Wednesday, July 10, 2013

Gold and silver vs. paper currency: Legal Tender Cases

In the Legal Tender Cases (79 U.S. 457 (1870)), argued in the U.S. Supreme Court, Justice Clifford discusses the Founding Fathers' intent regarding gold and silver as opposed to paper currency in his dissent. The question in the cases was "whether the Congress may declare [Treasury] notes to be lawful money, make them a legal tender, and impart to such a currency the quality of being a standard of value, and compel creditors to accept the payment of their debts in such a currency as the equivalent of the money recognized and established by the Constitution as the standard of value by which the value of all other commodities is to be measured."

Money, in the constitutional sense, means coins of gold and silver fabricated and stamped by authority of law as a measure of value, pursuant to the power vested in Congress by the Constitution. [Footnote omitted]
Coins of copper may also be minted for small fractional circulation, as authorized by law and the usage of the government for eighty years... [Footnote omitted]
Even the authority of Congress upon the general subject does not extend beyond the power to coin money, regulate the value thereof and of foreign coin. [Footnote omitted]
Express power is also conferred upon Congress to fix the standard of weights and measures, and of course that standard, as applied to future transactions, may be varied or changed to promote the public interest, but the grant of power in respect to the standard of value is expressed in more guarded language, and the grant is much more restricted.
Power to fix the standard of weights and measures is evidently a power of comparatively wide discretion, but the power to regulate the value of the money authorized by the Constitution to be coined is a definite and precise grant of power, admitting of very little discretion in its exercise, and is not equivalent, except to a very limited extent, to the power to fix the standard of weights and measures, as the money authorized by that clause of the Constitution is coined money, and as a necessary consequence must be money of actual value, fabricated from the precious metals generally used for that purpose at the period when the Constitution was framed.
Coined money such as is authorized by that clause of the instrument consists only of the coins of the United States fabricated and stamped by authority of law, and is the same money as that described in the next clause of the same section as the current coins of the United States, and is the same money also as "the gold and silver coins" described in the tenth section of the same article [Article I], which prohibits the states from coining money, emitting bills of credit, or making "anything but gold and silver coin a tender in payment of debts."
Intrinsic value exists in gold and silver, as well before as after it is fabricated and stamped as coin, which shows conclusively that the principal discretion vested in Congress under that clause of the Constitution consists in the power to determine the denomination, fineness, or value and description of the coins to be struck, and the relative proportion of gold or silver, whether standard or pure, and the proportion of alloy to be used in minting the coins, and to prescribe the mode in which the intended object of the grant shall be accomplished and carried into practical effect.
Discretion, to some extent, in prescribing the value of the coins minted is beyond doubt vested in Congress, but the plain intent of the Constitution is that Congress, in determining that matter, shall be governed chiefly by the weight and intrinsic value of the coins, as it is clear that if the stamped value of the same should much exceed the real value of gold and silver not coined, the minted coins would immediately cease to be either current coins or a standard of value as contemplated by the Constitution. [Footnote omitted] Commercial transactions imperiously require a standard of value, and the commercial world, at a very early period in civilization, adopted gold and silver as the true standard for that purpose, and the standard originally adopted has ever since continued to be so regarded by universal consent to the present time.
Paper emissions have, at one time or another, been authorized and employed as currency by most commercial nations, and by no government, past or present, more extensively than by the United States, and yet it is safe to affirm that all experience in its use as a circulating medium has demonstrated the proposition that it cannot by any legislation, however stringent, be made a standard of value or the just equivalent of gold and silver. Attempts of the kind have always failed, and no body of men, whether in public or private stations, ever had more instructive teachings of the truth of that remark than the patriotic men who framed the federal Constitution, as they had seen the power to emit bills of credit freely exercised during the war of the Revolution not only by the Confederation, but also by the states, and knew from bitter experience its calamitous effects and the utter worthlessness of such a circulating medium as a standard of value. Such men, so instructed, could not have done otherwise than they did do, which was to provide an irrepealable standard of value, to be coined from gold and silver, leaving as little upon the subject to the discretion of Congress as was consistent with a wise forecast and an invincible determination that the essential principles of the Constitution should be perpetual as the means to secure the blessings of liberty to themselves and their posterity.
Associated as the grant to coin money and regulate the value thereof is with the grant to fix the standard of weights and measures, the conclusion, when that fact is properly weighed in connection with the words of the grant, is irresistible that the purpose of the framers of the Constitution was to provide a permanent standard of value which should, at all times and under all circumstances, consist of coin, fabricated and stamped, from gold and silver, by authority of law, and that they intended at the same time to withhold from Congress, as well as from the states, the power to substitute any other money as a standard of value in matters of finance, business, trade, or commerce...

