HG 
 
 361 
 
 VV4- 
 
 UC-NRLF 
 
 SB 37 7bD 
 
 MISUSE 
 OF 
 
 LEGAL TENDER 
 
 SIDNEY WEBSTER 
 
 CM 
 
 Si 
 
 O 
 
LIBRARY 
 
 OF THE / 
 
 UNIVERSITY OF CALIFORNIA 
 Class 
 
MISUSE 
 OF LEGAL TENDER 
 
 BY 
 SIDNEY WEBSTER 
 
 NEW YORK 
 D. APPLETON AND COMPANY 
 
 1893 
 
COPYRIGHT, 1893, 
 BY D. APPLETON AND COMPANY. 
 
MISUSE OF LEGAL TENDER. 
 
 IT is the necessary duty of every State 
 to prescribe a uniform money of account 
 the signs and figures of its expression. 
 Without such money of account, enforced 
 by the State throughout its jurisdiction, 
 justice can not be done to suitors in its 
 courts of law, nor symmetrical and orderly 
 statements of receipts and expenditures, 
 debts and credits, be kept in its public 
 offices. Therefore, one of the first things 
 the Congress did, when it had assembled 
 under the new Constitution, was to declare 
 that "the money of account of the United 
 States shall be expressed in dollars or units, 
 dimes or tenths, .cents or hundredths." 
 The Federal Constitution having used the 
 
 107497 
 
Misuse of Legal Tender. 
 
 word "dollars" twice once in the decla- 
 ration that, in suits at common law, the 
 right of trial by jury shall be preserved, 
 "where the amount in controversy shall 
 exceed twenty dollars " it is to be im- 
 plied that Congress could not have adopted 
 any other unit. 
 
 Another function of the State, even 
 more necessary and important, is to pre- 
 scribe a uniform measure of value, time, 
 weight, quantity, distance, in which con- 
 tracts can be expressed, and by the judi- 
 cial power their performance enforced. Of 
 those functions, the most perplexing for 
 lawmakers has been the providing of a 
 uniform measure, standard and unit of 
 value, commonly called "money," which 
 is to pass freely from hand to hand, and 
 everywhere be accepted without regard to 
 the credit of the person tendering it. Such 
 money is to be not only the common de- 
 nominator of all thinking concerning values, 
 not only the common medium for buying, 
 
Misuse of Legal Tender. 
 
 selling, exchanging products and services, 
 but the standard by which to foreknow the 
 value of a contract to be completed, or an 
 act to be done, in the future. 
 
 The United States decided to make 
 and emit all American money, and to pre- 
 scribe the value of foreign coins the circula- 
 tion of which as lawful money was to be 
 permitted. The several States surrendered 
 to Congress their power "to coin money, 
 regulate the value thereof, and of foreign 
 coin." The thing by comparison -with 
 which the value of every other thing could 
 be ascertained was described as " money." 
 It was to be metallic. Its quantity was, un- 
 til the law of 1853 relating to minor silver 
 coins, determined not by Congress, but, 
 under free coinage of silver and gold, by the 
 quantity of those metals carried by indi- 
 viduals to the mints to be coined, and of 
 those coins taken back to the melting pots 
 to be changed into bullion. Thus it is now 
 under the free coinage of gold. Whoever 
 
Misuse of Legal Tender. 
 
 
 will take gold to the mints can have it 
 freely made into money. Under free coin- 
 age all the gold in the world is potential 
 money. The Congress of the era of the 
 Constitution no more deemed it expedient 
 to prescribe or limit the quantity of money 
 than the number of plows or hoes. 
 
 Whether the first Congress embodied 
 our monetary unit in a silver dollar or in a 
 gold dollar, or the unit reposed in both 
 metals on a weight ratio of an ounce of gold 
 to fifteen ounces of silver, it is not material 
 now to inquire. 
 
 The standard of value has never been 
 any sort of a paper dollar, even although 
 the greenback dollar was after 1862 a legal- 
 tender dollar. 
 
 The law of 1873 having declared that a 
 one-dollar coin, containing 25%, grains of 
 standard gold, " shall be the unit of value," 
 made that dollar, and no other dollar, to be 
 thereafter the legal and sole measure of all 
 value. Whether a good or a bad standard, 
 
Misuse of Legal Tender. 
 
 it is the standard ordained by a law unre- 
 pealed and unmodified. It became then 
 and there a part of every promise, or con- 
 tract, thereafter made to pay a dollar. The 
 standard dollar of the United States is now 
 embodied in that metal, and only in that 
 metal. 
 
 It is familiar knowledge, that laws ex- 
 isting at the time and place of a contract 
 form a part of its validity, its construction, 
 its enforcement, and its discharge. 
 
 It goes without saying that the stand- 
 ard of value which is a part of a contract 
 should not be changed by legislation so as 
 to impair the obligation of an existing con- 
 tract, any more than the standard of quantity 
 should be changed; nor when a debt has 
 been created by a contract, the payment of 
 which is long deferred, should a subsequent 
 law intentionally change the medium of 
 payment in order to benefit either the payer 
 or payee. 
 
