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Opinion of the Attorney-General.
I have the honor to acknowledge the receipt of the following resolution, adopted by the Senate on the seventh of April inst :
Resolved, That the Attorney General be requested to report, within three days, to the Senate, whether in his opinion the engrossed bill from the Assembly, to provide for the completion of the Erie Canal #. and the Genesee Valley and Black River Canals, conflicts with the provisions of the onstitution.
The questions submitted for my opinion are exceedingly grave and important, and deserve the most careful and thorough examination. No man should be willing to hazard an opinion on such a subject, without patient thought and faithful research, justice to himself, to the subject, and the people demand it; but, the time limited to my use in the resolution, invaded as it has been by other and unavoidable official duties, has necessarily rendered it impossible for me to give these questions the attentive examination I desired and they deserved. I have, however, thrown a few suggestions into a form, quite crude, it is true, and submit them to the Senate, in answer to the resolution. On examining the bill transmitted to me by your honorable body and to which the resolution points, it occurred to me that its provisions might possibly conflict with sec. 10 of article 1 of the Constitution of the United States, which, among other limitations of the powers of the States, declares that “no State shall emit bills of credit.” Are the “Canal Revenue Certificates” authorized by the 2nd section of this act, bills of credit, within the meaning of the Constitution ? 1. They are drawn on the credit of a fund which has no present existence, and which is uncertain in the nature of things. The holder relies and must rely on the faith of the State and on its obligation to provide this fund. The certificate is therefore based on the credit of the State. 2. They are negotiable by delivery merely in form, they are payable to A. B. or his assigns—Delivery of a chose is an assignment, and passes all the interest to the 3.W 66. p #. They are intended to circulate through the community for its ordinary purposes as money, and are redeemable at a future day. The bill makes them receivable in payment of labor on the public works. 4. Superadded is the ability of the holder to re-deliver them to the State and thus convert them into bank notes or bills, to be employed as the ordinary circulating medium of the country. In the case of Craig et al., vs. The State of Missouri, 4 Peters, R. 431, Chief Justice Marshall, in delivering the opinion of the Court, thus describes “bills of credit”, “In its enlarged and perhaps literal sense, the term ‘bill of credit” may comprehend any instrument by which a State engages to pay money at a future day; thus including a certificate given for money borrowed. But the language of the Constitution itself, and the mischief to be prevented which we know from the history of our country, equally limit the interpretation of the terms. To ‘emit bills of credit' conveys to the mind the idea of issuing paper intended to circulate through the community for its ordinary purposes as money, which paper is redeemable at a future day.” The friends of this bill say that these certificates are not given for a loan, they are not evidence of a deposit, they create no liability, but are given by the vender on a sale of his property, to a vendee, as evidence that the vendee is entitled to the thing he purchased when it comes into existence. Looking beyond that mysticism to the real nature of the transaction, to my mind these amphibious certificates very strikingly resemble the Missouri certificates which were pronounced to be “bills of credit.” They differ in denomination, but in most other respects agree. The Missouri certificates were issued on a deposit of money or its equivalent; so are these issued under the authority of this bill. Those rested in an ample fund for their redemption; nominally so do these—Those bore a certain rate of interest; so do these. Those were issued in denominations convenient for the ordinary wants of the community; so are these. Those were receivable in payment of taxes, and the salaries of public officers; these are receivable in payment of labor on the public works, and thus far the bill makes them currency. This is the immediate parallel of the two cases, and it is significant, but the parallel is decidedly to the disadvantage of the New York certificates, when, by passing through the transmuting crucible of legislative ingenuity, they become bank bills and form the ordinary circulating medium of the country. No such contrivance can change their character, and if, in any stage of their existence, or any condition they may assume, they may come in conflict with this 10th section, they are void. Speaking of the Missouri certificates, Chief Justice Marshall says: “Had they been termed ‘bills of credit’ instead of “certificates, nothing would have been wanting to bring them within the prohibitory words of the Constitution. Can this make any real difference? Is the proposition to be maintained that the Constitution meant to prohibit names and not things? That a very important act, big with great and ruinous mischief which is forbidden by words most appropriate for its description, may be performed by the substitution of a name? That the Constitution, in one of its most important provisions, may be openly evaded by giving a new name to an old thing % We cannot think so. We think the certificates emitted under the authority of this act, are as entirely ‘bills of credit’ as if they had been so