CONSIDERATIONS

 

 

FOR

 

 

BANKERS,

AND

 

 

HOLDERS OF UNITED STATES BONDS.

 

 

BY LYSANDER SPOONER.

______________

 

 

 

 

BOSTON:

A. WILLIAMS & CO., 100 WASHINGTON STREET.

NEW-YORK: American News Company, 121 Nassau Street.

1864

[*3]

 

CONTENTS.

_________

 

 

CONSIDERATIONS

FOR

BANKERS.

 

CHAPTER I.

 

EXPLANATION OF THE AUTHOR’S NEW SYSTEM OF PAPER CURRENCY.

 

 

THE principle of the system is, that the currency shall repre­sent an invested dollar, instead of a specie dollar.

The currency will, therefore, be redeemable, in the first instance, by an invested dollar, unless the bankers choose to redeem it with specie.

The capital is made up of a given amount of property de­posited with trustees.

This capital is never diminished; but is liable to pass into the hands of new holders, in redemption of the currency, if the trus­tees fail to redeem the currency with specie.

The amount of currency is precisely equal to the nominal amount of capital.

When the currency is returned for redemption, (otherwise than in payment of debts due the bank,) and the trustees are not able, or do not choose, to redeem it with specie, they redeem it by a conditional transfer of a corresponding portion of the capital. And the conditional holder of the capital thus transferred, holds [*6] it, and draws interest upon it, until the trustees redeem it, by paying him its nominal value in specie.

Under certain exceptional and extraordinary circumstances, this conditional transfer of a portion of the capital, becomes an absolute transfer; and the conditional holder of the capital transferred, becomes an absolute holder of it - that is, an abso­lute stockholder in the bank.

In such cases, therefore, the final redemption of the currency consists in making the holders of the currency bona fide stock­holders in the bank itself.

To repeat, in part, what has now been said:

The currency, besides being receivable for debts due the bank, is redeemable, first, with specie, if the bankers so choose; or, secondly, by a conditional transfer of a part of the capital.

The capital, thus conditionally transferred, may be itself redeemed, by the bank, on paying its nominal value in specie, with interest from the time of the transfer.

Or, this conditional transfer, of a portion of the capital, may, under certain circumstances, become an absolute transfer.

A holder of currency, therefore, is sure to get for it, either specie on demand; or specie, with interest, from the time of demand; or an amount of the capital stock of the bank, corres­ponding to the nominal value of his currency.

In judging of the value of the currency, therefore, he judges of the value of the capital; because, in certain contingencies, he is liable to get nothing but the capital for his currency. But if the capital be worth par of specie, or more than par of specie, he infers that his currency will be redeemed, either in specie on de­mand, or by a temporary transfer of capital; which capital will afterwards be itself redeemed with specie.

All that is necessary to make a bank, under this system, a sound one, is, that its capital shall consist of productive prop­erty - its actual value fully equal to, or a little exceeding, its nominal value - and of a kind not perishable, or likely to depre­ciate in value. [*7]

Mortgages, rail-roads, and public stocks will probably be the best capital; and most likely they are the only capital which it will ever be expedient to use.

If further explanation of the nature of the system be needed, at this point, it can be given - more easily, perhaps, than in any other way - by supposing the capital to consist of land - as follows:

Suppose that A is the owner of one hundred, B of two hun­dred, C of three hundred, and D of four hundred, acres of land; that all these lands are of uniform value, to wit, one hundred dollars per acre; that they will always retain this value; and that they are all under perpetual leases at an annual rent of six dollars per acre.

A, B, C, and D, put all these lands into the hands of trustees, to be held as banking capital; making an aggregate capital of one hundred thousand dollars. Their rights, as lessors, going with the lands into the hands of the trustees - that is, the trus­tees being authorized to receive the rents, and apply them to the uses of the bank, if they should be needed.

A, B, C, and D, then, are the bankers, doing business through the trustees.

Their dividends, as bankers, it is important to be noticed, will consist both of the rents of the lands, and the profits of the banking; making dividends of twelve per cent. per annum, if the banking profits should be six per cent.

The banking will be done in this way - The trustees will make certificates for one, two, three, five, ten dollars, and so on, to the aggregate amount of one hundred thousand dollars; corresponding to the whole value of the lands.

These certificates will be issued for circulation as currency, by discounting notes, &c.

Each certificate will be, in law, a lien upon the lands for one dollar, or for the number of dollars expressed in the certificate.

The conditions of this lien will be these -

1. That these certificates shall be a legal tender in payment of all debts due the bank. [*8]

2. That when one hundred dollars of these certificates shall be presented for redemption, the trustees, unless they shall re­deem them with specie, shall give the holder a conditional title to one acre of land. This conditional title will empower the holder to demand of the trustees rent for that acre, at the rate of six dollars per annum, until they redeem the acre itself, by paying him an hundred dollars in specie for it. And no divi­dends shall be made by the trustees, to the bankers, (A, B, C, and D,) either from the rents of any of the other lands, or from the profits of banking, until this conditional title to the one acre, given to the holder of currency, shall have been can­celled, by the payment of the hundred dollars in specie, with interest, or rent, for the time the conditional title shall have been in his hands.

3. That when certificates are presented for redemption, in sums less than one hundred dollars, the trustees, unless they re­deem them with specie on demand, shall redeem them with specie, (adding interest, except on small sums,) before making any dividends, either of rents, or banking profits, to the bankers (A, B, C, and D).

4. Whenever an acre of land shall have been conditionally transferred in redemption of currency, a corresponding amount of currency (one hundred dollars) must be reserved from circula­tion, until that acre shall have been redeemed by the bank; to the end that there may never be in circulation a larger amount of currency, than there is of land, in the hands of the bankers, with which to redeem it.

5. So long as any of the lands shall remain the property of the original bankers, (A, B, C, and D,) - free of any condi­tional title, as before mentioned - the trustees will have the right, as their agents, to cancel all conditional titles, by paying an hundred dollars in specie for each acre, with interest, (or rent,) at the rate of six per cent. per annum, during the time the conditional title shall have been outstanding. And the trus­tees must do this, before they make any dividends, either of rents, or banking profits, to the bankers themselves. [*9]

But if, at any time, the banking shall be so badly managed, as that it shall become necessary for the trustees to give conditional titles to the whole thousand acres, (constituting the entire capital of the bank), the rights of the original bankers (A, B, C, and D) in the lands, shall then be absolutely forfeited into the hands of those holding the conditional titles; who will then become absolute owners of them (as banking capital, in the hands of the same trustees) - in the same manner as A, B, C, and D had been before; and will go on banking with them in the same way as A, B, C, and D had done, and through the agency of the same trustees.

