the people to the protection of the other political factor. It is impossible to point out every single consequence of this general principle. A few instances will make the matter sufficiently clear. The states cannot tax a bank created by the United States and acting as their fiscal agent, or the salary or other emoluments of federal offi

cials, or federal bonds, etc. Congress cannot tax state property, such as a railroad, salaries of state officials, municipalities and their property, etc.2

Among the debts of the United States for the payment of which congress could levy taxes are to be understood

1 The fact that a corporation created by the United States renders its creator some service does not entitle it to exemption from all taxation by the states. Railroad Co. vs. Peniston, Wallace, XVIII., 5.

2 See on this point, McCulloch vs. Maryland, Wheaton, IV., 316; Veazie Bank vs. Fenno, Wallace, VIII., 533; and Collector vs. Day, Wallace, XI., 113. The principal sources of income of the Union are the customs and the internal revenue taxes. The latter are sufficiently characterized by giving the principal heads of the income derived from them. The nation received in 1884 from distilled liquors, $76,905,385; from tobacco, $26,092,400; from malt liquors, $18,084,954. In 1883, it received from the sale of stamps, with which various articles had to be provided, $7,053,053; and from banks and bankers, $3,784,995. The taxation of business formerly went much further than at present. But even now it is not restricted to banks and bankers, as might appear from the above list. (The taxation of the capital and deposits of banks and bankers ceased March 3, 1883; they are, however, burdened with several other taxes.) Every manufacturer and dealer in tobacco or the liquors designated is still subject to taxation as such. The articles and occupations which had to be taxed during the war, but which have since been freed, yielded in 1866 an income of $236,236,037. The proceeds of the customs were, in 1884, $195,067,489. The total imports for the year 1883 represented a value of $723,180,914, of which $515,676,196 consisted of merchandise subject to duties. These goods paid an average duty of 41.63 per cent., equal to 29.68 per cent. on the total import. In 1884 the imports decreased to $667,697,993. On the questions here treated, see F. Hilliard, Taxation, Boston, 1885, and Cooley, Law of Taxation, Chicago, 1876.

those incurred under the articles of confederation as well as those contracted afterwards. The former are covered by the provisions of article VI., § 1, that the validity of existing obligations shall not be touched by the adoption of the constitution. The latter are covered by the express grant of the right to contract new debts. Congress is empowered "to borrow money on the credit of the United States" (art. I., sec. 8, § 2). This power is granted without any limitation. Money may therefore be borrowed in every way known to modern mercantile life; nay, according to the decisions of the supreme court, in such a way that there is no borrowing whatever, even in the broadest sense of the term, but simply an advantage gained to the nation by the strengthening of its credit. The right to create the United States bank was deduced from this provision. Upon this clause, moreover, the constitutionality of the present system of national banks must be based. Whether (and, if so, how far) congress has the power of making the federal currency a legal tender is a question which has formerly, and again quite recently, actively engaged the attention of the people, the politicians and the courts. But, in spite of the repeated decisions of the supreme court sustaining it, this power is

1 In this connection the fourth section of the fourteenth amendment, which needs no commentary, may be cited. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any state shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void."

2 They are compelled to invest a large portion of their capital in government bonds, and thus the federal government can naturally borrow money much more easily.

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not considered as definitely established, since public opinion looks upon these decisions and their motives, at least in part, as very doubtful. Efforts are therefore being made to settle this very important question beyond doubt by an amendment to the constitution. At this point I can supplement what has been stated in another connection concerning this great contest by pointing out another constitutional provision, which cannot be properly wholly disregarded in the argument, but, nevertheless, contains no certain indication of the intentions of the authors of the constitution on this question. The states are forbidden to "make anything but gold and silver coin a tender in payment of debts." The question was therefore not overlooked by the Philadelphia convention. But what conclusion is to be drawn from the express prohibition on the one hand and silence on the other? Was there no need of prohibiting congress because it has only the powers granted it? Or may the disputed power be deduced from this silence, because without it the worth of the power to borrow money would have been substantially diminished and this power was granted without any limitation? No party and no political school has ever declared it to be a general principle of constitutional law that the federal government must be authorized to do whatever the states are expressly forbidden to do. And the very matters most closely related to the question in hand are not so treated by the constitution as to necessitate such a conclusion. In the very same paragraph the states are forbidden to coin money, but although this right must rest somewhere and could appertain only to the federal government if denied the states, yet the constitution does not let the matter rest with that