denominated in the act itself.” I have already suggested the striking analogy of the two cases, and if the case cited is authority, it is difficult to lift the certificates to be issued under the authority of this bill, out of it, and I am not aware that the authority of that case has ever been doubted. If these certificates shall be declared to be within the prohibitory words of the Constitution of the United States, some anxiety may be felt, in certain quarters, for the stability of our present system of banking, but there is no occasion for alarm. The stocks which have heretofore been deposited, or which may be deposited in pursuance of the general banking law, as security for bank circulation, have been legitimately created. They are recognized by the Constitution, and were issued upon actual and bona fide loans to the State Government. They do not contravene the Constitution of the State or United States, and are as enduring as the Constitution itself. The faith and credit of the State are pledged in the most solemn manner, for their redemption. They stand upon a footing entirely different from certificates, issued upon the deposit of money with the Comptroller, accompanied by a declaration that the State is not thereby made a debtor, and the deposit is not a loan of money. Stripped of the obscuring machinery of the bill, this pretended transaction of sale is as transparent as the dew drop. A. deposits one hundred thousand dollars with the State, and declares that it is not a loan nor to be treated as a loan. He receives a certificate, declaring that he is entitled to receive one hundred thousand dollars from the State in twenty-one years, and semi-annual interest at 6 per cent, and strange as such a transaction may appear, both parties all the while insist that it is not a loan or a deposit. On receiving this hermaphroditic certificate, he immediately delivers it to the Comptroller, and receives in its stead one hundred thousand dollars of bank bills, to be used as currency. It is clear that the one hundred thousand dollars of bank bills rest on the one hundred thousand dollars deposited as the security. If the certificate is no evidence of debt, and the transaction has none of the characteristics of a loan, the certificate might be wiped out, without at all affecting the nature of the transaction. No legerdemain can change the thing, there it stands and will stand, in bold relief, 22
all the opinions of all the wise men of the world to the contrary notwithstanding: The intermediate certificate is a most clumsy contrivance to evade the Constitution; but the Constitution does not war upon names, or, in the language of Chief Justice Marshall, “it does not prohibit names.” Without the intervention of the “certificate,” all will agree that the transaction would be a violation of the Constitution, on the hypothesis that no loan is made and no liability created. If such an hypothesis can be predicated of this bill, then I maintain that the certificate is wholly umimportant, and the bill unconstitutional. If the deposit creates a debt or liability on the part of the State, it is by no means clear that the transaction is not within the prohibitory words of the Constitution; the certificate itself is not entirely free from this difficulty, and while it may, by a single contemporaneous act, be converted into a circulating medium, it is almost, if not entirely, impossible to avoid the constitutional prohibition. I confess that I have not examined this question with sufficient care to pronounce definitely upon it. I desire to call the attention of Senators to it, and I doubt not, that they will satisfy themselves that the paper authorized to be issued by this bill is not prohibited by the Constitution of the United States, before they yield their assent to this enactment. There is, however, another constitution, which the oath of most public officers requires them to support, and which cannot be knowingly over-rode in the passage of bills, without criminality; and it is always important to inquire, “is this bill opposed to the Constitution of the State of New York?” Is this particular enactment prohibited by it ! . This inquiry, it seems, was suggested at the very outset, in connection with the bill “to provide for the completion of the Erie Canal enlargement, and the Genesee Valley and Black River Canals;” for a very elaborate opinion of a distinguished jurist, concurred in by two eminent members of the legal profession, accompanied the report of the committee, by which this bill was originally introduced into the Assembly. It is not a matter of surprise that this unusual precaution, to fortify a bill in advance, by the written opinion of eminent men, should have been taken in this case, for nobody but a singularly bold man, would have ventured upon such an expedient as is presented in this bill, however urgent the necessity, after reading the Constitution which he had sworn to support, until his own doubts and convictions were removed by the authority of “great names.” These doubts, it seems, were silenced by an ingenious interpolation of a section into the Constitution, which the instrument itself does not contain, and which the author himself admits is composed of synonims, framed for the occasion, by the substitution of “synonymous and equivalent expressions.” After having made a Constitution to meet the bill, it is easy to find that the bill agrees with the Constitution. In examining this important question, I find myself obliged to test its provisions by the Constitution as it is: as the convention framed it, and the people adopted it. I do not feel at liberty to depart from it, to wrest and mutilate