This currency, it will be seen, must necessarily be forever solvent - supposing, as we have done, that the lands retain their original value. It will be absolutely incapable of insolvency; for there can never be a dollar of currency in circulation, without there being a dollar of land, in the hands of the bankers, (or their trustees,) which must be transferred (one acre of land for a hundred dollars of currency) in redemption of it, unless re­demption be made in specie. All losses, therefore, fall upon the bankers, (in the loss of their lands,) and not upon the bill holders. If the bankers should fail - that is to say, if they should be compelled to transfer all their lands in redemption of their circulation - the result would simply be, that the lands would pass, unincumbered, into the hands of a new set of hold­ers - to wit, the conditional holders - who would have received them in redemption of the currency - and who would proceed to bank upon them, (reissue the certificates, and redeem them, if necessary, by the transfer of the lands,) in the same way that their predecessors had done. And if they too, should rose all the lands, by the transfer of them in redemption of the currency, the lands would pass, unincumbered, into the hands of still another set of holders, (the second body of conditional holders, who will now become absolute holders,) who would bank upon them, as the others had done before them. And this process would go on indefinitely, as often as one set of bankers should [*10] fail (lose all their lands). Whenever one set of bankers should have made such losses as to compel the conditional transfer of all their lands, the conditional transfers would become absolute transfers, and the lands would pass absolutely into the hands of a new set of holders (the conditional holders); and the bank, as a corporation, would be just as solvent as at first. So that, how­ever badly the banking business should be conducted, and how­ever frequently the bankers might fail, (if transferring all their capital (lands), in redemption of their circulation, may be called failing,) the bank itself, as a corporation, could not fail. That is to say, its circulation could never fail of redemption. The lands (the capital) would forever remain intact; forever equiva­lent to the circulation; and forever subject to a compulsory de­mand in redemption of the circulation. In this way all losses necessarily fall upon the bankers, (in the loss of their capital, the lands,) and not upon the bill holders, who are sure to get the capital (lands), dollar for dollar, for their currency, if they do not get specie.

From the preceding explanation it will be seen that, if all lands were of an uniform value, and were to retain that value in perpetuity, it would be perfectly easy to use them as banking capital, under the author’s system, and thus create the most abundant and solvent currency that could be desired.

But all lands are not of a uniform value; and, therefore, they cannot be used, acre by acre, as banking capital, under this sys­tem. Nevertheless, by means of mortgages, lands may be used as banking capital; since mortgages upon lands can be made to any desirable extent, and all of a uniform value; or at least nearly enough so for all practical purposes. And this value they will retain in perpetuity.

The real estate of this country amounts to some ten thousand millions of dollars. Mortgaged for only half its real value, it would furnish banking capital to the amount of five thousand millions of dollars.

The rail-roads that we now have, and those that we shall have, [*11] taken at only half their value, would furnish several hundred millions more of good banking capital.

There will probably also be two thousand millions, or more, of United States Stocks, which, if they should stand perma­nently at par, or thereabouts, will make good banking capital.

There is, therefore, no more occasion for a scarcity of currency, than for a scarcity of air.

And this currency would all be solvent, stable, and furnished at the lowest rate of interest at which the business of banking could be done.

Under such a system there could never be another crisis; the prices of property would be stable; the rate of interest would always be moderate; industry would be uninterrupted, and much more diversified than it ever hitherto has been; and prosperity would necessarily be universal.

No evils could result from the great amount of currency fur­nished by this system; for no more would remain in circulation than would be wanted for use. By returning it to the bank for redemption, the holder would either get specie for it, or have it redeemed by the conditional transfer to him of a part of the capital, on which he would draw interest, until the capital so transferred to him, should either be itself redeemed with specie, or made an absolute property in his hands. Currency, therefore, returned for redemption, and not redeemed with specie, is really put on interest, by being redeemed by the conditional transfer of interest-bearing capital. Whenever, therefore, if ever, the prices of property should become so high as not to yield as good an income as money at interest (the interest being paid in specie), the holders of currency would return it to the banks for redemp­tion, beyond the ability of the banks to pay specie. The banks would be compelled to redeem it by the conditional transfer of interest-bearing capital; and thus take it out of circulation.

In short, the currency represents a dollar at interest, instead of a dollar in specie; and whenever it will not buy, in the market, property that is worth as much as money at interest, [*12] (the interest payable in specie,) it will be returned to the bank, and put on interest, (by being redeemed in interest-bearing capi­tal,) and thus taken out of circulation. No more currency, therefore, would remain in circulation, than would be wanted for use, the prices of property being measured by the value of an interest-bearing dollar, instead of a specie dollar, if there should be a difference between the two.

Such is, perhaps, as good a view of the general principles of the system, as can be given in the space that can be spared for that purpose. For a more full description, reference must be had to the pamphlet containing the system itself, with the Articles of Association, that will be needed by the banking companies. In the Articles of Association, the system is more fully developed, and the practical details more fully given, than they can be in any general description of the system. <fn1>

The recent experience of this country, under a currency redeemable only by being received for taxes, and made converti­ble at pleasure into interest-bearing bonds (U. S.), is sufficient to demonstrate practically - what is so nearly self-evident in theory as scarcely to need any practical demonstration - that under a system like the author’s, where the currency (when not redeemed in specie on demand) is convertible at pleasure into solvent interest-bearing stocks, there could never be a redundant cur­rency in actual circulation, nor any undue inflation in the prices of property. That experience proves that currency issued, and not needed for actual commerce, at legitimate prices, will be converted into the interest-bearing stocks which it represents, and thus taken out of circulation, rather than used to inflate prices beyond their legitimate standard. <fn2> [*13]

This experience of the United States, with a currency con­vertible into interest-bearing bonds, ought, therefore, to extin­guish forever all the hard money theories as to the indefinite inflation of prices by any possible amount of solvent paper cur­rency. It ought also to extinguish forever all pretence that a paper currency should always be redeemable in specie on demand; a pretence that is merely a branch of the hard money theory. This experience ought to be taken us proving that other values than those existing in gold and silver coins - values, for example, existing in lands, rail-roads, and public stocks - can be represented by a paper currency, that shall be adequate to all the ordinary necessities of domestic commerce; and consequently that we can have, at all times, as much paper currency as our domestic industry and commerce can possibly call for; and that the frequent revulsions we have hitherto had - owing to our de­pendence upon a currency legally payable in specie on demand, and therefore liable to contraction whenever specie leaves the country - are wholly unnecessary. This experience ought, therefore, to serve as a practical condemnation of all restraints upon the most unlimited paper currency, provided only that such currency be solvent, and actually redeemable, at the pleasure of the holder, in the property which it purports to represent.

Substantially the same things are proved by the experience of England. The immense amount of surplus money in that country is not used to inflate prices at home; but seeks invest­ment abroad. It is sent all over the world, either in loans to [*14] governments, or as investments in private enterprises, rather than used to inflate prices at home beyond their true standard.

The experiences of the two countries, therefore, demonstrate that there is no such thing possible as an undue inflation of prices, by a solvent paper currency - that is, a currency always redeemable in the specific property it purports to represent. And such a currency is that which would be furnished by the author’s system; for the property represented by it is always deliverable, dollar for dollar, in redemption of the currency itself. [*15]

 

CHAPTER II.

 

THE AUTHOR’S SYSTEM CANNOT BE PROHIBITED BY THE STATES.

 

THE author holds his system by a copyright on the Articles of Association, that will be needed by the banking companies. His system, therefore, stands on the same principle with patents and copyrights. And the use of it can no more be prohibited by the State governments, than can the use of a patented machine, or the publication of a copyrighted book.

The Constitution of the United States expressly gives to Con­gress “power to promote the progress of science and useful arts, by securing, for limited times, to authors and inventors, the ex­clusive right to their respective writings and discoveries.” And the laws passed by Congress, in pursuance of this power, are “the supreme law of the land, * * * any thing in the laws of any estate to the contrary notwithstanding.”

If the State governments could prohibit the use of an inven­tion, or the publication of a book, which the United States patent or copyright laws have secured to an inventor or author, the whole “power of Congress to promote the progress of science and useful arts,” by patent and copyright laws, could be defeated by the States.

