Briscoe v. Bank of Commonwealth of Kentucky
36 U.S. 257 (1837)

Annotate this Case

U.S. Supreme Court

Briscoe v. Bank of Commonwealth of Kentucky, 36 U.S. 11 Pet. 257 257 (1837)

Briscoe v. Bank of Commonwealth of Kentucky

36 U.S. (11 Pet.) 257

ERROR TO THE COURT OF

APPEALS OF KENTUCKY

Syllabus

On 29 November, 1820, the Legislature of Kentucky passed an act establishing a bank by the name of "The Bank of the Commonwealth of Kentucky." The first section of the act declares the bank shall be established "in the name and behalf of the Commonwealth of Kentucky" under the direction of a president and twelve directors to be chosen by the legislature. The second section enacts that the president and directors shall be a corporation, capable of suing and being sued and of purchasing and selling every description of property. The third section declares the bank to be exclusively the property of the commonwealth. The fourth section authorizes the issuing of notes, and the fifth declares the capital to be two millions of dollars, to be paid by all moneys afterwards paid into the Treasury for the vacant lands of the state, and so much of the capital stock as was owned by the state in the Bank of Kentucky, and as the treasurer of the state received those moneys, he was required to pay them into the bank. The bank had authority to receive money on deposit, to make loans on good personal security or on mortgage, and was prohibited increasing its debts beyond its capital. Limitations were imposed on loans, and the accommodations of the bank were apportioned among the different counties of the state. The bank was by a subsequent act authorized to issue three millions of dollars, and the dividends of the bank were to be paid to the treasurer of the state. The notes of the bank were issued in the common form of bank notes in which the bank promised to pay to the bearer on demand the sum stated on the face of the note. The pleadings excluded the court from considering that any part of the capital had been paid by the state, but in the argument of the case it was stated and not denied that all the notes which bad been issued, and payment of which bad been demanded had been redeemed by the bank. By an act of the Legislature of Kentucky it was required that the notes of the bank should be received on all executions by plaintiffs, and if they failed to endorse on such execution that they would be so received, further proceedings on the judgment

were delayed for two years. The Bank of the Commonwealth of Kentucky instituted a suit against the plaintiffs in error on a promissory note for which the

notes of the bank had been given as a loan to the drawers of the note. The defendants in the suit claimed that the note given by them was void, as the same was given for the notes of the bank, which were "bills of credit" issued by the State of Kentucky, against the provisions of the Constitution of the United States which prohibits the issuing of "bills of credit" by the states of the United States and that the act of the Legislature of Kentucky, which established the bank, was unconstitutional and void. By the court:

"The act incorporating the Bank of the Commonwealth of Kentucky was a constitutional exercise of power by the State of Kentucky, and the notes issued by the bank are not bills of credit within the meaning of the Constitution of the United States."

The definition of the terms "bills of credit," as used in the Constitution of the United States, if not impracticable, will be found a work of no small difficulty.

Page 36 U. S. 258

The terms "bills of credit," in their mercantile sense, comprehend a great variety of evidences of debt which circulate in a commercial country. In the early history of banks, it seems their notes were generally denominated "bills of credit," but in modern times they have lost that designation and are now called either bank bills or bank notes. But the inhibitions of the Constitution apply to bills of credit in a limited sense.

Description of the bills of credit which were issued in the early history of the colonies, afterwards the United States of America.

The case of Craig v. State of Missouri, 4 Pet. 410, cited.

The definition of a bill of credit, which includes all classes of bills of credit emitted by the colonies and states, is a paper issued by the sovereign power containing a pledge of its faith and designed to circulate as money.

If the legislature of a state attempts to make the notes of any bank a tender, the act will be unconstitutional, but such attempt could not affect in any degree the constitutionality of the bank. The act which related to the receiving the notes of the Bank of the Commonwealth of Kentucky was not connected with the charter.

The federal government is one of delegated powers; all powers not delegated to it or inhibited to the states are reserved to the states or to the people.

A state cannot emit bills of credit, or in other words it cannot issue that description of paper to answer the purposes of money which was denominated before the adoption of the Constitution "bills of credit." But a state may grant acts of incorporation for the attainment of these objects, which are essential to the interests of society. This power is incident to sovereignty, and there is no limitation on its exercise by the states, in respect to the incorporation of banks, in the federal Constitution.

At the time of the adoption of the Constitution, the "Bank of North America" and "the Massachusetts Bank" and some others were in operation. It cannot therefore be supposed that the notes of these banks were intended to be inhibited by the Constitution, or that they were considered as "bills of credit" within the meaning of that instrument. In many of their most distinguishing characteristics, they were essentially different from bills of credit in any one of the various forms in which they were issued. If then the powers not delegated to the federal government nor denied to the states are retained by the states or the people, and by a fair construction of the terms "bills of credit," as used in the Constitution, they do not include ordinary bank notes, it follows that the powers to incorporate banks to issue these notes may be exercised by a state.

A uniform course of action involving the right to the exercise of an important power by the state government for half a century, and this almost without question, is no unsatisfactory evidence that the power is rightfully exercised.

A state cannot do that which the federal Constitution declares it shall not do. It cannot "coin money." Here is an act inhibited in terms so precise, that they cannot be mistaken. They are susceptible but of one construction. And it is certain that a state cannot incorporate any number of individuals, and authorize them to coin money. Such an act would be as much a violation of the Constitution as if money were coined by an officer of the state under its authority. The act being prohibited cannot be done by a state, directly or indirectly. The same rule applies to bills of credit issued by a state.

To constitute a bill of credit within the Constitution, it must be issued by a state on the faith of the state, and designed to circulate as money. It must be a paper which circulates on the credit of the state, and so received and used in the ordinary

Page 36 U. S. 259

business of life. The individual or committee who issue it must have power to bind the state; they must act as agents, and of course not incur any personal responsibility nor impart as individuals any credit to the paper. These are the leading characteristics of a bill of credit, which a state cannot emit. The notes issued by the Bank of the Commonwealth of Kentucky have not these characteristics.

When a state emits bills of credit, the amount to be issued is fixed by law, as also the fund out of which they are to be paid, if any find be pledged for their redemption, and they are issued on the credit of the state, which in some form appears upon the face of the notes or by the signature of the person who issues them.

No sovereign state is liable to be sued without her consent. Under the Articles of Confederation, a state could be sued only in cases of boundary. It is believed that there is no case where a suit has been brought at any time on a bill of credit against a state, and it is certain that no suit could have been maintained on this ground prior to the Constitution.

The case of Craig v. State of Missouri, 4 Pet. 410, is not authority to sustain the claim that the notes of the Bank of the Commonwealth were bills of credit. The decisions in that case applied to obligations of an entirely different character.

There is no principle decided by this Court in the case of Craig v. State of Missouri which at all conflicts with the views presented by the Court in this case. Indeed the views of the Court are sustained and strengthened by contrasting the present case with that.

The case of Bank of the United States v. Planters' Bank of Georgia, 9 Wheat. 904, cited.

The case of Bank of the Commonwealth v. Wister, 2 Pet. 315, cited.

In the Mercer Circuit Court of the State of Kentucky, the president and directors of the Bank of the Commonwealth of Kentucky, on 15 April 1831, filed a petition of debt stating that they hold a note upon the defendants, George H. Briscoe, Abraham Fulkerson, Mason Vannoy and John Briscoe, in substance, as follows, to-wit:

"2048 Dollars, 37 cents."

"One hundred and twenty days after date, we jointly and severally promise to pay the president and directors of the Bank of the Commonwealth of Kentucky or order 2048 dollars, 37 cents, negotiable and payable at the branch bank at Harrodsburg, for value received. Witness our hands this 1 February 1830."

"G. H. BRISCOE"

"A. FULKERSON"

"MASON VANNOY"

"JOHN BRISCOE"

Page 36 U. S. 260

The defendants appeared and filed the following pleas:

"The defendants, after craving oyer of the note, and the same being read to them, say that the note was executed on no other or further consideration than that of another note which had been previously executed by them to the plaintiffs for a certain sum, negotiable and payable at the branch of the said bank at Harrodsburg, and that the note so previously executed was executed by them on no other or further consideration than that of the renewal of another note of the like tenor, and the defendants aver that previous to the time of executing the note last mentioned, the Legislature of the Commonwealth of Kentucky, in the name and on behalf of the said commonwealth, by an act which passed on 29 November 1820, established a bank the capital stock of which was declared to be $2,000,000, which said capital stock the said bank never received, or any part thereof, as these defendants aver; that by the provisions of said act, the president and directors of the said bank, and their successors in office, were declared and made a corporation and body politic, in law and fact, by the name and style of 'The President and Directors of the Bank of the Commonwealth of Kentucky;' that also by said act the president and directors of the said bank were illegally and contrary to the provisions of the Constitution of the United States empowered and authorized, for and on behalf of the said commonwealth and upon her credit, to make bills of credit, to-wit, bills or notes to an amount not exceeding $2,000,000, signed by the president and countersigned by the principal cashier, promising the payment of money to any person or persons, his, her or their order, or to the bearer, and the said bills or notes were so made illegally, in violation of the said Constitution, to emit, issue and circulate through the community for its ordinary purposes as money; that under the authority of the said act of the legislature, and in violation of the said Constitution of the United States, the said president and directors had, before the date of the note last aforesaid, for and on behalf of the commonwealth and on her credit, made various bills of credit, to-wit, notes of various denominations in amount from one to one hundred dollars, signed by the president of the said bank and countersigned by the principal cashier, promising therein and thereby to pay the person in each note mentioned, or bearer, on demand, the amount therein mentioned in money, and were transferable on delivery, and that for the purpose of circulating said notes through the community for its ordinary purposes

Page 36 U. S. 261

as money, the legislature of the said commonwealth, by an act passed on 25 December in the year 1820, had, amongst other things, provided and declared in substance that upon all executions of fieri facias which should be thereafter issued from any of the courts of the said commonwealth, endorsed that notes on the Bank of Kentucky or its branches, or notes on the bank of the Commonwealth of Kentucky or its branches 'might by the officer holding such execution be received from the defendant in discharge thereof,' such executions, so endorsed, should only be replevied and delayed in their collection for the space of three months; but that all executions of fieri facias which should thereafter be issued from any of the courts of the said commonwealth, without any endorsement for the reception of notes on the Bank of Kentucky or its branches or notes on the Bank of the Commonwealth of Kentucky or its branches, should be replevied and delayed in its collection for the space of two years, or, if not so replevied, that property levied upon under the same should be sold upon a credit of two years."

"The said president and directors, for the like purpose and with the like intent, afterwards, to-wit, on the ___ day of _____ (that being the date of the note executed by the defendants last above mentioned), did, for and on behalf of the said commonwealth, for her benefit, and on her credit, illegally and contrary to the said Constitution of the United States, emit and issue the notes or bills of credit, so made as aforesaid, by the president and directors of said bank, to the amount of $2,048.37 by loaning at interest, and delivering the same to the defendant Briscoe. And the defendants in fact aver that the only consideration for which the note last above mentioned was executed by them was the emission and loan of the said bills of credit, so made and issued as aforesaid to said Briscoe by the plaintiffs, who are the president and directors of the bank aforesaid; wherefore they say that the consideration of the said last above mentioned note, executed by them, was illegal, invalid, and in violation of the Constitution of the United States, and that each of the notes thereafter executed by them as aforesaid, by way of renewal as aforesaid, of the said last above-mentioned note, was also founded upon the illegal, invalid, and insufficient consideration aforesaid, and none other, and this they are ready to verify and prove; wherefore, they pray judgment, &c."

"And the defendants, for further plea in this behalf, say that the plaintiffs their action aforesaid against them ought not to have and

Page 36 U. S. 262

maintain because they say that the only consideration for which the note in the petition mentioned was executed was the renewal of a note which had been previously executed by them to the plaintiffs for the sum of $2,048.37, negotiable and payable at the branch of the Bank of the Commonwealth of Kentucky located at Harrodsburg. And they aver that previous to the date of the note, so renewed as aforesaid, the plaintiffs, under the provisions, and by the authority of the act of the Legislature of the Commonwealth of Kentucky establishing the Bank of the Commonwealth of Kentucky, approved 29 March 1820, and contrary to that provision of the Constitution of the United States which inhibits any state from emitting bills of credit, had, on behalf of the said commonwealth and upon her credit, made various bills of credit, signed by the president of said Bank of the Commonwealth of Kentucky and countersigned by the principal cashier therein, and thereby promising to pay to the person in each of said bills mentioned, or bearer, on demand, the respective amounts in each of said bills expressed, in money, and the said bills so made and signed by the said president and cashier, the plaintiffs, afterwards, to-wit, on the day of the date of the note last aforesaid, for the purpose of circulating the said bills of credit, so as aforesaid made, through the community as money, did, for and on behalf of the said commonwealth and for her benefit and upon her credit, illegally and contrary to the aforesaid provisions in the Constitution of the United States, emit and issue said bills of credit, so made as aforesaid, to the amount of $2,048.37, of the said bills, by loaning and delivering the same to the defendant Briscoe at interest, reserved and secured upon said loan for the benefit of the said commonwealth at the rate of six percentum per annum upon the amount aforesaid, and the defendants in fact aver that the only consideration for which the note last above mentioned was executed by them was the emission and loan of the said bills of credit, so issued as aforesaid, by the plaintiffs to the defendant Briscoe. And so they say the consideration of the said last-mentioned note was illegal, invalid, and in violation of the Constitution of the United States, and that the consideration of the note sued on, executed by these defendants, in renewal of the said last-mentioned note as aforesaid, is likewise illegal, invalid, and contrary to the Constitution of the United States, and this they are ready to verify and prove, wherefore, they pray judgment, &c."

To these pleas, the plaintiffs demurred, and the defendants joined

Page 36 U. S. 263

in the demurrer. The Circuit Court of Mercer County gave judgment for the plaintiffs, and the defendants appealed to the Court of Appeals of Kentucky. In the Court of Appeals the following errors were assigned by the appellants.

1. The court erred in sustaining the demurrer of the defendant in error, to the first plea of the plaintiffs in error.

2. The court erred in sustaining the demurrer to the second plea.

3. The decision of the court upon each demurrer, as well as in rendering final judgment against plaintiffs in error, is erroneous and illegal.

On 5 May 1832, the Court of Appeals affirmed the judgment of the circuit court. That court delivered the following opinion:

"We are called upon in this case, to readjudicate the question of the constitutionality of the Bank of the Commonwealth and its right to maintain an action upon an obligation given in consideration of a loan of its notes. We consider this question as having been settled in the case of Lampton v. Bank, 2 Litt. 300. If it be true, as contended in argument on behalf of the appellants, that the question is presented on the face of the charter, that case has been incidentally recognized and confirmed by a hundred cases that have since passed through this Court. The case of Craig v. Missouri, 4 Pet. 410, has been relied on as ruling this. We do not think that it does; they are distinguishable in at least one important and essential particular."

The appellants prosecuted this writ of error.

Page 36 U. S. 311

MCLEAN, Justice, delivered the opinion of the Court.

This case is brought before this Court by a writ of error from the Court of Appeals of the State of Kentucky under the 25th section of the Judiciary Act of 1789. An action was commenced by the Bank of the Commonwealth of Kentucky, against the plaintiffs in error, in the Mercer Circuit Court of Kentucky on a note for $2,048.37, payable to the president and directors of the bank, and the defendants filed two special pleas, in the first of which oyer was prayed of the note on which suit was brought, and they say that the plaintiff ought not to be have, &c., because the note was given on the renewal of a like note, given to the said bank, and they refer to the act establishing the bank and allege that it never received any part of the capital stock specified in the act; that the bank was authorized to issue bills of credit on the faith of the state, in violation of the Constitution of the United States. That by various statutes, the notes issued were made receivable in discharge of executions, and if not so received, the collection of the money should be delayed, &c., and the defendants aver that the note was given to the bank on a loan of its bills, and that the consideration, being illegal, was void. The second plea presents substantially the same facts. To both the pleas, a general demurrer was filed, and the court sustained the demurrer and gave judgment in favor of the bank. This judgment was removed by appeal to the Court of Appeals, which is the highest court of judicature in the state, where the judgment of the circuit court was affirmed, and being brought before this Court by writ of error, the question is presented whether the notes issued by the bank are bills of credit, emitted by the state in violation of the Constitution of the United States.

This cause is approached under a full sense of its magnitude. Important as have been the great questions brought before this tribunal for investigation and decision, none has exceeded, if it have equaled, the importance of that which arises in this case. The amount of property involved in the principle is very large, but this amount, however great, could not give to the case the deep interest which is connected with its political aspect.

Page 36 U. S. 312

There is no principle on which the sensibilities of communities are so easily excited as that which acts upon the currency; none of which states are so jealous as that which is restrictive of the exercise of sovereign powers. These topics are to some extent involved in the present case. It does not belong to this Court to select the subjects of their deliberations, but they cannot shrink from the performance of any duty imposed by the Constitution and laws.

