Fighting "Gresham's Law"
IT has been a misfortune in connection with our national financing that from the beginning of our history the requirements of the Treasury have been confused with other issues.
From the day of Hamilton until the present customs tariffs have been laid with the double object in view of obtaining revenue and of affording a greater or lesser degree of "protection" to manufacturing industries.
The currency has perpetually been in politics. The "fathers" had so recently experienced the suffering and loss incident to the use of an inconvertible paper currency that they placed in the Constitution a provision that "no State shall . . . emit bills of credit" or "make anything but gold and silver coin a tender for debt." So far as the Federal Government is concerned, while the Constitution contains no express prohibition against the use of paper money, there is no authority given for its issue. The reports of the debate in the Convention show that there was an unanimity of feeling against the exercise of any such authority.
Until the outbreak of the Civil War the issuing of circulating notes had been left to the banks exclusively. Unfortunately the prohibition against such issues by the States was construed not to forbid the issuance of notes by State chartered banks.