Redeemable Notes Outlawed

The power to issue “Bills of Credit” or otherwise “redeemable notes” was a power denied to the Federal Government on August 16th 1787.

Amplify’d from
August 16, 1787 A.D., Constitutional Convention, Philadelphia, PA:

“Mr. Govr. Morris moved to strike out ‘and emit bills on the credit of the United States’ If the United States had credit such bills would be unnecessary: if they had not, unjust & useless.”

“Mr. Butler, 2ds. the motion.”

“Mr. Madison, will it not be sufficient to prohibit the making them a tender? This will remove the temptation to emit them with unjust views. And promissory notes in that shape may in some emergencies be best.”

“Mr. Govr. Morris. striking out the words will leave room for notes of a responsible minister which will do all the good without the mischief. The monied interest will oppose the plan of Government, if paper emissions be not prohibited.”

“Mr. Ghorum was for striking out, without inserting any prohibition. if the words stand they may suggest and lead to the measure.”

“Col. Mason had doubts on the subject. Congs. he thought would not have the power unless it were expressed. Though he had a mortal hatred to paper money, yet as he could not foresee all emergencies, he was unwilling to tie the hands of the Legislature. He observed that the late war could not have been carried on, had such a prohibition existed.”

“Mr. Ghorum. The power as far as it will be necessary or safe, is involved in that of borrowing.”

“Mr. Mercer was a friend to paper money, though in the present state & temper of America, he should neither propose nor approve of such a measure. He was consequently opposed to a prohibition of it altogether. It will stamp suspicion on the Government to deny it a discretion on this point. It was impolitic also to excite the opposition of all those who were friends to paper money. The people of property would be sure to be on the side of the plan, and it was impolitic to purchase their further attachment with the loss of the opposite class of Citizens.”

“Mr. Ellsworth thought this a favorable moment to shut and bar the door against paper money. The mischiefs of the various experiments which had been made, were now fresh in the public mind and had excited the disgust of all the respectable part of America. By witholding the power from the new Governt. more friends of influence would be gained to it than by almost any thing else. Paper money can in no case be necessary. Give the Government credit, and other resources will offer. The power may do harm, never good.”

“Mr. Randolph, notwithstanding his antipathy to paper money, could not agree to strike out the words, as he could not foresee all the occasions which might arise.”

“Mr. Wilson. It will have a most salutary influence on the credit of the United States to remove the possibility of paper money. This expedient can never succeed whilst its mischiefs are remembered, and as long as it can be resorted to, it will be a bar to other resources.”

“Mr. Butler. remarked that paper money was a legal tender in no Country in Europe. He was urgent for disarming the Government of such power.”

“Mr. Mason was still adverse to tying the hands of the Legislature altogether. If there was no example in Europe as just remarked, it might be observed on the other side, that there was none in which the Government was restrained on this head.”

“Mr. Read, thought the words, if not struck out, would be as alarming as the mark of the Beast in Revelations”

“Mr. Langdon had rather reject the whole plan than retain the three words ‘(and emit bills)‘”

“On the motion for striking out
N. H. ay. Mas. ay. Ct. ay. N. J. no. Pa. ay. Del. ay. Md. no. Va. ay.* N. C. ay. S. C. ay. Geo. ay.”

“The clause for borrowing money, agreed to nem. con.”

“*This vote in the affirmative by Virga. was occasioned by the acquiescence of Mr. Madison who became satisfied that striking out the words would not disable the Govt. from the use of public notes as far as they could be safe & proper; & would only cut off the pretext for a paper currency, and particularly for making the bills a tender either for public or private debts.”




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