The definition of the term "bills of credit," as used in the Constitution, is the first requisite in the investigation of this subject, and if this be not impracticable, it will be found a work of no small difficulty. Even in standard works on the exact sciences, the terms used are not always so definite as to express only the idea intended. In works on philosophy, there is generally still less precision of language. But in political compacts more is often left for construction than in most other compositions. This results in a great degree from the elements employed in the formation of such compacts; certain interests are to be conciliated and protected; the force of local prejudices must be met and overcome, and habits and modes of action the most opposite are to be reconciled. This was peculiarly the case in the formation of the Constitution of the United States. And instead of objecting to it on account of the vagueness of some of its terms, its general excellence, both as it regards its principles and language, should excite our admiration.

The term "bills of credit," in its mercantile sense, comprehends a great variety of evidences of debt which circulate in a commercial country. In the early history of banks, it seems their notes were generally denominated bills of credit, but in modern times they have lost that designation, and are now called either "bank bills" or "bank notes." But the inhibition of the Constitution applies to bills of credit in a more limited sense.

It would be difficult to classify the bills of credit which were issued in the early history of this country. They were all designed to circulate as money, being issued under the laws of the respective colonies, but the forms were various in the different colonies and often in the same colony. In some cases they were payable with interest, in others without

Page 36 U. S. 313

interest. Funds arising from certain sources of taxation were pledged for their redemption in some instances; in others, they were issued without such a pledge. They were sometimes made a legal tender, at others, not. In some instances a refusal to receive them operated as a discharge of the debt; in others a postponement of it. They were sometimes payable on demand; at other times at some future period. At all times the bills were receivable for taxes, and in payment of debts due to the public, except perhaps in some instances where they had become so depreciated as to be of little or no value. These bills were frequently issued by committees, and sometimes by an officer of the government or an individual designated for that purpose.

The bills of credit emitted by the states during the Revolution and prior to the adoption of the Constitution were not very dissimilar from those which the colonies had been in the practice of issuing. There were some characteristics which were common to all these bills; they were issued by the colony or state, and on its credit. For in cases where funds were pledged, the bills were to be redeemed at a future period, and gradually, as the means of redemption should accumulate. In some instances, Congress guaranteed the payment of bills emitted by a state. They were perhaps never convertible into gold and silver immediately on their emission, as they were issued to supply the pressing pecuniary wants of the government, their circulating as money was indispensable. The necessity which required their emission precluded the possibility of their immediate redemption.

In the case of Craig v. State of Missouri, 4 Pet. 410, this Court was called upon, for the first time, to determine what constituted a "bill of credit" within the meaning of the Constitution. A majority of the judges in that case, in the language of THE CHIEF JUSTICE, said that

"bills of credit signify a paper medium, intended to circulate between individuals, and between government and individuals for the ordinary purposes of society."

A definition so general as this would certainly embrace every description of paper which circulates as money. Two of the dissenting judges on that occasion gave a more definite, though perhaps a less accurate meaning of the terms "bills of credit." By one of them, it was said

"a bill of credit may therefore be

Page 36 U. S. 314

considered a bill drawn and resting merely on the credit of the drawer, as contradistinguished from a fund constituted or pledged for the payment of the bill."

And in the opinion of the other it is said

"To constitute a 'bill of credit' within the meaning of the Constitution, it must be issued by a state, and its circulation as money enforced by statutory provisions. It must contain a promise of payment by the state generally when no fund has been appropriated to enable the holder to convert it into money. It must be circulated on the credit of the state -- not that it will be paid on presentation, but that the state, at some future period, or a time fixed or resting in its own discretion, will provide for the payment."

These definitions cover a large class of the bills of credit issued and circulated as money, but there are classes which they do not embrace, and it is believed that no definition short of a description of each class would be entirely free from objection, unless it be in the general terms used by the venerable and lamented Chief Justice. The definition, then, which does include all classes of bills of credit emitted by the colonies or states, is a paper issued by the sovereign power containing a pledge of its faith and designed to circulate as money.

Having arrived at this point, the next inquiry in the case is whether the notes of the Bank of the Commonwealth were "bills of credit" within the meaning of the Constitution. The first section of the charter provides that the bank shall be established in the name and behalf of the Commonwealth of Kentucky under the direction of a president and twelve directors, to be chosen by joint ballot of both houses of the general assembly, &c. The second provides that the president and directors of the bank and their successors in office shall be a corporation and body politic, in law and in fact, by the name and style of the president and directors of the bank of the Commonwealth of Kentucky, and shall be capable in law to sue and be sued, to purchase and sell every description of property. In the third section it is declared that the stock of the bank shall be exclusively the property of the Commonwealth of Kentucky, and that no individual shall own any part of it. The fourth section authorizes the president and directors to issue notes, &c., and in the fifth section it is declared that the capital stock

Page 36 U. S. 315

shall be two millions of dollars, to be paid as follows:

"All moneys hereafter paid into the Treasury for the purchase of the vacant land of the commonwealth; all moneys paid into the Treasury for the purchase of land warrants; all moneys received for the sale of vacant lands, west of the Tennessee River, and so much of the capital stock owned by the state in the Bank of Kentucky"

and as the treasurer of the state received these moneys from time to time he was required to pay the same into the bank. The bank was authorized to receive moneys on deposit, to make loans on good personal security or on mortgages, and by the ninth section, the bank was prohibited from increasing its debts beyond double the amount of its capital. Certain limitations were imposed on loans to individuals, and the accommodations of the bank were to be apportioned among the different counties of the state. The president was required to make a report to each session of the legislature. The notes were to be made payable in gold and silver, and were receivable in payment of taxes and other debts due to the state. All mortgages executed to the bank gave to it a priority. By a supplementary act it was provided that the president and directors might issue three millions of dollars. In 1821 an act was passed authorizing the treasurer of the state to receive the dividends of the bank. The notes issued by the bank were in the usual form of bank notes, in which the Bank of the Commonwealth promised to pay to the bearer on demand the sum specified on the face of the note.

There is no evidence of any part of the capital's having been paid into the bank, and as the pleas to which the demurrers were filed aver that no part of the capital was paid, the fact averred is admitted on the record. It is to be regretted that any technical point arising on the pleadings should be relied on in this case, which involves principles and interest of such deep importance. Had the bank pleaded over and stated the amount actually paid into it by the state under the charter, the ground on which it stands would have been strengthened. As the notes of the bank were receivable in payment for land and land warrants, and perhaps constituted no inconsiderable part of the circulation of the state, the natural operation would be for the treasurer to receive the notes of the bank and pay them over to it as

Page 36 U. S. 316

a part of its capital. This would be to the bank equal to a payment in the notes of other banks, as it would lessen the demand against it, leaving to the bank the securities on the original discounts.

The notes of this bank, as also the notes of the Bank of Kentucky, by an act of the legislature, were required to be received in discharge of all executions by plaintiffs, and if they failed to endorse on the executions, that they would be so received, further proceedings on the judgment were delayed two years.

On the part of the plaintiffs in error, it is contended that the provision in the Constitution that "no state shall coin money," "emit bills of credit," or "make anything but gold and silver coin a tender in payment of debts" are three distinct powers which are inhibited to the states, and that if the bills of the Bank of the Commonwealth were substantially made a tender, by an act of the Legislature of Kentucky, it must be fatal to the action of the bank in this case. It is unnecessary to consider on this head whether the above provision of the act of the legislature, making these notes receivable in discharge of executions, is substantially a tender law; as such a question, however it might arise on the execution, cannot reach the obligation given to the bank. If the legislature of a state attempt to make the notes of any bank a tender, the act will be unconstitutional, but such attempt could not affect in any degree the constitutionality of the bank. The act referred to in the present case was not connected with the charter of the bank. So far as this act has a bearing on the bills issued by this bank and may tend to show their proper character, it may be considered.

But the main grounds on which the counsel for the plaintiffs rely is that the Bank of the Commonwealth, in emitting the bills in question, acted as the agent of the state, and that consequently the bills were issued by the state. That as a state is prohibited from issuing bills of credit, it cannot to indirectly what it is prohibited from doing directly. That the Constitution intended to place the regulation of the currency under the control of the federal government, and that the act of Kentucky is not only in violation of the spirit of the Constitution, but repugnant to its letter. These topics have been ably discussed at the bar and in a printed argument on behalf of the plaintiffs.

That by the Constitution the currency, so far as it is composed of

Page 36 U. S. 317

gold and silver, is placed under the exclusive control of Congress, is clear, and it is contended, from the inhibition on the states to emit bills of credit, that the paper medium was intended to be made subject to the same power. If this argument be correct, and the position that a state cannot do indirectly what it is prohibited from doing directly be a sound one, then it must follow as a necessary consequence that all banks incorporated by a state are unconstitutional. And this, in the printed argument, is earnestly maintained, though it is admitted not to be necessary to sustain the ground assumed for the plaintiffs. The counsel of the plaintiffs who have argued the case at the bar do not carry the argument to this extent. This doctrine is startling, as it strikes a fatal blow against the state banks, which have a capital of near $400,000,000 and which supply almost the entire circulating medium of the country. But let us for a moment examine it dispassionately.

The federal government is one of delegated powers. All powers not delegated to it or inhibited to the states are reserved to the states or to the people. A state cannot emit bills of credit, or in other words it cannot issue that description of paper, to answer the purposes of money, which was denominated before the adoption of the Constitution "bills of credit." But a state may grant acts of incorporation for the attainment of those objects which are essential to the interests of society. This power is incident to sovereignty, and there is no limitation in the federal Constitution, on its exercise by the states, in respect to the incorporation of banks. At the time the Constitution was adopted, the Bank of North America, the Massachusetts Bank, and some others, were in operation. It cannot, therefore, be supposed that the notes of these banks were intended to be inhibited by the Constitution, or that they were considered as "bills of credit" within the meaning of that instrument. In fact, in many of their most distinguishing characteristics, they were essentially different from bills of credit in any of the various forms in which they were issued.

If, then, the powers not delegated to the federal government nor denied to the states are retained by the states or the people, and by a fair construction of the terms bills of credit, as used in the Constitution, they do not include ordinary bank notes, does it not follow

Page 36 U. S. 318

that the power to incorporate banks to issue these notes may be exercised by a state? A uniform course of action involving the right to the exercise of an important power by the state governments for half a century -- and this almost without question -- is no unsatisfactory evidence that the power is rightfully exercised. But this inquiry, though embraced in the printed argument, does not belong to the case, and is abandoned at the bar.

A state cannot do that which the federal Constitution declares it shall not do. It cannot coin money. Here is an act inhibited in terms so precise that they cannot be mistaken; they are susceptible of but one construction. And it is certain that a state cannot incorporate any number of individuals and authorize them to coin money; such an act would be as much a violation of the Constitution as if the money were coined by an officer of the state under its authority. The act, being prohibited, cannot be done by a state either directly or indirectly. And the same rule applies as to the emission of bills of credit by a state. The terms used here are less specific than those which relate to coinage. Whilst no one can mistake the latter, there are great differences of opinion as to the construction of the former. If the terms in each case were equally definite and were susceptible of but one construction, there could be no more difficulty in applying the rule in the one case than in the other.

The weight of the argument is admitted that a state cannot, by any device that may be adopted, emit bills of credit. But the question arises what is a "bill of credit" within the meaning of the Constitution? On the answer of this must depend the constitutionality or unconstitutionality of the act in question. A state can act only through its agents, and it would be absurd to say that any act was not done by a state which was done by its authorized agents. To constitute a "bill of credit" within the Constitution, it must be issued by a state on the faith of the state and be designed to circulate as money. It must be a paper which circulates on the credit of the state, and is so received and used in the ordinary business of life. The individual or committee who issue the bill must have the power to bind the state; they must act as agents, and of course do not incur any personal responsibility, nor impart, as individuals, any

Page 36 U. S. 319

credit to the paper. These are the leading characteristics of a bill of credit, which a state cannot emit.

Were the notes of the Bank of the Commonwealth "bills of credit" issued by the state?

The president and directors of the bank were incorporated and vested with all the powers usually given to banking institutions. They were authorized to make loans on personal security and on mortgages of real estate. Provisions were made and regulations common to all banks, but there are other parts of the charter which it is contended show that the president and directors acted merely as agents of the state.

In the preamble of the act it is declared to be

"expedient and beneficial to the state and the citizens thereof to establish a bank on the funds of the state for the purpose of discounting paper and making loans for longer periods than has been customary and for the relief of the distresses of the community."

The president and directors were elected by the legislature. The capital of the bank belonged to the state, and it received the dividends.

These and other parts of the charter, it is argued, show that the bank was a mere instrument of the state to issue bills, and that if by such a device the provision of the Constitution may be evaded, it must become a nullity.

That there is much plausibility and some force in this argument cannot be denied, and it would be vain to assert that on this head the case is clear of difficulty.

The preamble of the act to incorporate the bank shows the object of its establishment. It was intended to "relieve the distresses of the community," and the same reason was assigned, it is truly said, for the numerous emissions of paper money during the Revolution and prior to that period.

To relieve the distresses of the community or the wants of the government has been the common reason assigned for the increase of a paper medium at all times and in all countries. When a measure of relief is determined on, it is never difficult to find plausible reasons for its adoption. And it would seem, in regard to this subject, that the present generation has profited but little from the experience of past ages.

The notes of this bank, in common with the notes of all other banks in the state and indeed throughout the Union, with some

Page 36 U. S. 320

exceptions, greatly depreciated. This arose from various causes then existing, and which, under similar circumstances, must always produce the same result.

The intention of the legislature in establishing the bank, as expressed in the preamble, must be considered in connection with every part of the act, and the question must be answered whether the notes of the bank were "bills of credit" within the inhibition of the Constitution.

Were these notes issued by the state?

Upon their face, they do not purport to be issued by the state, but by the president and directors of the bank. They promise to pay to bearer, on demand, the sums stated.

Were they issued on the faith of the state? The notes contain no pledge of the faith of the state, in any form. They purport to have been issued on the credit of the funds of the bank, and must have been so received in the community.

But these funds, it is said, belonged to the state, and the promise to pay, on the face of the notes, was made by the president and directors, as agents of the state.

They do not assume to act as agents, and there is no law which authorizes them to bind the state. As in perhaps all bank charters they had the power to issue a certain amount of notes, but they determined the time and circumstances which should regulate these issues.

When a state emits bills of credit, the amount to be issued is fixed by law, as also the fund out of which they are to be paid, if any fund be pledged for their redemption, and they are issued on the credit of the state, which in some form appears upon the face of the notes, or by the signature of the persons who issue them.

As to the funds of the Bank of the Commonwealth, they were, in part only, derived from the state. The capital, it is true, was to be paid by the state, but in making loans, the bank was required to take good securities, and these constituted a fund to which the holders of the notes could look for payment, and which could be made legally responsible.

In this respect, the notes of this bank were essentially different from any class of bills of credit which are believed to have been issued.

The notes were not only payable in gold and silver on demand, but there was a fund, and in all probability a sufficient fund, to redeem

Page 36 U. S. 321

them. This fund was in possession of the bank, and under the control of the president and directors. But whether the fund was adequate to the redemption of the notes issued or not is immaterial to the present inquiry. It is enough that the fund existed independent of the state, and was sufficient to give some degree of credit to the paper of the bank.

The question is not whether the Bank of the Commonwealth had a large capital or a small one, or whether its notes were in good credit or bad, but whether they were issued by the state, and on the faith and credit of the state. The notes were received in payment of taxes, and in discharge of all debts to the state, and this aided by the fund arising from notes discounted, with prudent management, under favorable circumstances, might have sustained, and is believed did sustain, to a considerable extent, the credit of the bank. The notes of this bank which are still in circulation are equal in value, it is said, to specie.

But there is another quality which distinguished these notes from bills of credit. Every holder of them could not only look to the funds of the bank for payment, but he had in his power the means of enforcing it.

The bank could be sued, and the records of this Court show that while its paper was depreciated, a suit was prosecuted to judgment against it, by a depositor who obtained from the bank, it is admitted, the full amount of his judgment in specie.

What means of enforcing payment from the state had the holder of a bill of credit? It is said by the counsel for the plaintiffs that he could have sued the state. But was a state liable to be sued?

In the case Chisholm v. Georgia, in 1792, it was decided that a state could be sued before this Court, and this led to the adoption of the amendment of the Constitution, on this subject. But the bills of credit which were emitted prior to the Constitution are those that show the mischief against which the inhibition was intended to operate. And we must look to that period, as of necessity we have done, for the definition and character of a bill of credit.

No sovereign state is liable to be sued, without her consent. Under the Articles of Confederation, a state could be sued only in cases of boundary.

It is believed that there is no case where a suit has been brought at any time on bills of credit against a state, and it is certain that

Page 36 U. S. 322

no suit could have been maintained, on this ground, prior to the Constitution.

In the year 1769, the Colonial Legislature of Maryland passed an "act for emitting bills of credit," in which bills to the amount of $318,000 were authorized to be struck, under the direction of two commissioners, whom the governor should appoint. These persons were to be styled "commissioners for emitting bills of credit," by that name to have succession to sue or be sued in all cases relative to their trust. The commissioners were authorized to make loans on good security, to draw bills of exchange on London, under certain circumstances, and they were authorized to reissue the bills issued by them.

