LECTURE X. many States. 1 1 Bennett v. Butterworth, 14 How. 669, 674. See also Hipp v. Babur, 19 How. 271; Lewis v. Cocks, 23 Wall. 466; Killian v. Ebbinghaus, 110 U. S. 568; Buzard v. Houston, 119 U. S. 347; Thompson v. Railroad Companies, 6 Wall. 134; Hutchins v. King, 1 Wall. 53; Holland v. Challen, 110 U. S. 15; Whitehead v. Shattuck, 138 U. S. 146. 2 Scott v. Neely, 140 U. S. XI. IMPAIRMENT OF THE OBLIGATION OF CONTRACTS.1 ARTICLE I, SECTION 10. No State shall enter Lecture XI. THE topic for this discourse is taken from Laws impairing section 10, Article I, of the Constitution of the the obligation of United States, which reads as follows: "No State shall enter into any treaty, alliance, or confederation; grant letters of marque and reprisal; coin money; emit bills of credit; make anything but gold and silver coin a tender in payment of debts; pass any bill of attainder, ex post facto law, or law impairing the obligation of contracts, or grant any title of nobility." Out of that important sentence I have selected for a more careful consideration the words, "or law impairing the obligation of contracts." contracts. 1 This Lecture was Lecture IX of the Lectures delivered before the classes of the University Law School. LECTURE XI. the obligation of contracts. The first Article of the Constitution begins Laws impairing with provisions concerning the organization of the two houses of the legislative body, the Senate and the House of Representatives, and then section eight in affirmative language confers certain express powers upon the Congress of the United States, that is to say, upon the Federal Government, or the General Government, of the Union, as distinguished from the States, and the people of the States. In section nine certain limitations are laid down in regard to the power of the Federal legislature. Among other things it is provided that it shall not pass any bill of attainder, or any ex post facto law, and through a number of negotiations states what shall not be done by the Congress of the United States, or by the National Government. This limitation is upon the States. Bills of credit. In section ten, above quoted, limitations are imposed upon the individual States, the language being that "no State" shall do any of the things which are here prohibited. In passing, it may be remarked that the phrase "emit bills of credit was for a long time the subject of judicial and political controversy. It was questioned whether it did not prevent any State from issuing bonds, or chartering banks of issue, but the better opinion seems to be, (and it was so decided in 1830, by Chief Justice Marshall1) that to "emit bills of credit" meant to issue in the name of the State some form of certificates of indebtedness which were "intended 1 Craig v. The State of Missouri, 4 Pet. 408, 432. Bills of credit. to circulate through the community, for its or- LECTURE XI. dinary purposes, as money, which paper was redeemable at a future day," and that if such was not the purpose their issue would not come within this clause. No State is permitted to "make anything but Legal tender. gold and silver coin a tender in payment of debts." The object of this provision was to correct what had grown to be an enormous evil at that time, that of a debased paper currency, in connection with the further prohibitions against any State passing any ex post facto law, or law impairing the obligation of contracts, in order to prevent the scaling of debts or the authorization of their payment in a depreciated and worthless paper. This was thought to be necessary because it was seen that statutes of the States passed for that purpose would constitute one of the great hindrances to the collection and payment of honest debts. In approaching this subject the following Circulating quotation from Mr. Bancroft's "History of the medium when the Constitution was Constitution of the United States" will be of framed. service in getting a better knowledge of the condition of the times when that instrument was framed. The whole work is the most valuable contribution to the history of the period preceding the time when it was adopted and subsequent thereto, that has yet been written. The author, speaking of the events which went before the formation of the Constitution, says: "The thirteen American States had a larger experience of the baleful consequences of paper LECTURE XI. medium when the framed. money than all the world besides. As each of them had a legislation of its own, the laws were Constitution was as variant as they were inconvenient and unjust. The shilling had differing rates from its sterling value to an eighth of a dollar. The confusion in computing the worth of the currency of one State in that of another was hopelessly increased by the laws which discriminated between different kinds of paper issued by the same State; so that a volume could hardly hold the tables of the reciprocal rates of exchange. Moreover, any man loaning money or making a contract in his own State or in another, was liable at any time to loss by some fitful act of separate legislation. The necessity of providing effectually for the security of private rights and the steady dispensation of justice, more, perhaps, than anything else, brought about the new Constitution."1 History of this clause in the Constitution. One of the earliest of the Constitutions proposed for the confederated States contained provisions for some of the items mentioned; for instance, as to coining money, emitting bills of credit, and passing ex post facto laws. That branch of the instrument had been passed over and committed to the charge of the committee on revision and style. For the purpose of preventing any interference with contracts the Convention had relied very largely upon the clause prohibiting the passage of any ex post facto law. The original draft had nothing in it about impairing the obligation of contracts when it was 1 Bancroft's Hist. Const., vol. 1, book 2, c. 6; author's Last Revise, vol. 6, p. 167. |