 It is bad enough and deplorable enough 
 

 
 8 Misuse of Legal Tender. 
 
 when a standard of value fluctuates by 
 natural causes, by variations in the demand 
 or supply of the precious metal or metals 
 of which it is composed, or by causes 
 which a government can not satisfactorily 
 control. An absolutely unvarying stand- 
 ard of value is probably an unattainable ob- 
 ject, but governments can at least abstain 
 from meddling therewith solely in order to 
 benefit debtors or creditors, and transfer the 
 ownership of property. 
 
 When a standard of value has been es- 
 tablished by law, that dollar which is the 
 standard of value, and no other dollar, 
 should be the dollar in tender of payments. 
 
 The United States had an illuminating 
 experience of a depreciating legal-tender 
 dollar which fell from 977., cents in January, 
 18.62, to }8'/ a cents in July, 1864, and of an 
 appreciating legal-tender dollar which rose 
 from that last named gold value to 100 
 cents in 1879. The United States have had 
 a similar experience of the depreciation of 
 
Misuse of Legal Tender. 9 
 
 the gold price of an ounce of pure silver, 
 which was $i.3i 3 / IO in 1834 (when the ratio 
 was changed to i to 1 6), $1.36 in 1859, and 
 is now 75 cents. 
 
 It required an experience like that of our 
 war of secession to teach us that one dollar, 
 may differ from another in value, and the 
 dollar of to-day may be less or more in value 
 than that of to-morrow. 
 
 Not less difficult than keeping a dollar 
 invariable in value is ascertaining precisely 
 the increase or decrease, from time to time, 
 of the purchasing power of a dollar. The 
 experts are not many whose mental and 
 moral equipment, whose experience in 
 trade, are such as to dispel all suspicions of 
 doubt of the accuracy of their appreciations 
 of samples and averages, quantities and 
 qualities, and of their deductions from tables 
 of prices. 
 
 The most deplorable effect of such fluc- 
 tuations in a standard of value is the uni- 
 versal deception of the community respect- 
 
io Misuse of Legal Tender. 
 
 ing the increase or diminution of its wealth, 
 manifested in the case of a depreciating 
 standard by extravagant expenditure, fol- 
 lowed, when the bubble bursts, by a period 
 of long depression. 
 
 After the enactment of the Sherman law 
 of 1890 the United States had only one 
 standard dollar, but had four differing dol- 
 lars, each available as tender under condi- 
 tions specified in the statute enacting each. 
 
 The discretion given by Congress, and 
 exercised by each successive Secretary of 
 the Treasury since the resumption of specie 
 payments in 1879, has been successful in 
 maintaining parity, within the jurisdiction 
 of the United States, between each and all 
 of those dollars. 
 
 If the law shall withdraw that discre- 
 tion, or if a future Secretary of the Treasury 
 shall reverse the policy of his predecessors, 
 refuse to redeem with the standard gold 
 dollar the old or new greenback debt, and 
 refuse gold dollars to Congressmen, judicial 
 
Misuse of Legal Tender. 
 
 officers, officeholders, pensioners, and other 
 Government creditors, whenever the head 
 of the Treasury has a choice between pay- 
 ing silver or gold dollars, the real condition 
 of our enactments concerning tender will 
 leap to light. 
 
 If the transaction of selling, buying, de- 
 livering, paying, is instantly finished, the 
 quality or value of the currency which is 
 the medium of the exchange may not be 
 important. The delivering and paying be- 
 ing simultaneous, disputes will not be likely 
 to appear, growing out of differences re- 
 specting the dollars of payment, and requir- 
 ing for settlement the aid of suits at law to 
 recover damages for nondelivery of the 
 article purchased on tender of the price, or 
 of a suit in equity to enforce a specific de- 
 livery. But when, by the contract, payment 
 is a long time deferred, as in the case of a 
 railway bond not due and payable till a half 
 century after its date, uncertainty in regard 
 to the medium of payment created by the 
 
12 Misuse of Legal Tender. 
 
 possibility of legislation intended to affect 
 that medium, and so modify the contract, 
 can but be disturbing. 
 
 Precisely that uncertainty is what is 
 now so alarming investors, owners of 
 loanable capital, and every one who has, 
 or hopes to have, money at interest the 
 payment of which is deferred. The real 
 cause is the misuse of legal tender in and 
 since 1862, the vindication by the Supreme 
 Court of that misuse, and the possibility of 
 new legislation in the same direction which 
 will impair or modify the obligation, ex- 
 pressed or implied, of existing contracts. 
 
 There is even distrust whether, in any 
 contract for the future payment of dollars, 
 the dollars can be so described as to escape 
 legislation modifying the contract in respect 
 to the possible dollars of legal tender. 
 
 The States denied to themselves by the 
 Constitution the right to emit "bills of 
 credit," meaning thereby a promise to pay 
 money, issued directly by the State, involv- 
 
Misuse of Legal Tender. 
 
 ing the credit of the State, and intended, on 
 such credit, to circulate in the ordinary uses 
 of business, and the Supreme Court has de- 
 cided that notes issued by banks chartered 
 by a State are not the forbidden "bills of 
 credit." 
 
