After a vote against bills as legal tender in Hepburn, and a half-step in the opposite direction in the intermediary Veazie Bank case, President Grant’s two recent appointees to the Court[i], replacing a vacancy which existed at the time of the first Legal Tender Case[ii] and Justice Grier[iii], respectively, joined with the previous minority in effecting a complete volte-face. In doing so, the (now) majority relied on several arguments, including the presumptive validity of Congressional statutes and the fact that the Constitution, with its inability to contemplate all scenarios which might arise, required the use of the Necessary and Proper Clause to ensure that Congress would have great leeway in how its enumerated powers are exercised[iv].
While the Court’s discussion of the presumptive validity of Congressional acts was perhaps intended to camouflage its clear disregard for the principles of stare decisis, its discussion of the Necessary and Proper Clause was a bit more convincing (if still at odds with precedent). Noting that the government has the power to borrow, the majority argued that it must follow that Congress could also consider and pursue the best means by which to do so. By making its treasury notes a legal tender for private debts, the majority argued, it made them more valuable, and thus ensured increased demand[v]. “Making the notes legal tenders gave them a new use, and it needs no argument to show that the value of things is in proportion to the uses to which they may be applied.”[vi] Because, the majority argued, legal tender power was necessary and proper to borrowing money to fund the government, it was therefore constitutional[vii].
In addition, and in a further nod to pragmatism, the majority opinion also stressed the national emergency the country which precipitated the Legal Tender Act:
We do not propose to dilate at
length upon the circumstances in which the country was placed, when Congress
attempted to make treasury notes a legal tender. They are of too recent
occurrence to justify enlarged description. Suffice it to say that a civil war
was then raging which seriously threatened the overthrow of the government and
the destruction of the Constitution itself. It demanded the equipment and
support of large armies and navies, and the employment of money to an extent
beyond the capacity of all ordinary sources of supply. Meanwhile the public
treasury was nearly empty, and the credit of the government, if not stretched
to its utmost tension, had become nearly exhausted[viii]
[ix]
[x].
The
dissent in Knox did not go down without
a fight; after all, it was under the belief that the issue had been settled in
its favor less than two years previously. The essence of the dissenting opinion was what
we would now call a strict constructionist objection to giving the notes the
quality of “legal tender,” which would make them tender for private debts as well as public debts[xi],
because the coinage clause only addressed ‘coins’:
It is not claimed that any express
prohibition exists, but it is insisted that the spirit of the Constitution was
violated by the enactment. Here those who assert the unconstitutionality of the
acts mainly rest their argument. They claim that the clause which conferred
upon Congress power ‘to coin money, regulate the value thereof, and of foreign
coin,’ contains an implication that nothing but that which is the subject of
coinage, nothing but the precious metals can ever be declared by law to be
money, or to have the uses of money[xii].
[i]
Justices Joseph P. Bradley and William Strong,
respectively. Grant’s appointment of Bradley and Strong could (and has) provide
a topic for a journal article in its own right as a discussion of an early
example (in the US at any rate) of packing a court.
[iii] Because Grier had already retired from the bench at the time
the decision was announced, his vote is interestingly not counted by some
historians who thus assert that the decision in the first Legal Tender Case was
4-3 rather than 5-3 (despite the decision itself noting that Grier agreed with,
and voted with, the published opinion). Whether or not his vote counted, and
far more consequentially than this interesting anecdotal historical footnote,
the anti-paper-money justices still, of course, had a majority.
[ix] The point of the majority was to cast
the Legal Tender Acts as an act of national survival; as a later Court would
put it, the Constitution “is not a suicide pact.” Kennedy v.
Mendoza-Martinez, 372 U.S. 144, 160 (1963).
[xi] By this point it didn’t seem
that anyone had an objection to the Congress declaring that bills could serve
as a means of payment for debts to the government. It was rather only the
payment of private debts which was up for dispute at this point.
J
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