In the year 1712, it is stated in Hewit's History of South Carolina, the Legislature of that colony established a public bank and issued 48,000 pounds in bills of credit, called "bank bills;" the money was to be lent out at interest on landed or personal security.

The bills emitted under these acts are believed to be peculiar, and unlike all other emissions under the colonial governments. But a slight examination of the respective acts will show that the bills authorized by them were emitted on the credit of the colonies, and were essentially different from the notes in question. The holders of these bills could not convert them into specie; they could bring no suit. The Maryland bill was as follows:

"This indented bill of six dollars shall entitle the bearer hereof, to receive bills of exchange, payable in London, or gold and silver, at the rate of four shillings and six pence per dollar for the said bill, according to the directions of an act of the assembly of Maryland."

Dated at Annapolis; signed by R. Conden and J. Clapham.

If the leading properties of the notes of the Bank of the Commonwealth were essentially different from any of the numerous classes of bills of credit issued by the states or colonies, if they were not emitted by the state, nor upon its credit, but on the credit of the funds of the bank, if they were payable in gold and silver on demand, and the holder could sue the bank, and if, to constitute a bill of credit, it must be issued by a state, and on the credit of the state, and the holder could not, by legal means, compel the payment of the bill, how can the character of these two descriptions of paper be considered as identical? They were both circulated as money, but in name, in form, and in substance, they differ.

Page 36 U. S. 323

It is insisted that the principles of this case were settled in the suit of Craig v. Missouri. In that case, the Court decided that the following paper, issued under a legislative act of Missouri, was a "bill of credit" within the meaning of the Constitution:

"This certificate shall be receivable at the Treasury, or any of the loan offices of the State of Missouri, in the discharge of taxes or debts due to the state, in the sum of _____ dollars, with interest for the same, at the rate of two percent per annum from the date."

By the act, certificates in this form of various amounts were issued, and were receivable in discharge of all taxes or debts due to the state and in payment of salaries of state officers. Four of the seven judges considered that these certificates were designed to circulate as money, that they were issued on the credit of the state, and consequently, were repugnant to the Constitution. These certificates were loaned on good security, at different loan offices of the state, and were signed by the auditor and treasurer of state. They were receivable in payment of salt, at the public salt works,

"and the proceeds of the salt springs, the interest accruing to the state, and all estates purchased by officers under the provisions of the act, and all the debts then due or which should become due to the state were pledged and constituted a fund for the redemption of the certificates,"

and the faith of the state was also pledged for the same purpose.

It is only necessary to compare these certificates with the notes issued by the Bank of the Commonwealth to see that no two things which have any property in common could be more unlike. They both circulated as money and were receivable on public account, but in every other particular they were essentially different. If, to constitute a bill of credit, either the form or substance of the Missouri certificate is requisite, it is clear, that the notes of the Bank of the Commonwealth cannot be called bills of credit. To include both papers under one designation would confound that most important distinctions, not only as to their form and substance but also as to their origin and effect.

There is no principle decided by the Court in the case of Craig v. State of Missouri which at all conflicts with the views here presented. Indeed, the views of the Court are sustained and strengthened by contrasting the present case with that one. The State of Kentucky is the exclusive stockholder in the Bank of

Page 36 U. S. 324

the Commonwealth, but does this fact change the character of the corporation? Does it make the bank identical with the state? And are the operations of the bank the operations of the state? Is the bank the mere instrument of the sovereignty to effectuate its designs? And is the state responsible for its acts? The answer to these inquiries will be given in the language of this Court used in former adjudications.

In the case of Bank of the United States v. Planters' Bank, 9 Wheat. 904, the Chief Justice, in giving the opinion of the Court, says

"It is, we think, a sound principle that when a government becomes a partner in any trading company, it divests itself, so far as concerns the transactions of that company, of its sovereign character and takes that of a private citizen. Instead of communicating to the company its privileges and its prerogatives, it descends to a level with those with whom it associates itself and takes the character which belongs to its associates and to the business which is to be transacted. Thus, many states of the Union which have an interest in banks are not suable even in their own courts, yet they never exempt the corporation from being sued. The State of Georgia, by giving to the bank the capacity to sue and be sued, voluntarily strips itself of its sovereign character so far as it respects the transactions of the bank, and waives all the privileges of that character. As a member of a corporation, a government never exercises its sovereignty. It acts merely as a corporator, and exercises no other power in the management of the affairs of the corporation, than are expressly given by the incorporating act. . . . The government, becoming a corporator, lays down its sovereignty so far as respects the transactions of the corporation, and exercises no power or privilege which is not derived from the charter. The state does not, by becoming a corporator, identify itself with the corporation."

In the case of Bank of the Commonwealth of Kentucky v. Wister, 3 Pet. 318, the question was raised whether a suit could be maintained against the bank on the ground that it was substantially a suit against the state. The agents of the defendants deposited a large sum in the bank, and when the deposit was demanded, the bank offered to pay the amount in its own notes, which were at a discount. The notes were refused, and a suit was commenced on the certificate of deposit.

A judgment being entered against the bank in the Circuit Court of

Page 36 U. S. 325

Kentucky, a writ of error was brought to this Court. In the court below, the defendant pleaded to the jurisdiction on the ground, that the State of Kentucky alone was the proprietor of the stock of the bank, for which reason it was insisted that the suit was virtually against a sovereign state.

MR. JUSTICE JOHNSON, in giving the opinion of the Court, after copying the language used in the case above quoted, said

"If a state did exercise any other power in or over a bank or impart to it its sovereign attributes, it would be hardly possible to distinguish the issue of the paper of such banks from a direct issue of bills of credit, which violation of the Constitution, no doubt, the state here intended to avoid."

Can language be more explicit and more appropriate than this, to the points under consideration?

This Court further said

"The defendants pleaded to the jurisdiction on the ground that the State of Kentucky was sole proprietor of the stock of the bank, for which reason it was insisted, that the suit was virtually against a sovereign state. But the Court is of opinion that the question is no longer open here. The case of United States Bank v. Planters' Bank of Georgia was a much stronger case for the defendants than the present, for there, the State of Georgia was not only a proprietor, but a corporator. Here, the state is not a corporator, since, by the terms of the act, the president and directors alone constitute the body corporate, the metaphysical person liable to suit."

If the bank acted as the agent of the state, under an unconstitutional charter, although the persons engaged might be held liable individually, could they have been held responsible as a corporation?

It is true the only question raised by the plea was whether the bank could be sued, as its stock was owned by the state? But it would be difficult to decide this question without to some extent considering the constitutionality of the charter. And indeed it appears that this point did not escape the attention of the Court, for it said

"If a state imparted any of its sovereign attributes to a bank in which it was a stockholder, it would hardly be possible to distinguish the paper of such a bank from bills of credit,"

and this, the Court said, "the state in that case intended to avoid."

These extracts cover almost every material point raised in this investigation. They show that a state, when it becomes a stockholder in a bank,

Page 36 U. S. 326

imparts none of its attributes of sovereignty to the institution, and that this is equally the case whether it own a whole or a part of the stock of the bank.

It is admitted by the counsel for the plaintiffs that a state may become a stockholder in a bank, but they contend that it cannot become the exclusive owner of the stock. They give no rule by which the interest of a state in such an institution shall be graduated, nor at what point the exact limit shall be fixed. May a state own one-fourth, one-half, or three-fourths of the stock? If the proper limit be exceeded, does the charter become unconstitutional, and is its constitutionality restored if the state recedes within the limit? The Court is as much at a loss to fix the supposed constitutional boundary of this right as the counsel can possibly be.

If the state must stop short of owning the entire stock, the precise point may surely be ascertained. It cannot be supposed that so important a constitutional principle as contended for exists without limitation.

If a state may own a part of the stock of a bank, we know of no principle which prevents it from owning the whole. As a stockholder, in the language of this Court above cited, it can exercise no more power in the affairs of the corporation than is expressly given by the incorporating act. It has no more power than any other stockholder to the same extent.

This Court did not consider that the character of the incorporation was at all affected by the exclusive ownership of the stock by the state. And they say that the case of Planters' Bank presented stronger ground of defense than the suit against the Bank of the Commonwealth. That in the former, the State of Georgia was not only a proprietor but a corporator, and that in the latter the president and directors constituted the corporate body. And yet in the case of Planters' Bank, the Court decided the state could only be considered as an ordinary corporator, both as it regarded its powers and responsibilities.

If these positions be correct, is there not an end to this controversy? If the Bank of the Commonwealth is not the state, nor the agent of the state, if it possess no more power than is given to it in the act of incorporation, and precisely the same as if the stock were owned by private individuals, how can it be contended that the notes of the bank can be called "bills of credit" in contradistinction from the notes of other banks?

Page 36 U. S. 327

If, in becoming an exclusive stockholder in this bank, the state imparts to it none of its attributes of sovereignty, if it holds the stock as any other stockholder would hold it, how can it be said to emit bills of credit? Is it not essential to constitute a bill of credit within the Constitution that it should be emitted by a state? Under its charter, the bank has no power to emit bills which have the impress of the sovereignty or which contain a pledge of its faith. It is a simple corporation, acting within the sphere of its corporate powers, and can no more transcend them than any other banking institution. The state, as a stockholder, bears the same relation to the bank as any other stockholder.

The funds of the bank and its property of every description are held responsible for the payment of its debts, and may be reached by legal or equitable process. In this respect it can claim no exemption under the prerogatives of the state. And if, in the course of its operations, its notes have depreciated, like the notes of other banks, under the pressure of circumstances, still it must stand or fall by its charter. In this, its powers are defined, and its rights and the rights of those who give credit to it are guaranteed. And even an abuse of its powers, through which its credit has been impaired and the community injured, cannot be considered in this case.

We are of the opinion that the act incorporation the Bank of the Commonwealth was a constitutional exercise of power by the State of Kentucky, and consequently that the notes issued by the bank are not bills of credit, within the meaning of the federal Constitution. The judgment of the Court of Appeals is therefore

Affirmed with interest and costs.

MR. JUSTICE THOMPSON, concurring.

I concur in that part of the opinion of the Court which considers the bills issued by the bank as not coming under the denomination of bills of credit, prohibited by the Constitution of the United States to be emitted by the states. The two great infirmities which attended the bills of credit which circulated as money, and come within the mischief intended to be guarded against by the constitutional prohibition, were the want of some real and substantial fund being provided for their payment and redemption and no mode provided for enforcing payment of the same.

It is true that in many and perhaps in most cases where they

Page 36 U. S. 328

were issued, provision was made for the redemption of the bills, so far as the promise of the state, through the medium of taxation, might be said to provide the means for payment, but this was illusory and could in no way be enforced. The bills were always signed by some person, who, upon their face, appeared to act in the character of agent of the state and who could not, of course, be made personally responsible for their payment, and the state was not suable under the old Confederation nor under the present Constitution, even before the amendment in that respect, by citizens of the same state, and those would most likely be the persons who would be the principal holders of the bills issued by the state of which they were citizens. There being therefore no means of enforcing payment of such bills, their credit depended solely upon the faith and voluntary will of the state, and were therefore purely bills of credit. But that is not the situation or character of the bills of the bank in question. There is an ample fund provided for their redemption, and they are issued by a corporation which can be sued and payment enforced in the courts of justice in the ordinary mode of recovering debts.

If I considered these bank notes as "bills of credit" within the sense and meaning of the constitutional prohibition, I could not concur in opinion with the majority of the Court that they were not emitted by the state. The state is the sole owner of the stock of the bank, and all private interest in it is expressly excluded. The state has the sole and exclusive management and direction of all its concerns. The corporation is the mere creature of the state, and entirely subject to its control, and I cannot bring myself to the conclusion that such an important provision in the Constitution may be evaded by mere form.

MR. JUSTICE STORY, Dissenting.

When this cause was formerly argued before this Court, a majority of the judges, who then heard it were decidedly of opinion that the act of Kentucky, establishing this bank was unconstitutional and void as amounting to an authority to emit bills of credit, for and on behalf of the state, within the prohibition of the Constitution of the United States. In principle, it was thought to be decided by the case of Craig v. State of Missouri, 4 Pet. 410. Among that majority was the late Mr. Chief Justice Marshall, a name never to be pronounced without reverence. The cause has been again argued, and precisely upon the same grounds as at the former argument. A

Page 36 U. S. 329

majority of my brethren have now pronounced the act of Kentucky to be constitutional. I dissent from that opinion, and retaining the same opinion which I held at the first argument, in common with the Chief Justice, I shall now proceed to state the reasons on which it is founded. I offer no apology for this apparent exception to the course which I have generally pursued, when I have had the misfortune to differ from my brethren, in maintaining silence, for in truth it is no exception at all, as upon constitutional questions I ever thought it my duty to give a public expression of my opinions when they differed from that of the Court.

The first question naturally arising in the case is what is the true interpretation of the clause of the Constitution that "no state shall emit bills of credit?" In other words, what is a "bill of credit" in the sense of the Constitution? After the decision of the case of Craig v. State of Missouri, I had not supposed that this was a matter which could be brought into contestation -- at least unless the authority of that case was to be overturned and the Court were to be set adrift from its former moorings. The Chief Justice, in delivering the opinion of the Court upon that occasion in answer to the very inquiry 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; this is the sense in which it has been always understood."

Again,

"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."

Again,

"if the prohibition means anything, if the words are not empty sounds, it must comprehend the emission of any paper medium by a state government for the purposes of common circulation."

One should suppose that this language was sufficiently exact and definite to remove all possible doubt upon the point, and it has the more weight because it came from one who was himself an actor in the very times when bills of credit constituted the currency of the whole country, and whose experience justified him in this exposition.

But it seems that this definition is not now deemed satisfactory or to be adhered to, and a new exposition is sought which, in its predicaments, shall not comprehend the bills in question. The arguments of the learned counsel for the bank on the present occasion have, as it appears to me, sought for a definition which shall exclude

Page 36 U. S. 330

any perils to their case; rather than a definition founded in the intention and language of the Constitution. It appears to me, that the true nature and objects of the prohibition, as well as its language, can properly be ascertained only by a reference to history; to the mischiefs existing, and which had existed when the Constitution was formed; and to the meaning then attached to the phrase "bills of credit," by the people of the United States.

If we look into the meaning of the phrase, as it is found in the British laws, or in our own laws, as applicable to the concerns of private individuals or private corporations, we shall find that there is no mystery about the matter; and that when bills of credit are spoken of, the words mean negotiable paper, intended to pass as currency or as money, by delivery or endorsement. In this sense, all bank notes, or, as the more common phrase is, bank bills, are bills of credit. They are the bills of the party issuing them, on his credit, and the credit of his funds, for the purposes of circulation as currency or money. Thus, for example, as we all know, bank notes payable to the bearer (or, when payable to order, endorsed in blank), pass in the ordinary intercourse and business of life, as money; and circulate and are treated as money. They are not, indeed, in a legal and exact sense, money; but, for common purposes, they possess the attributes, and perform the functions of money. Lord MANSFIELD, in Miller v. Rice, 1 Burr. 457, speaking on the subject of bank notes, observed, "that these notes are not like bills of exchange, mere securities, or documents for debts, and are not so esteemed; but are treated as money, in the ordinary course and transactions of credit and of business, by the general consent of mankind; and on payment of them, whenever a receipt is required, the receipts are always given as for money, not as for securities or notes." And, indeed, so much are they treated as money, that they pass by a will which bequeaths the testator's cash, or money, or property.

In confirmation of what has been already stated, it may be remarked, that in the charter of the Bank of England, in 5 & 6 William & Mary, c. 20, § 28, an express provision is made, by which the bill or bills obligatory, and of credit, of the bank, are declared to be assignable and negotiable. Similar expressions are to be found in the many acts of the American states, incorporating banks; as has been abundantly shown in the citations at the bar. [Footnote 1]

Page 36 U. S. 331

The reason is obvious why they are called bills of credit -- they are intended to pass as currency or money, and they are issued on the credit of the bank or of other persons who are bound by them. Not but that there is a capital fund or stock for their redemption, for in general all banks have such a fund, but that the credit is still given to the corporation, and not exclusively to any particular fund. Indeed, in many cases (as in Massachusetts), the private funds and credit of the corporators are by law, to a limited extent, made responsible for the notes of banks.

Such, then, being the true and ordinary meaning applied to bills of credit, issued by banks and other corporations, that they are negotiable paper designed to pass as currency and issued on the credit of the corporation, there is no mystery in the application of the same terms to the transactions of states. The nature of the thing is not changed; the object of the thing is not changed, whether the negotiable paper is issued by a corporation or by a state. Mutato nomine, de te fabula narratur. A bill of credit, then, issued by a state is negotiable paper, designed to pass as currency and to circulate as money. It is distinguishable from the evidence of debt issued by a state for money borrowed or debts otherwise incurred, not merely in form, but in substance. The form of the instrument is wholly immaterial. It is the substance we are to look to; the question is whether it is issued, and is negotiable, and is designed to circulate as currency. If that is its intent, manifested either on the face of the bill or on the face of the act, and it is in reality the paper issue of a state, it is within the prohibition of the Constitution. If no such intent exists, then it is a constitutional exercise of power by the state. This is the test -- the sure and in my judgment the only sincere test -- by which we can ascertain whether the paper be within or without the prohibition of the Constitution. All other tests which have hitherto been applied and all other tests which can be applied will be illusory and mere exercises of human ingenuity to vary the prohibition and evade its force. Surely it will not be pretended that the Constitution intended to prohibit names and not things; to hold up the solemn mockery of warring with shadows, and suffering realities to escape its grasp. To suffer states, on their own credit, to issue floods of paper money, as currency, and if they do not call them bills of credit, if they do not

Page 36 U. S. 332

give them the very form and impress of a promise by the state or in behalf of the state, in the very form so current and so disastrous in former times, then they are not within the prohibition. Let the impressive language of Mr. Chief Justice Marshall on this very point, in the case of Craig v. State of Missouri (a voice now speaking from the dead), let it convey its own admonition, and answer to the argument.

