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Posted by Still not convinced on August 05, 1998 at 18:51:02:

In Reply to: Re: Good cite, flawed interpretation--[who's?] posted by T. Mann on August 05, 1998 at 15:00:27:

: : : Where did Juilliard v Greenman overturn Knox.?

Huh??! Are you reading the same Knox v. Lee opinion I am?

The one I read ruled that the legal tender acts WERE Constitutional as can be gathered from the excerpts of the court's opinion provided below. Those summaries will also show that the Hepburn v. Griswold opinion was the case which was overruled, not the Knox v. Lee case as you stated. (Hepburn v. Griswold ruled that the legal tender acts were unconstitutional as applied to contracts established before passage of the act). As a matter of fact, the Juilliard v. Greenman case fully supported the Knox v. Lee opinion in upholding the legal tender acts, and the power of Congress to declare legal tender of any kind, including notes of private banks like the Federal Reserve.

"Under the power to borrow money on the credit of the United States, and to issue circulating notes for the money borrowed, [Congress'] power to define the quality and force of those notes as currency is as broad as the like power over a metallic currency under the power to coin money and to regulate the value thereof. Under the two powers, taken together, congress is authorized to establish a national currency, either in coin or in paper, and to make that currency lawful money for all purposes, as regards the nation government or private individuals. The power of making the notes of the United States a legal tender in payment of private debts, being included in the power to borrow money and to provide a national currency, is not defeated or restricted by the fact that its exercise may affect the value of private contracts"
LEGAL TENDER CASES, 110 U.S. 421, at 448 (1884) {Juilliard v. Greenman}

To which I would only add that the same power applies to making FRNs legal tender as well, as can be seen in the excerpts from Knox v. Lee below. This quote also addresses your comments about impairing contracts.

The Knox v. Lee court also noted that the Hepburn v. Griswold case was decided by an incomplete court (i.e. too few Justices) per the requirements of law at the time of the Hepburn v. Griswold case, and that the Knox v. Lee hearing, in front of a full court had reversed the Hepburn v. Griswold ruling.

It appears to me that you have misconstrued the opinion of the court in some fashion. Your comments about the case are not supported by what I read there, in fact they are directly rebutted. Even after a careful review of the court's opinion I remain convinced that, at least since 1870, Congress' power over the currency of the nation includes the ability to issue fiat and legally give it the capability to fulfill contracts requiring payment in, as the court put it, 'legal value'.

Again, I'll say that I don't particularly like that result, and I'll admit that it's possible the founding fathers attempted to prevent such an occurrence. But the fact remains, Knox v. Lee made it all nice and legal, and that decision hasn't been overturned to date. So despite your string of conspiratorial facts, the government has been acting within its legal bounds, whether we deem those acts to be good or bad.

If you wish to change it, convince Congress to remove the laws authorizing fiat legal tender. You are not helping the matter by spreading unsupported information and generally complaining about how the government is operating outside its bounds, when a careful review of the facts shows the opposite to be true.


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Excerpts from Court's opinion in:

LEGAL TENDER CASES, 79 U.S. 457 (1870) {Knox v. Lee and Parker v. Davis}


[79 U.S. 457, 529]

Mr. Justice STRONG delivered the opinion of the court.

The controlling questions in these cases are the following: Are the acts of Congress, known as the legal tender acts, constitutional when applied to contracts made before their passage; and, secondly, are they valid as applicable to debts contracted since their enactment?

. . .
[79 U.S. 457, 530]

the fundamental question, that which tests the validity of the legislation, is, can Congress constitutionally give to treasury notes the character and qualities of money? Can such notes be constituted a legitimate circulating medium, having a defined legal value? If they can, then such notes must be available to fulfill all contracts (not expressly excepted) solvable in money, without reference to the time when the contracts were made

. . .
[79 U.S. 457, 536]

Indeed the whole history of the government and of congressional legislation has exhibited the use of a very wide discretion, even in times of peace and in the absence of any trying emergency, in the selection of the necessary and proper means to carry into effect the great objects for which the government was framed, and this discretion has generally been unquestioned, or, if questioned, sanctioned by this court

. . .
[79 U.S. 457, 537]

. Under the same power and other powers over the revenue and the currency of the country, for the convenience of the treasury and internal commerce, a corporation known as the United States Bank was early created. To its capital the government subscribed one-fifth of its stock. But the corporation was a private one, doing business for its own profit. Its incorporation was a constitutional exercise of congressional power for no other reason than that it was deemed to be a convenient instrument or means for accomplishing one or more of the ends for which the government was established

. . .
[79 U.S. 457, 538]

(quoting Chief Justice Marshall from Fisher v. Blight)
'Congress,' said this court, 'must possess the choice of means, and must be empowered to use any means which are in fact conducive to the exercise of a power granted by the Constitution. The government is to pay the debt of the Union and must be authorized to use the means which appear to itself most eligible to effect that object. It has, consequently, a right to make remittances by bills or otherwise, and to take those precautions which will render the transaction safe.'