 In that condition of the law, and with 
 no lawful money possible besides metallic 
 money, why was there need of a thing 
 called " legal tender " ? Why did the Con- 
 stitution declare, and why did the States 
 consent to the declaration, that "no State 
 shall make anything but gold and silver 
 coin a tender in the payment of debts " ? 
 
 The term of the Constitution is "tender," 
 not "legal tender." It applies only to a 
 "debt," which is a definite and fixed sum 
 of money due by one individual to another. 
 It may be created by contract, statute, or 
 judgment. A promise by an individual, or 
 a judicial decree in equity, to deliver a horse, 
 or a ton of silver bullion, does not create a 
 "debt." A promise or a judgment to pay 
 
14 Misuse of Legal Tender. 
 
 a definite sum in "dollars" does create a 
 "debt," and the law of "tender" applies. 
 "Tender " is in all law Roman, French, 
 English, or American a part of the law of 
 "payment," and is treated as such. It is 
 technically applicable only to contracts for 
 the payment of money. It is payment duly 
 proffered to a creditor, which may be ren- 
 dered abortive by the act of the creditor. 
 Under the Code Napoleon (Title III, 1258) 
 a legal tender must be made through a 
 ministerial officer. The effect of a valid 
 tender, if rejected, is not to discharge the 
 debt, but to enable the debtor, when sued 
 for the debt, to pay the money into court, 
 and get judgment for such cost of his de- 
 fense as accrued after the tender. If a State 
 can not be sued, then the law of tender does 
 not apply to the State. One may have con- 
 tracted to deliver, at a specified time and 
 place, a ton of pure gold, may refuse or 
 fail to deliver, and then a suit can be begun 
 for damages to be proved and assessed in 
 
Misuse of Legal Tender. 15 
 
 dollars. In such a case, as a "debt" by 
 judgment is impending, a tender is appli- 
 cable. 
 
 How a legal-tender prohibition, appli- 
 cable to the States in the Union, came to 
 pass, can best and easiest be appreciated 
 by reading the statutes of any one of the 
 several States enacted or in force contem- 
 poraneously with the framing of the Federal 
 Constitution. 
 
 Those statutes enable the defendant in 
 every action of debt, covenant, trespass, 
 trover, slander, or libel, to make and plead 
 a tender, or bring into court the money 
 due on such contract, or sufficient amends 
 for such trespass or injury, as well as the 
 plaintiffs costs up to the time of tender ; 
 and if the plaintiff refusing it shall go on 
 with his suit, and the damages finally as- 
 sessed shall not be more than the tender, 
 the plaintiff shall not recover costs, and 
 shall pay to the defendant his costs. 
 
 One readily discerns that a motive and 
 
1 6 Misuse of Legal Tender. 
 
 a purpose of such a legal-tender law was 
 to stop litigation and benefit a deserving 
 defendant. The chief motive was not to 
 benefit a particular coinage, or currency, as 
 by compelling individuals, strangers to the 
 transaction, to take as money something 
 the Government had given as evidence of 
 its own indebtedness, or to accept a sub- 
 sidiary and inferior coin not a unit of value, 
 which coin was made by Congress only to 
 furnish a market for the product of certain 
 silver mines! 
 
 A comparison of the greenback legisla- 
 tion of 1862, the silver-dollar coinage enact- 
 ment of 1878, the Sherman law of 1890, 
 with the foregoing very elementary exposi- 
 tion of the real purpose of "legal tender," 
 will make obvious how it has been misap- 
 plied by Congress. 
 
 The enactment of February 21, 1853, re- 
 ducing the weight of half-dollar, quarter- 
 dollar, dime, and half-dime silver coins, de- 
 serves brief mention here. Then began 
 
Misuse of Legal Tender. 17 
 
 Treasury purchasing and coining of silver 
 solely on Government account In 1834, 
 when our coinage ratio was i to 16, and 
 silver on that ratio $1.29 an ounce, the 
 actual price in Europe was over $1.31, in 
 1853 was $1.34, and in 1859 was $1.36. 
 No silver could remain with us on those 
 terms. To prevent the departure, the 
 weight of the half-dollar was in 1853 re- 
 duced from 2o6 T / 4 standard grains to 192 
 grains, or some seven per cent ; the sub- 
 multiples were reduced in proportion, and 
 made a legal tender for sums not over 
 five dollars. Then, for the first time, our 
 silver coins were not all a full legal tender. 
 They have never all been such since then, 
 as will be discerned further on. Silver be- 
 gan to fall from $1.36 an ounce to its pres- 
 ent price, but nevertheless there was no 
 effort, forty years ago, to make the under- 
 weighted coins a full tender in payment of 
 debts. 
 