Beyond all doubt, the framers of the Constitution intended that the money unit of the United States, for measuring values, should be one dollar, as the word dollar in the plural form is employed in the body of the Constitution, and also in the Seventh Amendment, recommenced by Congress at its first session after the Constitution was adopted. Two years before that, to-wit, July 6, 1785, the Congress of the Confederation enacted that the money unit of the United States should "be one dollar," and one year later, to-wit, August 8, 1786, they established the standard for gold and silver, and also provided that the money of account of the United States should correspond with the coins established by law. [Footnote omitted]...
[Footnote omitted]
[I]t necessarily follows that Congress cannot under any circumstances make paper promises of any kind a legal tender in payment of debts... 
Prior to the decision just pronounced, it is conceded that the second question presented in the record was never determined by this Court except as it is involved in the first question, but it is admitted by the majority of the Court that the first question -- that is, the question whether the acts under consideration are constitutional as to contracts made before their passage -- was fully presented in the case of Hepburn v. Griswold, and that the Court decided that an act of Congress making mere paper promises to pay dollars a legal tender in payment of debts previously contracted is unconstitutional and void...
Strong support to the view here taken is also derived from the case of Craig v. Missouri,last cited, in which the opinion was given by the Chief Justice. Loan certificates issued by the state were the consideration of the note in suit in that case, and the defense was that the certificates were bills of credit and that the consideration of the note was illegal. Responsive to that defense the plaintiff insisted that the certificates were not bills of credit, because they had not been made a legal tender, to which the court replied, that the emission of bills of credit and the enactment of tender laws were distinct operations, independent of each other; that both were forbidden by the Constitution; that the evils of paper money did not result solely from the quality of its being made a tender in payment of debts; that that quality might be the most pernicious one, but that it was not an essential quality of bills of credit nor the only mischief resulting from such emission. [Footnote omitted]...
Against the motion, he says, we urged that it would be improper to deprive the Congress of that power; that it would be a novelty unprecedented to establish a government which should not have such authority; that it was impossible to look forward into futurity so far as to decide that events might not happen that would render the exercise of such a power absolutely necessary &c. But a majority of the Convention, he said, being wise beyond every event, and being willing to risk any political evil rather than admit the idea of a paper emission in any possible case, refused to trust the authority to a government to which they were lavishing the most unlimited powers of taxation, and to the mercy of which they were willing blindly to trust the liberty and property of the citizens of every state in the Union, and "they erased that clause from the system." [Footnote omitted]...
Argument to show that the national Treasury was organized on the basis that the gold and silver coins of the United States were to be the standard of value is unnecessary, as it is a historical fact which no man or body of men can ever successfully contradict...
Congressional legislation organizing the new government had now progressed to the point where it became necessary to reexamine that subject and to make provision for the exercise of the power to coin money, as authorized by the Constitution. Pursuant to that power, Congress, on April 2, 1792, passed the act establishing a mint for the purpose of a national coinage, and made provision, among other things, that coins of gold and silver of certain fineness and weight and of certain denominations, value and descriptions, should be from time to time struck and coined at the said mint. Specific provision is there made for coining gold and silver coins as follows: first, gold coins, to-wit: Eagles of the value of ten dollars or units; half-eagles of the value of five dollars; quarter-eagles of the value of two and a half dollars, the act specifying in each case the number of grains and fractions of a grain the coin shall contain, whether fabricated from pure or standard gold. Second, silver coins, to-wit, "DOLLARS OR UNITS," each to contain 371 grains and 4/16ths parts of a grain of pure silver, or 416 grains of standard silver...
Provision, it must be conceded, is not there made in express terms that the money unit of the United States shall be one dollar, as in the ordinance passed during the Confederation, but the act under consideration assumes throughout that the coin called dollar is the coin employed for that purpose, as is obvious from the fact that the words dollars and units are treated as synonymous, and that all the gold coins previously described in the same section are measured by that word as the acknowledged money unit of the Constitution. Very strong doubts are entertained whether an act of Congress is absolutely necessary to constitute the gold and silver coins of the United States, fabricated and stamped as such by the proper executive officers of the mint, a legal tender in payment of debts. Constituted as such coins are by the Constitution the standard of value, the better opinion would seem to be that they become legal tender for that purpose, if minted of the required weight and fineness, as soon as they are coined and put in circulation by lawful authority...

Enough has already been remarked to show that the money unit of the United States is the coined dollar, described in the act establishing the mint, but if more be wanted, it will be found in the 20th section of that act, which provides that the money of account of the United States shall be expressed in dollars or units, dimes or tenths &c., and that all accounts in the public offices and all proceedings in the federal courts all be kept and had in conformity to that regulation.