. . .
[79 U.S. 457, 543]

(paraphrasing Veazie Bank v. Fenno)
There, this court, speaking through the Chief Justice, avowed that it is the constitutional right of Congress to provide a currency for the whole country; that this might be done by coin, or United States notes, or notes of National banks (i.e. today's FRNs); and that it cannot be questioned Congress may constitutionally secure the benefit of such a currency to the people by appropriate legislation

. . .
[79 U.S. 457, 544]

Concluding, then, that the provision which made treasury notes a legal tender for the payment of all debts other than those expressly excepted, was not an inappropriate means for carrying into execution the legitimate powers of the government, we proceed to inquire whether it was forbidden by the letter or spirit of the Constitution.

. . .
[79 U.S. 457, 545]

(The Constitution) was designed to provide the same currency, having a uniform legal value in all the States. It was for this reason the power to coin money and regulate its value was conferred upon the Federal government, while the same power as well as the power to emit bills of credit was withdrawn from the States. The States can no longer declare what shall be money, or regulate its value. Whatever power there is over the currency is vested in Congress. If the power to declare what is money is not in Congress, it is annihilated.

. . .
[79 U.S. 457, 549]

Every contract for the payment of money, simply, is necessarily subject to the constitutional power of the government over the currency, whatever that power may be, and the obligation of the parties is, therefore, assumed with reference to that power.

. . .
[79 U.S. 457, 549]

There is a wide distinction between a tender of quantities, or of specific articles, and a tender of legal values. Contracts for the delivery of specific articles belong exclusively to the domain of State legislation, while contracts for the payment of money are subject to the authority of Congress, at least so far as relates to the means of payment. They are engagements to pay with lawful money of the United States, and Congress is empowered to regulate that money. It cannot, therefore, be maintained that the legal tender acts impaired the obligation of contracts.

. . .
[79 U.S. 457, 549 - 550]

Nor can it be truly asserted that Congress may not, by its action, indirectly impair the obligation of contracts, if by the expression be meant rendering contracts fruitless, or partially fruitless. Directly it may, confessedly, by passing a bankrupt act, embracing past as well as future transactions. This is obliterating contracts entirely. So [Congress] may relieve parties from their apparent obligations indirectly in a multitude of ways. It may declare war, or, even in peace, pass non-intercourse acts, or direct an embargo. All such measures may, and must operate seriously upon existing contracts, and may not merely hinder, but relieve the parties to such contracts entirely from performance. It is, then, clear that the powers of Congress may be exerted, though the effect of such exertion may be in one case to annul, and in other cases to impair the obligation of contracts. And it is no sufficient answer to this to say it is true only when the powers exerted were expressly granted. There is no ground for any such distinction. It has no warrant in the Constitution, or in any of the decisions of this court. . . . An embargo suspends many contracts and renders performance of others impossible, yet the power to enforce it has been declared constitutional.

. . .
[79 U.S. 457, 551 - 552]

By the act of June 28, 1834, a new regulation of the weight and value of gold coin was adopted, and about six per cent. was taken from the weight of each dollar. The effect of this was that all creditors were subjected to a corresponding loss. The debts then due became solvable with six per cent. less gold than was required to pay them before. The result was thus precisely what it is contended the legal tender acts worked. But was it ever imagined this was taking private property without compensation or without due process of law? Was the idea ever advanced that the new regulation of gold coin was against the spirit of the fifth amendment? And has any one in good faith avowed his belief that even a law debasing the current coin, by increasing the alloy, would be taking private property? It might be impolitic and unjust, but could its constitutionality be doubted? Other statutes have, from time to time, reduced the quantity of silver in silver coin without any question of their constitutionality.

. . .
{And finally, after rebutting every argument claiming the legal tender acts were unconstitutional, the court added that any other claims not covered still did not transgress on the power of Congress to declare legal tender.}

[79 U.S. 457, 552]

We are not aware of anything else which has been advanced in support of the proposition that the legal tender acts were forbidden by either the letter or the spirit of the Constitution. If they were, . . . they were not transgressive of the authority vested in Congress.


. . .
[79 U.S. 457, 553 - 554]

it will be seen that we hold the acts of Congress constitutional as applied to contracts made either before or after their passage. In so holding, we overrule so much of what was decided in Hepburn v. Griswold, [which] ruled the acts unwarranted by the Constitution so far as they apply to contracts made before their enactment. That case was decided by a divided court, and by a court having a less number of judges than the law then in existence provided this court shall have. These cases [Knox v. Lee and Parker v. Davis] have been heard before a full court, and they have received our most careful consideration. . . . thoroughly convinced as we are that Congress has not transgressed its powers . . .



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