Article 1, Section 10, Clause 1
[Volume 3, Page 463]
James Madison to Charles J. IngersollFeb. 1831Writings 9:437--38
The evil which produced the prohibitory clause in the Constitution of the U. S. was the practice of the States in making bills of credit, and in some instances appraised property, "a legal tender." If the notes of the State Banks therefore, whether chartered or unchartered be made a legal tender, they are prohibited; if not made a legal tender, they do not fall within the prohibitory clause. The No. of the "Federalist" [no. 44] referred to was written with that view of the subject; and this, with probably other contemporary expositions, and the uninterrupted practice of the States in creating and permitting Banks, without making their notes a legal tender, would seem to be a bar to the question, if it were not inexpedient now to agitate it.
A virtual and incidental enforcement of the depreciated notes of the State Banks, by their crowding out a sound medium, tho' a great evil, was not foreseen; and if it had been apprehended, it is questionable whether the Constitution of the U. S. which had so many obstacles to encounter would have ventured to guard against it by an additional obstacle. A virtual and it is hoped an adequate remedy, may hereafter be found in the refusal of State paper, when debased, in any of the Federal transactions; and in the controul of the Federal Bank, this being itself controuled from suspending its specie payments by the public authority.
The Writings of James Madison. Edited by Gaillard Hunt. 9 vols. New York: G. P. Putnam's Sons, 1900--1910. See also: Federalist
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