Completed, as the circle of measures adopted by Congress

were, to put the new government into successful operation by the passage of that act, it will be instructive to take a brief review of the important events which occurred within the period of ten years next preceding its passage, or of the ten years next following the time when that measure was first proposed in the Congress of the Confederation. Two reasons suggest the 21st of February, 1782, as the time to commence the review, in addition to the fact that it was on that day that the committee of Congress made their report approving of the project to establish a national mint. [Footnote omitted] They are as follows: (1) because that date just precedes the close of the War of the Revolution, and (2) because the date at the same time extends back to a period when all America had come to the conclusion that all the paper currency in circulation was utterly worthless, and that nothing was fit for a standard of value but gold and silver coin fabricated and stamped by the national authority...

Hepburn v. Griswold, [Footnote omitted] ... In that case, the contract bore date prior to the passage of the law, and he showed conclusively that it could never be necessary and proper, within the meaning of the Constitution, that Congress, in executing any of the express powers, should pass laws to compel a creditor to accept paper promises as fulfilling a contract for the payment of money expressed in dollars. Obviously the decision was confined to the case before the Court, but I am of the opinion that the same rule must be applied whether the contract was made before or after the passage of the law, as the contract for the payment of money, expressed in dollars, is a contract to make the payment in such money as the Constitution recognizes and establishes as a standard of value. Money

values can no more be measured without a standard of value than distances without a standard of extent, or quantities without a standard of weights or measures, and it is as necessary that there should be a money unit as that there should be a unit of extent, or of weight, or quantity. [Footnote omitted]

