Borrowing Power

Clause 2. Congress Borrowing Power

According to the Constitution, the “Congress shall have Power” … “to borrow Money on the credit of the United States.” The original draft of the Constitution reported to the convention by its Committee of Detail empowered Congress “To borrow money and emit bills on the credit of the United States.” 1 When this section was reached in the debates, Gouverneur Morris moved to strike out the clause “and emit bills on the credit of the United States.” Madison suggested that it might be sufficient “to prohibit the making them a tender.” After a spirited exchange of views on the subject of paper money, the convention voted, nine states to two, to delete the words “and emit bills.” 653 Nevertheless, in 1870, the Court relied in part upon this clause in holding that Congress had authority to issue treasury notes and to make them legal tender in satisfaction of antecedent debts.2

More about Borrowing Power

When it borrows money “on the credit of the United States,” Congress creates a binding obligation to pay the debt as stipulated and cannot thereafter vary the terms of its agreement. A law purporting to abrogate a clause in government bonds calling for payment in gold coin was held to contravene this clause, although the creditor was denied a remedy in the absence of a showing of actual damage.3

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References

This text about Borrowing Power is based on “The Constitution of the United States of America: Analysis and Interpretation”, published by the U.S. Government Printing Office.

[Footnote 1] 2 M. FARRAND, THE RECORDS OF THE FEDERAL CONVENTION OF 1787 144, 308-309

(rev. ed. 1937).$$653 Id. at 310.

[Footnote 2] Knox v. Lee (Legal Tender Cases), 79 U.S. (12 Wall.) 457 (1871), overruling Hepburn v. Griswold, 75 U.S. (8 Wall.) 603 (1870).

[Footnote 3] Perry v. United States, 294 U.S. 330, 351 (1935). See also Lynch v. United States, 292 U.S. 571 (1934).

Tables of Contents

• Borrowing Power and other Topics in the Contents – Article 1 of the U.S. Constitution
• U.S. Constitutional Law Category
• List of amendments to the U.S. Constitution
• Borrowing Power and other Topics in the Constitution Contents
• Interpretation of the U.S. Constitution (Table of Contents)
• Clauses of the Constitution (Table of Contents)