its context, and to construct out of the fragments, a provision consistent with pre-conceived opinions, or necessary to the attainment of a particular end. The main question is, is this bill in conflict with any of the provisions of the Constitution of this State ; In construing constitutions, “the safest rule of interpretation will be found to be to look to the nature and objects, of the particular powers, duties, rights, restrictions and limitations, with the aids of cotemporary history, and to give to the words of each such operation, and force, consistent with their legitimate meaning, as fairly to secure and attain the ends proposed.” To ascertain the proper and legitimate meaning of such an instrument, words must be understood in their ordinary sense, and sentences must be read as they stand; the framers of the instrument must be supposed to have used the language of the country according to its natural import; and courts and legislatures must read and understand it as it is read and understood by the millions. Applying these rules of construction, it is important for us to know what were the objects in view, and the ends to be attained by the 7th article of the Constitution. This must be gathered from the instrument itself; by a correct reading of each independent sentence; by a comparison of its parts, one with another, and by the aids of cotemporary history. The language of the instrument is unequivocal. The first great object of the provisions of that article, as declared by itself, was to secure the speedy and certain payment of the existing debt of the State, and to that end, certain means of the State were placed beyond the reach of delegated power, and sacredly dedicated to that object. The motive which influenced this object, secured the next. It was reasonable to suppose that the payment of one debt, would be no possible advantage to the community, unless the creation of a future debt was prohibited. The next object, therefore, was to remove from the Legislature the power to create a State debt. To that end the Constitution declares, (sec. 12,) “Except the debts specified in the 10th and 11th sections of this article, no debt shall be hereafter contracted, by or on behalf of this State, unless such debt shall be authorized by a law for some single work or object to be distinctly specified therein; and such law shall impose and provide for the collection of a direct annual tax, to pay, and sufficient to pay the interest on such debt, and also to pay and discharge the principal of such debt within eighteen years, from the time of the contracting thereof.” This law shall not take effect unless adopted by the people at a general election. The debts authorized in the 11th section, are “debts contracted to repel invasion, suppress insurrection, or defend the State in war,” and the 10th section allows the State “to meet casual deficits or failures in revenue, or for expenses not provided for,”—to contract debts, which shall not at any time, singly or in the aggregate, exceed one million of dollars. These provisions show the object to be accomplished, and how effectually that object is secured. The third great object of this article was the completion of the public works which were suspended by the financial pressure of 1842. The convention was deeply impressed with the importance of the certain completion of these works, and as speedily as could be done consistently with safety to the credit of the State, and with justice to the public creditors. The patriotic devotion of the members of that body, to the true interests of the country, is not to be questioned. They believe, (and the people nobly responded to that belief.) that financial integrity, was the first duty of a free people; that having met the just demands of the public creditors, the next imperative duty was to protect the citizens against the abuse of delegated power, and posterity against the grinding and unjust oppressions of the past. These objects secured by the most explicit provisions of the organic law, their attention was turned to the protection and improvement of public property. No hostility was manifested or could be felt, towards these works; they are the pride and reliance of the State. We point to them as noble monuments of the energy, sagacity, public spirit and perseverance of a free people. We claim them as the legitimate achievements of free institutions, and the devotion of the convention to the accomplishment of what is everywhere regarded as a sacred duty, is signally manifested in the Constitution which it framed. After meeting the claims of twenty-two and a half million of State debt, and securing public credit, by imposing needed restrictions on legislative power, the remainder of the annual revenues were sacredly dedicated to the completion of these State works. This provision is contained in the third section of this article. These are the objects sought to be attained by this article is apparent from the article itself. But I am willing to look beyond the article, to the history of the times, in search of the occasion and necessity of its adoption, in aid of its true interpretation. I am desirous to ascertain, if possible, whether there was anything in the history of the eight or ten years anterior to the convention of 1846, calculated to originate a new provision of the fundamental law, like the 7th article of the Constitution. Mr. Spencer has adopted this course, and I think has shown himself as faulty in his historical recollections, as he is sophical in his reasoning. He says “great apprehensions were entertained of the reckless creation of large debts for the accomplishment of objects that would not reimburse the expense, and that thus the people would be ultimately subjected to heavy taxation to repay the sum so borrowed. The apprehensions never embraced works which would certainly and inevitably pay for themselves. It was confined to those which might produce taxation.” It is certainly to be regretted that a contemporary of the terrible financial struggle through which this State passed from 1838 to 1842, should, after the lapse of less than a decade of years, have ventured upon remarks like those above quoted. Mr. Spencer was a distinguished actor in the exciting and oppressive scenes of 1840 and '41, and no man knows better than himself, the cause of those “great apprehensions” of which he speaks. They were not confined to any particular works or class of works, but grew out of the policy of the State and its consequences. I affirm
