REPORT OF COMMITTEE CONTINUED.

59

that they might constitute them, under their own constitutions, complete legislatures. Hence they agreed, in convention, to abstain from the exercise of certain enumerated powers, which otherwise would justly and rightfully pertain to them as 'free and independent States.' And intending, in good faith, to relinquish and abandon the exercise of those certain powers, they inserted in their constitutional compact of union express prohibitions. The States, by fair and natural construction, would retain to themselves all powers not conferred exclusively upon the Federal Government, or expressly prohibited to the States; and yet, out of abundant caution, and to remove the possibility of doubt or cavil, an express amendment of the Constitution to that effect was adopted and ratified.

"It will not be questioned by the Secretary, the Committee suppose, that the States did possess, and have reserved the power to borrow money. Certain it is, that they have very generally and very extensively exercised such power. Now, if the power to borrow money on the credit of a State be unqualified, like the power of Congress to borrow money on the credit of the United States, the Committee cannot comprehend the logic by which the conclusion is reached, that, in the latter case, whilst the absolute and independent power of issuing bills was intentionally withheld, yet it was meant to leave Congress unrestricted in the choice of such means of borrowing, if the emission of bills should, at any time, be deemed the most expedient mode of attaining that object; and by which, in the former case, the other and contrary conclusion is also reached, that whilst the absolute and independent power of emitting bills of

credit is prohibited to the States, the like unrestricted choice in the means of borrowing, by the emission of bills, should at any time be deemed the most expedient mode of attaining that object, is not left to the States. Neither Congress nor the States can emit bills of credit, in the exercise of an absolute and independent power. Congress and the States possess the unqualified power to borrow money. Congress is unrestricted in the choice. of means, and may issue bills of credit, if that mode of borrowing should, at any time, be deemed the most expedient. The States, however, are not equally unrestricted in the choice of means, and may not issue bills, although that mode of borrowing should, at any time, be deemed the most expedient. * * When the loan obtained is for any considerable length of time, it is usual to fund the debt thereby created by issuing certificates of stock. Where the loan obtained has only a short time to run, and it is proposed to pay it off speedily with the accruing revenue, the ordinary mode is, to authorize the Secretary of the Treasury to issue treasury notes, payable at the expiration of a limited time, bearing such interest as may be expressed and allowed by the act directing the issue of the notes. Such notes are intended, bona fide, as a temporary loan, and are not designed or expected to circulate as a currency. Such notes were doubtless within the contemplation of Gouverneur Morris, when he remarked, that striking out the authority to issue bills of credit, would not prevent the use of the notes of a responsible minister, and that would do all the good without the mischief. The use of public notes can be justified only as the mode of effecting a loan-they are employed to

* *

AMOUNT OF NOTE ISSUES, 1837-1844.

61

Το

acknowledge the existence of a debt due by the United States, and contain a promise to pay it, at some future stipulated time, with interest, as may be agreed. issue notes for circulation, payable on demand, under cover of the authority to borrow money in the form of treasury notes, is deemed an abuse of authority which ought to be corrected."

From March 3, 1843, until July 26, 1846, no new issues of treasury notes were authorized. From 1837 to 1844 treasury notes amounting to $47,002,900 were issued under eight different acts, of which $46,216,935.82 were redeemed by the close of 1845. The lowest denomination for any one note was $50, but where new notes were issued in place of old ones the accrued interest was often added. The amount authorized to be originally issued by these several acts was thirty-one millions. The remainder consisted of reissues.

The notes issued under the act of October 12, 1837, and the six succeeding acts were all printed from the same series of plates, and the different rates of interest were inserted in writing. A new set of plates were prepared for notes issued under the act of March 3, 1843, and the following words, " with interest at the rate of one mill per $100 per annum," were engraved in the body of the note. These notes were all of the same size, the largest ever issued, and measure eight by four inches. Photo-lithographs of the originals issued under these acts may be found at the beginning and end of this volume.

The following table exhibits the amount of treasury notes issued each year, under different acts of Congress, from October 12, 1837, to March 3, 1843, from which it will be seen that the total amount issued was

$47,002,900, all of which was sold or issued at par. Interest varied from 1 mill per cent. to 6 per cent., and the amount authorized was fifty-one millions.

CHAPTER VII.

TREASURY NOTES OF THE PERIOD OF THE MEXICAN WAR.

ON July 1, 1844, the public debt of the United States amounted to $24,748,188, and consisted principally of stocks not payable until the lapse of ten and twenty years.' The 5 per cent. stocks payable in ten years were at a premium of 106, and the 6 per cent. stocks payable in twenty years, at a premium of 116. The Secretary estimated that the revenue under the tariff of 1842 would yield a much larger amount than was necessary. Accordingly, Congress, in July, 1846, passed a bill amending the tariff and reducing the duties on imports. In the meantime, during the year 1845, difficulties with Mexico, owing to the annexation of Texas, rendered war inevitable, and on May 13, 1846, war was declared. Secretary Walker estimated that, if the war should continue for a year, there would be a deficiency of more than twelve millions; and, in order to meet this deficiency, a bill was reported from the Committee on Ways and Means, which, with some additions, embodied the provision of the act of October 12, 1837, as to treasury notes, and that of April 14, 1842, as to a loan. The following is the form of a $100 note issued under this act: See page 65.

1 Report of Secretary Bibb, 1844.