 The Congress which met after the presi- 
 
1 8 Misuse of Legal Tender. 
 
 dential election of 1860 found the Treasury 
 in need of money. Unprecedented expendi- 
 tures were in sight. Only two methods of 
 obtaining money were thought of during 
 1 86 1, namely, taxing and borrowing, as 
 was done for the War of 1812, and for the 
 Mexican War, when our finances were kept 
 on a metallic basis. In July and August of 
 that year the emission of Treasury notes 
 "in exchange for coin" was authorized. 
 They did not bear any interest ; they were 
 redeemable on demand; they were to be 
 accepted for all Government dues. No legal- 
 tender power was given to them. The 
 sub-Treasury law was suspended to enable 
 the coin obtained to be deposited in "sol- 
 vent specie-paying banks," thence to be 
 withdrawn by checks. After the battle of 
 Bull Run the banks took a hundred and 
 fifty million of the loan, expecting the 
 Treasury to permit the money to be depos- 
 ited with them, and by the Treasury drawn 
 out by checks as needed ; but the Treasury 
 
Misuse of Legal Tender. 
 
 having demanded gold immediately, the 
 demand compelled the banks to suspend 
 specie payments, and a crisis was at hand. 
 The Treasury, by one blow, "broke" the 
 banks and itself ! 
 
 In the beginning of 1862 two plans 
 were before the House Ways and Means 
 Committee for meeting the crisis and ob- 
 taining funds and supplies for the war. In 
 both, notes were to be issued, not bearing 
 interest, but receivable for Government 
 dues. The two plans differed in respect to 
 legal-tender power. There were in the 
 committee two contending schools of eco- 
 nomic thought. One was led by Mr. Mor- 
 rill, of Vermont, and the other by Mr. 
 Spaulding, of New York. The former in- 
 sisted that the new notes would circulate 
 without attaching thereto the legal-tender 
 quality ; that the circulation would be ade- 
 quately secured by making them receivable 
 for all national taxes, dues, and loans ; that 
 if cheaper than coin they would be preferred 
 
20 Misuse of Legal Tender. 
 
 by one class, the debtors and purchasers; 
 that no appreciable and useful advantage 
 would be gained by compelling creditors to 
 receive them in satisfaction of pre-existing 
 debts, even if Congress had the right to 
 make them a legal tender. The other school 
 substantially conceded the unconstitution- 
 ally of the legal-tender feature of a credit 
 currency in time of peace, but contended 
 that the new notes would not circulate un- 
 less those taking them for supplies sold to 
 the Government could compel their credit- 
 ors, and all creditors, to take them for ante- 
 cedent debts payable in dollars, thus mak- 
 ing the notes a sort of forced loan, if any 
 loan at all. After two months' debate, the 
 party led by Mr. Spaulding won, and in a 
 little more than a twelvemonth some four 
 hundred and fifty millions of the notes were 
 issued. In July, 1864, their gold value was 
 only 38 cents, and the price of what the 
 Government purchased with the notes was 
 increased nearly 300 per cent. The Gov- 
 
Misuse of Legal Tender. 21 
 
 ernment received on an average about par 
 in notes for its bonds sold, but only half as 
 much in gold, even although the selling 
 agents made implied promises that the 
 bonds should be paid in that metal. In the 
 presence of the four hundred and fifty mil- 
 lions of greenbacks, gold and silver fled 
 away, as now gold departs in presence of 
 one hundred and forty-seven millions of 
 Sherman notes emitted since 1890. 
 
 Congress did not give to the new notes 
 a legal-tender power in order to promote 
 the administration of justice in our courts, 
 or to protect from costs of litigation a de- 
 fendant tendering what was lawfully de- 
 mandable from him, or to prevent lawsuits, 
 but to float Government bills of credit, and 
 benefit a new form of credit currency. It 
 was much as if, under an " eight-hour law" 
 for laboring men, Congress doubled or 
 diminished by half the length of an hour, 
 in order to promote the sale of a new kind 
 of clock in which Congress was interested, 
 
22 Misuse of Legal Tender. 
 
 and made the changed hour apply to pre- 
 existing contracts for labor! It was a ter- 
 rible arraignment of the legal-tender legis- 
 lation of 1862 which the Supreme Court ut- 
 tered by the pen of Chief-Justice Chase, in 
 the decision in the case of Hepburn vs. Gris- 
 wold, when he wrote : 
 
 "The legal-tender quality was only valu- 
 able for the purpose of dishonesty. Every 
 honest purpose was answered as well, and 
 better, without it." 
 
 The second dealing by the Government 
 with legal tender was in 1878, when Con- 
 gress, having in 1875 ordered the green- 
 back debt to be paid and destroyed after 
 1879, required the paid greenbacks to be re- 
 issued. That was, in effect, a new creation 
 of new notes and of new debt, in time of 
 peace and without war necessity. Con- 
 gress did not venture to expressly attach a 
 legal-tender faculty to the new bills of credit, 
 but the Supreme Court did, in Juilliard's 
 case. 
 
Misuse of Legal Tender. 
 