"And can this [said he] make any real difference? Is the proposition to be maintained that the Constitution meant to prohibit names, and not things? That a very important act, big with great and ruinous mischief, which is expressly forbidden by words most appropriate for its description may be performed by the substitution of a name? That the Constitution, in one of its most important provisions, may be openly evaded by giving a new name to an old thing? We cannot think so."

But the argument need not be rested here. The question here is not what is meant by bills of credit in a mere theoretical sense. But I trust that I shall abundantly show that the definition which was given in the case of Craig v. State of Missouri, and the definition which I maintain is the true one, stripped of all mystery, and all extraneous ingredients, is the true one, confirmed by the whole history of the country, and that the true meaning of bill of credit was just as well known and understood from the past and the passing events at the time of the adoption of the Constitution as the terms habeas corpus, trial by jury, process of impeachment, bill of attainder, or any other phrase to be found in the technical vocabulary of the Constitution. And I mean to insist that the history of the colonies, before and during the Revolution and down to the very time of the adoption of the Constitution, constitutes the highest and most authentic evidence to which we can resort to interpret this clause of the instrument, and to disregard it would be to blind ourselves to the practical mischiefs which it was meant to suppress and to forget all the great purposes to which it was to be applied. I trust that I shall be able further to show from this very history that any other definition of bills of credit than that given by the Supreme Court in the case of Craig v. State of Missouri is in opposition to the general tenor of that history, as well as to the manifest intention of the framers of the Constitution.

Before I proceed further, let me quote a single passage from the Federalist, No. 44, in which the writer, in terms of strong denunciation and indignation, exposes the ruinous effects of the paper money

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of the revolution (universally, in those days, called by the name of bills of credit, for there was no attempt to disguise their character), and then adds,

"In addition to these persuasive considerations, it may be observed that the same reasons which show the necessity of denying to the states the power of regulating coin prove with equal force that they ought not to be at liberty to substitute a paper medium instead of coin."

This passage shows the clear sense of the writer that the prohibition was aimed at a paper medium which was intended to circulate as currency, and to that alone.

But it has been said that bills of credit, in the sense of the Constitution, are those only which are made, by the act creating them, a tender in payment of debts. To this argument it might be sufficient to quote the answer of the Chief Justice in delivering the opinion of the Court in the case of Craig v. State of Missouri.

"The Constitution itself [said he] furnishes no countenance to this distinction. The prohibition is general. It extends to all bills of credit, not to bills of credit of a particular description. That tribunal must be bold indeed which, without the aid of other explanatory words, could venture on this construction. It is the less admissible in this case because the same clause of the Constitution contains a substantial prohibition to the enactment of tender laws. The Constitution therefore considers the emission of bills of credit and the enactment of tender laws as distinct operations, independent of each other, which may be separately performed; both are forbidden. To sustain the one because it is not also the other -- to say, that bills of credit may be emitted if they be not a tender of debts -- is in effect to expunge that distinct, independent prohibition and to read the clause as if it had been entirely omitted. We are not at liberty to do this."

But independently of that reasoning, the history of our country proves that it is not of the essence of bills of credit, it is not a part of their definition, that they should be a tender in payment of debts. Many instances, in proof of this, were given in the opinion so often alluded to. Not a single historian upon this subject alludes to any such ingredient as essential or indispensable.

It has been said (and it has never been denied) that the very first issue of bills of credit, by any of the colonies, was by the Province of Massachusetts in 1690. The form of these bills was:

"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

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accepted by the treasurer and receivers subordinate to him in all public payments and for any stock at any time in the Treasury."

Then followed the date and the signatures of the committee authorized to emit them. [Footnote 2] They were not made a tender in payment of debts except of those due to the state. In 1702, 3 Ann. c. 1, another emission of bills of credit for �15,000 was authorized in the same form, but they were not made a tender by the act, and the then duties of impost and excise were directed to be applied to the discharge of those bills, as also a tax of �10,000 on polls and estates, real and personal to be levied and collected, and paid into the Treasury, in 1705. A subsequent act, passed in 1712, made them a tender in payment of private debts. In 1716, Act of 3 Geo. I, c. 6, a further emission of �150,000 in "bills of credit" was expressly authorized to be made in the like form, to be distributed among the different counties of the province in a certain proportion stated in the act, and to be put into the hands of five trustees in each county to be appointed by the legislature, to be lent out by the trustees on real security in the county in certain specified sums for the space of ten years at five percent per annum. The mortgages were to be made to the trustees, and to be sued for by them, and the profits were to be applied to the general support of the government. These bills were not made a tender. Now this act is most important to show that the fact, that the bills of credit were to be let out on mortgage was not deemed the slightest degree material to the essence of such bills. An act for the emission of bills of credit not materially different in the substance of its provisions had been passed in 1714, 1 Geo. I., c. 2. Another act for the emission of �50,000 in bills of credit was passed in 1720, 7 Geo. I, c. 9, containing provisions nearly similar, except that the trustees were to be appointed by the towns, and the profits were to be received by the towns, and a tax of �50,000 on polls and estates was authorized to be raised to redeem the same.

In 1720, the Colony of Rhode Island issued bills of credit nearly in the form of the Massachusetts bills, and they were made a tender in payment of all debts excepting special ones, and similar bills were issued in 1710 and 1711. In 1715, another issue was authorized, to be lent out by trustees and committees of towns on mortgage for ten years. There

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is no clause in the act declaring them a tender. The same year, another emission was authorized. In 1709, the Colony of Connecticut authorized an emission of bills of credit in a similar form, appropriating a tax for their redemption. There was no clause making them a tender. Numerous other acts of the like nature were passed between that period and 1731, some of which made them a tender and others not. In 1709, the Colony of New York issued bills of credit in a form substantially the same, and they were made a tender in the payment of debts, and these bills were to bear interest. Many other emissions of bills of credit were, from time to time, authorized to be made in similar forms; they were generally made a tender, and generally funds were provided for their due redemption.

In 1722, the Province of Pennsylvania issued bills of credit in a form not substantially different from those of the New England states, which were delivered to trustees to be loaned on mortgages on land or ground rents, and they were made a tender in payment of all debts. Other emissions for like purposes were authorized by subsequent laws. In the year 1739, an emission of bills of credit was authorized by the State of Delaware for similar purposes and in a similar form, to be loaned on mortgages. They were made a tender in payment of debts, and a sinking fund was provided.

In 1733, Maryland authorized an emission of bills of credit to the amount of �90,000, to be issued by and under the management of three commissioners or trustees, who were incorporated by the name of "The commissioners or Trustees for emitting Bills of Credit," and by that name might sue and be sued, and sell all real and personal estate granted them in mortgage, &c. These bills of credit, with certain exceptions, were to be lent out on interest by the commissioners or trustees, at four percent, upon mortgage or personal security, and a sinking fund was provided for their redemption, &c., and they were made a tender in payment of debts. Another emission was authorized in 1769, and two commissioners were appointed to emit the bills, to be called "commissioners for emitting Bills of Credit," and by that name to have succession, and to sue and be sued. These bills also were to be lent out by the commissioners on security, and a fund was provided for their redemption. These bills were not made a tender. [Footnote 3]

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In Virginia, bills of credit were issued as early as 1755 under the name of treasury notes which bore interest and were made a tender in payment of debts. Emissions were subsequently made at other periods, and especially in 1769, 1771 and 1773. These three last were not made a tender. In 1778, another emission of them was authorized, which were made a tender, and a fund was pledged for their redemption. Many other issues were subsequently made which were a tender. What demonstrates that these treasury notes were deemed bills of credit is the fact that by an act passed in 1777, ch. 34, it was made penal for any person to "issue or offer in payment any bill of credit or note for any sum of money payable to the bearer," and that the Act of 1779, ch. 24, makes it a felony for any person to steal any bill of credit, treasury note, or "loan office certificate of the United States, or any of them," and that the Act of 1780, ch. 19, after reciting that the exigencies of the war requires the emission of paper money, &c., authorizes the emission of 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." In 1748, North Carolina authorized the emission of bills of credit, which were made a tender, and a fund was provided for their redemption, and many subsequent emissions were authorized with similar provisions.

In 1703, South Carolina first issued bills of credit. They were to bear an interest of twelve percent. Funds were provided for their redemption. They do not seem originally to have been made a tender. Many other acts for the emission of bills of credit were from time to time passed by the colony, some if not all of which were made a tender. One of these acts, passed in 1712, was of a peculiar nature, but as I have not been able to procure a copy of it, I can only refer to it as it is stated by Hewitt, 1 Hewitt's Hist. of S.Car. 204, who says

"At this time the legislature thought proper to establish a public bank, and issued �48,000 in bills of credit, called bank bills, for answering the exigencies of government and for the convenience of domestic commerce. This money was to be lent out at interest on landed or personal security, and according to the tenor

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of the act for issuing the same, it was to be sunk gradually by �4,000 a year, which sum was ordered to be paid annually by the borrowers into the hands of the commissioners appointed for that purpose."

In 1760, Georgia authorized an emission of bills of credit to be lent out at interest, and mortgages were to be taken by the commissioners. These bills were made a tender. Subsequent acts for issuing bills of credit were passed, but it is not necessary to recite them.

Congress, during the revolutionary war, issued more than $300,000,000 of bills of credit. The first issue was in 1775, and the confederated colonies were pledged for their redemption. None of the bills of credit issued by Congress was made a tender, probably from the doubt whether Congress possessed the power to make them a tender. The form of those first issued was as follows:

"This bill entitles the bearer to receive _____ Spanish milled dollars, or the value thereof, in gold and silver, according to the resolutions of Congress."

The last emission was made in 1780, under the guarantee of Congress, and was in the following form:

"The possessor of this bill shall be paid _____ Spanish milled dollars, by 31 December 1786, with interest in like money at the rate of five percent per annum, by the State of _____, according to an act of the Legislature of the State of _____, the ___ day of _____ 1780."

The endorsement by Congress was,

"The United States insures the payment of the within bill, and will draw bills of exchange annually, if demanded, according to a resolve of Congress of 18 March 1780."

These bills were expressly required by Congress to issue on the funds of the individual states established for that purpose, and the faith of the United States was pledged for their payment. They were made receivable in all public payments.

I will close this unavoidably prolix, though, in my judgment, very important review of the history of bills of credit in the colonies and during the Revolution with a reference to the Act of 24 Geo. II, c. 53 (1751), for regulating and restraining the issues of paper money in New England. That act in its prohibitory clause expressly forbid the issue of "any paper bills, or bills of credit of any kind or denomination whatsoever" except for certain purposes and upon certain specified emergencies, and constantly speaks of "paper bills, or bills of credit" as equivalent expressions, thus demonstrating that the true meaning of bills of credit was paper emitted by the state and intended to pass as currency -- or in other

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words, as paper money. It further requires that the acts authorizing such issues of "paper bills or bills of credit" shall provide funds for the payment thereof, and makes provisions for cases where such "paper bills or bills of credit" had been loaned out on security, and declares that "no paper currency or bills of credit" issued under the act shall be a legal tender in payment of any private debts or contracts whatsoever.

This historical review furnishes a complete answer to every argument which has been used on the present or on former occasions, which made the nature of bills of credit depend upon any other quality than the simple one of being for money, and negotiable, and designed to pass as paper money or paper currency. When it is said that it is of the essence of "bills of credit" that they should be a legal tender, we find that many of them never were a tender. Nay, that the enormous issues by the Revolutionary Congress were altogether stripped of this quality. When it is said that to constitute bills of credit their circulation as money must be enforced by statutable provisions, we find that in many cases, from the very nature and character of the acts, no such compulsory circulation was contemplated. They did not in their form generally contain any express promise on the part of the state to pay them, whether funds were provided or not, and the same form was used in both cases. There was, indeed, in my judgment, in every case, an implied obligation and promise of the state of pay them whether funds were provided or not. When it is said that it is not a bill of credit unless credit is given to the state on its own express promise to pay, and not when the paper is only declared to be receivable in payment of debts due to the state, that there must be a promise to pay, and not merely a promise to receive, we find that the very first issues of bills of credit were of this very character, and contained no promise, and yet the colonial legislatures appropriated to them the very name as their true designation. When it is said that a bill which is payable on demand is not a bill of credit nor a bill which contains no promise to pay at a future day, we find that on their face nearly all the colonial issues were without any limitation of time and were receivable in payments to the state immediately upon their presentation, though funds for their redemption were not provided except in futuro. The issues by Congress were, with a single exception, without any limitation of time as to payment, and were to be paid in gold or silver.

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The emission of 1780, already stated, was to be paid at a future time. But Congress made no express promise to pay any of their other issues; they simply pledged the colonies for their redemption, and yet Congress called them bills of credit. When it is said that bills of credit cannot bear interest, for that disqualifies them for a paper currency, we find that in point of fact such bills were issued both by the colonies and by the Revolutionary Congress, and indeed since by the United States in the form of treasury notes. When it is said that bills of credit are such only as are issued upon the mere credit of the state, and not bottomed upon any real or substantial fund for their redemption, we find that in most cases the colonial bills of credit were issued upon such funds, provided by the very terms of the acts. The Statute of 24 Geo. II, c. 53, also in terms applies the very phrase not only to bills resting on the mere credit of the state, but also to bills having suitable funds provided for their redemption. It goes further and prohibits the colonies, in future, from issuing such bills without providing suitable funds. In short, the history of bills of credit in the colonies conclusively establishes that none of these ingenious suggestions and distinctions and definitions were or could have been in the minds of the framers of the Constitution. They acted upon known facts, and not theories, and meant, by prohibiting the states from emitting bills of credit, to prohibit an issue, in any form, to pass as paper currency or paper money, whose basis was the credit, or funds, or debts, or promises of the states. They looked to the mischief intended to be guarded against in the future by the light and experience of the past. They knew that the paper money issued by the states had constantly depreciated, whether funds for its redemption were provided or not whether there was a promise to pay or a promise to receive; whether they were payable with or without interest; whether they were nominally payable in praesenti or in futuro. They knew that whatever paper currency is not directly and immediately, at the mere will of the holder, redeemable in gold and silver is and forever must be liable to constant depreciation.

We know the same facts as well as they. We know, that the treasury notes of the United States, during the late war, depreciated fifty percent; that during the period of the suspension of specie payments by our private banks at the same period, though with capitals supposed to be ample, their bank bills sunk from fifteen to twenty-five percent below their nominal value. The bills of this very Bank of the Commonwealth

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of Kentucky, of whose solid and extensive capital we have heard so much, were admitted at the argument to have sunk fifty percent from their national value. The framers of the Constitution could not without irreverence (not to use a stronger phrase) be presumed to prohibit names and not things; to aim a blow at the artificial forms in which paper currency might be clothed and leave the substance of the mischief untouched and unredressed; to leave the states at liberty to issue a flood of paper money with which to inundate the community upon their own sole credit, funds, and responsibility, so always that they did not use certain prescribed forms of expression. If the states were to possess these attributes in ample sovereignty, it was worse than useless to place such a prohibition in the front of the Constitution. It was holding out a solemn delusion and mockery to the people by keeping the faith of the Constitution to the ear and breaking it to the sense. My judgment is that any such interpretation of the Constitution would be as unsound as it would be mischievous. The interpretation for which I contend is precisely that which was maintained by this Court in the case of Craig v. State of Missouri, where all these ingenious suggestions, distinctions, and definitions to which I have alluded were directly overruled. I might indeed have spared myself some labor in these researches if I had not considered that case as in some measure assailed in the present decision -- if, indeed, it is not shaken to its very foundation.

The next question in the case is whether the act of Kentucky establishing this bank is unconstitutional by authorizing an emission of bills of credit in the shape of the bank bills or notes of that bank within the prohibition of the Constitution. The argument is that the state cannot do that indirectly which it cannot, consistently with the Constitution, do directly, and that the bank corporation is here the sole and exclusive instrument of the state, managing its exclusive funds, for its exclusive benefit, and under its exclusive management. Even this obvious principle, that the state cannot be permitted indirectly to do what it is directly prohibited to do by the Constitution, has been denied on the present occasion -- upon what grounds of reasoning I profess myself incapable of comprehending. That a state may rightfully evade the prohibitions of the Constitution by acting through the instrumentality of agents in the evasion, instead of acting in its own direct name, and thus escape from all its constitutional obligations is a doctrine to which I can never subscribe and which, for the honor of the country, for the good faith and integrity

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of the states, for the cause of sound morals and of political and civil liberty, I hope may never be established. I find no warrant for any such doctrine in the case of Craig v. State of Missouri, either in the opinion of the Court or in that of the dissenting judges.

