out. It is well known that the text of the former was largely incorporated with the latter. But the constitutionality of the Legal Tender Acts, passed during the late rebellion, has been so repeatedly affirmed, that we apprehend this to be no longer an open question.1

The Constitution also gives to Congress the right to levy taxes and raise a revenue in order "to pay the debts" of the United States. A fatal defect in the old system was the power it afforded for borrowing money while withholding the means of securing repayment.2

The management of the national finances belongs to the Secretary of the Treasury. Since the adoption of the Constitution he has held the purse of the nation. But this officer has not always wielded the vast power with which present laws invest him. The Continental government provided loan-office commissioners; and under the Funding Bill of Aug. 4, 1790, this system was renewed. These commissioners, appointed one for each State, exercised an active supervision of the public debt, and received subscriptions for the loans. The United States Bank, after its second establishment in 1817, succeeded to these functions, together with its branches. So loan offices were abolished. On the downfall of the United States Bank, local banks and special agencies were brought into requisition. Then came the sub-Treasury system, affording material assistance in the large cities, and supplying, in a measure, the want of a national bank, but tending to concentrate power in the hands of the Secretary of the Treasury. This proved inadequate for the needs of Government in time of great pressure. Hence the Treasury Department has latterly employed private agents, and the immense popular loans put upon the market and taken up by our citizens during the late rebellion were managed chiefly by enterprising financiers under the direction of the Secretary. The national banks established under Act of Feb. 25, 1863, have also rendered important service as depositaries and fiscal agents, and introduced a new order of things.

1 See Metropolitan Bank v. Van Dyck, 27 N.Y. 400; Schollenberger v. Brinton, 52 Penn. St. 9, 100; Latham v. United States, 1. Court of Claims, 149. See, also, 2 Am. Law Rev. 403. The Supreme Court of the United States has not yet passed upon this important question.

For discussion of the proper construction of the word "to" in the above clause, see Story's Commentaries, ch. 14, §§ 904-927, which favors the sense "in order to."

When the Revolutionary debt was consolidated, a sinking fund was created for its gradual liquidation. Instead of leaving this to the management of the Secretary of the Treasury, Congress established a board of commissioners with full power to meet interest payments and to purchase outstanding certificates of stock with their balances from time to time. The war debt of 1812 was likewise committed to them. This board continued until 1836, when, by Act of July 4th of that year, it was abolished, and its duties were once more transferred to the Secretary; the national debt being then nearly extinguished.

Since the adoption of the Constitution, the usual evidences of the public debt have been distinguished as bonds and notes. But the common law definitions do not apply to them. One form of obligation is as solemn and binding upon the United States as the other. The seal of the Treasury Department is in either case affixed. Nor is it to be supposed that the bonds constitute a preferred claim. The practical difference seems to be that, whereas the Treasury notes are issued for short periods, from one to three years, and then funded, cancelled, or, if necessary, reissued, the bonds are issued for longer periods, and possess, in theory at least, the advantages of a permanent investment.

The modern introduction of coupon bonds in the mercantile community has greatly changed the characteristics of the long loans. Treasury notes were usually in comparatively small sums, and passed readily from hand to hand. Government bonds, on the contrary, were issued for large amounts, and could only be transferred by assignment on the books of the Department. The former were better adapted for circulation; the latter could be held with greater safety. But those who compare the "five-twenty" and "seventhirty" loans of the late war will see that there is little distinction between them, so far as amount of certificate is concerned; and still less in respect to negotiability. These, however, represent the two forms of government obligations.

Let us observe one or two leading principles laid down in regard to coupon bonds.

In Baldwin v. Ely, the Supreme Court held that certificates under the treaty between the United States and Mexico, bearing the indorsement in blank of the payee, though not on the same

19 How. 580.

footing as negotiable paper by the law merchant, were property transferable by such indorsement and delivery, there being no evidence offered to impeach the defendant's title.

In a subsequent case, that of Moran v. Commissioners of Miami County, the court remarked, that county bonds, issued with interest warrants annexed, were commercial securities, and that the holder had full title.

But the negotiability of coupon bonds was distinctly and finally affirmed in the more recent case of Thomson v. Lee County.2 The conclusion here was, that coupon bonds, payable to bearer, are negotiable securities, which pass by delivery and have all the qualities and incidents of commercial paper. Also that coupons, so drawn as to be separated from the bonds, are negotiable, so that the holder may sue on them without producing the bonds or being interested in them.

