that a tax levied by a state on its own corporations, on their property or franchises, when not discriminating against rights held in other states, and not laid upon imports nor exports nor on transportation to or from other states, does not conflict with any constitutional power of Congress.1

§ 312. The cases which have been referred to show that the Supreme Court of the United States, at an early day, took high national ground upon the subject of taxation by the states, and has never receded from that position. On the other hand, it has given a fair and equitable construction to the exceptions contained in the organic law, and has allowed to the separate commonwealths as free and full exercise of the great function of taxing as is necessary for their existence as subordinate political societies.

SECTION II.

THE POWER TO BORROW MONEY.

§ 313. The second general grant of legislative power contained in Section VIII. of Article I. is in these words: "Congress shall have power. . . to borrow money on the credit of the United States." In this immediate connection should be read a clause of Section X., as follows: "No state shall emit bills of credit, or make anything but gold and silver coin a tender in payment of debts."

But few questions strictly legal in their character have arisen or can arise under this provision authorizing Congress to borrow money. The language is as broad as possible; it contains in itself no limitations. The extent of the borrowing power must be, and is, commensurate with the wants of the government. For whatever purposes money may be expended, money may be borrowed to meet the expenditure. Nay, even though the money should be appropriated by Congress to some object, or in some manner not warranted by the organic law, this transgression could not, according to any principles of law or justice, invalidate the arrangement by which such money might have been borrowed. It

1 The Delaware R. R. Tax, 18 Wall. 206, 232.

cannot be that the public creditor is bound to see that the national legislature makes a proper use of the moneys loaned to it. Practically, therefore, the capacity of Congress to borrow money is absolutely unlimited; questions respecting its use are questions of policy, and not of constitutional

power.

§ 314. By what particular methods and measures may Congress exercise the power of borrowing? The answer is easy. Applying the rule which, as has been shown, is applicable to all the general grants of the Constitution, Congress may adopt such means as it thinks best, which are conducive to the efficient execution of the power; may pass all laws which have a tendency to make the provision operative. The government may go into the market and ask loans from capitalists in exchange for its evidences of debt, whatever form those evidences may assume, scrip of stock, bonds, treasury notes, certificates of indebtedness, and the like. This has been the usual mode, but it is by no means the only one in which money can be borrowed. Of course the legis lature may also adopt all ancillary measures which have the effect to render its obligations more certain and secure in the hands of public creditors; it may declare certain acts to be crimes, and affix punishments upon the offenders. As a long series of decisions made by the Supreme Court has settled the rule that the states may not tax the public securities of the nation in the hands of owners, a fortiori Congress has power by a declaratory statute to exempt them from such

taxation.

§ 315. But the power to borrow money may be exercised by the use of measures and methods whose relation to the end proposed does not seem to be so immediate and direct as in the cases last referred to. At a very early day in our history it was thought proper to establish a United States Bank, for the purpose of assisting the government in the management of its finances. The right in Congress to create such an institution was partly rested upon the general grant of power to borrow money; the bank was said to be a means conducive to this end, a legitimate measure for the

execution of this attribute. I do not purpose to enter into the discussion of the question whether Congress has authority to charter such a bank, much less to inquire into the policy of such an act. It is enough to say that the Supreme Court has most deliberately affirmed the power in the great cases of McCulloch v. Maryland and Osborn v. The Bank of the United States; 2 and the rule may be considered as settled in that court, and of course in the state tribunals.

The validity of the statute creating the present system of National Banks must be rested upon the same principles. Indeed, these institutions seem to have a more intimate connection with the function of borrowing money, and to be a more direct means of exercising that function. A large proportion of their capital must be invested in the national securities, and thus a very extensive demand for those securities is created, and borrowing by the government is made easier.