Credit currency, whether issued by the states or the United States, or by private corporations or individuals, is not recognized by the Constitution as a standard of value, nor can it be made such by any law which Congress or the states can pass, as the laws of trade are stronger than any legislative enactment. Commerce requires a standard of value, and all experience warrants the prediction that commerce will have it, whether the United States agree or disagree, as the laws of commerce in that respect are stronger than the laws of any single nation of the commercial world. [Footnote omitted]...
Power to coin money and regulate the value of domestic and foreign coin was vested in the national government to produce uniformity of value and to prevent the embarrassments of a perpetually fluctuating and variable currency. [Footnote omitted]...
Goods and chattels were directly bartered,
one for another, when the division of labor was first introduced, but gold and silver were adopted to serve the purpose of exchange by the tacit concurrence of all nations at a very early period in the history of commercial transactions. [Footnote omitted] Commodities of various kinds were used as money at different periods in different countries, but experience soon showed the commercial nations that gold and silver embodied the qualities desirable in money in a much greater degree than any other known commodity or substance. [Footnote omitted] Daily experience shows the truth of that proposition and supersedes the necessity of any remarks to enforce it, as all admit that a commodity to serve as a standard of value and a medium of exchange must be easily divisible into small portions; that it must admit of being kept for an indefinite period without deteriorating; that it must possess great value in small bulk and be capable of being easily transported from place to place; that a given denomination of money should always be equal in weight and quality, or fineness to other pieces of money of the same denomination, and that its value should be the same or as little subject to variation as possible. [Footnote omitted] Such qualities, all agree, are united in a much greater degree in gold and silver than in any other known commodity, which was as well known to the members of the Convention who framed the Constitution as to any body of men since assembled and entrusted to any extent with the public affairs. They not only knew that the money of the commercial world was gold and silver, but they also knew, from bitter experience, that paper promises, whether issued by the states or the United States, were utterly worthless as a standard of value for any practical purpose.
Evidence of the truth of these remarks of the most convincing character is to be found in the published proceedings of that Convention. Debate upon the subject first arose when an amendment was proposed to prohibit the states
from emitting bills of credit or making anything but gold and silver coin a tender in payment of debts, and from the character of that debate, and the vote on the amendment, it became apparent that paper money had but few if any friends in the Convention. [Footnote omitted] Article seven of the draft of the Constitution, as reported to the Convention, contained the clause, "and emit bills on the credit of the United States," appended to the grant of power vested in Congress to borrow money, and it was on the motion to strike out that clause that the principal discussion in respect to paper money took place. Mr. Madison inquired if it would not be sufficient to prohibit the making such bills a tender, as that would remove the temptation to emit them with unjust views. Promissory notes, he said, in that shape, that is when not a tender, "may in some emergencies be best." Some were willing to acquiesce in the modification suggested by Mr. Madison, but Mr. Morris, who submitted the motion, objected, insisting that if the motion prevailed, there would still be room left for the notes of a responsible minister, which, as he said, "would do all the good without the mischief." Decided objections were advanced by Mr. Ellsworth, who said he thought the moment a favorable one "to shut and bar the door against paper money," and others expressed their opposition to the clause in equally decisive language, even saying that they would sooner see the whole plan rejected than retain the three words, "and emit bills." Suffice it to say, without reproducing the discussion, that the motion prevailed -- nine states to two -- and the clause was stricken out and no attempt was ever made to restore it. Paper money as legal tender had few or no advocates in the Convention, and it never had more than one open advocate throughout the period the Constitution was under discussion, either in the Convention which framed it or in the conventions of the states where it was ratified. Virginia voted in the affirmative on the motion to strike out that clause, Mr. Madison being satisfied that if the motion prevailed,
it would not have the effect to disable the government from the use of Treasury notes, and being himself in favor of cutting "off the pretext for a paper currency, and particularly for making the bills a tender, either for public or private debts." [Footnote omitted] When the draft for the Constitution was reported, the clause prohibiting the states from making anything but gold and silver a tender in payment of debts contained an exception "in case Congress consented," but the Convention struck out the exception and made the prohibition absolute, one of the members remarking that it was a favorable moment to crush out paper money, and all or nearly all of the Convention seemed to concur in the sentiment. [Footnote omitted]
Contemporaneous acts are certainly evidence of intention, and if so, it is difficult to see what more is needed to show that the members of that Convention intended to withhold from the states and from the United States all power to make anything but gold and silver a standard of value or a tender in payment of debts. Equally decisive proof to the same effect is found in the debates which subsequently occurred in the conventions of the several states, to which the Constitution, as adopted, was submitted for ratification. [Footnote omitted] Mr. Martin thought that the states ought not to be totally deprived of the right to emit bills of credit, but he said "that the Convention was so smitten with the paper money dread that they insisted that the prohibition should be absolute." [Footnote omitted]
"Currency" is a word much more comprehensive than the word "money," as it may include bank bills and even bills of exchange as well as coins of gold and silver, but the word "money," as employed in the grant of power under consideration, means the coins of gold and silver, fabricated and stamped as required by law, which, by virtue of their intrinsic value, as universally acknowledged, and their official origin, become the medium of exchange and the standard
by which all other values are expressed and discharged. Support to the proposition that the word money, as employed in that clause, was intended to be used in the sense here supposed is also derived from the language employed in certain numbers of the Federalist, which, as is well known, were written and published during the period the question whether the states would ratify the Constitution was pending in their several conventions. Such men as the writers of those essays never could have employed such language if they had entertained the remotest idea that Congress possessed the power to make paper promises a legal tender. [Footnote omitted]
Like support is also derived from the language of Mr. Hamilton in his celebrated report recommending the incorporation of a national bank. He first states the objection to the proposed measure that banks tend to banish the gold and silver of the country, and secondly he gives the answer to that objection made by the advocates of the bank that it is immaterial what serves the purpose of money, and then says that the answer is not entirely satisfactory, as the permanent increase or decrease of the precious metals in a country can hardly ever be a matter of indifference.
"As the commodity taken in lieu of every other, it [coin] is a species of the most effective wealth, and as the money of the world, it is of great concern to the state that it possesses a sufficiency of it to face any demands which the protection of its external interests may create."
He favored the incorporation of a national bank, with power to issue bills and notespayable on demand in gold and silver, but he expressed himself as utterly opposed to paper emissions by the United States, characterizing them as so liable to abuse and even so certain of being abused that the government ought never to trust itself "with the use of so seducing and dangerous an element." [Footnote omitted] Opposed as he was to paper emissions by the United States, under any circumstances, it is past belief that he could ever have concurred in the proposition to make
such emissions a tender in payment of debts, either as a member of the Convention which framed the Constitution or as the head of the Treasury Department...
Seventy years are included in this review, even if the computation is only carried back to the passage of the act establishing the mint, and it is clear that there is no trace of any act, executive or legislative, within that period which affords the slightest support to the new constitutional theory that Congress can by law constitute paper emissions a tender in payment of debts. Even Washington, the father of our country, refused to accept paper money in payment of debts contracted before the War of Independence, and the proof
is full to the point that Hamilton, as well as Jefferson and Madison, was opposed to paper emissions by the national authority. [Footnote omitted]...
Authority to coin money was vested in Congress to provide a permanent national standard of value, everywhere the same and subject to no variation except what Congress shall make under the power to regulate the value thereof, and it is not possible to affirm, with any hope that the utterance will avail in the argument, that the power to coin money is not an express power, and if those premises are
conceded it cannot be shown that Congress can so expand any other express power by implication as to nullify or defeat the great purposes which the power to coin money and establish a standard of value was intended to accomplish...
Such notes are not declared in the acts of Congress to be a standard of value, and if they were the provision would be as powerless to impart that quality to the notes as were the processes of the alchemist to convert chalk into gold or the contrivances of the mechanic to organize a machine and give it perpetual motion. Gold and silver were adopted as the standard of value, even before civil governments were organized, and they have always been regarded as such to the present time, and it is safe to affirm that they will continue to be such by universal consent, in spite of legislative enactments and of judicial decisions. Treasury notes, or the notes in question, called by what name they may be, never
performed that office, even for a day, and it may be added that neither legislative enactments nor judicial decisions can compel the commercial world to accept paper emissions of any kind as the standard of value by which all other values are to be measured. [Footnote omitted] Nothing but money will in fact perform that office, and it is clear that neither legislative enactments nor judicial decisions can perform commercial impossibilities. Commodities undoubtedly may be exchanged as matter of barter, or the seller may accept paper promises instead of money, but it is nevertheless true, as stated by Mr. Huskisson, that money is not only the common measure and common representative of all other commodities, but also the common and universal equivalent. Whoever buys, gives, whoever sells, receives such a quantity of pure gold or silver as is equivalent to the article bought or sold; or if he gives or receives paper instead of money, he gives or receives that which is valuable only as it stipulates the payment of a given quantity of gold or silver. [Footnote omitted]
"Most unquestionably," said Mr. Webster, [Footnote omitted]
"there is no legal tender, and there can be no legal tender, in this country, under the authority of this government, or any other, but gold and silver. . . . This is a constitutional principle, perfectly plain and of the very highest importance."
He admitted that no such express prohibition was contained in the Constitution, and then proceeded to say:
"As Congress has no power granted to it in this respect but to coin money and to regulate the value of foreign coins, it clearly has no power to substitute paper or anything else for coin as a tender in payment of debts and in discharge of contracts,"
adding that
"Congress has exercised the power fully in both its branches. It has coined money and still coins it, it has regulated the value of foreign coins and still regulates their value. The legal tender, therefore, THE CONSTITUTIONAL STANDARD OF VALUE, IS ESTABLISHED AND CANNOT BE OVERTHROWN."
Beyond peradventure, he was of the opinion that gold and silver, at rates fixed by Congress, constituted the
legal standard of value, and that neither Congress nor the states had authority to establish any other standard in its place. [Footnote omitted]...
in the case of Gwin v. Breedlove, [Footnote omitted] in which the opinion of the Court was delivered by the late Mr. Justice Catron, than whom no justice who ever sat in the Court was more opposed to the expression of an opinion on a point not involved in the record.
No state shall coin money, emit bills of credit, or make anything but gold and silver a tender in payment of debts. These prohibitions, said Mr. Justice Washington, [Footnote omitted] associated with the powers granted to Congress to coin money and regulate the value thereof and of foreign coin, most obviously constitute members of the same family, being upon the same subject and governed by the same policy. This policy, said the learned justice, was to provide a fixed and uniform standard of value throughout the United States, by which the commercial and other dealings between the citizens thereof, or between them and foreigners, as well as the moneyed transactions of the government, should be regulated. Language so well chosen and so explicit cannot be misunderstood, and the views expressed by Mr. Justice Johnson in the same case are even more decisive. He said the prohibition in the Constitution to make anything but gold or silver coin a tender in payment of debts is express and universal. The framers of the Constitution regarded it as an evil to be repelled without modification, and that they have therefore left nothing to be inferred or deduced from construction on the subject. [Footnote omitted]