 In the same year of currency woe came 
 the law "to authorize a silver dollar and to 
 restore its legal-tender character." Then 
 the coining ratio of silver and gold was by 
 law i to 16; the market ratio was i to 18; 
 the coining value of an ounce of silver was 
 $1.29 in gold, but the market value was 
 $1.15, and of a silver dollar was only q8 T / IO 
 cents. Those new silver dollars Congress 
 made a "legal tender at their nominal value, 
 for all debts and dues, public and private, 
 except where otherwise expressly stipulated 
 in the contract." Here, as in 1862, the 
 motive and purpose were to use legal tender 
 to float a currency. The plan of 1853 was 
 adopted, only adding more legal-tender 
 faculty. The new silver dollar was not 
 made a full legal tender, inasmuch as cer- 
 tain debts were excepted, but the misem- 
 ployment of legal tender was all the same. 
 
 The contention of Mr. Bland is that, up 
 to 1873, the silver dollar, containing _37r/ 4 
 grains of pure silver, was the unit of account 
 
24 Misuse of Legal Tender. 
 
 and standard of value ; but even if, in that 
 year, the gold dollar of 25 8 / IO standard grains 
 was made the sole unit and standard, yet 
 his law of 1878, "for the coinage of the 
 standard silver dollar, and to restore its legal- 
 tender character," displaced the gold and 
 replaced the silver standard. A miscon- 
 struction and snare! Recoinage, and limited 
 legal-tender power, did not made the re- 
 stored silver dollar a unit and measure of all 
 values. And, besides, the full legal-tender 
 power of 1792 was not in 1878 given to 
 silver. 
 
 It is quite true that, when specie pay- 
 ments were resumed in 1879, recoinage of 
 the silver dollar had gone on a year, and 
 that the new silver dollar law entered, with 
 its legal-tender attachment, like every other 
 pertinent law, into every contract to pay 
 dollars thereafter made in the United States. 
 It is also quite true that every debt of the 
 United States, subsequently created and 
 specifically payable in "coin," can in the 
 
Misuse of Legal Tender. 25 
 
 discretion of the Treasury be discharged by 
 the tender of silver dollar coin, but even 
 that legal-tender faculty does not, and did 
 not in 1878, make the silver dollar the unit 
 and standard of value. The " parity " dec- 
 laration in the Sherman law would, were 
 there nothing else, cut out by the roots Mr. 
 Eland's contention. His speeches, urging 
 free coinage as a means of lifting the silver 
 in the silver dollar to a commercial parity 
 with the gold in the gold dollar, recognize 
 the fact that the silver dollar has depreciated 
 below the standard gold dollar. He would 
 elevate silver up to the standard ! He does 
 not propose to reduce the number of grains 
 of standard gold in the gold dollar, but, if 
 he shall fail to get free coinage on a basis of 
 i to 1 6, he would increase the weight and 
 size of the silver dollar so that it shall con- 
 form to the gold dollar. He vociferates 
 against the gold bug, but yet pleads in the 
 same shrill notes that the silver bug is to 
 be lifted into a present commercial and 
 
26 Misuse of Legal Tender. 
 
 world-wide equality and equivalence with 
 the other bug. 
 
 Finally, in 1890, came a still more dis- 
 astrous misapplication of legal tender at a 
 time when neither war nor any other public 
 necessity constrained it, because applied to 
 a pure credit currency. The motive was the 
 purchase of silver bullion, not all to be ne- 
 cessarily coined, but to be in part a ware- 
 housed and useless Government asset. The 
 Government not having the ready money 
 with which to pay for the purchases, it was 
 proposed to issue Treasury notes predicated 
 on and measured by the gold value of the 
 silver when bought; and so, precisely as in 
 the war period of 1862, Congress attached 
 a legal-tender faculty to the notes issued as 
 Government debt to those selling silver bul- 
 lion to the Government. In order to float 
 the more than one hundred and forty-seven 
 millions of Treasury notes now outstanding 
 for silver purchases since 1890, Congress 
 said in effect to the sellers of the silver, 
 
Misuse of Legal Tender. 27 
 
 that the law will compel every creditor to 
 accept the notes in discharge of anybody's 
 debt, "except where otherwise expressly 
 stipulated in the contract." The old ex- 
 ception of 1869 and 1878 was paraphrased. 
 The motive and purpose of 1890 were to 
 again dishonor legal tender by making it a 
 float for the Sherman Treasury notes emitted 
 in exchange for silver. 
 
 The tender of payment, to prevent or 
 stopjitigation, or, if the suit can not be pre- 
 vented or stopped, to compel the plaintiff to 
 pay all the costs, is not a frequent event. 
 If the tender be made in any sort of circu- 
 lating currency, such as bank notes, it will 
 be valid unless the creditor specifically ob- 
 jects to the kind of dollars tendered. But 
 when such formality shall be required, it is 
 obvious that only the dollar which is by 
 law the "unit of value," the standard of all 
 value, and an unlimited legal tender (which 
 no greenback or silver dollar is), should be 
 used. Take away from the silver dollars 
 
 ' 
 
28 Misuse of Legal Tender. 
 
 and paper dollars legal-tender power in the 
 law courts, and fear of repudiation, or scal- 
 ing down of debts thereby, will disappear. 
 The United States have now some seventy 
 million dollars of minor silver coinage, but 
 that mass excites no solicitude, and would 
 not if ten times as much, because it can not 
 under the law of 1879 be a tender for over 
 ten dollars in one payment. 
 
