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in legal tender notes, would not such an act have been void Ž Or, suppose that it had passed an act granting banking privileges without first requiring security to redeem their bills in specie, and allowing them to redeem their bills in legal tender notes—would not such an act have been in violation of both the letter and spirit of the Constitution ? And if the Legislature of this State could not constitutionally have granted such privileges to banking institutions in this State, how can Congress or the Courts do so : I suppose that an individual or association must now comply with all the requirements of the laws and Constitution of this State, before banking privileges can be bestowed upon them. Can this Court say otherwise 2 Has it such power? And if so, by what authority ? Admitting that such preliminary steps must be taken, how inconsistent to say that after all this care to protect the People, the banks may disregard their obligations with impunity. But time will not permit me to dwell here: I must pass to another proposition. By the act creating them, these notes are made legal tender for the payment of all debts public and private : is the redemption of their bills by a bank the payment of a debt within the literal meaning of the term ' I have shown that a bank can only become such by complying with the Constitution and the law. They are allowed to circulate notes as money, upon condition that they will redeem the same upon demand in specie. The relation of debtor and creditor does not exist between the bill holders and the banks issuing the bills: a bill-holder gives no credit to the bank in receiving its bills, but relies, and has a legal right to rely upon the securities pledged for their redemption against loss with the superintendent. The bill holder has the constitutional right to demand of the bank its redemption in specie: upon this condition alone was the bank allowed to issue the bill, and upon this guaranty the holder received it: certainly, it will not be said that a legaltender note is an equivalent to specie. As I understand, you may not have an action against a bank for the amount of its bills upon a refusal by it to redeem the same, but must apply to the superintendent for the sale of the securities pledged for the redemption of its bills with him. The bills issued by a bank are certainly not a debt, such as one contracted for the rent of a banking house, the payments of its clerks, &c. For a debt of this kind you might have an action, but could not require the sale of its securities as upon the refusal to redeem its bills in specie. The Court is undoubtedly aware that for the last two years or or more, throughout the country, (but more particularly in the city of New York)—there has been a most unprecedented demand for the precious metals. Wall street has been crowded with those seeking to speculate in them ; and also by those whose necessities demanded their use. Notwithstanding the abundance of legal-tender notes, the great money market of these States has only looked upon gold and silver as the standard currency of the land. The Superintendent of the Banking Department of this State in his report for 1863, says: —
“The most important event in the financial history of the last fiscal year has been, the suspension of specie payments by the banks of this and other States: this occurrence dates from December 28th, 1861, at which time the annual report from this deartment had already passed through the press, thus precluding allusion to the subject. To whatever causes such suspension shay be attributable, the event is one of serious amount to the whole community: conversion of a paper currency into gold and silver, at the will of the holder, is the elementary attribute through which alone its existence can be tolerated. The evils resulting from an irredeemable paper currency are so generally understood and conceded, as to need no special elucidation. The laws of this State bearing upon the subject are of such unmitigated severity, that where the demand for payment in coin is persistently enforced, the banks have no alternative but compliance, or the relinquishment of banking privileges. In view of the immunity granted to the banks by the legislature, after the suspension of specie payments in 1837, the framers of the present Constitution embodied therein the following clause: ‘The Legislature shall have no power to pass any law sanctioning in any manner, directly or indirectly, the suspension of specie payments by any person, association or corporation issuing bank notes of any description.’ It is obvious therefore, that under the unrestricted operations of the laws of this State, an irredeemable paper currency cannot be maintained. It is true, the community might waive for a short period the payment of coin, if there was no eatensive demand for the precious metals. Such was the case during the partial suspension of 1857, which being the result of a partial monetary spasm, lasted only three or four months, and therefore invalidates the position that there could be continued suspension of specie payments by the banks of this State.”
It is well known that there is at this present time an extensive demand for the precious metals, unparalleled in the history of this government.
Either the banks of this State, or those holding their bills issued as money, must be subjected to loss at the present time in the use of such bills as money.