Some persons may imagine that, whatever may be the right secured to inventors, by patents, the right secured to authors, by copyrights, is only a right to publish their ideas; leaving the State governments still free to prohibit the practical use of the ideas themselves. But this is a mistake. Of what avail would be the publication of ideas, if they could not be used? How utterly ridiculous and futile would be the idea of securing to the people a mere knowledge of “science and useful arts,” with no [*16] right, on their part, to apply them to the purposes of life. How could Congress “promote the progress of science and useful arts,” if the people were forbidden to practise them? The right secured, therefore, is not a mere right of publication, but also a right of use.

The objects of patents and copyrights are identical, viz.: to secure to inventors and authors, and through them to the peo­ple - against all adverse legislation by the States - the practical enjoyment and use of the ideas patented and copyrighted.

Copyrights, it must be observed, are not granted, as some may suppose, for mere words - for the words of all books were the common property of mankind before the books were copyrighted; and they remain common property afterwards. The copyright, therefore, is for the ideas, and only for the ideas, which the words are used to convey, or describe.

In copyrights, therefore, equally as in patents, the right se­cured is the right to ideas; that is, to those ideas that are original with the authors of the books copyrighted. And the right thus secured to ideas, is the right, on the part of the author, not only to reduce those ideas to practical use himself but also to sell them to others for practical use.

If the right, secured to authors by copyrights, were simply a right to publish their ideas, but not to use them, nor sell them to others to be used, the most important knowledge, conveyed by books, might remain practically forbidden treasures, if the State governments should choose to forbid their use.

These conclusions are natural and obvious enough; but as the point is one of great importance, it may be excusable to enforce it still further.

The ground here taken, then, is, that a State government has no more constitutional power to prohibit the practical use of any knowledge conveyed by a copyrighted book, than it has to pro­hibit the publication or sale of the book itself.

The sole object of the copyright laws are to encourage the production of ideas for the enjoyment and use of the people; to [*17] secure to the people the right to enjoy and use those ideas; and to secure to authors compensation for their ideas. All these objects would be defeated, if the States could interfere to prevent the use of the ideas thus produced; because if the ideas could not be used, there would be no sale for the books; and conse­quently authors would get no pay for writing them; and would have no sufficient motive to write or print them.

It is an axiom in law, that where the means are secured, the end is secured; that the means are secured solely for the sake of the end. It would be as great an absurdity in law, as in business, to secure the means, and not the end; to plant the seed, and abandon the crop; to incur the expense, and neglect the profits. What an absurdity, for example, would it be for the law to secure a man in the possession of his farm, but not in his right to cultivate it, and enjoy the fruits. What an absurdity would it be for the law to secure men in the possession of steam engines, but not in the right to use them. But these would be no greater absurdities than it would be for the law to secure to the people a knowledge of “science and useful arts,” but not the right to use them.

The sole object of the law in securing to all, men the possession of their property of all kinds, is simply that they may use it, and have the benefit of it. And the sole object of the laws, that secure to the people knowledge - which is but a species of property, and a most valuable kind of property - is that they may use it, and promote their happiness and welfare by using it.

An illustration of the principle, that where the means are secured, the end is secured, is seen in the constitutional provision that “the right of the people to keep and bear arms shall not be infringed.” This provision does not secure to the people a mere naked. “right to keep and bear arms” for that right would be of no practical value to them. But it secures the right also to use them in any and every way that is naturally and intrinsically just and lawful; for that is the only end the people can have in view in “keeping and bearing arms.” [*18]

On the same principle, too, if the Constitution had declared that “the right of the people to buy and keep food should not be infringed,” it would thus have guaranteed to them, not merely “the right to buy and keep food,” but also the right to eat the food thus bought and kept; because the eating would be the only end that could be had in view in buying and keeping food.

Another illustration of the same principle is found in the con­stitutional provision that “Congress shall have power to coin money, and fix the standard of weights and measures.” Have the States any power to forbid the people to buy and sell the money coined by the United States? Or to forbid the people to use the standard weights and measures fixed by the United States? Certainly not. Although the Constitution does not say it in express words, it does say, by necessary implication, that the money, coined by the United States, may be freely bought and sold by the people (because that is one of the ends for which the money is coined); and that the standard weights and measures, fixed by the United States, may be freely used by the people (for that is one of the ends for which the standard of weights and measures was fixed); and that the States can neither forbid the use of the weights and measures, nor the buying or selling of the coin.

The sole object of books is to convey knowledge. If the knowledge cannot be used, of what use are the books themselves?

If a State government can prohibit the use of the knowledge conveyed in a copyrighted book, it might just as well prohibit the buying or reading of the book. The object of the book would be no more defeated in one case than in the other.

This power of “promoting the progress of science and useful arts,” by means of patent and copyright laws, was given to Congress principally, if not solely, because it was feared that the State governments might, in some cases, be unfavorable to that end. But if the States can now prohibit the use of the knowl­edge conveyed by books, they have that very power of obstructing [*19] “the progress of science and useful arts,” which the Constitution intended to take from them.

Furthermore, it is the theory of the courts that the nation purchases the ideas of authors and inventors; that it purchases them solely for the use of the people; and that it pays authors and inventors for their ideas, by giving them certain exclusive rights over them for a term of years.<fn3> By this theory, the ideas themselves are supposed to become the property of the nation, from the times when the patents or copyrights are granted; or from the times when the ideas are put upon the government records, in the patent office, or elsewhere. Now, suppose the United States government had been authorized, by the Constitu­tion, to purchase the same ideas, and pay the money for them, instead of paying for them by giving the authors and inventors certain monopolies in the use of them. Could a State, in that case, have prohibited the practical use of the ideas, which the government had thus bought, and paid the nation’s money for, solely for the use of the people? Clearly not. Suppose the United States government had been authorized (by the Constitu­tion) to buy, and pay the money for, Morse’s invention of the telegraph, for the use of the people. Could a State have pro-<fn3> [*20] hibited the use of the invention, which the nation had thus bought for the use of the people, and paid the people’s money for? Certainly not.

Suppose the United States government (being authorized by the Constitution), had bought books on agriculture, for the use of the people, and paid the nation’s money for them - (instead of paying for them by copyrights, as it does now) - books on the chemical nature and treatment of soils, books on the various plants which the people wish to cultivate, and the various animals which the people wish to rear. Could a State have forbidden the people to read those books? Or to practically apply the knowl­edge conveyed by them? Clearly not. The idea would be preposterous. The principle that the United States Constitution, in securing to the people those means of agricultural progress, had, by necessary implication, secured to them the right to use those means against all interference by the States, would have been a complete answer to any such pretence on the part of the States.

We might as well say that a State has a right to forbid the people to use the post office, which the United States government has provided for their benefit, as to say that a State has a right to forbid the people to use any “science or useful art,” which the United States government has bought for their benefit.

Any other principle than this would authorize the States to prohibit the practical use of all ideas patented and copyrighted by the United States; anti thus utterly defeat the power given to Congress “to promote the progress of science and useful arts,” by means of patents and copyright laws.

It is to be borne in mind that the people of a single State are not the only ones interested in the practical use of patented and copyrighted ideas within that State.

If, for example, the cotton growing States were to prohibit the use of Whitney’s patented cotton gin within those States, the people of all the other States, that manufacture or wear cotton goods, would be made the poorer by the act. If Louisiana were [*21] to prohibit the use of Fulton’s patented steamboat within her limits, a great blow would be struck at the commerce and indus­try of the whole Mississippi valley. If Ohio, Indiana, Illinois, Iowa, and Wisconsin, were to prohibit the use of McCormick’s patented reaper within those States, the price of grain would be affected throughout the whole country. If Massachusetts were to prohibit the use of patented sewing machines, the prices of boots, shoes, and all other clothing, manufactured within the State, for the people of other States, would be enhanced. If New York were to prohibit the use of Hoe’s patented printing press within that State, all the commercial intelligence that radiates from the city of New York, would be delayed, and made more expensive; and the commerce of the whole country would be injured. For these reasons no State can be permitted to pro­hibit, within her limits, the use of any of the “sciences and useful arts,” which may be patented or copyrighted by the United States.

