit the character of a tender, attests the customary association between these two ideas.

During the Revolutionary War, under the exigencies of that time, with a country without resources and a treasury without money, bills of credit, known as Continental money, were issued by Congress. But, while receivable in discharge of taxes and other public dues, they were not made a tender by Congress, although the States were recommended to make them such.

MR. COLLAMER. And did make them so.

MR. SUMNER. At the adoption of the National Constitution, the people, to their wide-spread cost, had become familiar with bills of credit and their incidents, while all conversant with Colonial history must have known the part which bills of credit played for nearly a century, not only as a help to currency, but as a tender, constituting paper money. And yet, with all this ample knowledge,--present certainly to the framers of the Constitution, if not to the people,--no express words on this subject were introduced into the text of the Constitution, except with regard to the States. The conclusion from this silence, under all the circumstances, is strong, if not irresistible.

But the omission of the Constitution with regard to bills of credit was practically supplied by Congress, which has not hesitated to assume the existence of the power. If the Constitution failed to speak, Congress has not failed; and the exercise of this power cannot now be questioned, without unsettling our whole financial system. But we have seen that throughout our Colonial history the tender was a constant, though not inseparable, incident of the bill of credit,--that, indeed, it was so much part of the bill of credit that the Imperial Parliament positively interfered to separate the two, and, while sanctioning the bill of credit, forbade the tender. And now, if this historical review is properly apprehended, if it is not entirely out of place, it must conduct to the conclusion, that, whatever may be the present question of policy, the power to make Treasury notes a tender has precisely the same origin in the Constitution with the power to create Treasury notes. It is true that you may exercise one power and decline the other; but if you assume the power to issue bills of credit, I am at a loss to understand how you can deny the power to make them a tender. The two spring from the same fountain. You may refuse to exercise one or both; but you cannot insist upon one, under the Constitution, and reject the other.

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