Opinion of the court.

controlling quality was that of money, and that therefore they were subject to taxation in the same manner, and to the same extent, as coin issued under like authority.

And there is certainly much force in the argument. It is clear that these notes were intended to circulate as money, and, with the national bank notes, to constitute the credit currency of the country.

Nor is it easy to see that taxation of these notes, used as money, and held by individual owners, can control or embarrass the power of the government in issuing them for circulation, more than like taxation embarrasses its power in coining and issuing gold and silver money for circulation.

Apart from the quality of legal tender impressed upon them by acts of Congress, of which we now say nothing, their circulation as currency depends on the extent to which they are received in payment, on the quantity in circulation, and on the eredit given to the promises they bear. In these respects they resemble the bank notes formerly issued as currency.

But, on the other hand, it is equally clear that these notes are obligations of the United States. Their name imports obligation. Every one of them expresses upon its face an engagement of the nation to pay to the bearer a certain sum. The dollar note is an engagement to pay a dollar, and the dollar intended is the coined dollar of the United States; a certain quantity in weight and fineness of gold or silver, authenticated as such by the stamp of the government. No other dollars had before been recognized by the legislation of the national gov ernment as lawful money.

Would, then, their usefulness and value as means to the exercise of the functions of government, be injuriously affected by State taxation?

It cannot be said, as we have already intimated, that the same inconveniences as would arise from the taxation of bonds and other interest-bearing obligations of the government, would attend the taxation of notes issued for circulation as money. But we cannot say that no embarrassment would arise from such taxation. And we think it clearly within the discretion of Congress to determine whether, in view of all the circumstances attending the issue of the notes, their usefulness, as a means of carrying on the government, would be enhanced by exemption from taxation; and within the constitutional power of Congress,

Opinion of the court.

having resolved the question of usefulness affirmatively, to provide by law for such exemption.

There remains, then, only this question, Has Congress exercised the power of exemption?

A careful examination of the acts under which they were issued, has left no doubt in our minds upon that point.

The act of February, 1862,* declares that "all United States bonds, and other securities of the United States, held by individuals, associations, or corporations, within the United States, shall be exempt from taxation by or under State authority."

We have already said that these notes are obligations. They bind the national faith. They are, therefore, strictly securities. They secure the payment stipulated to the holders, by the pledge of the national faith, the only ultimate security of all national obligations, whatever form they may assume.

And this provision is re-enacted in application to the second issue of United States notes by the act of July 11, 1862.†

And, as if to remove every possible doubt from the intention of Congress, the act of March 3, 1863, which provides for the last issue of these notes, omits, in its exemption clause, the word "stocks," and substitutes for "other securities," the words "Treasury notes or United States notes issued under the provisions of this act."

66

It was insisted at the bar, that a measure of exemption in respect to the notes issued under this-different from that provided in the former acts, in respect to the notes authorized by them was intended; but we cannot yield our assent to this view. The rule established in the last act is in no respect inconsistent with that previously established. It must be regarded, therefore, as explanatory. It makes specific what was before expressed in general terms.

Our conclusion is, that United States notes are exempt; and, at the time the New York statutes were enacted, were exempt from taxation by or under State authority. The judgment of the Court of Appeals must therefore be

REVERSED.

* 12 Stat. 346, 2.

† Ib. 546.

Ib. 709.

Statement of the case.

THE GEORGIA.

1. A case in prize heard on further proofs, though the transcript disclosed no order for such proofs; it having been plain, from both parties having joined in taking them, that either there was such an order, or that the proofs were taken by consent.

2. A bonâ fide purchase for a commercial purpose by a neutral, in his own home port, of a ship of war of a belligerent that had fled to such port in order to escape from enemy vessels in pursuit, but which was bonâ fide dismantled prior to the sale and afterwards fitted up for the merchant service, does not pass a title above the right of capture by the other belligerent.