The same reasons apply to currency. If New York, for ex­ample, were to prohibit all but a metallic currency within her limits, the commerce of the whole country, so far as it is carried on within the city or State of New York, would be disturbed, obstructed, and injured. The industry of the whole country would be discouraged to a corresponding degree; and the whole country would be made the poorer. On the other hand, if the best systems of credit and currency, that can be invented, are allowed free course in the city and State of New York, that city and State can do very much, by the use of such credit and cur­rency, to facilitate the commerce, and consequently to develop the industry, of every State in the Union. Even, therefore, if it were admitted that the State of New York might deprive her own citizens of useful inventions in currency and credit, it cannot be permitted to her to dictate in regard to the currency and credit used in the commerce of the whole country within her limits. She is not an independent nation in regard to commerce, and consequently not in regard to credit or currency. [*22]

The principle of the United States Constitution, in regard to ideas patented and copyrighted, or in regard to “the progress of science and useful arts,” is, that authors, inventors, and people, shall have the free right to experiment with, and practically test, all ideas for themselves, without asking permission of the several State legislatures. It presumes that they (authors, inventors, and people) are competent to determine, after experiment, what inventions are practically valuable to them, and what worthless.

How preposterous would be the principle - as a political or economical one - that all the ideas, which authors and inventors may Originate, in “science and useful arts,” must be submitted to, and approved by, the several State legislatures, (who are utterly incompetent to judge of either their truth or utility,) before the authors and inventors can be permitted to demonstrate their truth or utility to the people, or the people be permitted to adopt then Such a principle would be manifestly absurd, ridiculous, destructive of men’s natural rights, and destructive of all “progress in science and useful arts.” It would be a tyranny that no people on earth could endure. On such a principle, not even an almanac could be published, or a new rat trap used, within any State, until the legislature of the State should have solemnly sat upon it, and given it the sanction of their profound wisdom, or profound ignorance. If any thing of this nature were to be tolerated in this country, it would plainly be most proper and expedient that Congress, as the legislature for the whole country, should take the matter in hand, and decide, for the whole country, upon the truth and utility of all new ideas offered for public adoption; instead of referring them to the several State legislatures. But Congress knows that they are utterly incompetent to any such task; and, therefore, they leave the whole matter - as the Constitution intended they should -to be determined by the authors, inventors, and people interested. And if this is the principle of the Constitution in regard to all other ideas in “science and useful arts,” it is equally the princi­ple of the Constitution in regard to currency (other than legal [*23] tender) and credit; for the Constitution makes no discrimination between inventions and ideas on these latter subjects, and those in relation to other matters (as we shall more fully see in subse­quent chapters). The Constitution knows but one law for all new ideas in “science and useful arts.” And that law is that authors and inventors may come freely face to face with the peo­ple, and test all ideas to their mutual satisfaction; leaving the people free to adopt or reject at their own discretion.

If there be any one of the “useful arts,” to which the fore­going principles ought to be applied, banking is preeminently that one. (By banking is here meant the art of representing by paper - for loans and currency - other values than those existing in coin) Banking is the art of arts It is the art upon which nearly all other arts depend mainly for their efficiency as ex­perience has demonstrated continually for the last hundred years. Directly or indirectly it furnishes both the tools and materials for nearly every trade. Directly or indirectly it creates the demand for, and furnishes the supply of every marketable commodity. For the want of such adequate credit and currency as banking is capable of supplying, all other arts, especially the mechanic arts, are at all times greatly crippled, and at frequent intervals para­lyzed; the natural and normal demand for manufactured com­modities suspended, and their prices struck down; the rich made poor, and the poor driven into idleness and destitution. The industry of almost any people - even of those among whom the mechanic arts have already made the greatest progress - would probably be doubled in value by such a diversity of production, such an increase of machinery, such uninterrupted activity, and such stability in prices, as an adequate system of banking would introduce. And the wealth thus produced would be far more equally and equitably distributed than wealth is now.

The imperfection or inadequacy of all former systems of bank­ing is a thing on all hands confessed. There is no art, in which there is greater need of invention. Consequently there is none, in which invention is better entitled to all the protection which [*24] the constitutional power of Congress “to promote the progress of science and useful arts” can give.

For the reasons that have now been given, the right to use practically the author’s system of banking, is absolutely secured to him and his assigns, by the United States copyright; and, as has already been said, can no more be prohibited by the State governments, than can the use of a patented machine, or the publication of a copyrighted book.

By what has been said, it is not meant that the patent or copy­right laws of Congress are designed, or can be used, to shield a person in the commission of any acts that are fraudulent, or intrin­sically criminal; but only that they are a protection for the free use of all ideas, that are patented and copyrighted by the United States, and that are, naturally and intrinsically, innocent and lawful.

That the author’s system of banking is, naturally and intrinsi­cally, innocent and lawful - as clearly so as any other system of banking that was ever invented - no one will dispute. The honest use of the system, therefore, cannot be prohibited by the States. But any frauds or crimes, committed under color of using the system, may be punished like any other frauds or crimes.

The same principles, of course, apply to any and every other system of banking, which is, naturally and intrinsically, innocent and lawful, and which men may invent, and choose to experiment with, and put in practice. Men have the same natural and con­stitutional rights to invent, experiment with, and get patented or copyrighted, and put in practice, new systems of banking, as they have to invent, experiment with, get patented, and put in Opera­tion, new churns and washing machines. And the only restraints, that can constitutionally be imposed upon them, by the State governments, are, that the natural “obligation of their contracts” must be enforced, and they must commit no frauds nor crimes. <fn4> [*25][*26][*27]

 

CHAPTER III.

 

THE AUTHOR’S SYSTEM CANNOT BE TAXED, EITHER BY THE

UNITED STATES, OR THE STATES.

 

NEITHER the United States, nor the States, can tax the au­thor’s system of banking, consistently with the theory which the courts hold in regard to patents and copyrights.

That theory is, that a patent or copyright, guaranteeing to an inventor or author, and his heirs and assigns, the free and exclu­sive right to use his invention, or publish his book, for a term of years, is the price which the United States government, as agent for the whole people, pays an inventor or author for his invention or book, for the benefit of the public.<fn5>

The courts hold that the reasons for granting patents and copy­rights are these, namely, that an inventor has in his mind an invention, or an author has in his mind a book, which, it is sup­posed, may be of value to the public; but that neither the inven­tor nor the author has any sufficient inducement to make his [*28] invention or book known, unless he can derive some pecuniary advantage from it. The United States, therefore, says to the inventor: If you will secure your invention to the use of the public) by putting upon the government records such a descrip­tion of it, and of the manner of using it, as that the public will be able, from your description, to make and use your machine, in defiance of you, (after your patent shall have expired,) the gov­ernment will, as a compensation for your so doing, secure to you, and your heirs and assigns, the free and exclusive use of the in­vention for a given number of years. When, therefore, the inventor has put upon the government records such a description of his invention, and of the manner of using it, as the govern­ment stipulates for, the bargain is complete, and the faith of the government is pledged, that he shall have the free and exclusive use of his invention for the term of years agreed on.