By far the greater part of the Government securities is held in coupon bonds or notes. But some purchasers, trustees, and others, who wish to hold their stock securely and do not change investments frequently, prefer registered bonds. Their assignments must be recorded on the books of the Treasury, and interest can only be drawn by the registered owner, or his attorney duly authorized. The Act of April 15, 1842, which seems to be the first departure from the old system, permits the Secretary of the Treasury to make the certificate hereafter in such form that it may be transferable by delivery, instead of being assignable on the books of the Treasury.

When public securities were formally assigned, conflicting questions of ownership sometimes arose at the Treasury Department. Private caveats were filed with the Secretary or the officer paying the dividends. Attorney General Wirt laid down the proper rule to be followed by the Government agent in such cases. The holder by assignment indorsed upon the paper itself is, he observes, prima facie the owner; but not necessarily so, since a valid assignment may be made on a separate paper, which will pass the title without actual delivery of the certificate. Private caveats should therefore be so far regarded, that, in cases of doubt, disbursements remain suspended until the parties have settled their rights in a court of law.3

But caveats are now of little consequence. In the case of Murray v. Lardner, where United States securities had been stolen and afterwards sold by a broker to an innocent purchaser, it was held, that want of title in the vendor did not affect the sale; that the only question that could be raised was that of fraud in the purchase, with the burden of proof on the party who assails the possession.

As production of the certificate is the necessary evidence of government's indebtedness, no remedy exists at law to the creditor who has lost or destroyed it. But justice and sound policy demand that the State shall not repudiate its debt on such grounds, provided it is secured against loss from future bona fide holders of the missing securities. Accordingly the Act of Feb. 4, 1819, authorizes the Secretary of the Treasury, on proof of the loss or destruction of any Treasury note, and the tender of a suitable bond of indemnity, to pay the party entitled the full amount of his demand. Although this act has a general application, a strict construction would not probably extend it to coupon bonds, a later class of commercial securities. But numerous private acts have been passed by Congress within the last few years for the relief of creditors whose securities were accidentally destroyed, in application of the same liberal principle; and it is probable that some general statute in extension of the Act of 1819, will soon be needed; so immense is the mass of public securities floating about the country, liable at any moment to loss or destruction without fault on the owner's part.

The various loan acts prescribe the method of issuing the public securities, which are usually signed by some public officer,-at present by the Treasurer, an officer subordinate to the Secretary, -and then countersigned. The commissioners of loans formerly countersigned; this duty now devolves upon the Register of the Treasury. The practice as to affixing the seal of the Treasury has not always been uniform; but it is now affixed to all securities. An interesting case under the Loan Acts of the Continental Congress came before the Court of Claims a few years since.2 Certain certificates which were properly issued and signed by the Continental Treasurer required by law the counter-signature of a loanoffice commissioner. But they were countersigned" by order of

1 2 Wall. 110.

2 Ward v. United States, 1 Court of Claims, 360.

J. A. Treutlin, Esq., Governor of Georgia; E. Davies, Jr." It did not appear that Davies was a loan commissioner, or that he had ever acted in that capacity. The court held, that the owner could not recover, although it appeared that similar bonds had been cancelled by the Treasury Department, and that Government had paid four years' interest upon some of those in suit.

It may, however, be added, that these certificates were originally issued for the benefit of the State of Georgia, and that it did not appear that any consideration ever came to the United States. There are numerous statutes which commit Congress to the liberal policy of sustaining the national obligations by correcting mere informalities in the mode of execution.1

A clause was commonly inserted in the early loan acts of the National Government, solemnly pledging the faith of the United States for repayment of principal and interest; but it is generally omitted of late years, although sometimes found, as in the Act of July 17, 1861. It does not, of course, add to the validity of the engagement. So also it was customary to designate some specific source of revenue for the redemption of loans; as, for instance, duties on imports, and revenue from sales of public lands; but general appropriations are now made. With the rapid enlargement of the executive bureaus, and the multiplicity of details in the management of our finances, less precision is now employed than formerly in the terms of Loan Acts, and a liberal discretion is left to the Secretary of the Treasury as to the rate and denominations of national securities, and the method of bringing them into the market. The uniform legislation has been in favor of loans redeemable at pleasure of the Government after a short period, and within a period not exceeding forty years, with interest according to emergencies; but not greater than six per cent. The certificates are to be publicly sold, or under sealed proposals after advertisement; but not below par under any circumstances. The policy has been to issue temporary Treasury notes in preference to depreciated certificates; and in this manner the nation bridged the chasm in the contest of 1812 with Great Britain, and in the Mexican War.

We have already noticed the means employed, during the late rebellion, by Secretary Chase in "popularizing" the national loan

1 See, e.g., Act of 1864, c. 172, § 6.