Remarks of the Chief Justice in the case of Sturges v. Crowninshield [Footnote omitted] may also be referred to as even more explicit and decisive to the same conclusion than anything embodied in the other cases...he added, "NOTHING BUT GOLD AND SILVER COIN CAN BE MADE A TENDER IN PAYMENT OF DEBTS." [Footnote omitted]...
Still the draft of the Constitution, as reported, contained the words "and to emit bills" appended
to the clause authorizing Congress to borrow money. When that clause was reached, says Mr. Martin, a motion was made to strike out the words "to emit bills of credit;" and his account of what followed affords the most persuasive and convincing evidence that the Convention, and nearly every member of it, intended to put an end to the exercise of such a power...
More forcible vindication of the action of the Convention could hardly be made than is expressed in the language of the federalist, [Footnote omitted] and the authority of Judge Story warrants the statement that the language there employed is "justified by almost every contemporary writer," and is "attested in its truth by facts" beyond the influence of every attempt at contradiction. Having adverted to those facts the commentator proceeds to say,
"that the same reasons which show the necessity of denying to the states the power of regulating coin, prove with equal force that they ought not to be at liberty to substitute a paper medium instead of coin."
Emissions of the kind were not declared by the Continental Congress to be a legal tender, but Congress passed a resolution declaring that they ought to be a tender in payment of all private and public debts, and that a refusal to
receive the tender ought to be an extinguishment of the debt, and recommended the states to pass such laws. They even went further and declared that whoever should refuse to receive the paper as gold or silver should be deemed an enemy to the public liberty; but our commentator says that these measures of violence and terror, so far from aiding the circulation of the paper, led on to still further depreciation. [Footnote omitted] New emissions followed and new measures were adopted to give the paper credit by pledging the public faith for its redemption. Effort followed effort in that direction until the idea of redemption at par was abandoned. Forty for one was offered and the states were required to report the bills under that regulation, but few of the old bills were ever reported, and of course few only of the contemplated new notes were issued, and the bills in a brief period ceased to circulate, and in the course of that year quietly died in the hands of their possessors. [Footnote omitted]
Bills of credit were made a tender by the states, but all such, as well as those issued by the Congress, were dead in the hands of their possessors before the Convention assembled to frame the Constitution. Intelligent and impartial belief in the theory that such men, so instructed, in framing a government for their posterity as well as for themselves, would deliberately vest such a power, either in Congress or the states, as a part of their perpetual system, can never in my judgment be secured in the face of the recorded evidences to the contrary which the political and judicial history of our country affords. Such evidence, so persuasive and convincing as it is, must ultimately bring all to the conclusion that neither the Congress nor the states can make anything but gold or silver coin a tender in payment of debts.
Exclusive power to coin money is certainly vested in Congress, but
"no amount of reasoning can show that executing a promissory note and ordering it to be taken in payment
of public and private debts is a species of coining money. [Footnote omitted]"...