The other part of the argument, from which the conclusion is drawn that the act is unconstitutional, requires a more extended consideration. But before proceeding to that, it is proper to notice the statement at the bar that the point of the constitutionality of this act has been already decided by this Court. If so, I bow to its authority. I am not disposed to shake, even if I could, the solemn decisions of this Court upon any great principles of law, and a fortiori not that which respects the interpretation of the Constitution itself. But I shall require proof before I yield my assent that the point has been so decided. The case relied on is Bank of Commonwealth of Kentucky v. Wister, 2 Pet. 318. In my judgment, that case justifies no such conclusion. It was not even made or suggested in the argument; it was not touched by the judgment of the Court.

What was that case? Wister brought a suit in the Circuit Court of the United States in Kentucky against the bank, to recover a sum deposited in the bank. The bank filed a plea to the jurisdiction of the court, alleging that the bank was a body corporate established by an act of the Legislature of Kentucky, and

"that the whole capital stock of the said corporation is exclusively and solely the property of the state, and that the state, in her political sovereign capacity as a state, is the sole and exclusive and only member of the corporation."

The Court decided, that the suit was rightfully brought against the corporation, and was within the jurisdiction of the circuit court. Why? Because the Court was of opinion that though the corporation was created by the state, the state was not even a member of the corporation.

"The president and directors alone [said MR. JUSTICE JOHNSON in delivering the opinion of the Court] constitute the body corporate, the metaphysical person liable to suit. Hence, by the laws of the state itself, it is excluded from the character of a party, in the sense of the law, when speaking of a body corporate."

And in confirmation of this view of the matter, a passage was cited from the opinion in United States Bank v. Planters' Bank of Georgia, 9 Wheat. 904. The learned judge then said, and this is the comment on which so much reliance has been placed,

"To which it may be added that if a state did exercise any other power in or over a bank or impart to it its sovereign attributes, it would be hardly

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possible to distinguish the issue of the paper of such banks from a direct issue of bills of credit, which violation of the Constitution no doubt the state here intended to avoid."

Now this language imports, at most, only that a case might have existed which would have been a violation of the Constitution but which was admitted not to be the case before the Court -- that is, where the state imparted its sovereign attributes to the corporation. The Court did not say that the Constitution of the United States had not been violated by the issue of the bank bills, for that question was never presented for its consideration, but only said that the state did not intend to violate the Constitution and did not intend to communicate its sovereign attributes. Neither the facts of the case nor the declaration nor the plea to the jurisdiction in any manner raised or could raise any such question. The corporation, as such, was capable of suing and being sued by the laws of Kentucky. However proper, then, the language might have been as an admonition of the danger to the bank if its ground of objection to the jurisdiction was maintainable, it did not commit the Court in the slightest manner to any definite opinion as to the constitutionality of its issues of bank paper.

Let us now proceed to the consideration of the charter of the bank, and ascertain whether it is a mere agent of the state, and what are the powers and authorities which are given to it as to the issues of bank bills. The act of 1820 declares, in the first section, that "A bank shall be and thereby is established in the name and on behalf of the Commonwealth of Kentucky," under the direction of a president and twelve directors, to be chosen by the legislature, from time to time, by joint ballot of both houses. The second section declares the president and directors a corporation by the corporate name, &c., conferring on the corporation the usual powers. The third section declares that the whole capital stock of the bank shall be exclusively the property of the Commonwealth of Kentucky, and no individual or corporation shall be permitted to own or pay for any part of the capital of the bank. The fourth section declares that the president and directors shall have power to issue notes, not under the denomination of one dollar nor over one hundred dollars, signed by the president and countersigned by the cashier. These bills or notes are, by subsequent sections, authorized to be made payable to order or to bearer and to be negotiable accordingly, and they are declared to be receivable at the treasury and by public officers in all payments of taxes and other debts to the state, and for county levies, and are to

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be payable and redeemable in gold and silver. The capital stock of the bank is to consist of $2,000,000, to be raised and paid as follows: all moneys paid into the treasury for the purchase of vacant lands of the state, and so much of capital stock owned by the state in the Bank of Kentucky (which it seems had then stopped payment) as may belong to the state, after the affairs of that bank were settled up, with the profits thereof not heretofore pledged or appropriated by law. And the treasurer of the state was required from time to time, as he received moneys on any of these accounts, to pay them to the bank. By other sections, the bank was authorized to discount bills of exchange and notes and to receive deposits and to loan money on mortgage on real estate, distributing their loans in certain proportions among the citizens of the different counties, and the interest arising from all loans and discounts, after payment of expenses, was to be considered as part of the annual revenue of the state and subject to the disposition of the legislature. The notes of the Bank of Kentucky were also receivable in payment of all debts due to the Commonwealth Bank.

Such are the principal provisions of the charter. It is clear, therefore, that the bank was a mere artificial body or corporation, created for the sole benefit of the state, and in which no other person had or could have any share or interest. The president and directors were the mere agents of the state, appointed and removable at its pleasure. The whole capital stock to be provided consisted of the proceeds of the public lands and other property of the state, which should be paid over to the bank from time to time by the treasurer of the state. The public lands themselves and the other funds were not originally conveyed to or vested in the corporation, but were left in the free possession of the state itself. The president and directors had no interest whatsoever in the institution, but only had the management of it, subject to the control of the state. They were not personally liable for nonpayment of any of the bills or notes or debts of the bank, but only for their personal misconduct in any excess of issues or debts beyond double the amount of the capital stock. The state was entitled to all the profits. And though the bills and notes of the bank were declared payable in gold and silver, it seems that no human being was made directly responsible for the payment -- not the president and directors in their private capacity, for they contracted no personal responsibility, and not the state (as we have been told at the argument), because the state had not, in its

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own name, promised to pay them -- nay, it is said that these bills and notes were not even issued on the credit of the state.

Another thing is quite clear, and that is that as the bank existed for the sole benefit of the state, and all its officers were appointed by the state and removable at its pleasure, the state possessed an unlimited power over the corporation. The whole funds possessed by it, whether they were capital stock, or debts, or securities, or real estate, or bank notes, belonged in fact to the state. The state was the equitable owner, and might at any time, without any violation of the rights of the corporation, which was its own exclusive agent, resume and appropriate these funds to itself, and might at its own pleasure repeal and annihilate the charter, and by its sovereign legislative act become, ipso facto, the legal owner, as it was in fact the equitable owner of the property and franchise. I know of no principle of law or of the Constitution which would have been violated by such a course, for it would have been only conferring upon the equitable owner the legal title to his own estate and property, and resuming, on the part of the principal, the funds and the business confided to his agents.

The bills or notes of the bank were to circulate as currency. That is so palpable on the face of the charter as not to have been even questioned at the argument. They were, then, stripped of mere technical forms, the bills of the state, issued by the agent of the state, on the exclusive funds of the state, for the benefit and profit of the state, to circulate as currency within the state, and without any other responsibility than that of the state. In what respect then do they differ from bills of credit of the state? I can perceive none.

In the first place it is said that they were not issued on the credit of the state, and that the state is not responsible, directly or indirectly, for their payment. I confess, until I heard the argument at the bar, I had not supposed that any such proposition would be maintained or could be maintainable. If these bills were not issued on the credit of the state, on whose credit were they issued? It is said, that they were issued on the credit of the corporation; and what is the corporation? A mere metaphysical being, the creature and agent of the state, having no personal existence and incapable per se of any personal responsibility. The president and directors constituted that corporation and were its sole members, and they were not personally liable. The official legal entity, called the president and directors, might be sued. But what then? The capital stock was

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not vested in them so as to be liable to be taken in execution in a suit against them. Could a creditor of the corporation seize or sell the public land, on his execution against them? No one pretends that. Suppose the state should choose, as it well might, to assume the whole agency and funds of the corporation to itself; could the creditor have any redress against the state? It is admitted, that he could not have any redress, because the state is not suable.

It is said that the bills are not taken on the credit of the state because the state has not promised, in terms, to pay them. If it had so promised, the state not being suable, the holder could here have no redress against the state. But I insist that in equity and in justice, the bills must be treated as the bills of the state, and that if the state were suable, a bill in equity would lie against the state, as the real debtor; as the real principal. And I say this upon principles of eternal justice, and upon principles as old as the foundations of the common law itself. How can it be truly said that these bills were not taken on the credit of the state? Were they not to be paid out of the proceeds of the public lands and other property of the state? Were they not receivable in payment of debts to the state, for the very reason that they were the issues of the state, for its own benefit? And was not credit given to the state upon this very ground? It has been said at the argument that funds were provided for the payment of the bills by the provisions of the charter, and therefore no credit to the state ultra these funds can be inferred. But surely the case of the old colonial bills of credit answers that position. They had funds assigned for their redemption; they in many cases had mortgages upon loans authorized to be made, as they are in the present charter; and yet the legislature called them bills of credit. The colonists did not promise to pay them, and yet they deemed them their bills of credit. Why? Because, in truth and in fact, and not upon any metaphysical subtleties and fictions, they were issued upon the general credit of the state, and if the funds pledged fell short of the payment, the state was bound to redeem them. The argument on this head assumes the very matter in controversy. It assumes that the state never, directly or ultimately, held itself out as responsible for the payment of the bills, but that the holder trusted, and trusted exclusively, to the funds provided for him in the charter. Now I deny this inference altogether. Because a state assigns funds for the payment of its debts or bills, does it follow that the holder trusts exclusively to those funds?

When a creditor takes a pledge,

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or has a security for payment of his debt, does he thereby exonerate the debtor from all personal responsibility? If the agent is authorized to pledge certain funds of his principal for the payment of the debt, does that exonerate the principal from all personal liability? No such doctrine has ever yet been established, to my knowledge, in any code of law, and least of all in the common law. On the contrary, it is at the common law held incumbent on those who insist that there has been any exclusive credit given to a fund, to establish the fact by clear and irresistible proofs.

Suppose, in this very case, the corporation had circulated, as it had a right to do, its own bank bills to the amount of $5,000,000, and the funds assigned by the state, and the funds in the hands of the corporation had been wholly inadequate to redeem them; would not the state have been bound in reason, in justice and in equity, to pay the deficiency? Would a court of equity for a moment tolerate any private person to escape under such circumstances from his own responsibility for the acts and conduct of his agent, fully authorized by him? Would it not say qui sentit commodum, sentire debet et onus? Would it be consistent with good faith for a state to proclaim that it was not bound by the solemn obligations of its own agents, acting officially for its own exclusive benefit and interest and upon its own funds, to the payment of debts thus justly and honestly contracted? I put these questions because it seems to me that they can be answered only one way, and that is by affirming the positive responsibility of the state in foro justitiae. The citizens must be presumed to trust, in all such cases, to the general credit and good faith of the state, and not merely to the fund contemplated or provided for their redemption. So in similar cases, the colonies understood their own obligations; so the Continental Congress, and so the United States have constantly understood their own obligations. Although a fund may have been provided for payment of their bills of credit; although those bills of credit contained no direct promise of the state; although they purported, in form, to be the acts of trustees, or commissioners, or committees acting under the authority of the state, yet they well understood that the general credit of the state for the redemption of the bills was necessarily implied, and that without that silent necessary pledge, the bills could not and would not have circulated at all, except upon compulsion, and by irresistible power of the government.

It is obvious that whether a state be suable or not cannot constitute

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a test whether an instrument of currency issued by or on behalf of a state be a bill of credit or not. It may be a bill of credit although the state is not suable thereon, as was in fact the case with all the ante-revolutionary bills of credit, for the colonies never were suable. On the other hand, the state may expressly allow itself to be sued on an instrument issued on its behalf, and yet in may not be a bill of credit. As for example, a state may authorize suits to be brought for debts due by itself, and if it should issue, through its officers, a certificate of loan for money borrowed, if it were not intended to pass as currency, it would not be a bill of credit.

But it is said that here the state was not only not suable on these bank bills, but that the corporation itself was expressly suable, under the charter, and the promise to pay was made by the corporation, and the promise being made by the corporation, it in effect excludes any obligation on the part of the state. There is no magic in words. What was this corporation in fact? A mere legal entity; a mere agent of the state, existing for the state, with funds belonging to the state, and dealing wholly upon the credit which these bills derived from the state. The persons who were president and directors for the time being, were not (as I have already said) personally liable for the payment of those bills. The metaphysical personage only was liable, and the promise, if it is not to be treated as a mere delusion and phantom, was the promise of the state itself, through that personage.

Suppose the state had authorized its treasurer, in his official capacity and without any personal liability, to issue these very bank bills, saying, "I, A. B., as treasurer, promise to pay,", &c., and the whole proceeds of these bills were to be for the benefit of the state, and they were to be paid out of the funds of the state, in the treasury; could there be a doubt that the state would, in truth, be the real debtor? That they would be issued on its credit? That the state would, in conscience, in common honesty, in justice be responsible for their payment? If this would be true, in such a case I should be glad to know in what respect that case substantially differs from the one before the Court. It is precisely the very case, and in the same predicament, as the bills of credit issued by Maryland in 1733 and 1769. There, the commissioners were created a corporation, and were to issue the bills, and were authorized to sue and be sued, and no one ever dreamed, and least of all, the state itself, that they were not the bills of credit of the state. If a state can, by so simple a device as the creation of a corporation as its own

Page 36 U. S. 348

agent, emit paper currency on its own funds, and thus escape the solemn prohibitions of the Constitution, the prohibition is a dead letter. It is worse than a mockery. If we mean to give the Constitution any rational interpretation on this subject, we must look behind forms and examine things. We must ascertain for whose benefit, on whose credit, with whose funds, for what purposes, of currency or otherwise, the instrument is created and the agency established. Whether it be the issue of a treasurer of a state or of a corporation of a state or of any other official personage must be wholly immaterial. The real question must be in all cases whether in substance it is the paper currency of the state.

But it has been argued that if this bank be unconstitutional, all state banks founded on private capital are unconstitutional. That proposition I utterly deny. It is not a legitimate conclusion from any just reasoning applicable to the present case. The Constitution does not prohibit the emission of all bills of credit, but only the emission of bills of credit by a state, and when I say by a state, I mean by or in behalf of a state, in whatever form issued. It does not prohibit private persons or private partnerships or private corporations (strictly so called) from issuing bills of credit. No evils, or at least no permanent evils, have ever flowed from such a source. The history of the country had furnished no examples of that sort -- of a durable or widely extended public mischief. And if any should exist, it would be within the competency of the state legislatures to furnish an adequate remedy against such issues by private persons. In point of fact, prohibitions now exist in many states against private banking and against the issue of private bank paper with the intent that it shall pass at currency. The mischief was not there; it had never been felt in that direction. It was the issue of bills of credit as a currency, authorized by the state on its own funds and for its own purposes, which constituted the real evil to be provided against. The history of such a currency constituted the darkest pages in the American annals, and had been written in the ruin of thousands who had staked their property upon the public faith, always freely given and but too often grossly violated. The great inquiry at the adoption of the Constitution was not whether private banks, corporate or incorporate, should exist, not whether they should be permitted to issue a paper currency or not, but whether the state should issue it on its own account. The anxious inquiry then was quis custodiet custodes? The answer is found in the

Page 36 U. S. 349

Constitution. But it has in my judgment (though I am sure my brethren think otherwise) become a mere name. Stat nominis umbra.

The states may create banks as well as other corporations upon private capital, and so far as this prohibition is concerned, may rightfully authorize them to issue bank bills or notes as currency, subject always to the control of Congress, whose powers extend to the entire regulation of the currency of the country. When banks are created upon private capital, they stand upon that capital, and their credit is limited to the personal or corporate responsibility of the stockholders, as provided for in the charter. If the corporate stock, and that only, by the charter is made liable for the debts of the bank, and that capital stock is paid in, every holder of its bills must be presumed to trust exclusively to the fund thus provided, and the general credit of the corporation. And in such a case a state owning a portion of the funds, and having paid in its share of the capital stock, is treated like every other stockholder, and is understood to incur no public responsibility whatsoever. It descends to the character of a mere corporator, and does not act in the character of a sovereign. That was the doctrine of this Court in United States Bank v. Planters' Bank of Georgia, 9 Wheat. 904.

"It is [said the Court on that occasion], we think, a sound principle that when a government becomes a partner in any trading company, it divests itself, so far as concerns the transactions of that company, of its sovereign character and takes that of a private citizen."

In the present case, the legislature expressly prohibited any partnership, or participation with other persons in this bank. It set it up exclusively upon the capital of the state as the exclusive property of the state, and subject to the exclusive management of the state through its exclusive agents. It acted, therefore, in its sovereign character and capacity, and could not, even for an instant, even in intendment of law, divest itself in the transactions of the bank of that character and capacity.