without the possibility of successful contradiction, that it was the “new impulse,” “the more speedy englargement,” and the rapid accumulation of State stocks consequent thereon, which produced these “great apprehensions,” prostrated the means and credit of the State, and sent her stocks down in the market to a condition of ruinous depreciation, under which no government can live. These “apprehensions” were the legitimate consequences of the policy as a system of finance, and this system embraced all the canals of the State. It was the over-stimulated superabundance of enlargement scrip, and Genesee Valley and Black River scrip, created by the false promises of visionary men, whose opinions, unfortunately, were predominant in the Legislature, that begat these “great apprehensions.” No other State work was then in progress, no other scheme was then in contem: plation, and it is idle, nay, worse than idle, to say that these apprehensions embraced any other works than the three canals provided for in this very bill. If subsequent history was silent, I would repose on the well-remembered calamities of the three years next preceding the year 1842, in vindication of my historical accuracy, but fortunately the legislation of the year 1842 was based on those very calamities and the urgent necessities of the State growing out of the too rapid prosecution of the enlargement and the unfinished canals. . At the opening of the session of that year these apprehensions had grown to a crisis which could not be passed, and these works which “would certainly and inevitably pay for themselves” were stopped from the absolute and irresistible necessities of the case, and that very taxation, the fear of which lay at the foundation of these “great apprehensions,” was from the same absolute necessity resorted to. The bill usually denominated the “stop and pay bill” answered the most sanguine expectations of its friends, and the people submitted to its exactions with cheerfulness, because they saw in it an earnest that the faith and credit of the State would be preserved, and in evidence of returning financial sanity in the representatives of the people. Confidence revived, and the disreputable spectacle of the Comptroller of the State of New York shining “on change” in pursuit of short loans at fifteen per cent discount, and seven per cent interest, no longer mortified the just pride of the citizens of a great state. Nothing is more historically true than that the financial policy of the years 1838, 1839, 1840 and 1841, originated the convention of 1846. The principal object of the convention was to incorporate the substance of “the people's resolutions” in the constitution, and thereby impose restrictions on the debt creating power of the Legislature. This was one of the objects of the seventh article, and if that object was not accomplished, the convention was a signal failure. Having been honored with a seat in that body, I think I may speak with some confidence of the views and opinions of the members of it, with regard to the financial policy to be adopted as a part of the fundamental law. When I say, that not a member of that body supposed, that any power was left with the Legislature to contract debt, (beyond the million which was designed as an elastic provision to meet unexpected contingencies,) except in the mode prescribed in the Constitution itself. I believe the statement will be concurred in by every member who was in his place while the 7th article was under discussion. In corroboration of this statement I appeal to the published proceedings of the convention. There was no compromise of the cardinal principle of compelling a submission to the people of every project for the creation of a debt, beyond $1,000,000. I shall assume, notwithstanding Mr. Spencer's running philological commentary, on the words “applied” and “manner,” that the convention intended to prohibit the creation of any debt by the Legislature, and the anticipation of any of the revenue of the State, except in the cases specifically provided for, and that it employed apt words to accomplish that object. 1st. Does this bill create a State debt? and 2nd. Does it anticipate the revenues of the canals, which are by the Constitution required to be applied “in each fiscal year” to the Erie enlargement, and to the unfinished lateral canals : What is a debt When may a State or an individual properly be said to be in debt? I answer when he or it, is under a legal or equitable obligation to pay money, or its equivalent, to another at the present or any future time; and this notion rests in the moral sense of mankind. The obligation to return value for value, is coeval with the idea of a separate or individual estate; it is of very great antiquity, and has found a place in the domestic polity of almost every nation under