Contracts for the payment of money, whether made before or after the passage of such a provision, are contracts, if the promise is expressed in dollars, to pay the specified amount in the money recognized and established by the Constitution as the standard on value, and any act of Congress which in theory compels the creditor to accept paper emissions instead of the money so recognized and established impairs the obligation of such a contract, no matter whether the contract was made before or after the act compelling the creditor to accept such payment, as the Constitution in that respect is a part of the contract, and by its terms entitles the creditor to demand payment in the medium which the Constitution recognizes and establishes as the standard of value.

Evidently the word "dollar," as employed in the Constitution, means the money recognized and established in the express power vested in Congress to coin money, regulate the value thereof and of foreign coin, the framers of the Constitution having borrowed and adopted the word as used by the Continental Congress in the ordinance of the 6th of July, 1785, and of the 8th August, 1786, in which it was enacted that the money unit of the United States should be

"one dollar," and that the money of account should be dollars and fractions of dollars, as subsequently provided in the ordinance establishing a mint. [Footnote omitted]
Repeated decisions of this Court of recent date [Footnote omitted] have established the rule that contracts to pay coined dollars can only be satisfied by the payment of such money, which is precisely equivalent to a decision that such notes as those described in the acts of Congress in question are not the money recognized and established by the Constitution as the standard of value, as the money so recognized and established, if the contract is expressed in dollars, will satisfy any and every contract between party and party. Beyond all question, the cases cited recognize
"the fact accepted by all men throughout the world that value is inherent in the precious metals; that gold and silver are in themselves values, and being such, and being in other respects best adapted to the purpose, are the only proper measures of value; that these values are determined by weight and purity, and that form and impress are simply certificates of value, worthy of absolute reliance only because of the known integrity and good faith of the government which"
put them in circulation. [Footnote omitted]...
it is clear that where the contract is for the payment of a certain sum of money and the promise is expressed in dollars or in coined dollars, the promisee, if he sees fit, may lawfully refuse to accept payment in any other medium than gold and silver, made a legal tender by act of Congress passed in pursuance of that provision of the Constitution which vests in Congress the power to coin money, regulate the value thereof and of foreign coin.
Foreign coin of gold and silver may be made a legal tender, as the power to regulate the value thereof is vested in Congress as well as the power to regulate the value of the coins fabricated and stamped at the mint...
Authority, it is conceded, exists in Congress to pass laws providing for the issue of Treasury notes, based on the national credit, as necessary and proper means for fulfilling the end of the express power to borrow money, nor can it be doubted at this day, that such notes, when issued by the
proper authority, may lawfully circulate as credit currency, and that they may, in that conventional character, be lawfully employed, if the act authorizing their issue so provides, to pay duties, taxes, and all the public exactions required to be paid into the national Treasury. Public creditors may also be paid in such currency by their own consent, and they may be used in all other cases, where the payment in such notes comports with the terms of the contract. Established usage founded upon the practice of the government, often repeated, has sanctioned these rules, until it may now be said that they are not open to controversy, but the question in the cases before the court is whether the Congress may declare such notes to be lawful money, make them a legal tender, and impart to such a currency the quality of being a standard of value, and compel creditors to accept the payment of their debts in such a currency as the equivalent of the money recognized and established by the Constitution as the standard of value by which the value of all other commodities is to be measured...
this long and unbroken usage, that Treasury notes shall not be constituted a standard of value nor be made a tender in payment of debts, is entitled to great weight, and when taken in connection with the persuasive and convincing evidence, derived from the published proceedings of the Convention, that the framers of the Constitution never intended to grant any such power, and from the recorded sentiments of the great men whose arguments in favor of the reported draft procured its ratification, and supported as that view is by the repeated decisions of this Court and by the infallible rule of interpretation that the language of one express power shall not be
so expanded as to nullify the force and effect of another express power in the same instrument, it seems to me that it ought to be deemed final and conclusive that Congress cannot constitute such notes or any other paper emissions a constitutional standard of value or make them a legal tender in payment of debts -- especially as it covers the period of two foreign wars, the creation of the second national bank, and the greatest financial revulsions through which our country has ever passed...
Congress may also borrow money to carry on war without limitation, and in exercising that express power may issue Treasury notes as the requisite means for carrying the express power into execution, but Congress cannot constitute such notes a standard of value nor make them a legal tender, neither in time of war nor in time of peace, for at least two reasons, either of which is conclusive that the exercise of such a power is not warranted by the Constitution: (1) because the published proceedings of the Convention which adopted the Constitution, and of the state conventions which ratified it, show that those who participated in those deliberations never intended to confer any such power; (2) because such a power, if admitted to exist, would nullify the effect and operation of the express power to coin money, regulate the value thereof and of foreign coin, as it would substitute a paper medium in the place of gold and silver coin, which in itself, as compared with coin, possesses no value, is not money, either in the constitutional or commercial sense, but only a promise to pay money, is never worth par, and often much less, even as domestic exchange, and is always fluctuating and never acknowledged either as a medium of exchange or a standard of value in any foreign market known to American commerce...