The United States says also to the author: If you will secure to the public the right to your book, by depositing a copy with the government, so that it may be republished in defiance of you, (after your copyright term shall have expired,) the government will secure to you, and your heirs and assigns, the free and ex­clusive right to publish and sell it for a term of years. When, therefore, the author has deposited with the government a copy of his book, in pursuance of this stipulation on the part of the United States, the contract is complete, and the faith of the gov­ernment is pledged, that he shall have the free and exclusive right to publish his book for the term of years agreed on.

The amount of these transactions - according to the theory of the courts - is, that the government buys an author’s or inven­tor’s ideas, and contracts to give him, as compensation for them, a certain exclusive use of them for a term of years.

The courts hold that the general government, on behalf of the whole country, makes this contract with authors and inventors; being specially authorized to do so by the Constitution of the United States.

On this theory, the government cannot consistently tax, either [*29] the ideas themselves, or the use of them. It cannot consistently tax the ideas themselves, as property, for they are supposed to be the property of the United States; and for the government to tax them, as property, would be taxing its own property; and would be as absurd as it would be to tax the National Capitol, or any other property of the government. It cannot consistently tax the author or inventor for his exclusive use of the ideas; for that exclusive use is the price which the government agrees to pay him for his ideas; and is, therefore, a debt, which it owes him. It, therefore, can no more consistently tax him for receiv­ing this pay for his ideas, than it can tax any body else for re­ceiving his pay for services rendered, or property sold, or money lent, to the government.

This price, be it observed, which the United States government agrees to pay, is not paid in full, until the patent or copyright term has expired; because the price itself consists in the exclusive use, or in the government protection to the exclusive use, of the invention or book, for that term. If, now, the govern­ment can tax this price, before it is fully paid, it really taxes a debt which it owes. And for the government to tax a debt, which it owes, is really keeping back a part of the debt.

In other words, if, before the inventor or author shall have had the free and exclusive use of his invention or book secured to him for the full term stipulated for, the general government can tax this free and exclusive use, which, for a valuable consideration paid to the United States, by the author or inventor, has been guaranteed to him, it can wholly or partially invalidate the con­tract made with him. Such a tax is virtually withholding, or keeping back, or taking back, a part of the price, which the United States, on behalf of the whole country, had agreed to pay him. If the use of the invention or book can be taxed to the amount of one per cent., ten per cent., fifty per cent., or one hundred per cent., of its value, by the very government that promised to secure the use to him, then one per cent., ten per cent., fifty per cent., or one hundred per cent., of the price, [*30] agreed to be paid to him, is taken back, or virtually withheld from him, by the very party that promised to pay it to him.

Such a tax, according to the theory of the courts, would be a tax upon a debt, which the United States owes the author or in­ventor. And a right, on the part of the United States, to impose such a tax, would be as absurd, and as inconsistent with the obli­gation of a debt, as would be the right of any other debtor, to tax his creditor for the debt due by the former to the latter. If all debtors could tax their creditors at pleasure for the debts due by the former to the latter, the payment of debts would be a very easy matter. And if the United States can tax, at pleasure, all the debts they owe, the public debt may legally, and consistently with the public faith, be very easily paid.

When the United States government voluntarily becomes a debtor, by purchasing something valuable, and agreeing to pay for it at a future time, it voluntarily puts itself in the position of any and all other debtors. That is, it agrees to pay the amount in full; and not merely to pay all except what it may choose to withhold, or take back, under the name of taxation. A promise of this latter kind would amount to no promise at all.

Suppose the United States government (as agent for the whole country) were to purchase, of an individual, supplies for the United States army; and were to give him a contract to pay him in six months. And suppose that, before paying this debt, the government should tax it, to the amount of one hundred per cent., in the hands of this creditor of the United States. How much would this creditor have coming to him when the contract should be due? Or how much would he realize for the supplies he had furnished, and taken the government’s contract for? Nothing. Yet a tax of one per cent. would be just as absurd in principle, and just as inconsistent with the obligation of a debt, as would be a tax of one hundred per cent. Such taxation would clearly be withholding a part of the debt, which the government owed him, and had agreed to pay him, for value received. The government might just as well have seized the supplies, without pretending to [*31] make any compensation at all, as to pretend to buy them, promise to pay for them, and then tax that debt or promise before it is fulfilled. It is for this reason, that the general government can­not, without a breach of faith, tax any portion of the debt it’ is now contracting. Such a tax would really be a mode of with­holding payment of money it had agreed to pay.’ And for the same reason the general government cannot, consistently with the theory of the courts in regard to patents and copyrights, tax them, or the use of them. Such taxation, according to the theory of the courts, would be withholding a part of the price, which the general government, on behalf of the whole country, had agreed to pay for books and inventions.

And what the general government cannot, consistently with the public faith, do, in the way of taxing patents and copyrights, the States, counties, cities, and towns cannot consistently do; because any contract, made by the general government, is made for and on behalf of the whole country; and States, counties, cities, and towns are as much bound by it, as is the general government itself.

If States, counties, cities, and towns could tax patents and copyrights, they could wholly or partially, (according to the extent of the tax,) defeat the value of the contracts, which the United States, on behalf of the whole country, makes with authors and inventors.

The subscriber is not aware that inventions and copyrights, or the use of inventions or copyrights, have ever been taxed, either in this country, or in any other, until the recent tax upon telegraphic messages. And this tax, according to the theory of the courts, ought clearly to be held illegal, or at least inconsistent with the public faith.

The country has too great an interest in “the progress of science and useful arts,” to tolerate Congress, or the State gov­ernments, in breaking faith with authors and inventors, by rob­bing them, either directly or indirectly, of the free and exclusive right to “their writings and discoveries” for the term of years [*32] that was stipulated for, when, relying upon the public faith, they sold their ideas to the government, (as they virtually did when they put their books and inventions beyond their own control, by putting them upon the government records.) <fn6>

For the reasons now given, the subscriber assumes that the use of his system of banking will never be taxed, either by the United States, or the States.

This freedom from taxation is perfectly just, for still another reason, namely, that the land, which constitutes the banking cap­ital under the author’s system, is liable to be taxed, as land, at its true value, equally with all other land. The fact that it is used as banking capital, is no reason for taxing it beyond its true value, when all other land is equally free to be used as banking capital, if the owners shall so choose.

This exemption from taxation is likely to be an important mat­ter for many years, if not forever; and is sufficient, of itself to challenge tile consideration of bankers. [*33]

 

CHAPTER IV.

 

THE STATE GOVERNMENTS CANNOT CONTROL, OR IN ANY MAN­NER INTERFERE WITH, THE AUTHOR’S SYSTEM.

 

THE same reasons that have been already given against the right of the State governments to prohibit, or tax, the use of the author’s system of banking, are equally weighty against all power, on the part of the States, to assume to control, or in any manner interfere with, the operation of the banks, either by restricting the rates of interest or exchange, or subjecting the banks to the oversight of Commissioners, or requiring them to keep on hand given amounts of specie, or to publish statements, or make returns, of their condition or proceedings.

A State, for example, would have no more power to fix the rates of interest or exchange, taken by these banks, than to fix the price paid for the use of a patented machine, or for the pub­lication of a copyrighted book. Nor would it have any more power to subject the banks to the oversight of Commissioners appointed by the State, than it would to subject the use of all patented machines, and the publication of all copyrighted books, to the supervision of Commissioners appointed by the State. It would have no more right to require the banks to make returns, or publish statements, of their condition and proceedings, than it would to require the same things of all persons using patented machines, or publishing copyrighted books.

