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system, the United States says: (1) there shall be a currency for the whole country; (2) it shall be furnished by the United States and guaranteed by it, but issued through private banks; (3) in receiving these printed notes the banks shall leave as security with the United States a certain quantity of bonds of the United States which are their own property; (4) they must return these notes to the United States before they can have their bonds again. This, of course, is uniting the operation of the two powers of borrowing and of issuing a currency. If the government, instead of this arrangement, were to issue its own currency directly, like the greenbacks, it need not necessarily borrow with it; for it might, as we have seen, lend it on security (which might or might not be its own bonds), to be used by others.

But, on the other hand, it may borrow money with it; and that is the natural and obvious way of giving out its currency. That was, in point of fact, done during our great rebellion. If this currency be one which is the full legal equivalent of money, a legal tender, the principle is still the same; the government may borrow with this currency as well as any other. When the government notes consist of promises to pay, the phrase of borrowing is, of course, strictly applicable. It is true we more commonly speak of this operation as that of the government selling its bonds or notes, as we speak of a man selling his own promissory notes. But it is, in fact, borrowing money on a promise to pay; and in the case of the government it is borrowing upon a kind of promise to pay, which is a part of the medium of exchange, and of that which is, in the full legal sense, money.

We perceive, then, a great difference between private borrowing and public borrowing.[1] When a nation borrows it may, as we see, borrow with its currency; and if its currency be made a legal tender it may borrow with that. I do not say, if a government were denied the power of establishing a paper currency at all, that it could give to its paper the quality of legal tender in order to borrow with it. To do that would, indeed, help the borrowing process; but, on the supposition I am now making, viz., of a government with no power to establish a paper currency, it would be an evasion of the restriction put upon it, to say that it could, merely for facility of borrowing, annex to its security a quality which would be forbidden if it were not borrowing. It is not, then,


  1. And so Juilliard v. Greenman, 110 U. S. at p. 448, per Gray, J.