James P. Hodges, Ph.D.

Member: National Speakers Association, American Society for Training and Development

Tuesday, December 25, 2012

The Battle of Bunker Hill: The British Could Not Afford Any More Victories Like It

The Battle of Bunker Hill: 
The British Could Not Afford Any More Victories Like It

King George III
King George III of England was a firm believer in the divine right of kings, and subjected the American colonists to tyrannical rule. When the colonists petitioned for a fair settlement of grievances, George III declared that a state of rebellion existed, thus dooming any hope for a peaceful resolution. The king may have done this so that all the property held by the “traitors” would revert back to the Crown, thus enriching his own coffers. 

The Battle of Bunker Hill was the first pitched battle between the British Army and the American Continental Army. The Americans had only 1,500 inexperienced troops who faced off against much more experienced British forces. 

George Germain was the Secretary of State for Colonial Affairs and ran the war for the British. Germain was a favorite of the King, but he commanded little or no respect from his officers after having been convicted of cowardice in the French and Indian War (at Minden). Thomas Gage was commander-in-chief of the British forces. General William Howe was second in command under Gage, and was field commander at the Battle of Bunker Hill.

The top commander of the Continental Army was Israel Putnam. He constructed the battle plans at headquarters, where he remained. George Washington was not present at Bunker Hill because he was en route to Boston after having been elected General in Chief by the Continental Congress in Philadelphia.

The events leading up to the Battle of Bunker Hill began in April 1775, when the British retreated back to Boston after the skirmishes at Lexington and Concord. On June 13, 1775, the British senior officers suddenly realized they needed to fortify the hills surrounding Boston. If the Americans could gain the higher ground, enemy cannons could fire down upon the British, either pulverizing them into submission or forcing them to flee the city.

American spies had infiltrated the British forces, so the Continental Army commanders were made aware of their plans to take the hills. The Colonists acted swiftly to pre-empt the British. The Americans immediately sent militias from four New England colonies (Massachusetts, New Hampshire, Connecticut, and Rhode Island) to take the hills. These were the same farmers, merchants and artisans who only a few months before had driven the Redcoats back to Boston. The mostly raw, unregulated, and undisciplined troops were still learning how to be soldiers, but they were brave. The more experienced British had a distinct advantage, as they were accustomed to the horrors of the battlefield. 

On June 16, 1775, a contingent of about 1,500 American troops was sent under the command of Colonel William Prescott to fortify Bunker Hill, one of the hills outside of Boston. Prescott disobeyed his orders, choosing instead to fortify Breed’s Hill, which was closer to the British lines. This breakdown in the chain of command caused the tactical plans made back at headquarters to no longer be aligned with what the troops had achieved in the field. Breed’s Hill would prove more difficult to reinforce because of its close proximity to the British. In addition, there was no line of retreat from Breed’s Hill, as opposed to Bunker Hill, which led to the Americans suffering more casualties than otherwise would have been necessary. Fortunately, the British failed to fortify a narrow neck of land right above Bunker Hill, which they could have used to trap the Americans and starve them out.