If the State governments can, in any way, obstruct or em­barrass authors and inventors in the use of their copyrights and inventions, they can impair or destroy the value of the copyrights or patents granted by the United States; and so far defeat the Constitution of the United States, and the powers of Congress on this subject. [*34]

The Supreme Court of the United States has explicitly in­dorsed these principles, by declaring that the use of “patent rights” can neither be taxed, retarded, impeded, burdened, nor in any manner controlled, by the State governments. And the same principle obviously applies to copyrights, because these are intrinsically of the same nature with patent rights, and be­cause also the rights, of authors and inventors are placed upon the same grounds by the Constitution.

This declaration of the Supreme Court was made in the case of McCulloch vs. Maryland, 4 Wheaton’s Reports. It was made incidently, but nevertheless explicitly, and as illustrating a prin­ciple which the court declared to be vital to the existence and operation of the general government.

The immediate question, before the court, was, whether the State of Maryland had a right to tax the Maryland branch of the United States Bank?

The court first determined that the United States had a con­stitutional right to create a bank to be employed as an agent of the United States in keeping and disbursing the public monies.

The court next declared “that the power to tax involves the power to destroy;” and that to allow the States to tax, or exer­cise any authority whatever over, any of the agencies employed by the United States in executing its constitutional powers, was incompatible with the supremacy of the United States, and was equivalent to subjecting the United States government to absolute destruction, whenever the State governments should please to destroy it.

And in this connexion, the court spoke of the United States mails, of the mint, of patent rights, of the papers of the Custom House, and of judicial process of the United States, as illustra­tions of the various means used by the United States, and which could not be taxed, nor in any manner interfered with, by the States. [*35]

Thus the court say,

“If we apply the principle for which the State of Maryland contends [that the States may tax the means employed by the general government for executing its powers] to the Constitution generally, we shall find it capable of changing totally the char­acter of that instrument. We shall find it capable of arresting all the measures of the government, and prostrating it at the foot of the States. The American people have declared their Con­stitution, and the laws made in pursuance thereof to be supreme; but this principle would transfer the supremacy, in fact, to the States.

“If the States may tax one instrument, employed by the gov­ernment in the execution of its powers, they may tax any and every other instrument. They may tax the mail; they may tax the mint; they may tax patent rights; they may tax the papers of the Custom House; they may tax judicial process; they may tax all the means employed by the government, to an excess which would defeat all the ends of government. This was not intended by the American people. They did not design to make their government dependent on the States.” Page 482.

Also the court say,

“The court has bestowed on this subject its most deliberate consideration. The result is a conviction that the States have no power, by taxation, or otherwise, to retard, impede, burden, or in any manner control, the operations of the constitutional laws enacted by Congress to carry into execution the powers vested in the general government. This is, we think, the un­avoidable consequence of that supremacy which the Constitution has established.” Page 436.

This was an unanimous opinion of the court - expressly de­clared by them to be such. And, as we have already seen, they expressly applied the principle to “patent rights.” And if the principle is applicable to patent rights, it is equally applicable to copyrights; because they are both of the same nature, and stand on the same grounds in the Constitution.<fn7>

We have, then, in effect, an explicit declaration of the Supreme [*36] Court of the United States, “that the State” have no power, by taxation, or otherwise, to retard, impede, burden, or in any manner control,” the use of patents and copyrights, granted by the United States.

If the bankers should commit any frauds, or any acts that were intrinsically criminal, they could be punished, as for any other frauds or crimes; because patents and copyrights do not authorize the commission of crimes. Or if they should not fulfil their contracts, they could be compelled to fulfil them. But so long as they should fulfil their contracts, and be charged with no acts intrinsically criminal, a State government could no more interfere with them as banks, than it could interfere with anybody else for using a patented machine, or publishing a copyrighted book. And thus the business of banking (including the rates of interest and exchange) would be entirely relieved from all that arbitrary and tyrannical State legislation, which has hitherto been so annoy­ing, vexations, and injurious both to bankers and to the public.

If there is any business whatever, that ought to be free from all arbitrary restraints and interference, it is banking; for the reason that, in this country, the credit and currency furnished by the banks, are the direct mainsprings of nearly all our industry and commerce. All arbitrary restrictions upon banking, are, therefore, nothing else than arbitrary restrictions upon industry and commerce; and are as absurd, injurious, and tyrannical as would be arbitrary restrictions upon the use of steam engines, water wheels, locomotives, or any other machinery or instru­mentalities by which our industry and commerce are carried on.

If banking is an intrinsically criminal business, it should be prohibited altogether. If it is an innocent and useful one, it should be free from all arbitrary restrictions and interference, like any other honest business. Free competition, and freedom from all arbitrary interference, in banking, will furnish the best currency and credit, and at the cheapest rates, just as free com­petition, and freedom from all arbitrary interference, in all other business, furnish the best commodities, and at the lowest prices. [*37]

 

CHAPTER V.

 

UNCONSTITUTIONALITY OF THE LEGAL TENDER ACTS OF CONGRESS.

 

THE general government is attempting, by its legal tender acts, and its bank act, to force into circulation its own currency, and the currency of banks authorized by itself; and to force out of circulation all other currency; or to bring it down to a level with its own. This makes it necessary to consider the constitutionality of the legal tender acts of Congress.

Those, who imagine that the legal tender acts of Congress are constitutional, seem to imagine that Congress have power to fix, and do fix, the legal tender in payment of debts in all cases whatsoever; that they have power not only to prescribe what shall be the legal tender in payment of all debts, but also to say how much of any thing whatever (which they may choose to call a legal tender) shall be sufficient to satisfy any debt what­soever; that, in short, Congress have power to declare arbitrarily what, and how much, all contracts, between man and man, shall amount to; and at their pleasure or discretion, to make them more, less, or other than the parties have made them.

Thus they hold, in effect, that men have no power, of them­selves, to make obligatory contracts; and that men’s contracts with each other have, of themselves, no validity at all, which the laws are bound to recognize and maintain; but that it rests with Congress, in their discretion, or at their will, to alter men’s con­tracts, and make them valid for more, less, or other than the parties have agreed on.

All these enormous conclusions legitimately and necessarily [*38] follow from the idea that the late legal tender acts of Congress are constitutional.

But, in truth, Congress have no powers whatever of this kind. Parties make their own contracts; and , Congress have no power whatever to make them more, less, or other than the parties have made them. Congress have no power to say how much of any thing - gold and silver coin, or any thing else - shall be sufficient to satisfy any contract whatever between man and man.<fn8>

Parties make their own contracts. Of course they, and they alone, fix the tender. That is, they agree what, and how much, is to be paid. Otherwise there would, in law, be no contract. A contract to pay no particular thing, and no particular quantity of any thing, would, in law, be no contract at all. To make a contract, then, is necessarily to fix the tender. Parties cannot make valid binding contracts otherwise than by themselves fixing the legal tender, both in kind and amount.<fn9>

What the debtor agrees to pay, and the creditor to receive, is the legal tender, and the only legal tender, both in kind and amount, in payment of that debt. And Congress have no au- [*39]­ thority in the matter, to alter the legal tender, or make the con­tract more, less, or other than the parties themselves have made it. If it were not so, men would be deprived of all power of making their own contracts.

Thus, where a contract is to pay one hundred bushels of wheat, one hundred bushels of wheat constitute the legal tender, anti the only legal tender, in fulfilment of that contract, or in payment of that debt; and Congress have no power to alter it. Congress have nothing to do with the matter.

So, too, if one man contracts to convey his farm to another, that farm is the legal tender, and the only legal tender, in fulfil­ment of that contract.

