Chapter V.
Legality of the System.
Admitting, for the sake of the argument—what is not true in fact—that the State governments have constitutional power to forbid private banking, their statutes for that purpose, being contrary to natural right, must be construed to the letter; and the letter of few, if any, of them is such as to prohibit the system here proposed.
Thus Maine prohibits “any drafts, bills, or promissory notes, or other evidences of debt.”
New Hampshire prohibits “bills, notes, checks, drafts, or obligations.”
Massachusetts prohibits “any note, bill, order, or check.”
Rhode Island prohibits “any note, bill, order, or check.”
Connecticut prohibits “any bill of credit, bond, promissory writing, or note, bill of exchange, or order.”
New York prohibits “notes, or other evidences of debt.”
New Jersey prohibits “bills, notes, or other evidences of debt.”
Pennsylvania prohibits “any promissory note, ticket or engagement of credit in the nature of a bank note.”
Ohio prohibits “any note, bill, or other evidence of debt.”
Michigan prohibits “any bills, notes, due bills, drafts, or other evidences of debt.”
Illinois prohibits “any note, or bill.”
Wisconsin prohibits “any bills, or promissory notes, or other evidences of debt.”
Mississippi prohibits “notes, bills, certificates of deposit, or evidences of debt.”
Georgia prohibits “any bills, or promissory notes of private bankers.”
The currency proposed—the Circulating Stock—comes within the letter of none of these prohibitions. It consists neither of “notes,” “promissory notes,” “orders,” “checks,” “drafts,” “bonds,” “certificates of deposit,” “bills of credit,” “bills of exchange,” “due bills,” nor “tickets or engagements of credit in the nature of bank notes.”
Although, if it should come into circulation, it may, very likely, in common parlance, and from motives of convenience, be denominated “bills,” yet it is not “bills,” in any legal sense, in which that word was used at the times these statutes were enacted.
It cannot be called “evidences of debt”—that is, of personal indebtedness—in the sense, in which this description is evidently used in these statutes.
It is not an “obligation,” in the sense, in which that word is legally used. That is to say, it is not a personal “obligation,” in the nature of a debt, as the term debt is now understood.
It is, in law, simply bona fide certificates of bona fide stocks; as really so as are any certificates of railroad stocks, or of any other stocks whatever. It is bona fide certificates of, or evidences of title to, veritable property in land, as really so, as are deeds, mortgages, leases, or any other written instruments for the conveyance of title to, or rights in, real estate. As such, it obviously comes within the letter of none of the preceding prohibitions. The holders of the certificates are the bona fide owners of the stocks, or property represented; and in selling the stocks themselves, they pass the certificates, or evidences of title. And this is the whole matter, in a legal point of view.
The statutes, however, of some of the States are in somewhat different terms from those already cited.
Thus Vermont prohibits “any bill of credit, bond, promissory writing or note, bill of exchange, order, or other paper.”
Whether this prohibition of “any other paper,” as a currency, can, in law, be held to prohibit the sale of bona fide stocks, or property in land, and passing the certificates thereof, or the titles thereto, is, to say the least, very doubtful.
New Jersey, in addition to the preceding prohibition of “bills, notes, or other evidences of debt,” prohibits “any ticket of any denomination whatever, intended to circulate for the payment of debts, dues, or demands, in lieu of, or as a substitute for, bank notes or bills, or other lawful currency of the State.”
What may be the legal meaning of a “ticket,” we will not now undertake to settle; nor whether this prohibition interdicts the sale of bona fide stocks, and the transfer of the paper titles thereto.
Virginia prohibits “any note, or other security, purporting that money or other thing of value is payable by, or on behalf of, such person” (the person issuing).
This statute clearly would not interdict the currency proposed.
The letter of the statutes of Missouri, Kentucky, Tennessee, Alabama, North Carolina, and of the constitution of Texas, is, perhaps, comprehensive enough to prohibit the proposed currency.
In the statutes of Indiana, Iowa, Arkansas, Maryland, and Delaware, I have found nothing, that seemed to me to prohibit the proposed currency.
If this currency should evade the interdict of these statutes against private banking, it would also evade the interdict of the State laws against usury; for the issue of the currency by the banks, in exchange for the promissory notes of individuals, is, in law, a mere sale of bona fide stocks, or property, on credit, like the sale of any other stocks, or property, on credit, and at a price agreed on. And if these stocks should happen to sell for more than their nominal value, that would be a matter of no more legal importance than for railroad shares to sell for more than their par or nominal value.
But, admitting that the language of all the foregoing prohibitions are sufficiently comprehensive to embrace the currency proposed, the statutes themselves, so far as they should be applied to that currency, would nearly all of them be unconstitutional and void, as being in conflict with the “natural right to acquire and dispose of property;” a right, that is either expressly or impliedly recognized and guaranteed by most, or all, of the State constitutions, and bills of rights. This “natural right to acquire and dispose of property,” includes a right to buy and sell, as well as to produce and give away, property. The issuing of the currency proposed, and the passing of it, from hand to hand, as a currency, would, in law, be merely a buying and selling of the property it should represent—that is to say, the buying and selling of bona fide property in land—like any other property. The only difference between it and other property, would be, that it would be bought and sold more frequently than other property.
But not only all these State laws against private banking, but all State laws against usury, and all other laws whatsoever, that assume either to prohibit, invalidate, or impair any contract whatsoever, that is naturally just and obligatory, are unconstitutional and void, as being in conflict with that provision of the constitution of the United States, which declares that “no State shall pass any law impairing the obligation of contracts.”
This provision does not designate what contracts have, and what have not, an “obligation.” It leaves that point to be ascertained, as it necessarily must be, by the judicial tribunals, in the case of each contract that comes before them. But it clearly implies that there are contracts that have an “obligation.” Any State law, therefore, which declares that such contracts shall have no obligation, is plainly in conflict with this provision of the constitution of the United States.
This provision