I have not thought it necessary, in the views which I have taken of this case, to resort to the state of the pleadings, though they fortify every portion of the reasoning which I have endeavored to maintain. One of the averments in the first plea is that the president and directors of the bank were illegally authorized,

"for and on behalf of the commonwealth, and upon her credit, to make bills of credit, to emit bills or notes, to an amount not exceeding _____ millions

Page 36 U. S. 350

of dollars, &c., and when so made, &c.; to emit, issue and circulate through the community, for its ordinary purposes, as money."

The plea goes on to allege that the president and directors had, before the date of the note sued on,

"for and on behalf of the Commonwealth of Kentucky and on her credit, made various bills of credit, viz., notes of various denominations, in amount from one dollar to one hundred dollars, &c., promising therein and thereby to pay the person on each note mentioned or bearer, on demand, the amount therein mentioned in money, and were transferable by delivery."

The demurrer admits the truth of these averments, and upon technical principles of pleading I do not see how their conclusiveness in the present question can be avoided. But I do not rely on the state of the pleadings. I found my judgment upon the principles presented by the admitted state of the facts that these bank bills are bills of credit within the true intent and meaning of the Constitution; that they were issued by and in behalf of the state upon the credit of the state by its authorized agents, and that the issue is a violation of the Constitution.

I am conscious that I have occupied a great deal of time in the discussion of this grave question -- a question in my humble judgment second to none which was ever presented to this Court in its intrinsic importance. I have done so because I am of opinion (as I have already intimated) that upon constitutional questions, the public have a right to know the opinion of every judge who dissents from the opinion of the Court, and the reasons of his dissent. I have another and strong motive -- my profound reverence and affection for the dead. Mr. Chief Justice Marshall is not here to speak for himself, and knowing full well the grounds of his opinion, in which I concurred, that this act is unconstitutional, I have felt an earnest desire to vindicate his memory from the imputation of rashness or want of deep reflection. Had he been living, he would have spoken in the joint names of both of us. I am sensible that I have not done that justice to his opinion which his own great mind and exalted talents would have done. But with all the imperfections of my own efforts, I hope that I have shown that there were solid grounds on which to rest his exposition of the Constitution. His saltem accumulem donis, et fungar inani munere.

MR. JUSTICE BALDWIN, concurring.

It has so happened that I am the only member of the Court who composed one of the majority in the case of Craig v. Missouri, and now concurs with the majority in this case in affirming the judgment of the Court of Appeals; in this respect, my situation is peculiar, as well as in another particular. After an argument in the former case, two of the judges died; of the remaining five, three were of opinion, that the paper issued by the State of Missouri were bills of credit, and two of a contrary opinion; on the argument in 1830, there were two judges present who had not before sat in the cause and on whose opinion the result depended. If they agreed with the minority, the judgment was, of course, confirmed; if they divided, it was reversed, so that the one who joined the three made the judgment of the Court. This was my case; agreeing in opinion with the three who were for reversing, I concurred in the judgment and general course of the opinion and reasoning of the Court, though my opinion was formed on grounds somewhat different. It was my intention to have assigned my reasons in a separate opinion, but as it was the first term of my sitting in the Court, the business was new and pressing, and want of time prevented it; but at my suggestion, a clause was added to the opinion prepared by THE CHIEF JUSTICE, which would enable me afterwards to show the reasons of my judgment, should a similar question occur. In this case too I fully concur in the judgment rendered, yet not in the course of reasoning or the authority on which the opinion of the Court is based, so that my position is as peculiar in this as it was in Craig v. Missouri, and in one respect is in marked contrast with that of the other three judges who sat in that case. The judge who was in the majority then, and now dissents, was and is of opinion that the paper emitted in both cases came within the restriction of the Constitution as bills of credit; two, who then dissented and are now in the majority, were and are of opinion that the papers in neither case are bills of credit, so that no imputation of inconsistency can rest upon them. With me it is different; my judgment has led me to different results in the two cases, and therefore it cannot be deemed improper for me to explain the reasons why, though forming one of the majority in both cases, I stand in some measure alone. A judge who now dissents may find reasons therefor in the opinion delivered in Craig v. Missouri; those who now concur may rest on their dissenting opinions in that case, but the same course of reasoning and deduction which shows the consistency of others may lead to a very contrary conclusion as to mine. These considerations must be my apology for the course now taken.

In Craig v. Missouri, the subjects of controversy were certificates signed and issued by the auditor and treasurer pursuant to a law of that state, which were on their face receivable at the Treasury for taxes and debts due the state, bearing interest at the rate of two percent per annum. One-tenth the amount of said certificates were directed to be withdrawn annually from circulation; they were made a legal tender for all salaries and fees of office, in payment for salt to the lessee of the public salt works, at a price to be stipulated by law, and for all taxes due the state, or to any county or town therein. They were to be loaned on personal security, by joint and several bonds, bearing interest; the proceeds of the salt springs, the interest accruing on the bonds, all estates purchased under the law, all debts due or to become due to the state, were pledged and constituted a fund for their redemption, and the faith of the state was also pledged for the same purpose. It seemed to a majority of the Court to be impossible to disguise the character of this paper or to change its nature or effect by substituting the word "certificate" on its face for the word "bill;" the change was only in name, the thing was the same. Connected with the law under which the paper was issued, it was a bill, note or obligation, emitted by the state with the avowed purpose of circulating as money, for all the purposes referred to in the law; the funds and faith of the state were pledged for its payment, with interest from its date, and it was made a legal tender in payment of certain debts to individuals, and of taxes to towns and counties. No member of the Court was more clearly of opinion that these self-called certificates were bills of credit, to all intents and purposes, and that that part of the Constitution which declared that no state should emit them would be a dead letter, if they were not held to be within it, than I was. On this subject, my opinion went to the full extent of that which was delivered by THE CHIEF JUSTICE, and has been fully confirmed by subsequent reflection.

There was between the concurring judges and myself no other difference of opinion or in the reasons of our respective judgments than in the definition of a "bill of credit," which is thus given in the opinion ( 29 U. S. 4 Pet. 432):

"To emit bills of credit conveys to the mind the idea of issuing paper, intended to circulate through the community, for its ordinary purposes, as money, which paper is redeemable at a future day; this is the sense in which the terms have been always understood. If the prohibition means anything, if the words are not empty sounds, it must comprehend the emission of any paper medium by a state government, for the purpose of common circulation."

To this broad definition I could not assent; in my opinion, no paper medium could be deemed a bill of credit emitted by a state unless it contained on its face, or the law under which it was emitted gave, a pledge of its faith or credit for its redemption; nor then unless it was made a legal tender in the payment of some debts to individuals. Though the opinion is silent as to the pledge of the faith of the state being a requisite to constitute a bill of credit, and negatives the necessity of the paper's being made a legal tender, yet these matters entered into the character of the paper and were a part of the case before the Court, as appears in the opinion (4 Pet. 29 U. S. 432-433). The first sentence in the latter page shows the ground on which my opinion turned; the paper was a tender, and the faith of the state was pledged. This last clause was added to the opinion at my request: "It also pledges the faith and funds of the state for their redemption."

Thus, there was perfect union of opinion between the judges who composed the majority on the whole case presented for judgment, as well in the result as the course of reasoning which led to it; the only variance was as to the requisites of a bill of credit. Three judges holding that "any paper medium, emitted by a state government for the purpose of common circulation" filled the constitutional definition of a bill of credit, while one judge held that there were two additional requisites -- that the emission should be on the credit of the state and the paper declared a legal tender. But as the certificates or bills, taken in connection with the law directing their emission, contained all the requisites to constitute bills of credit, on the most limited construction which could be given to the Constitution, there could be no other difference of opinion than in the reasons for judgment. Had the opinion and reasoning been applied to the whole case, to paper not only emitted by a state for common circulation, but emitted on its faith and credit expressly pledged, and made a tender, the reasons would have been in perfect accordance with the views of the majority and their judgment. But though this was requested by me, the opinion was confined to only a part of the case on the record, taking no notice, in the reasoning, of the pledge of the faith of the state, in direct terms, or giving to it any declared effect in fixing the character of the paper. If this pledge had not appeared on the certificate or in the law my opinion would have been for affirming the judgment of the state court, and as three judges held that even with this pledge, the certificates were not bills of credit, it is evident that the judgment of this Court depended on this part of the law.

With this explanation, the case of Craig v. Missouri, so far from being an authority in favor of the proposition that it is not necessary to constitute a bill of credit that the faith of the state should be pledged for its payment, it must be taken as negativing it by the opinion of four judges. On the other hand, four judges were of opinion that it was not necessary that the certificates should have been made a legal tender for any purpose, in order to make them bills of credit. Thus understood, I adhere to the decision of the Court in that case, as it was judicially before it on the record, and yet retaining the same opinion now which I then expressed to the judges, I cannot feel myself precluded from acting on it in this case, because the opinion of the Court, as delivered, did not take the same course as mine in leading the majority to the conclusion they formed. To now abandon the deliberate result of my best judgment, formed and expressed in that case, which has been confirmed on the successive arguments in this, would look more like yielding to a train of reasoning on a part of a case, than respecting the judgment of the court on the whole record. It would also place me in a position of inextricable difficulty to now surrender my judgment to the same reasoning and illustrations, which failed to convince me seven years since, the more especially when the intervening investigation which it has been my duty to make on this subject has led my mind to the conclusion it first formed.

With these remarks the profession will understand the reason why I concurred in the judgment of the Court in this and the former case; in that, the faith of the State of Missouri was pledged for the payment of the paper which she emitted, and made a legal tender; in this, Kentucky has not pledged her faith to redeem the notes of the bank, nor made them a legal tender in payment of a debt. I also concur with the opinion of the Court in this case that these notes cannot be deemed to have been emitted by the state, and have no desire to add any views of my own on this part of the case, my object being to defend my own peculiar position as to the definition of a bill of credit, according to the true interpretation of the first sentence of the tenth section of the first article of the Constitution. It is in these words:

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

In analyzing this sentence, it is apparent that these restrictions on the states relate to three distinct subjects.

1. To those on which the Constitution had granted express powers to the federal government -- to make treaties, grant letters of marque and reprisal, coin money.

2. To those on which the Constitution made no grant of any power by either express words, any necessary implication, or any reasonable interpretation -- to emit bills of credit, make anything but gold and silver coin a legal tender in payment of debts, or pass any law impairing the obligation of contracts.

3. To those subjects on which the 9th section of the first article had imposed the same restriction on the United States and Congress, as the tenth section did on the separate states -- to pass any bill of attainder, ex post facto law, or grant any title of nobility.

On the last class of cases any comment is useless; there has never been any difference of opinion as to the meaning of a bill of attainder or a title of nobility, and though there have been doubts as to the meaning of an ex post facto law, they have long since been settled, so that we can safely assume that as to those parts of the ninth and tenth sections of the first article, the meaning of the Constitution is as plain and definite as its language.

By referring the terms to a standard of admitted authority from which they have been adopted in the Constitution, they become as intelligible as if their settled definition had been added by the convention which framed the instrument. What the standard of definition shall be depends on the term used; if it is one of common use, in the ordinary transactions of society, and so applied, it shall be taken in its common ordinary acceptation by those who use the term; if it relates to any particular art, science or occupation, its meaning is its common understood sense, according to the usage and its acceptation among men so employed. If it is a term appropriate to the common or statute law or the law of nations, it must be taken as intended to be applied according to its established definition as a known legal term. Hence the term "bill of attainder" means the conviction of a person of a crime by legislative power; an "ex post facto law" is one which makes an act criminal which when committed was no offense; a "title of nobility" is a term which defines itself. Thus, the terms used to as the third class of cases, have been considered as defined by a reference to their understanding in a legal sense.

In passing to the first class of cases, it will be found that the terms "treaty, alliance, confederation," and "letters of marque and reprisal," when referred to the law of nations, are perfectly defined; so is the term "coin money" when referred to the words in their common acceptation or their legal sense. There is no ambiguity in the words; taken separately or in connection, as a term or phrase, they require no other interpretation than is to be found in the known and universally received standard by which they are defined, nor can they be taken in any other sense or by any other reference unless there appears from the context or other parts of the same instrument an obvious intention to use and apply them differently from their ordinary or legal acceptation. These are the established unvarying rules of interpretation which assign a meaning to language, that requires explanation not contained in the words themselves; the want of certainty is cured by a reference to that which is certain, and when any word, term, or phrase has acquired a definite meaning, its use, without explanatory words, is always deemed to be so intended. With the universal consent of every statesman and jurist, the terms used in these two classes of cases, in the tenth section, with the exception of an ex post facto law, have been received and taken according to their known definition by municipal or national law and common understanding, and there is now the same common assent to the meaning of an ex post facto law as settled by the repeated adjudications of this Court.

The same rules have also been applied to all other parts of the Constitution, in which terms of known import are used, as the writ of habeas corpus, trial by jury, &c. No man ever doubted that they were used according to their definition by the common law or that the words "taxes, commerce, money, coin," were used and must be taken in their ordinary meaning and acceptation. It is indeed a universal rule, applied to all laws, supreme or subordinate, to all instruments of writing, all grants or reservations of power, property, franchise or immunity, and all contracts that the words and language used shall be interpreted by such reference, accordingly as the subject matter is made certain by their legal or commonly received definition or acceptation. There is another rule of interpretation, equally universal, that the whole instrument shall be examined to ascertain the meaning of any particular part or sentence so as to avoid any discrepancy, and the same standard be applied to all its terms, and every word which can bear upon its intention, referring each to the appropriate subject to which it relates, the standard is furnished for the interpretation. Thus, the word "bill" has a meaning depending on the subject matter to which it is applied; a "bill of credit" refers to the payment of money; a "bill of attainder" refers to the conviction of an offense by a legislature; so of the word "law," an "ex post facto law" refers to one which inflicts a punishment; a "law impairing the obligation of a contract" refers to money or property due or owned in virtue of a contract.

Taking it, then, as an undoubted proposition that the same rules of interpretation must be applied to all parts of the tenth section, taken in connection with the whole Constitution as one instrument of writing, I shall endeavor to ascertain what is the meaning of the terms used in reference to the second class of cases. The first term is "no state shall emit bills of credit." That by "state" is meant a state of this Union there can be no doubt. Next comes the word "emit," which, referring to bills of credit, means an emission of paper; a putting off, putting out, putting forth, or issuing bills by a state for the payment of money at some time by some person, and on credit. The time of payment, the fund out of which it is payable, the faith or credit reposed in or pledged by those who emit it depends on the law under which the state made or authorized the emission. Then comes the "term bills of credit," without any reference of explanatory words; but as it necessarily relates to the payment of money, the word bill must be taken as a paper containing some evidence that a certain sum is due to the person to whom it was emitted or issued or by whom it was held. It is a word of legal import, as well defined as any in the English language, according to the subject matter to which it is applied. "A bill is a common engagement for money given by one man to another; when with a penalty, it is a penal bill, when without one, it is a single bill" (Toml.L.D. 230);

"and it is all one with an obligation, saving that it is commonly called a bill when in English and an obligation when in Latin. But now by a bill we ordinarily understand a single bond, without a condition, by an obligation, a bond with a penalty and condition (Cow.L.I. tit. Bill; 5 Day's Com.Dig. 191, Obl. A); or according to the definition of Ch. Baron Comyn, 'a single bill is when a man is bound to another by bill or note, without a penalty.' (Ibid. 194, C)."

A "bill of credit" is also a well known term of the law; in its mercantile sense, it means a letter addressed by one merchant to another, to give credit to the bearer for money or goods, such letter being in the nature of a bill of exchange, is called a "bill," and so treated. Beawes, L.M. 483; S.P. 5 Day's Com.Dig. 131, Merchant, F. 3. When the word "bill" refers to paper emitted by a bank, there will be found a most marked adherence to the distinction between an obligation and a bill, as appears in the clause of the original charter of the Bank of England, read by plaintiffs' counsel,

"That all and every bill or bills obligatory and of credit, under the seal of the said corporation, made or given to any person or persons, shall and may, by endorsement thereon, &c., be assigned,"

&c., 5 W. & M. c. 20, § 29 (3 Ruff. 563). So, in the 26th section of the same act, "the corporation shall not borrow or give security by bill, bond, covenant or agreement under their common seal," &c. Ibid. The word "bill" denotes a sealed paper, either a bill obligatory, which is an obligation, or a bill of credit, which is a single bill, or if they are taken as synonymous, the words of the act are expressly confined to sealed bills, which require endorsement to make them assignable. Taking the term "bills obligatory and of credit, under the common seal of the corporation" to be what they are declared in the charter, they are, in their legal sense, and in common acceptation, the bills of the bank, or bank bills, issued under their seal. This leads to another distinction between the different kinds of paper issued by the bank, worthy of all observation in the present case; the notes issued by the bank were not under its common seal; they were payable to bearer on demand, and passed from hand to hand by delivery merely, without endorsement. They can therefore in no just sense, be deemed bills of credit under seal, requiring a special act of Parliament to make them assignable, and so well was this known and fully understood that we find throughout the extended charter to the bank in 8 & 9 Wm. III, bank bills and bank notes are referred to in the same marked contradistinction which exists between a sealed bill, assignable only by endorsement, and an unsealed note, payable to bearer and transferable by delivery only.