So, if one man contracts to give his horse to another, for value received, that horse is the legal tender, and the only legal tender, in fulfilment of that contract; and Congress have nothing to do with the matter.

On the same principle, when one man has contracted to pay another a hundred dollars, a hundred dollars constitute the legal tender, and the only legal tender, there can be in the case. Not because Congress have made the dollars a legal tender: but because the parties themselves made the dollars the tender in that particular case; just as, in the cases before supposed, the parties made the wheat, the farm, and the horse, the legal tender in those cases respectively.

If Congress can fix the tender, in payment of a debt, indepen­dently of the agreement of the parties, they can make at least a part of a contract between the parties, without their consent. But Congress have no more power to make any part of a contract between two parties, without their consent, than they have to make a whole one.

Congress have no power whatever in regard to legal tender, beyond what can be found in these words of the Constitution, to wit: “The Congress shall have power to coin money, and regu­late the value thereof and of foreign coin.”

This is the only power given to Congress ‘on the subject. And [*40] here is no power given, in express terms, to make the coin mentioned, either domestic or foreign, “a legal tender in payment of debts.” It is only by carefully analyzing all the terms of the provision, that, even by inference or implication, such an au­thority can be extracted from it. Let us see.

What is it “to coin money?” It is simply to weigh and assay pieces of gold, silver, or other metals, and stamp them in a man­ner to certify their quantity and quality - that is, their weight and fineness. This is the whole of it. And, so far as this simple act of coining goes, there is nothing that makes the coins a legal tender; or that gives Congress any authority to make them a legal tender.

After the pieces have been coined, they are sold by Congress in the market, and are afterwards sold by individuals in the mar­ket, for just what they may chance to bring, like any other mer­chandise; Congress having no control over their market value.

If a debtor agrees to pay, and a creditor to receive, these pieces of coin, the coins are thereby made the legal tender in payment of that particular debt. They thereby become necessarily the legal tender; not because Congress have so prescribed, but because the parties have so agreed. The parties, and not Con­gress, make them the legal tender.

Parties are under no legal obligation to make their contracts payable in coin - that is, in dollars. They are at perfect liberty to make them payable in wheat, corn, hay, iron, wool, cotton, pork, beef, or any thing else they choose. And when they do so make them, these other commodities become the tender; just as dollars become the tender when dollars are promised.

The whole object of coining money, therefore - so far as a legal tender is concerned - is, not to enforce any particular ten­der upon ‘the parties to contracts, but that there may be in the community certain commodities, suitable for a legal tender -that is, whose quantities and qualities may be precisely known -in order to facilitate the making and fulfilling of contracts by the parties, and the enforcing of them by the courts, with [*41] perfect certainty and precision. It is to furnish something, known to the law, and fixed by the law, and about which there may be no controversy between parties, and no doubt on the part of the courts, as to whether or not it is the identical thing - in kind, quantity, and quality - that was promised to be delivered.

When contracts are made to be fulfilled by the payment of wheat, wool, cotton, iron, &c., disputes are liable to arise between the parties as to whether the commodities tendered are of the precise quality with the ones promised. Hence litigation arises; and litigation too, which it is extremely difficult for courts to settle justly; because it is very difficult, and often impossible, for a court to know the precise quality of the commodities promised, as understood by the parties themselves at the times of their contracts.

It is desirable, therefore, that there should be something, known to the law, and which may be promised to be delivered, and about the quality of which there can be no dispute. Such a commodity serves both to prevent controversy and litigation, and to enable courts to settle them justly and truly when they do arise.

So far, then, as a legal tender is concerned, the whole object of the Constitution, in giving Congress “power to coin money,” is, not at all to take away from parties their natural power and right to make such contracts as they please, or to impair their contracts when made, but to aid them in making precisely such contracts as they wish; and to insure the enforcement of the contracts, by the courts, precisely as the parties made them.

The object of the Constitution is to give the people additional facilities (beyond what nature has provided) for making their own contracts, and having them accurately enforced; and not at all to take from them any natural power or right to make such contracts as they please; or to give Congress any power to inter­fere with, control, invalidate, or impair the contracts made.

But, secondly, Congress have power not only “to coin money,” but also “to regulate the value thereof and of foreign coin.”

What is it “to regulate the value thereof, and of foreign [*42] coin?” Certainly it is not to fix the current value of the coins, relatively to other commodities. It is not, for example, to say how much wheat, wool, cotton, iron, hay, or any thing else, one dollar, or five dollars, in coin, shall buy.

For Congress to fix the value of the coins, relatively to other commodities, would be equivalent to their fixing the value of other commodities relatively to coin. But that, clearly, is a matter for parties to agree upon; and one with which Congress have nothing to do.

What, then, is this power of Congress “to regulate the value thereof, and of foreign coin?”

If the Constitution had said simply that Congress should have “power to coin money, and regulate the value thereof” - omit­ting the words “and of foreign coin” - the legal conclusion probably would have been, that Congress should only have power to coin money, and regulate the intrinsic value thereof - that is, fix, at their discretion, the quantity and quality of the metals of ‘which the coins should be composed. But since Congress have “power to regulate the value of foreign coin” - the intrinsic value of which has already been fixed by the governments that coined them - we are, perhaps, under a necessity to infer that the power given to Congress “to coin money, and regulate the value thereof, and of foreign coin,” is a power to fix the legal value of all these different coins relatively with each other; that is, a power to say how many coins of one kind or denomination, shall be equal in value to a given number of another kind, or denomination.

But, if we accept this inference, we are also under a necessity to infer that it is only in the single case of a “tender in payment of debts,” that this legal value of the coins, as fixed by Congress, can be set up; for, in all other cases, it is clear that the parties to contracts are at perfect liberty to give and receive more or less for any one of the coins, than they would for any others of the same legal value.

It is, therefore, only by this inference, and this process of [*43] reasoning, that we can come to the conclusion that Congress have any power at all to fix the value of their own coins, and of foreign coins, for the purposes of a “tender in payment of debts.”

And when we thus find that Congress may, perhaps, have a certain power relatively to “a legal tender in payment of debts,” we find that, at most, it is only a power to fix the value of the different coins, relatively to each other; and not relatively to other things. In other words, we find that it is a power simply to say, for example, that five dollars, in silver, shall be equal to one half eagle in gold; that an English pound sterling, shall be equal to four dollars eighty-five cents of United States coin; and that a French Napoleon shall be equal to three dollars eighty-five cents of United States coin. And that it is only in the single case of “a tender in payment of debts,” that even this legal value of the coins, relatively to each other, can be fixed by Con­gress. In all other cases, all the different coins may be legally bought and sold at just such values as the parties to contracts may choose to put upon them.

The most, therefore, that can be said, in favor of the power of Congress, is, that they have power to coin money,. and regulate the value of the different pieces thereof and of foreign coin, relatively to each other, for the single purpose of a tender in payment of debts; and that they have no other power over the subject.

This power of Congress, it is to be noticed, is not a power to make the coins a legal tender, (when the parties to contracts have not done so;) but only a power to fix the value of the dif­ferent coins, relatively to each other, when the parties to con­tracts shall have made them a tender. In other words, it is only a power to say that, when the parties to contracts shall have agreed upon the amount of coin, or the number of dollars, to be paid, they shall be understood to have contracted for so much coin, or so many dollars, of any, or all, these different kinds, (at the option of the debtor,) and not for any one kind of coin, [*44] or one kind of dollars, rather than another of the same legal value. <fn10>

This power of Congress leaves parties at full liberty to make their own contracts; and consequently to fix their own tender, (without fixing which there can be no contract.) It only enables Congress virtually to prescribe beforehand what particular words or terms - such as dollar, eagle, dime, cent, and so forth - when used by the parties to contracts, shall be understood to mean. Just as Congress, in fixing the standard of weights and measures, virtually prescribe beforehand what the terms bushel, yard, rod, foot, acre, pound, gallon, &c., when used by the parties to con­tracts, shall be understood to mean.