 In presence of the divergencies and the 
 uncertainties of opinion in respect to the 
 future of silver among currency experts 
 and those who are responsible for the man- 
 agement of the treasuries, the mints, and 
 the mines of the world, it is becoming a 
 lawyer, not professing to be an expert 
 therein, to be reserved in the expression 
 of an opinion on the subject. But even a 
 mere lawyer may perhaps be permitted to 
 think that a metal so unstable in price as 
 silver has been since 1859, when its value 
 was $1.36 an ounce, is not suitable for the 
 embodiment of a unit and standard of all 
 
Misuse of Legal Tender. 29 
 
 value, and for an unlimited legal tender. 
 It may be that gold has risen in price, and 
 silver has not fallen in price sixty-six cents 
 an ounce in thirty-four years ; but the rise 
 of gold or fall in silver, whichever it may 
 be, began nearly a dozen years before the 
 Franco-German War, the German change 
 from a silver to a gold standard, the Amer- 
 ican adoption in 1873 of a unit of value ex- 
 clusively gold (which is here and there de- 
 nounced as a crime done in concealment), 
 and the closing of the mints of the Latin 
 Union to silver. 
 
 The rise in the price of gold and the fall 
 in the gold price of commodities are only 
 different terms describing the same thing. 
 Possibly the appreciation of gold, and not 
 man's inventions, hammered down the 
 prices of commodities; but, contemporane- 
 ously, the wages of labor, the income of pro- 
 fessional men clergymen, lawyers, physi- 
 cians, surgeons, and teachers the salaries 
 of those who conduct exchanges and great 
 
50 Misuse of Legal Tender. 
 
 enterprises, have increased enormously. 
 During the memory of living man the annual 
 interest to be paid for borrowed capital has 
 diminished over fifty per cent. 
 
 If the gold price of bodily and mental 
 labor has risen, and the rate of interest to 
 be paid by borrowers has fallen, will a con- 
 temporaneous rise in the price of gold injure 
 debtors, even although they have to pay 
 what will buy more commodities than it 
 would have bought when they borrowed, 
 so long as those commodities can be pro- 
 cured with proportionately less of such 
 bodily and mental labor? But, however 
 that may be, a fluctuating dollar is none the 
 less an evil. 
 
 It is noteworthy that none of those pre- 
 dicting national woes if Congress shall cease 
 annually buying and warehousing fifty-four 
 million ounces of silver, tell us of the future 
 production and price of silver when the 
 cessation shall have taken place. Will 
 silver keep on fluctuating in price, or will it 
 
Misuse of Legal Tender. 31 
 
 sink to a price measured by the lowest cost 
 and profit of improved methods of extrac- 
 tion, and remain reasonably stable around 
 that pivot price? Was the great fall in 
 the price of steel rails a calamity? As 
 merely a commodity, silver, at fifty cents an 
 ounce, will be more accessible than now to 
 those of moderate means who will be so 
 glad to have silver forks, spoons, teapots, 
 coffee-pots, and all the beautiful ornaments 
 into which silver can be worked will it 
 not ? As a money metal, as currency, or 
 even as a unit of value, a diminished price 
 * may not be fatal to its use if that price is 
 stable and fixed. Indeed, silver when stable 
 at fifty cents an ounce will be more suitable 
 for a money measure than when tumbling 
 down from $1.36 an ounce in 1859 to sev- 
 enty cents an ounce in 1893. 
 
 All the governments of the world enter- 
 ing into treaty stipulations with one another 
 to throw wide open all' their mints to the 
 free coinage of full legal-tender silver coin 
 
Misuse of Legal Tender. 
 
 and gold coin, on a fixed-weight ratio, 
 can, by the thumbscrew of legal tender, 
 probably lift the price of silver or depress 
 the price of gold (whichever be the proper 
 phrase) to a parity at 1 5% to i ; but what 
 can the United States do if there shall be 
 refusal at London, Berlin, Paris, Vienna, 
 Madrid, and Rome ? Washington can not 
 by war, even by the aid of its "white 
 squadron," compel international bimetal- 
 lism can it ? Concerted action by all the 
 nations can make an international court 
 for the adjustment of international differ- 
 ences, and peaceful arbitration the universal 
 rule, and can thus bring to pass the end of 
 armed strife, and the opening of the happy 
 day when nations shall learn war no more 
 and prepare for war no more. But, unfor- 
 tunately, the coming of international bimet- 
 allism now seems postponed to as far off a 
 future, thanks largely to the doings of the 
 American Congress in 1878 and 1890, as is 
 that "Congress of Nations " for which good 
 
Misuse of Legal Tender. 33 
 
 men in the Old World have longed and 
 labored, and died without the sight. Mr. 
 Gladstone's Government, now holding the 
 key of the position, seems at this moment 
 as likely to overthrow the gold monome- 
 tallic standard as to stipulate by treaty that 
 Parliament shall enact the McKinley law, or 
 throw into the Thames the "Old Lady of 
 Threadneedle Street, " with all her treasures. 
 The problem now presented by silver is 
 in one aspect colossal in its complexity! It 
 is a part of the currency problem which 
 occupies Europe, America, and Asia, super- 
 seding for the moment the problem of taxes 
 and their incidence. In dealing with it, 
 the greatest experts "audibly acknowledge 
 hesitation." But all agree, it is to be hoped, 
 that the unit of value, the standard of de- 
 ferred payments, the full legal-tender money, 
 with which all token currency, all fiduciary 
 currency, all the " counters" for small trans- 
 actions shall conform, ought to be embodied 
 only in a stable metal, or in stable metals 
 
 

 
 34 Misuse of Legal Tender. 
 
 whose relation to one another is fixed and 
 motionless. 
 
