Page:Harvard Law Review Volume 1.djvu/103

 functions of issuing a currency and borrowing money, if Congress give to its currency the quality of legal tender, wholly or mainly, because it will thus be a better instrument for borrowing purposes, it will not be in the power of a court to declare the legislation for that reason unconstitutional.

It will be convenient here to make a few discriminations. In order to supply a paper currency the government need not emit bills; it may charter a private bank to provide a circulation, and may simply regulate its operations; and it may be itself a stockholder, as in the case of the United States Bank. Or it may avail itself of banks already established. In such cases there is no borrowing of money. On the continent of Europe, as I am informed, most of the cases where governments made the paper currency a legal tender, before the time of our Constitution, — and, some of the instances, since, but not all, — were those of giving this quality to the paper of private or quasi public institutions; not to government bills. Now, in such cases, the government does not necessarily borrow money. Again, even where it makes its own paper a currency, and a legal-tender currency, it does not necessarily raise money on it, except, of course, in so far as it may go on to pay its debts with it, and thus borrow by a forced loan; for it may, as the States sometimes did, cause its paper to be given out by lending it on the security of other property. Or it may issue it to banks on their giving security for its redemption, and merely allow them to use it and issue it as a circulating medium. In such a case there is no borrowing by the government.

The case of the present National banks is not quite this; for they take notes furnished by the government and issue them as their own, and are fully and primarily responsible upon them; but the government is a sort of guarantor, and holds specific property of the banks, viz. government bonds, as security, to be applied to the redemption of the notes, being itself bound to redeem them on the failure of the banks to do so, and having the right to apply the bonds to reimburse itself. Now, there is here a remote element of borrowing; that is to say, the property of the banks which must be deposited consists of the securities of the United States; and, in order to get those securities, the banks, or somebody else, must have lent money to the United States. So that, under the existing