This power of Congress to prescribe what certain terms, such as dollar, bushel, and the like, when used in contracts shall be understood to mean, is a power that can be exercised only within [*45] very narrow limits, to wit, the limits of prescribing that those terms shall be understood to mean either such coins and measures as Congress shall have previously established and designated by the same terms, or such coins and measures as Congress shall have previously designated as the equivalents of the coins and measures designated by those terms.

The object of giving to Congress these powers “to coin money, and regulate the value thereof and of foreign coin, and fix the standard of weights and measures,” is not at all to give Con­gress any power to control parties in making their contracts; nor any power to alter or impair their contracts when made; but only to provide certain coins, weights, and measures, that shall be known alike to courts and people, in all the States, according to which contracts may be made, if the parties shall so choose; and according to which contracts may be fulfilled, when the parties shall have so agreed.

Congress have plainly no more right to alter the tender, when the parties have agreed on one, than they have to alter a measure, when the parties have agreed on one. Congress have no more power, for example, to say, ‘when a man has promised to pay a hundred dollars, that he shall be required to pay but fifty, or that he may tender something else than dollars, (or other coin of equal legal value,) than they have to say that, when he has promised to deliver a hundred bushels of wheat, he shall be required to pay but fifty; or that he may tender oats, apples, or onions, in­stead of wheat.

In short, Congress have no power whatever over men’s con­tracts, except simply to say that when men shall have agreed to pay a certain number of coins, of a denomination or denomina­tions which Congress shall have previously designated as being of the same legal value with certain other coins, this legal value of all the coins, relatively to each other, shall be recognized by the parties and the courts, and the contracts shall be fulfilled and enforced accordingly; and that when parties shall have agreed to pay a certain number of bushels, yards, or pounds, of any thing, [*46] it shall be understood that the bushels, yards, and pounds agreed upon, are such bushels, yards, and pounds as Congress shall have previously designated.

This power of Congress to designate beforehand certain coins, weights, and measures, with reference to which contracts may be made, (if the parties so choose,) with the certainty of having them accurately and truly fulfilled, is totally different from a power to control, alter, or impair men’s contracts, by prescribing that more, less, or other than the parties have -agreed on, shall be a legal tender in fulfillment of their contracts. The former power is a power in aid of men’s natural power and right to make their own contracts, and have them truly and accurately enforced. The latter power would be a power wholly destructive of all men’s natural rights to make their own contracts, or to have them enforced.

This attempt, on the part of Congress, to alter the tender, from what the parties to contracts have agreed on, and to require par­ties and courts to recognise any thing but “coin” as “a legal tender” in fulfilment of contracts for the payment of coin, is one of the most naked, impudent, and wicked usurpations that can be conceived. There is not a syllable in the Constitution that gives the slightest color of authority for any such enactment.

When a man has contracted, for value received, to deliver a plough, have Congress any constitutional power to enact that he may tender a gun, in fulfilment of that contract? Or if he has contracted to deliver a horse, have Congress power to enact that he may tender a bull? If a man has contracted to convey his farm, for value received, have Congress any power to enact that he may tender cats, dogs, snakes, and toads, in fulfilment of that contract? If a milliner has contracted to deliver a bonnet, have Congress power to enact that she may tender a wheelbarrow, or a handcart? If a jeweller has óontracted to deliver a necklace, have Congress any power to enact that he may tender a coal hod? If a man has contracted, for value received, to deliver, to a lady, chairs, sofas, carpets, mirrors, and pictures, for her parlor, have [*47] Congress power to enact that he may tender tar, turpentine, oil, and lampblack, instead of the things agreed on? If a handsome and spirited young man has promised marriage with a young and beautiful woman, have Congress power to enact that he may tender a decrepid old man in his stead? Just as much constitu­tional power have Congress to do any and all these absurd and ridiculous things, as they have to alter men’s contracts, or make any thing but “coin” a tender, where coin has been promised.

If Congress, under “the power to coin money, and regulate the value thereof, and of foreign coin,” have power to say that United States notes shall be a legal tender in payment of debts, they have evidently the same power to say that foreign notes - or the notes of foreign nations - shall also be a legal tender. If the word “coin,” as used in the Constitution, includes govern­ment notes, then certainly the words “foreign coin” include foreign government notes. So that, on the theory that Congress have power to make the United States notes a legal tender, it necessarily follows that they have equal power to make the notes of all other governments a legal tender.

Furthermore, the explicit provision of the Constitution, that “No ,State shall make any thing but gold and silver coin a tender in payment of debts,” is additional and conclusive evidence, if any more could be needed, that Congress have no power to make any thing but coin itself a tender.

But it is said that Congress have power to debase the coin, and thus impair the value of existing contracts; and that, if Congress can impair existing contracts by debasing the coin, they have equal power to impair them by making something else than coin a tender.

It is true that Congress have power to debase the coin; but it is utterly untrue that they have any power to affect the value of existing contracts by so doing. It might as well be said that they have power to reduce the bushel, gallon, and yard measures; and by so doing reduce the value of existing contracts for the delivery of grain, spirits, and cloths. [*48]

It is an established principle in law, that the words of a con­tract are to be taken in the sense in which they are used at the time the contract is entered into; and that nothing subsequent can alter that meaning. Contracts for so many pieces of coin, are contracts for the things signified by those words at the time; and not for other and different things, that may be created after­wards, and made to bear the same names. In other words, con­tracts are for things, and not for mere names.

But the technical lawyer will, perhaps, inquire how can the original contract be enforced, or judgment be given for the coin contracted for, after the current coin of the country has been de­based? The answer is, that in case of non-performance of con­tract, the principal has his option of two remedies, viz. : first, to bring suit for specific performance - that is, to compel the deliv­ery of the identical thing promised, where its delivery is reason­ably possible; and, second, where he does not desire the delivery of the identical thing promised, or where such delivery has be­come impossible, he can sue for the damage; the damage to be estimated and paid in the coin current at the time of the judg­ment.

Suppose, therefore, that from this day, the standard coin were to be debased to one half the value of the present standard; a creditor under a preexisting contract would have a right to de­mand payment of the original coin contracted for; and if pay­ment were refused, he would have a right to sue for specific per­formance - that is, for the delivery of the particular coin con­tracted for. And it would be the duty of the court to enforce such delivery, if coin of the original standard were still in cir­culation so that its delivery was reasonably possible. But if the original coin had so far disappeared as to make its delivery practi­cally impossible, then the creditor could sue for the damage; and it would be the duty of the jury, in estimating the damage, to take into account the relative value of the coin contracted for, and the debased coin, in which the damage was to be paid; and [*49] to give judgment for such an amount of the latter as would be equal in intrinsic value to the former.

There would be as much reason in saying that Congress have power, by increasing the value of the standard coin, to increase the value of existing contracts for coin, as there is in saying that they have power, by debasing the coin, to diminish the value of existing contracts for coin.

In short, contracts for the delivery of coin, at a future time, are not simply contracts for such coins as may, at that future time, happen to bear the names mentioned in the contracts. But they are contracts for such amounts of real gold and silver as the terms employed signify at the times when the contracts are entered into.