 The existing legal-tender system of 
 England makes gold coins the principal 
 legal tender (Bank of England notes are a 
 tender above five pounds excepting when 
 made by the bank), but all silver coins com- 
 posed of less valuable material, and circu- 
 lated above their real value, or, in other 
 words, as token coins, are, like our own 
 minor silver coins, a legal tender only to a 
 limited amount. 
 
 Jhejiat theory of money namely, that 
 its value can be created and upheld by the 
 State everywhere within its jurisdiction 
 rests on the contention that the State, by 
 its power of deciding what shall be a legal 
 tender and a discharge of all debts, can de- 
 termine not only what substance shall be 
 money, but what within limits shall be the 
 value of that substance. Legal tender is 
 the fulcrum whether in the case of the fiat 
 theory that the value of the money is con- 
 
Misuse of Legal Tender. 35 
 
 trolled by the will of the Government, or 
 in case of the free-trade theory that the 
 value of silver and gold is independent of 
 real control by the State, but is determined 
 by economic conditions, or in case of the 
 bimetallic theory which occupies a middle 
 ground between the fiat and free-trade 
 theories. 
 
 The United States, by the unmodified 
 second section of the law of February 28, 
 1878, stand committed to the constant en- 
 deavor to establish "internationally the use 
 of bimetallic money," and the fixity of rela- 
 tive value between the two metals. Appro- 
 priations were made therefor in 1878, and 
 down to 1892. Commissioners have re- 
 peatedly been appointed by successive Presi- 
 dents, and sent to Europe, notably and 
 recently to the conference at Brussels, in 
 aid of that result. Under the head of the 
 " Diplomatic Service" there is surviving in 
 the report by the Register of the Treasury 
 for 1892 an unexpended balance significantly 
 
Misuse of Legal Tender. 
 
 described "International Remoneti^ation of 
 silver." If the country and Congress have 
 turned their backs on international bimetal- 
 lism, then longer taxing us to promote it by 
 conferences, or by diplomatic methods, 
 seems rather incongruous. 
 
 Whatever is to be the outcome of the 
 battle of the standards whether a single 
 standard, a multiple standard, or a com- 
 posite standard let the only legal-ten- 
 der dollar be that which is the standard 
 dollar. 
 
 Even a casual inspection of our existing 
 laws relating to tender will disclose how 
 irrational they are. 
 
 All gold coins are, under the law of 1873, 
 a legal tender, "in all payments," at their 
 nominal value, when not below the stand- 
 ard weight and limit of tolerance; and if 
 below, then in proportion to actual weight. 
 They are unlimited legal tenders. Nothing 
 else is! 
 
 All greenback dollars are, under the law 
 
Misuse of Legal Tender. 37 
 
 of 1862, receivable in payment (i) of all 
 loans made to the United States, and (2) of 
 all taxes, debts, and demands of every kind 
 due to the United States, "except duties on 
 imports and interest, and (}) of all claims 
 and demands against the United States 
 "except for interest upon bonds, notes, and 
 certificates of debts or deposit." They are 
 in addition "a lawful money, and a legal 
 tender in payment of all debts, public and 
 private, within the United States, except 
 duties on imports and interest, as aforesaid." 
 That law of 1862 was the first to make 
 anything "lawful money" besides me- 
 tallic money. Congress did not declare that 
 the legal-tender clause shall be retroactive, 
 but the Supreme Court did so adjudge. 
 Before that judgment came, and indeed 
 before the legal-tender clause had been by 
 the judicial power pronounced constitu- 
 tional, the court endeavored to rescue 
 several classes of "debts " from the clutches 
 of the law, such as State taxes, and "debts " 
 
 
38 Misuse of Legal Tender. 
 
 payable specifically in coined dollars or in 
 gold dollars. 
 
 All silver dollars are, under the law of 
 1878, a legal tender, at their nominal value, 
 for all debts and dues, public and private, 
 "except where otherwise expressly stipu- 
 lated in the contract"] but the silver coins 
 of smaller denomination than one dollar are 
 a legal tender in full payment of dues, pub- 
 lic and private, "in all sums not exceeding 
 ten dollars." 
 