In providing for enlarging the capital of the bank, the subscribers were authorized to pay one-fifth of their subscription "in bank bills or bank notes, which have so much money bona fide resting due thereupon," &c., 3 Ruff. 657, § 23. The same words, "in bank bills or bank notes," are three times repeated in the 25th section, and are carried through the whole act. In the 36th section, the discrimination is too strongly marked to admit of any possible doubt; in this section it is declared

"That the forging or counterfeiting of any sealed bank bill, made or given out in the name of the said governor and company for the payment of any sum of money or of any bank note of any sort whatever signed for the said governor and company of the Bank of England, &c., shall be felony."

Ibid., 659. The act of 3 & 4 Ann. c. 9, is also most explicit in its provisions, which embrace all notes in writing, signed by any person, "or the servant or agent of any corporation," payable to order or bearer, and puts them on the footing of inland bills of exchange, according to the custom of merchants, but neither in terms or by construction can be applied to bills under seal, 4 Ruff. 180, or has ever been attempted to be so applied or constructed. We must therefore take the term "bills of credit," when applied to the paper issued by a bank, to mean an instrument under its corporate seal, payable to some person and assignable by endorsement, and not a note payable to order or bearer and transferable as an inland bill of exchange according to the universal acceptation of the term in England.

There is another class of bills of credit in England known by the name of "Exchequer bills," which are issued by the officers of the Exchequer when a temporary loan is necessary to meet the exigencies of government. They were first termed "tallies of loan," and orders of repayment, charged on the credit of the Exchequer in general, and made assignable from one person to another. 5 W. & M. c. 20, § 39; 3 Ruff. 566. By a subsequent act, the officers of the Treasury were authorized to cause bills to be made forth, at the receipt of the Exchequer, in such manner and form as they shall appoint, &c., and to issue the same to the uses of the war; they were made receivable for all taxes and money due at the Exchequer, bore an interest, a premium was given for giving them circulation, the nation was security for their payment. See 9 Wm. III., c. 20, § 63-3, 3 Ruff. 667-8; 7 Ann. c. 7, § 22, 4 Ruff. 345; 9 Ann. c. 7, passim, 4 Ruff. 431, and they were called "bills of credit." 3 Ruff. 679. Such is the nature of the three classes of bills of credit in England, whether they are letters or bills of credit of merchants, in the nature of a bill of exchange, the bills obligatory or of credit or of a bank, or Exchequer bills; they all partake of the same character, and are the bills of credit of the person, corporation or government which emits, makes forth, issues or puts them into circulation. The name given to the paper, its form, or the mode of giving it currency or circulation, is immaterial; its substance consists in its being an engagement to pay money at a future day, and that its payment rests on the security, faith, credit or responsibility of those who put it into circulation, pledged on the face of the bills of individuals and corporations, and the law of the nation which emits or issues them. Bills of credit were viewed in the United States in the same way, before the adoption of the Constitution and immediately afterwards. That the definition of a bill, by the common law and common acceptation, is the same here as in England and has ever been so accepted is a proposition which needs only to be asserted; the same reasoning also attaches to a letter of credit, in a mercantile sense, and the same distinction which has been shown to exist there, between bank bills and bank notes, was in the most explicit manner recognized, during the revolution.

On 31 December 1781, Congress passed an ordinance to incorporate the subscribers to the Bank of North America, and recommended to the legislatures of the several states to pass such laws as were necessary to give the ordinance full operation, agreeable to the resolutions of Congress on 26 May preceding. 7 Journ.Cong. 197, 199. In the proceedings of that day, we have the plan of the bank which was then approved; in the 12th article, it is provided, "That the bank notes, payable on demand," shall by law be made receivable in every state, for duties and taxes, and by the Treasury of the United States as specie; Congress also resolved that they should be received in payment of all. See 8 & 9 Wm. III, c. 20, § 63-6, 3 Ruff. [text missing] to the states to make the counterfeiting bank notes capital felony. 7 Journ.Cong. 87, 90; 26 May 1781. Pursuant to this recommendation, Pennsylvania passed an act to prevent and punish the counterfeiting the bank bills and bank notes of the bank made or to be made or given out. 18 March 1782; Pamph. Laws 11. In 1783, Delaware passed an act to punish the counterfeiting the bank bills and bank notes of the bank. 2 Laws Del. 773. But the law of Massachusetts, passed 8 March 1782, contains the most unequivocal evidence that the distinction between bank bills and bank notes was well known and understood, for it copies the 36th section of the Act of 8 & 9 Wm. III, before referred to,

"that if any person shall counterfeit any sealed bank bill or obligation made or given out for or in the name of the said P. D. & Co., for the payment of any sum of money, or any bank note of nay sort whatever, signed for or in the name of the said P. D. & Co."

Thomas' Laws Mass. 187. In all these acts, the words "note, bill, or obligation" are put in the same contradistinction from each other which the common law assigns to them, and so are the acts of Congress for chartering the Bank of the United States, which were patterned from the acts of Parliament chartering the Bank of England.

By the ninth fundamental article of the charter of 1791, it is provided, that "The total amount of the debts which the said corporation shall at any time owe, whether by bond, bill, note or other contract, shall not exceed, &c." 1 Stat. 194; s. 8th article of charter of 1816, 3 id. 272. In the 13th article, the 29th section of the 5 W. & M., c. 20, chartering the Bank of England, is copied, declaring that "the bills obligatory and of credit, under the seal of the said corporation," &c., shall be assignable by endorsement, &c. And bills or notes issued by the corporation, signed by the president and countersigned by the cashier, promising the payment of money, to any person or his order, or to bearer, though not under the seal of the corporation, shall be as binding on them as on a private person, and be negotiable by endorsement if payable to order, or by delivery only if payable to bearer. 1 Stat. 195; S.P. 12th article of charter of 1816, 3 id. 272, thereby adopting the provisions of the 3 & 4 Ann. c. 9, before referred to, as to notes.

In the twelfth article of the charter of 1816, there is this proviso

"That said corporation shall not make any bill obligatory, or of credit, or other obligation under its seal for the payment of a less sum than five thousand dollars."

In the 17th section, we find the paper issued by the bank placed in contradistinction, no less than five times, by the denomination of bills, notes or obligations, and the same distinction is made throughout the acts of 1791 and 1816. It is also carried into the acts of 1798 (omitting the word "obligation"), by which the counterfeiting of any bill or note, issued by order of the president, directors, and company of the bank is made a felony. 1 Stat. 573; the act of 1807, 2 id. 423, and the 18th and 19th sections of the act of 1816, 3 id. 275, in each of which the words "bill" and "note" are used to refer to the two kinds of paper, the word "bill" being used in its comprehensive sense, as a known legal term, embracing bills, bonds, obligations of all kinds, when under the corporate seal, according to their settled and unvaried acceptation.

In considering the third species of bills of credit which are issued by the government, I will first refer to their definition by Parliament as the best evidence of the meaning and acceptation of the term in England and as it was adopted in the United States. The authority for issuing tallies, orders or bills, from the Exchequer, and the manner of doing it, are pointed out in the Acts of 5 W. & M., c. 20; 8 & 9 Wm. III., c. 20, before referred to, and 8 & 9 Wm. III, c. 28; 3 Ruff. 677-679; also in Gilbert's Hist.Exch. 137. When money is paid into the Exchequer for debts due or on a loan to the government, the teller who receives it gives a bill for the amount, which is an Exchequer bill, or a bill of credit, a substantial definition of which will be found in the 11th section of the 8 & 9 Wm. III, c. 28; 3 Ruff. 679.

"Provided also that this act, or anything herein contained, shall not extend to alter or change any method of receipts or payments by bills of credit in the Exchequer, allowed or to be allowed by Parliament,"

referring evidently to two species of such bills which are issued from the Exchequer, according to the prescribed mode of accounting for all moneys paid. A bill of credit given to a debtor who pays his debt is merely the evidence of its payment, but a bill of credit given to one who lends money on the credit of the Exchequer, allowed to be pledged by act of Parliament, is a bill made forth on the credit of the government, who is a debtor to the holder for the amount, with interest thereon, as directed by the law.

It is evident that the Constitution did not intend to prevent the emission by a state of a bill of credit of the first description, which in effect would be no more than a receipt for a debt due the state; it clearly refers only to that class of bills of credit which were emitted by a state for the purposes declared in the law authorizing them to be emitted and put into circulation. Taken in this sense the term "bill of credit" will be found to have been as well defined in the United States before the adoption of the Constitution as it was in England, or as the term "bill of credit" in reference to bank bills had been, there and here, from the time when the first charter of a bank was granted.

By the ninth article of the Confederation, Congress was authorized "to borrow money or emit bills on the credit of the United States," but unless nine states consented, could not "coin money" nor emit bills, nor borrow money on the credit of the United States. By article twelve,

"All bills of credit emitted, moneys borrowed, and debts contracted by or under the authority of Congress &c., shall be deemed a charge against the United States, for payment and satisfaction whereof the said United States, and the public faith are hereby solemnly pledged."

1 Stat. 6-7.

If there is certainty in language, it would seem to be in this, as a definition of a "bill of credit," and was evidently copied in the tenth section of the first article of the Constitution; the prohibition against any less than nine in number of states acting on certain subjects is in the precise words, "nor coin money," "nor emit bills;" if it is asked what bills, the answer is "bills on the credit of the United States, bills of credit emitted by the authority of Congress on a pledge for the public faith." By substituting "state" for "United States in Congress assembled," the meaning of the words is identical and cannot be mistaken when they are transferred into the constitutional prohibition, "no state shall coin money, emit bills of credit" means bills on the credit of the state. Plain words must be perverted by something inconsistent with reason if they mean anything else; if they do not refer to bills emitted on the credit of the state, we must be informed on whose credit. It must be that of an individual, a corporation, or of the United States; those who assert such a proposition can have no respect for the Constitution or its framers. Yet they can in no other way evade the obvious meaning of plain words; the prohibition was intended, and does prohibit a state from emitting bills on its own credit, and not on any other credit. The prohibition is confined to a state, to an emission by a state, of bills of credit, emitted on the faith of a state, which can be pledged only by the law of a state, and no more exquisite torture can be inflicted on plain words than in the endeavor to make them mean more, mean less, or mean anything else than the credit of a state. When we look to the names affixed to the Articles of Confederation and the Constitution, when we consider that the former, after being long discussed in Congress and approved by that body, was submitted to the state legislatures, which deliberated nearly four years before its adoption, and that every word, phrase and sentence was fully discussed and most anxiously considered, it cannot be considered as a bold or rash assertion that the framers of both instruments comprehended the language they used, said what they meant, meant what they said, and stamped upon their work an impress of intention, which they at least designed should be intelligible to all capacities.

If the definition of a "bill of credit" as given in both instruments is not authoritative, I know of none higher to which to appeal as a more certain standard of political or judicial truth. In following such leaders in a path which they have plainly marked, I feel perfectly conscious of avoiding that disrespect for the solemn muniments of title on which the Union rests, which would be a cause of severe self-reproach, if, in this tribunal, I should rest my judgment on any contradictory authority. As, however, it cannot derogate from the respect due to the framers of those instruments or the instruments themselves to refer to authority subordinate only to that of state legislatures who made the confederation, and the people of the several states who ordained the Constitution, in affirmance of the definition of bills of credit, as given by all, I shall refer to the resolutions of the old Congress, and the acts of the new immediately after the adoption of the Constitution.

By the third section of the Act of July 1790, making provision for the debt of the United States, among other evidences of debt which were to be received as subscription to the proposed loan were the following:

"Those issued by the commissioners of loans, in the several states, including certificates given pursuant to the Act of Congress of 2 January, 1779, for bills of credit of the several emissions of 20 May, 1777, and 11 April, 1778, and in the bills of credit issued by the authority of the United States, at the rate of one hundred dollars in the said bills for one in specie."

1 Stat. 139. The general term "bills of credit," as used in the act of 1790, is defined in the resolutions of Congress on the days respectively referred to. 20 May 1770:

"Resolved, that the sum of 5,000,000 of dollars in bills on the credit of the United States be forthwith emitted under the direction of the board of Treasury."

3 Journ. 194. 11 April 1778:

"Resolved that 5,000,000 of dollars be emitted in bills of credit on the faith of the United States. . . . That the thirteen United States be pledged for the redemption of the bills of credit now ordered to be emitted."

4 Journ. 149. 2 January 1779: In the preamble and resolutions of this day, bills of credit are thus referred to. The United States has "been under the necessity of emitting bills of credit, for the redemption of which the faith of the United States has been pledged." "That any of the bills emitted by order of Congress, &c." "That the bills received on the said quotas," &c. "That the following bills be taken out of circulation; namely, the whole emissions of 20th May 1777, and 11th April 1778." 5 Journ. 5-6.

When, therefore, we find that in the Confederation, the acts and resolutions of Congress, these various terms are used as synonymous, all referring to the same species of paper, as well known and defined as the term "coin," "money," or any other term could be, and the same term, "bills of credit," used in the Constitution, it is not a little strange that those who framed the instrument should be supposed to have used it in a different sense, without adding some words denoting such intention. That, the term being adopted without explanation, was intended to be taken with the same meaning which had been so long and universally accepted would on any other than a constitutional question be deemed conclusive evidence of their intention cannot be doubted. If the term could admit of two interpretations, the members of the convention would adopt that which comported with the meaning given to the term by themselves, while members of Congress, before as well as after the adoption of the Constitution, rather than any other standard of interpretation to be found elsewhere. These reasons are strengthened by a reference to other parts of the Constitution, the terms of which are copied from the Articles of Confederation, as to coin money, regulate the value thereof, borrow money on the credit of the United States, fix the standard of weights and measures, and numerous others apparent on inspection.

As the Constitution was intended to be a supreme fundamental law and bond of union for ages to come, it was of the last importance to use those terms in the grant or prohibition of power which had acquired a precisely defined meaning either in common acceptation or as terms known to the common, the statute, or the law of nations, and infused, by universal consent into the most solemn acts of Congress, and the alliance of the Confederation, which expressed the sense in which the whole country understood words, terms, and language. The framers of the Constitution did not speak in terms known only in local history, laws or usages, nor infuse into the instrument local definitions, the expressions of historians, or the phraseology peculiar to the habits, institutions, or legislation of the several states. Speaking in language intended to be "uniform throughout the United States," the terms used were such as had been long defined, well understood in policy, legislation, and jurisprudence, and capable of being referred to some authoritative standard meaning; otherwise the Constitution would be open to such a construction of its terms as might be found in any history of a colony, a state, or their laws, however contradictory the mass might be in the aggregate. If we overlook the language of acts and instruments which express the sense in which it is understood by all the states, and seek for the true exposition of the Constitution in those which speak only for one state, we have the highest assurance, in the course and range of the argument in this case, that certainty cannot be found in the almost infinite variety of laws which had been passed by the states in relation to the emission of paper money. Nor is there more certainty in referring to the opinions of statesmen and jurists, in debates in conventions, or legislative bodies, or political writers, or commentators on the Constitution, among all of whom there is a most irreconcilable contradiction and discrepancy of views, on every debatable word and clause in the Constitution, the result of which has been strongly exemplified in the argument of the cases at this term depending on its true interpretation. Whether the remark made in the Senate of the United States by a profound and eminent jurist in a debate on a most solemn constitutional question is particularly applicable to the mass of what has been offered to the Court as authority in this case or not, yet its general practical truth must be admitted.

"If we were to receive the Constitution as a text, and then to lay down in its margin the contradictory commentaries which have been made and which may be made, the whole page would be a polyglot indeed. It would speak in as many tongues as the builders of Babel, and in dialects as much confused and mutually as unintelligible."

Fully convinced that the Constitution is best expounded by itself, with a reference only to those sources from which its words and terms have been adopted, I have always found certainty, and felt safety, in adhering to it as the text of standard authority to guide my reasoning to a correct judgment. In expounding it by opinion or on the authority of names, there is in my opinion great danger of error, for when it is found that from the time of its proposition to the people to the present, the wisest and best men in the nation have been and yet are placed foot to foot on all doubtful and many plain propositions in relation to its construction, it is as difficult as it would be invidious to select as a consulting oracle any man or class of statesmen or jurists in preference to another.

On the question involved in this case of what are bills of credit, my judgment is conclusively formed on the authority herein referred to; if it is not conclusive, I have neither found or have been directed to that which is paramount, or, in my judgment, at all coordinate or to be compared with it. Resting on this authority, it was my deliberate opinion that the certificates issued by a law of Missouri pledging the faith of the state for their redemption were bills of credit, prohibited by the Constitution. On the same authority, and as the result of subsequent researches, it is now my most settled conviction that the notes of the Commonwealth Bank of Kentucky are not bills of credit emitted by the State of Kentucky, inasmuch as the state has pledged neither its faith nor credit for their payment. And the notes not being payable at a future day nor issued on any credit as to time either on their face or by the law under which they were issued, but directed to be paid on demand, in gold or silver, they were not emitted to obtain a loan to the state or to meet its expenditures, and cannot be deemed its bills of credit. On a careful consideration of the mischiefs against the recurrence of which the Constitution interposed this prohibition, of its language, the bearing of the three phrases on each other, their evident spirit, and the meaning deducible therefrom, I cannot abandon my first impression that one requisite of a bill of credit is that it be made a tender in payment of debts.