Specie alone represents—as it has ever done—the standard by which the value of all securities is measured. By this standard, the bills of the banks of this State are not equal to specie by nearly one-half at the present time. In issuing such bills, the banks undertook to give back their equivalent, in fact and not in name. In fact, the bills were only to represent a dollar, and to be used as such. The bills are of no intrinsic value, nor were they intended to be. They were to be redeemed in specie, on demand. In doing this now, the banks are subjected to no loss in fact; because they are doing no more than they have undertaken to do, and for which they have received an equivalent in special privileges granted them. Therefore, when I say that the banks are subjected to no loss by redeeming their bills, I only mean to say that, by being thus compelled to comply with the terms of their organization, they would not be permitted to make some fifty per cent. upon the non-redemption of their own bills; or, in other words, by redeeming them in legal tender notes, which are not of greater value than the bills of the banks upon record.
For the last two years or more, the banks have been realizing large amounts of profits by a neglect and refusal to redeem their bills in specie; whilst those who were possessed of their bills, and were compelled to use specie, and to procure it by purchase in the market with these bills, have been subjected to a corresponding loss. It was because of these facts, that these suits were first instituted, and not from any desire to impair the value of legal tender notes.
Clients of mine being necessarily compelled to use specie, must either procure it for the bills of these banks which they held, or they must purchase it in the market at a premium ranging from thirty to seventy per cent. They were compelled to do one or the other. Specie must be had ; neither the bills of the banks or legal tender notes would answer the purpose; the Government would not receive the paper money of either its own make or that of the banks in payment of duties. For the purposes of travel in a great commercial Republic like ours, immense amounts of specie must be had ; coin alone is available throughout the civilized world.
In regard to the constitutional power of Congress to make anything but gold and silver a legal tender in payment of ordinary debts, there is a great doubt. Never before has such a right been claimed, or, at least, never exercised. Eminent jurists held it to be a monstrous and unwarranted assumption of power; while those who admit such right, do so principally upon the ground of right. The Courts in the first judicial district of this State have decided these legal tender notes invalid. Their decision amounts to this: in this seventh district a contrary conclusion was arrived at ; while the Court before whom this immediate case was brought, gave no written opinion— merely rendering a decision in order that the question might be at once brought before this Court. The question therefore is a new one, and upon which there is no binding decision. What has been said and done before the Courts thus far, shows that great doubt and perplexity exists on all sides, in regard to the power of Congress to make legal tender notes a legal tender for ordinary debts. The redemption of its notes by a bank must certainly be held not an ordinary debt; and the Courts should not give to legal tender notes greater latitude and effect than Congress intended, nor than is absolutely necessary, should it come to the conclusion that they are valid for any purpose.
But it must be apparent that Congress never intended to make them, and did not make them equal to specie—for the very act creating them shows that. And I ask the Court to consider well, before it says that the banks of this State—which are dependent upon and governed by the laws thereof—shall be permitted to redeem their bills in paper—a kind of money which, until within a recent period, was entirely unknown to . the law, and which could not have, in any manner, been contemplated in the contract creating banks. If the necessities of this Government are such that the exercise of so doubtful a prerogative shall be deemed necessary to maintain it, let it be done with care and moderation, and not go beyond the point where such necessity ends. There can be no necessity for breaking down the laws of this State, in order to sustain those of the general government. Should the Court hold that Congress has a right to make paper money of such a character as to allow our banks to redeem their bills with it, it does virtually break down and invalidate the laws and constitution of this State. And more than that, it says to the people of this State: “that which you have taken as money by virtue of the laws of this State, as being equal to gold and silver, and which is now of not more than half the value of gold and silver, you shall not enforce the payment of, against those from whom you received it; but you shall take our paper money, although it has no greater value than that which you have of your own banks in redemption of it.” But, both the Constitution and laws of the State and the General Government, may be sustained and promoted by a fair, impartial, and determined course on the part of the Judi. ciary, unbiased by any of the trifles which surround us; determined to sustain the Constitutions of both, and thereby maintain the rights and interests of both. I must here quote again from the report of the Superintendent for 1862. He says: *“At this peculiar juncture in public affairs, parties and individuals feel a willingness to strengthen the hands of the National Administration; measures that would arouse the most determined resistance in times of peace, are now acquiesced in—if not applauded. But there must be a limit to encroachments upon constitutional rights; if we would preserve tie. constituent elements of our present form of government. Instead of departing more widely from Constitutional principles, it becomes us rather to lay to heart and practice the beneficent counsel of the patriot JAckson ; who says: “Nor is our Government to be maintained—or our Union preserved—by invasions of the rights and powers of the several States. In thus attempting to make our General Government strong, we make