§ 316. But another and much more difficult question has arisen. Congress, impelled by what were considered to be the necessities of the situation, resorted to a measure which would hardly have been accepted under the ordinary circumstances of peace. In the exercise of its power to borrow money, the legislature provided for the issue of treasury notes designed to circulate generally as money. No question has been raised, no doubt has been expressed, as to the legality of this act. These notes are not different in kind from certificates of stock, or bonds; they are promises to pay, and therefore evidences of debt. Paying them out by the government for value received by it of some kind is really and directly borrowing money. Had the statute, therefore, stopped here, not a suspicion could have been cast upon its validity. But Congress went further, and declared that these notes should be a legal tender for the payment of all debts due to the United States, with a few specified exceptions, and also for the payment of all private debts. In respect to one of these provisions there can be no dispute: the government may lawfully make these, its promises, a legal

1 4 Wheat. 316.

29 Wheat. 738.

tender in payment of debts to itself. This point is universally conceded. Indeed, the legislature has, from time to time, since the adoption of the Constitution, resorted to such an expedient, and its authority to do so has never been denied. The controversy upon the statute is narrowed down to a single question: Is the provision declaring these treasury notes to be a legal tender in the payment of private debts a lawful and constitutional exercise of any general power conferred upon Congress?

§ 317. The Supreme Court of the United States has not as yet formally considered this subject, and passed upon the legality of the measure.1 In several of the state courts, however, cases necessarily and directly involving the question have arisen and been decided. In some of these courts the authority of Congress to enact the legal tender clause has been positively affirmed, in others as positively denied.2 In the cases of Metropolitan Bank v. Van Dyck, and Meyer v. Roosevelt, decided by the Court of Appeals in New York, the whole subject was examined in a most thorough and exhaustive manner, and it is proper to state in outline the arguments by which the court and the dissenting judges respectively reached their conclusions. The authority of the legislature to affix the compulsive attribute of legal tender to the treasury notes was rested upon the general grant of power to borrow money. The position was first broadly taken that any means and methods which conduce to the end permitted by the organic law, are themselves legitimate; that Congress is the sole judge as to such means; that treasury notes are evidences of debt, and issuing them is in fact borrowing money; that the peculiar attribute annexed to

1 This was written before the Legal Tender Decisions by the Supreme Court, which are stated ante, § 268 a, and which finally affirmed the constitutionality of the act, as applied to private debts, as well as to those due the government. The decision does not rest upon the power to borrow money, so much as on other powers mentioned in the Constitution. ED. 2 The following are some of the cases reported: In favor of the validity, Thayer v. Hedges, 23 Ind. 141; Brown v. Wilch, 26 Ind. 116; Lick v. Faulkner, 25 Cal. 404; Hintrager v. Bates, 18 Iowa, 174; Van Husen Opposed, Thayer v. Hedges, 22 Ind. 282.

v. Kanouse, 13 Mich. 303.

8 27 N. Y. 400.

them has a natural and direct tendency to enhance their value, to give them greater efficacy as a circulating medium, and is therefore a measure by which the borrowing of money is made easier. The case was held to be completely within the spirit of those decisions of the national court which declared the public securities of the government to be free from state taxation. One judge, Mr. Justice Marvin, also thought that the authority of Congress might be referred to its power to regulate commerce. The objection that the statute operated directly to impair the obligation of contracts was met by two answers: In the first place, the position was denied; in the second place, it was claimed that Congress was not forbidden to pass laws impairing the obligation of contracts. Two eminent judges dissented- Mr. Justice Denio and Mr. Justice H. R. Selden. Their views were briefly as follows: After admitting that Congress might issue treasury notes designed for circulation as money, and might declare them to be legal tender in payment of debts to the government, they denied that any authority existed to force these notes upon private persons in payment of private debts. They urged that a particular measure of legislation, to be within the scope of congressional powers, must have some direct relation to the end which the Constitution expressly authorizes; that it is not sufficient for such relation to be merely incidental or speculative. They claimed that the compulsive attribute annexed to these evidences of debt had no direct relation with the power to borrow or the act of borrowing. They chiefly relied, however, on the position that Congress has no capacity to interfere with the private contracts of individuals, any further and in any other manner than is directly authorized by the organic law; that the control over private agreements is a matter peculiarly within state jurisdiction.

§ 318. The several states, as bodies politic, have also the capacity and power to borrow money to any extent they may deem proper. The Constitution of the United States. places no restrictions upon them in respect to the amount of their loans, although their own constitutions very gener