 All (Sherman) Treasury note dollars are, 
 under the law of 1890, receivable for cus- 
 toms (which by statute the old greenbacks 
 are not, although made so by Treasury 
 order since 1879), for taxes, and all public 
 dues, and "a legal tender in payment of all 
 debts, public and private, except where 
 otherwise expressly stipulated in the con- 
 tract^ Are they payable, and to be re- 
 ceived, for principal and interest of the 
 public debt? The old (1862) greenback 
 legal-tender clause is, "all debts, public and 
 
Misuse of Legal Tender. 39 
 
 private, except duties on imports and in- 
 terest, as aforesaid." The silver-dollar 
 (1878) clause is, "all debts and dues, public 
 and private, except where otherwise ex- 
 pressly stipulated in the contract." That 
 clause, omitting "dues," was paraphrased 
 in 1890. 
 
 The result of the analysis is, that gold 
 coins are first in precedence, because they 
 have unlimited legal-tender power. Silver 
 dollars come next, but are inferior to gold 
 coins when a contract calls for them or for 
 any other dollars. Sherman Treasury note 
 dollars come next, and are superior to the 
 old greenbacks, which are really at the foot 
 of the list. 
 
 Gold certificate dollars, silver certificate 
 dollars, and national bank note dollars are 
 not legal tenders in any sum whatever, and 
 should not be. A gold dollar is the only 
 full and unlimited tender; it is the "unit of 
 value" ; it is now the standard to which 
 all dollars must conform ! 
 
4O Misuse of Legal Tender. 
 
 If for any reason the Treasury shall fail 
 to maintain the present local " parity" of 
 all our dollars, and the silver dollar shall 
 be in purchasing power no more worth 
 than the gold value of the silver therein, 
 then what will be the legal effect of the 
 phrase, "shall be a legal tender, except 
 where otherwise stipulated in the con- 
 tract"; or rather (which is more important), 
 what will the judicial power say shall be 
 the legal effect ? The origin of the phrase 
 is in the law of 1869 "to strengthen the 
 public credit." It was novel in legal-tender 
 legislation and literature. 
 
 Will a promise in a bond or note to pay 
 gold dollars, be taken as an expressed stipu- 
 lation not to make or plead in court a ten- 
 der of silver dollars ? It surely should be 
 taken as at least an implied stipulation. 
 What control will be given to the adverb 
 "expressly"? Will an expressed stipu- 
 lation to pay gold dollars be taken as an 
 expressed stipulation not to tender silver 
 
Misuse of Legal Tender. 41 
 
 dollars ? Must the stipulation " expressly " 
 cover tender? If when the note or bond 
 falls due, and there shall be a difference of 
 fifty per cent between gold dollars and 
 silver dollars, and the latter, having been 
 tendered at their nominal value and refused 
 on a gold-dollar contract, will the court give 
 judgment and issue execution for gold 
 dollars and the plaintiff's costs ? What 
 will our Supreme Court adjudge if a future 
 Congress shall enact that the present stand- 
 ard silver dollar shall be a full legal tender 
 for all private debts payable in gold dollars ? 
 Must those loaning or investing protect 
 themselves by stipulating for payment in a 
 specified weight of pure or standard gold, 
 as bullion, and only thus be rid of the legal 
 consequences of using the word "dollars " ? 
 One readily and naturally answers, that 
 to permit a contract calling for gold dollars, 
 each containing 25 8 / IO standard gold, to be 
 satisfied by tendering silver dollars each 
 worth only 54 cents in gold, will be an im- 
 
42 Misuse of Legal Tender. 
 
 pairment of the obligation of a contract, and 
 no court will tolerate such impairment. 
 But such a one may not have carefully 
 studied the reasons assigned by the Su- 
 preme Court in Juilliard's case, its aver- 
 ment that the Federal Government mean- 
 ing the law-making power is sovereign in 
 coinage and legal tender, and its intimation 
 that, although the Constitution has forbidden 
 a State to pass a law "impairing the obli- 
 gation of contracts," no such prohibition 
 has been put on Congress. 
 
 A great many investors, and not a few 
 lawyers, were startled when the Supreme 
 Court declared in its second legal-tender 
 decision that " the obligation of a contract 
 to pay money is to pay that which the law 
 shall recognize as money when the pay- 
 ment is to be made." Not less disturbing 
 was the judicial announcement in the same 
 opinion that it is incorrect "to speak of a 
 standard of values " ; that " value is an ideal 
 thing"; that "the gold or silver thing we 
 
Misuse of Legal Tender. 43 
 
 call a dollar is in no sense a standard of a 
 dollar," but only a representative of it. 
 Therefore "an honest dollar" and "a legal 
 dollar " must be the same. 
 
 If the perversion and misapplication of 
 legal tender by congressional legislation is 
 to continue, it may be that New York, and 
 other self-respecting States in the Union, 
 will be constrained to consider whether or 
 not a State law can be constitutionally en- 
 acted and enforced which will take care 
 that the obligation of every future contract 
 made, or implied, for the payment of dollars 
 within the State, but not specifying the 
 sort of dollars, shall be discharged only in 
 gold dollars (and in silver coins if less than 
 one dollar), of the United States, the same 
 being of the weight and fineness fixed by 
 Congress at the time the contract shall have 
 been made or implied. 
 
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