The crying evils which arose from the issue of paper money by the states cannot be so well described as they are in the language of the Constitution. The emission of bills of credit by the states, making them a tender in payment of debts, impaired and violated the obligation of contracts. The remedy is an appropriate one, reaching both the cause and effect, by three distinct prohibitions -- no state shall emit bills of credit, make anything a tender but gold and silver, nor pass any law impairing the obligation of contracts. Thus, the remedy covers the whole mischief, and goes beyond it, if supplied literally to its full extent; the mere emission of bills of credit was no evil; if no law coerced their circulation or reception by individuals, they are as harmless as certificates of stock, emitted on a voluntary loan to the state, which are admitted not to be the prohibited bills of credit. So long as they were not made a tender, they could produce no evils not common to all paper, whether of a state, a corporation or individual, which, by common consent, passes from hand to hand in the ordinary transactions of life. To prevent the circulation of such a medium, it was not necessary to call into action the high power of the Constitution; the evil would cure itself; when the paper ceased to pass by consent, it would pay no debt, nor lead to the violation of any contract. The prohibition could not have been intended to prevent the people from taking as money what would answer all the purposes of money in the interchanges of society, nor to deprive them of the exercise of their free will; on the contrary, it was made to prevent the coercion of their free will by a tender law, and leave them free to enforce the obligation of their contracts for the payment of money and the enjoyment of their property.

In the construction of all laws, we look to the old law, the mischief and the remedy, and so expound it as to suppress the mischief and advance the remedy; no just rule of interpretation requires a court to go further by applying the remedy to a case not within the mischief unless the words of the law are too imperative to admit of construction. I know no class of cases to which the rule is more appropriate than those embraced within those prohibitions of the Constitution on the exercise of powers reserved by the states over subjects on which Congress have no delegated power; there can be no collision between the laws of a state and the laws of the Union, as there would be, where a state would legislate on those subjects that had been confided to Congress or any department of the federal government. Taking the first class of cases in the tenth section, relating to treaties, letters of marque and reprisal, and coining money, which are subjects over which the Constitution grants express powers, as an example, it is evident that to make the prohibition effectual to the object in granting the powers, it must be total, so as to exclude the exercise of any power by a state over the subject matter. From the nature of these subjects, there can be no concurrent power in the two governments; hence we find that the first two were, even by the Article Six of Confederation, expressly prohibited to the states, without the consent of the United States. The same reasons apply to the third, because the express power in Congress to coin money, regulate the value thereof, and of foreign coin, coupled with the prohibition to a state to coin money, is a decisive expression of the intention that it shall not exercise the power, as in the case of a treaty, or a letter of marque and reprisal. The evils to be guarded against had not existed under the Confederation; the states separately had not made treaties, granted letters of marque or reprisal, nor coined money in violation of those articles; the evils were wholly prospective, but were to be apprehended if any doubt whatever could be raised on the terms of grant of those powers. Hence the prohibition.

Touching the third class of cases, bills of attainder, ex post facto laws, and titles of nobility, they were not subjects of any delegated powers to Congress; but as they were opposed to the whole spirit of the people, and the Constitution, it annulled all power, state and federal, to do these things, and the prohibition is, in its nature and object, absolute and illimitable. But the second class of prohibited cases, emitting bills of credit, tender laws, and those impairing the obligation of contracts, are widely different; the evils had existed, did exist, and must recur if not prevented. Congress could not legislate on these subjects, much less control the states, on whom the powers of Parliament, in all their transcendency, as well as the prerogative of the Crown, devolved by the revolution. 21 U. S. 8 Wheat. 584. Each state has the power of emitting bills of credit, of passing tender laws, 29 U. S. 4 Pet. 435, and exercised both, by annulling contracts and grants, the right to do which could not be contested by any authority. 4 Wheat. 17 U. S. 643, 17 U. S. 651. These were the acts which called aloud for the remedy given by the prohibitions to prevent their recurrence, which would have been certain if it had not been made.

This Court has declared the intention of the Constitution of the subject of contracts.

"It was intended to correct the mischiefs of state laws which had weakened the confidence between man and man, and embarrassed all transactions between individuals by dispensing with a faithful performance of engagements; to guard against a power which had been extensively abused, and to restrain the legislature in future from violating the rights of property. It protected contracts respecting property, under which some person could claim a right to something beneficial to himself; and since the clause must, in construction, receive some limitation, it ought to be confined to the mischiefs it was intended to remedy, not to authorize a vexatious interference with the internal concerns or civil institutions of a state, to embarrass its legislation in the regulation of internal government, or to render immutable those institutions, for these purposes, which ought to vary with varying circumstances. The term 'contract' must be understood in a more limited sense, so as not to embrace other contracts than those which respect property, or some object of value, and confer rights which may be asserted in a court of justice."

Dartmouth College Case, 4 Wheat. 17 U. S. 428-429.

"The principal was the inviolability of contracts. The plain declaration that no state shall pass any law impairing the obligation of contracts includes all laws which infringe the principle the convention intended to hold sacred, and no further. It does not extend to the remedy to enforce the obligation of a contract; the distinction between them exists in the nature of things, so that without impairing the obligation, the remedy may be modified as the state may direct."

Sturges v. Crowninshield, 4 Wheat. 200. It is also a principle declared by this Court that the prohibition does not extend to the passage of a state law which does not affect contracts existing when the law was enacted, which operates only on the obligation of posterior contracts, Ogden v. Saunders, 12 Wheat. 369, and no exposition of the Constitution is better settled or commands more universal assent than that the prohibition does not extend to the passage of retrospective, unjust, oppressive laws or those which divest rights, antecedently vested, if they do not directly impair the obligation of a contract, 27 U. S. 2 Pet. 411-413; 28 U. S. 3 Pet. 289; 33 U. S. 8 Pet. 110, and that

"the interest, wisdom and justice of the representative body and its relations with its constituents furnish the only security, where there is no express contract, against unjust and exclusive taxation as well as against unwise legislation generally."

29 U. S. 4 Pet. 563.

Let these principles of constitutional law be applied to the construction of the clause against emitting bills of credit, as they have been applied to the clause concerning the obligation of contracts, the conclusion seems to me inevitable that the same construction which imposes a limitation to the corrective remedy against the future violation of the sanctity of contracts, which it was the great object of the prohibition to protect, should be extended with at least as much liberality to limit the operation of that clause of the same article which prohibits an evil which by no possibility could impair the obligation of a contract without a tender law. The mischiefs of a mere emission of bills of credit are trivial in their consequences compared with the effect of tender laws; their combined effect is to violate a contract; surely then, the restriction on a state ought not to be construed more rigidly against an act, which cannot of itself produce the mischief intended to be remedied, than a law which wholly annuls a contract. If each clause is taken according to an universal rule that laws should be construed subjectam materiam, the lesser evil requires the more gentle corrective; but in assigning to the emission of bills of credit, without their being made a tender, a more restrictive meaning than to the direct violation of a contract, we act on the inverse rule. The protection is lessened in the same proportion as the danger is increased; the greater the mischief, the milder and less efficient is the remedy; reason and established principles alike require that a prohibition should be limited, so far as can be done, without producing the mischief intended to be remedied, and expanded, so far as is necessary to correct it. The construction must be according to the subject matter of the law, strict or liberal, as the nature of the case requires, and the object to be effected will be defeated or accomplished, ut res magis valeat quam pereat; that which will effectuate all the objects of the prohibition cannot be too narrow, that which goes beyond the express word, or necessary implication, to effect an object not within the mischief, must be too broad.

On the same rule which confines the prohibition as to contracts, to state laws passed affecting existing contracts, and excluding from the protection of the Constitution, all posterior contracts; a law making bank notes a legal tender in payment of debts contracted after the passage of the law, would not be within the prohibition. On the same principle by which an unjust, oppressive, retrospective law, or one which divests vested rights, is held not to impair the obligation of a contract per se, it must be held that a mere emission of bills of credit is not within the mischiefs intended to be corrected. There is no more danger in the exercise of this power, at the discretion of the legislature, than in these unrestrained powers, to modify the remedy to enforce the obligation of a contract, which this Court hold not to be affected by the prohibition. There is, in the nature of things, the same distinction between bills emitted, which are not made a tender, and those which are a tender, as between the remedy and the obligation of a contract; nay, the distinction is more marked. The obligation of a contract, without an effective remedy to enforce it, would be "a name," and not "a thing;" the word "obligation" would be an "empty sound," and the protection of the Constitution a solemn mockery. Yet if it is held to prohibit the emission only of bills of credit which were not a tender, it would prevent none but imaginary evils, and leave real practical ones unredressed. To emit the notes of an individual or a private corporation, for the purposes of circulation, would be productive of the same evils as the bills of credit of a state; the mischief does not depend on who is the owner of the stock pledged for its payment, or on whose credit they are received in circulation. Yet it is conceded by counsel, and agreed by all the judges, that bank notes are not within the prohibition, though they are as much "paper money," "paper medium," as the bills of credit of a state. Why, then, should the prohibition extend to the mere emission of the latter, and not to the former species of paper money, when neither are a tender in payment of debts? What good reasons can be assigned why the Constitution did not prohibit the emission of both if it prohibits one, and on what ground does the discrimination rest? It cannot be that there is less danger, in having the paper medium of the country based on the funds, faith and credit of the state, which can by taxation, levy a contribution ad libitum, on all the property of all its citizens, for its redemption, 17 U. S. 4 Wheat. 428; 29 U. S. 4 Pet. 563, than when a bank emits it on the mere credit of their corporate stock. Nor that a state will more readily sport with and abuse its plighted faith, than a corporation, an individual, or a banking association.

These questions are not unworthy the consideration of those who hold that it is not necessary to bring bills of credit within the prohibition, that they may be made a tender in payment of debts. That all

"paper intended to circulate through the community, for its ordinary purposes as money, which paper is redeemable at a future day, the emission of any paper medium by a state government, for the purpose of common circulation,"

though not made a tender, and though the faith, funds or credit of the state are not pledged for its redemption, are bills of credit. They are also worthy of notice by those who hold that paper emitted by the officers of a state, under the authority of a law, which paper is of the precise character above defined, which is made a tender, and for the redemption of which the funds and faith of the state are both most solemnly pledged, in the law directing its emission, are not bills of credit within the prohibition. It will not suffice that a disclaimer is made of its extension to bank notes, or a declaration that they are not included within the mischiefs, without assigning the reasons, or referring to the authority on which the discrimination is made, on just principles of construction.

For myself, I rest on the most solemn adjudications of this Court, as well prior as subsequent to the case of Craig v. Missouri, settling the rules and principles on which the most important prohibition in the tenth article has been construed, and in applying them to the clause now in question, find abundant authority for holding it necessary, that bills of credit be made a tender in payment of debts, to come within the prohibition. Taking my definition of bills of credit of a government, from acts of Parliament, of the old and new Congress, the Articles of Confederation, and the Constitution, I held, in Craig v. Missouri, that certificates emitted by a state for circulation, payable in future, on the faith and funds of the state, which certificates were made a tender were prohibited as bills of credit. On the same authority I now hold that the notes in question are not such bills of credit, because not emitted by the state, not made a tender in payment of any debts to individuals, nor the faith or general funds of the state pledged for their redemption. And further, on the authority of acts of Parliament, of the old Congress, of state legislatures before the adoption of the Constitution, and acts of Congress since, and of the common law, I make the distinction between the bills of credit issued under the seal of a bank and bank notes payable to bearer, on demand, and hold that the latter can by no just definition or legal construction come within the prohibition. I have resorted to these sources of information, as the fountain of constitutional law, and have found in them abundant cause of justification of the opinions which I formed in the former case, and adhere to in this.

The plaintiffs have relied much upon the pleadings in this record as presenting the question in controversy in an aspect different from what it would have been, if the averments of the plea had been denied by a replication, instead of being admitted by a demurrer. These averments are in the first plea. 1. That the state, by the law establishing the bank, declared that the capital stock thereof should be $2,000,000. 2. "But which capital stock the said bank never received, or any part thereof, as these defendants aver." From the admission of these averments it is contended that inasmuch as the capital stock was not made up and paid into the bank by the state, pursuant to the declaration contained in the law, the faith and credit of the state was legally, virtually, and morally pledged to provide this amount of capital as a fund for the redemption of the notes issued by the bank. And that having violated this pledge, the state was bound, and, if suable, was compellable to pay them, whereby the notes of the bank became bills of credit of the state as effectually as if they had been emitted on an express pledge of its faith or credit for their redemption.

The first averment is founded on the law of incorporation, and is an averment of mere matter of law as to which it is among the oldest and best settled rules of pleading, that the law will not suffer an averment of that to be law, which is not law; such averment or pleading is to no effect or purpose, though admitted by demurrer. Plowd. 168a; 170b. On an inspection of the law it appears that this averment refers only to the section which declares what the amount of the capital shall be, but the plea wholly omits any reference to the section which specifies the items which shall compose that capital, as a fund for the redemption of the notes. It is the proceeds of the lands belonging to the state, its surplus revenue, the stock of the state in the Bank of Kentucky, and the securities taken by the bank, on a loan of its notes to individuals. The mode of redemption was in making these notes receivable in payment for lands, taxes, debts due the state, the Bank of Kentucky, and the Bank of the Commonwealth. This was the only pledge given by the state, and it is not averred in the pleas that this pledge was in any way violated by any refusal to receive the notes for any such purposes; on the contrary, it is admitted that they were always so received; consequently the state has faithfully kept its faith as entire as it was pledged by the law. This part of the plea, therefore, is to no purpose or effect so far as it avers that to be law which is not law.

The notes of the bank constituted no part of its capital; while they remained on hand, they were worthless to the bank; when loaned out, they became the evidence of a specie debt, due by the bank on demand, to the holder; the securities taken for repayment, were part of the capital for their redemption. But as they were taken only for the precise amount of the notes loaned, the amount of debt due by and to the bank was equal, with only this difference, that the bank paid no interest on their notes, while they received interest on their loans; the accretion of interest, therefore, was the only means of increasing the capital by the issue of their notes. If they were burnt according to the direction of the law after they had performed their function in their reception as payment by the state or the bank, it was no loss to the bank which issued them; or if the notes were returned to the bank, by the state treasurer or the Bank of Kentucky, they were as useless as capital as before they were first issued. In reissuing them, their operation was the same, adding nothing to the capital; indeed, the proposition is self-evident that a bank note is not a fund for its own payment; a debt due by a bank is not a part of the capital stock pledged for the payment of the debt.

It thus appears that by the terms and necessary operation of the law, though the term capital stock is used in the law, the thing which was made the capital was the proceeds of lands, taxes, debt and bank stock, and as the law and Constitution regard things, and not names, such must be taken to be the spirit, substance and effect of the law of incorporation. Hence, the second averment is of a fact wholly immaterial, since it was no part of the law that the capital should ever be received by the bank in any other manner than the one pointed out, which was in fact the only manner in which it could be received -- that is, as a fund for the redemption of its notes. In virtue of this law, purchasers of land and debtors of the state or banks had the option of making payment in specie, the notes of other banks, or of the Commonwealth Bank; they would, of course, pay in that medium which was the easiest and cheapest to be obtained, which must have been the notes of the Bank of the Commonwealth, or they would never have been issued. So that the inevitable effect of the law, and the emission of these notes on loan, was to make their receipt in payment, the means of their redemption, in addition to the securities on which the loan was made, and precluded any reasonable probability, or even possibility, that the proceeds of the pledged funds would be paid into the coffers of the bank, in specie, or the notes or other banks, unless the notes of the Commonwealth Bank were more valuable, or more difficult to be obtained than either. That such a consummation was in the contemplation of the legislature, or can be assumed by the court, in order to give effect to the plea is a proposition too extravagant to have been made by counsel; if this assumption is not made, that the state was bound by the law to make up the capital stock of the bank, by the actual receipt of the pledged funds, then there can be no pretense of its reception having a material averment. Had this second averment been put in issue, and found for the defendant, the court must have rendered a judgment for the plaintiff non obstante veredicto, if he was otherwise entitled to judgment, on the ground that the issue was on an immaterial fact. 26 U. S. 1 Pet. 71.

[Footnote 1]

See the acts extablishing the Bank of New York, 1791, the Bank of Albany, in New York, the Bank of Pennsylvania, 1793, the Bank of New Jersey, 1823, the Bank of Baltimore, 1795, the Bank of Virginia, the State Bank of North Carolina, 1810, the Bank of Georgia; the Bank of Kentucky, &c.

[Footnote 2]

See 3 Story's Com. on the Constitution 231, note 2.

[Footnote 3]

I have been favored with a sight of one of the original bills issued under the act of Maryland, 1769. It is as follows:

"This indented bill of six dollars shall entitle the bearer hereof to receive bills of exchange, payable in London, or gold and silver, at the rate of four shillings and six pence sterling, per dollar, for the said bill, according to the direction of an Act of Assembly of Maryland dated at Annapolis, 4 March, A.D. 1770. R. Conden, J. C. Clapham."

These gentlemen were doubtless the commissioners appointed under the act.

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