APPEAL from the District Court for Massachusetts, condemning as prize the steamship Georgia, captured during the late rebellion. The case, as derived from the evidence of all kinds taken in the proceedings, was thus:

The vessel had been built, as it appeared, in the years 1862-3, at Greenock, on the Clyde, as a war vessel, for the Confederate government, and called the Japan; or if not thus built, certainly passed into the hands of that government early in the spring of 1863. On the 2d of April of that year, under the guise of a trial trip, she steamed to an obscure French port near Cherbourg, where she was joined by a small steamer with armaments and a crew from Liverpool. This armament and crew were immediately transferred to the Japan, upon which the Confederate flag was hoisted, under the orders of Captain Maury, who had on board a full complement of officers. Her name was then changed to the Georgia, and she set out from port on a cruise against the commerce of the United States. After being thus employed for more than a year-having in the meantime captured and burnt many vessels belonging to citizens of the United States-she returned and entered the port of Liverpool on the 2d of May, 1864, a Confederate vessel of war, with all her armament and complement of officers and crew on board. At the time she thus entered the port of Liverpool, the United States vessels of war, Kearsarge, Niagara, and Sacramento, were cruising off the British and

Statement of the case.

French coasts in search of her, the Alabama, and other vessels of the rebel confederation. It was resolved at Liverpool that she should be sold. It appeared that Captain Bulloch, an agent of the Confederacy at the port, at first thought of selling her at private sale, together with her full armament; but failing in that, she was advertised for public sale the latter part of May and the first of June. A certain Edward Bates, a British subject and a merchant of Liverpool, dealing not unfrequently in vessels, attracted by the advertisements, entered into treaty about her. The broker concerned in making a sale of her, testified that "Bates was desirous of knowing what would buy the ship, but he wished the armament excluded, as he did not want that." According to the statement of Bates himself, it had occurred to him that with her armament on board he might have difficulty in procuring a registry at the customs. All the guns, armament, and stores of that description, were taken out at Birkenhead, her dock when she first entered the port at Liverpool. The vessel had been originally strongly built, her deck especially; and this was strengthened by supports and stanchions. Though now dismantled, the deck remained as it was; the traces of pivot guns originally there still remaining. The adaptation of the vessel to her new service cost, it seemed, about £3000. How long she remained in port before she was dismantled was not distinctly in proof, though probably but a few weeks. The sale to Bates was perfected on the 11th June, 1864, by his payment of £15,000, and a bill of sale of the vessel from Bulloch, the agent of the Confederacy. He afterwards fitted her up for the merchant service, and chartered her to the government of Portugal for a voyage to Lisbon, and thence to the Portuguese settlements on the African coast. The testimony failed to show any complicity whatever of Bates with the Confederate purposes. But he had a general knowledge of the Georgia's career and history, testifying in his examination "that he knew from common report that she had been employed as a Confederate cruiser, but thought that if the United States government had any objection to the sale, they or their officers would have given

Statement of the case.

some public intimation of it, as the sale was advertised in the most public manner."

The American minister at the court of London, Mr. Adams, who was cognizant of the vessel's history from the beginning, and had kept himself informed of all her movements. and changes of ownership, having, on the 14th March, 1863, called the attention of Earl Russell, the British Secretary for Foreign Affairs, to the rule of public law, affirmed by the courts of Great Britain, which rendered invalid the sale of belligerent armed ships to neutrals in time of war, and insisting on its observance during the war of the rebellion, and having remonstrated, on the 9th of May, 1864, against the use made by the Georgia of her Majesty's port of Liverpool, informed him, on the 7th of June following, and just before the completion of the transfer to Bates, that the Federal government declined "to recognize the validity of the sale of this armed vessel, heretofore engaged in carrying on war against the people of the United States, in a neutral port, and claimed the right of seizing it wherever it may be found on the high seas." Simultaneously with this note Mr. Adams addressed a circular to the commanders of the different war vessels of the United States, cruising on seas over which the Georgia was likely to pass in going to Lisbon, informing them that in his opinion "she might be made lawful prize whenever and under whatever colors she should be found."* Leaving Liverpool on the 8th August, 1864, the vessel was accordingly captured by the United States ship of war Niagara, off the coast of Portugal, on the 15th following, and sent into New Bedford, Massachusetts, for condemnation. A claim was interposed by Bates, who afterwards, on the 31st January, 1865, filed a test affidavit averring that he was the sole owner of the vessel, was a merchant in Liverpool, and a large owner of vessels, that he had fitted out the Georgia at Liverpool for sea, and chartered her to

*Correspondence between Mr. Adams and Earl Russell, and Mr. Adams and Mr. Seward, communicated with the President's messages to the first and second sessions of the Thirty-eighth Congress.