The British were peeved at the patriots for being first on the scene and were eager to prove their superiority by driving the Americans out tout de suite. They sent cannon over intending to blast the Continental Army’s trenches and redoubts to smithereens, but they could not because their quartermaster had sent the wrong size cannon balls. 12 lb cannon balls had been sent that did not fit the barrels of the 6 lb cannons. This mistake was perhaps due to the fact that an infantry regiment had been in charge of cannons rather than the Royal Artillery. 

The British could have waited for one of their many transport ships to bring the right size cannon balls, but they did not want to delay the attack. They worried about losing face because of such a careless mistake. There were thousands of Bostonians up in the surrounding hills watching every move the British made. Howe wanted to prove to the American civilians that resistance to the king’s rule was futile. 

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As the day of the battle dawned on June 17, the sailors on a nearby British warship, “The Lively,” spotted the Americans digging fortifications. The crew began bombarding the patriots, but Admiral Samuel Graves, who was irritated about being awakened by gunfire, ordered them to stand down. The British Army high command had failed to alert the British Navy about their plans to attack Bunker Hill, so there was no coordinated action. The British could conceivably have put the rebellion down here once and for all, but they lost their chance due to a simple failure to communicate.

Rather than attacking at dawn, General Howe waited until mid-afternoon. This gave the colonists time to fill in the gaps in their lines and complete their fortifications. If the British had charged at daybreak, they would have caught the patriots before their trenches, which were topped off with log barricades, were ready. 

Luckily for the American cause for freedom, the British did not look to the great general, Hannibal, for inspiration on battle strategy. During the Battle of Rhone Crossing (218 BC), Hannibal was faced with crossing a bridge that was heavily defended by the Gauls (allied with the Romans). He split his army, ordering one half to cross the river at another point and then sneak up behind the enemy lines. Upon his command (he used smoke signals), his forces ambushed the Gauls in a devastating suprise attack, routing the Gallic army. Howe, rather than having some of his troops sneak up behind the American lines, chose instead to send his men charging straight up the hill four lines deep and a hundred men wide. He was sure that the Americans would flee when they were faced by British soldiers with sharp bayonets slashing and stabbing at them. 

As the Redcoats slowly advanced up the hill in exact formation, Colonel Prescott commanded his soldiers: “Don’t fire until you see the whites of their eyes!“ When the British reached the Americans’ trenches, the patriots let loose a withering fire that rained down upon them, chopping them down like harvesting a field of grain. Most British were hit below the waist, which did not kill them outright. Many suffered excruciating pain, and even some of the American soldiers were moved to tears by their pitiful cries of agony. 

The British Army advancing up Breed's Hill

The soldiers to the rear of the British ranks, seeing their comrades being cut down, retreated to the bottom of the hill. The British commanders sent them straight back up the hill again, marching in formation, to be cut down just as was the first wave. 

With the third wave, however, the British changed tactics. They ordered their men to not stop, fire and reload their muskets because it left them too vulnerable to being shot. Instead, they were to climb the hill as quickly as possible, with muskets unloaded, leap over the parapets, and stab the Americans with their bayonets. The patriots did not have bayonets mounted on their muskets, so once they ran out of ammunition, they were defenseless. They stood their ground in the face of the advancing wave of Redcoats for as long as the gunpowder lasted. The British were so enraged, they massacred every American soldier who could not escape, even the wounded and those trying to surrender.

Although the British carried the day, they were dumbfounded at the magnitude of the tragedy that had befallen them. Their casualties were sky high. Of all the battles fought in the Revolutionary War, this was their costliest in terms of killed and wounded in action. One high ranking British officer lamented, “We cannot afford any more victories like this.”

King George was incensed by the debacle at Bunker Hill. He blamed Gage, and fired him. This was a mistake for the British, because Gage was the only leading British official who had lived  in America (20 years). He even had an American wife. He knew the topography of America and understood the mentality of the Americans. In losing Gage, the British lost the advantage of his knowledge and insight. 

As a result of Bunker Hill, the British were later reluctant to charge Americans lying in wait behind fortified positions. So, of course, the Americans adopted this strategy, which helped them to eventually defeat the British and win their freedom. For example, at the Battle of Long Island, Howe had backed the Americans up against the East River, but he refused to order his men to make a frontal assault on them. This allowed the Americans to escape across the river and live to fight another day. 

On March 17, 1776 the British evacuated Boston never to return. The citizens of Boston commemorated that day as Patriots Day.  


James P. Hodges, Ph.D.

Member: National Speakers Association, American Society for Training and Development