1 Not "their" debts, as Schlief (p. 469) very arbitrarily translates this.

express prohibition, but expressly grants congress the power (art. I., sec. 8, § 5) "to coin money, to regulate the value thereof and of foreign coin."1 But on the

The coinage act of April 2, 1792, provided that the dollar should have 3714 grains of pure silver (416 standard) and the ten-dollar gold piece, the eagle, 247 grains of pure gold (270 standard). The relation of gold to silver was fixed at 1:15. The disadvantages which soon arose in commerce were not traced back to the principle of the “double standard,” but were attributed simply to the circumstance that gold had been valued too low. This difficulty was relieved by a law of June 28, 1834, which fixed the legal proportion of the two metals at 1:16. Thereafter the eagle was to contain only 232 grains, pure gold (258 standard). But if the former rule prevented the coinage of gold, the silver dollars, now above par, vanished out of circulation still more rapidly. A new coinage act of February 12, 1873, made the gold dollar the unit of coinage, but did not change the weight or fineness of gold coin ($1 equals 25.8 grains troy). The same law demonetized the silver dollar, i. e., thereafter only silver coins of fifty cents or less and also a new coin, 420 grains troy, called the trade dollar, because it was struck off solely in the interests of trade with Asia, were issued. The reason of the demonetization of the silver dollar was because, on account of its being above par, it had long since disappeared from circulation. In the preparation of the Revised Statutes, which became law June 20, 1874, the demonetization of the silver dollar — probably simply by an oversight-was made complete. The act of February 12, 1873, had provided that the silver thereafter coined should be legal tender only for $5 or less. The Revised Statutes extended this provision to all silver. Scarcely had the act of February 12, 1873, been passed than the value of silver began to sink rapidly in consequence of the extraordinary yield from the mines of Nevada, the adoption of the gold standard in Germany, etc. The result of this was an energetic agitation for the remonetization of silver, which speedily won over public opinion. A bill which President Hayes had refused to approve became a law February 28, 1878. The secretary of the treasury was directed to buy every month not less than two and not more than four million dollars' worth of silver at its market value and to coin it into silver dollars. The efforts to put the silver into circulation have, nevertheless, had only scant success. Of the $175,355,829 coined up to June 30, 1884, only $39,794,913 could be issued. In addition to this, there are $96,427,011 of "silver certifi

other hand the states are forbidden to issue "bills of credit," and the right of the federal government to do so is unquestioned, although this right was not expressly granted to it, but is merely deduced from the authority to borrow money. Yet the debates of the Philadelphia convention leave it very doubtful whether the intention was to give the federal government the right to issue paper money. An express grant of this power was in the draft of the constitution2 and was stricken out by a vote of nine states to two. The views of the delegates differed, however, as to what rights congress would have in this respect, if nothing were said about it. The prevailing, if not quite unanimous, view was that congress would not be able to make the federal notes a legal tender. On the other hand it may be alleged that the original idea was simply to forbid the states to issue bills of

cates" which are received in payment of taxes and customs by the government. There is a growing fear that the government will soon be no longer able to make its payments in gold, and that then there will be a great crisis. President Cleveland, shortly before his inauguration, declared himself in favor of the discontinuance of the coinage of silver, but in February, 1885, both houses of congress defeated proposals to that effect.

1" Bills of credit" are simply direct obligations of the state intended to circulate as money. Bank-notes do not fall under this description, even if the state is the sole holder of the bank stock. Craig vs. Missouri, Peters, IV., 410; Briscoe vs. Bank of the Commonwealth of Kentucky, Ibid., XI., 257; Darrington vs. Bank of Alabama, Howard, XIII., 12.

2" And emit bills on the credit of the United States."

3 Madison had proposed to declare this expressly instead of striking out the clause, but thereafter he voted to strike it out because he, as he says, had convinced himself that it "would not disable the government from the use of public notes, as far as they could be safe and proper; and would only cut off the pretext for a paper currency, and particularly for making the bills a tender, either for public or private debts." Elliot's Debates, V., 434, 435.