The Hepburn case was decided on 1 February 1870 (interestingly, on the very day that the United States Senate was actually debating a Currency Bill intended to authorize the expansion of the money supply [by about 15%] while, at the same time [this due to amendments to the bill adopted by the Senate that same day], re-circulating notes from banks with a surplus of same to those with a deficit in other parts of the country [roughly 1/4 of the notes then in circulation would be so transferred]): 7 Justices had voted on the issue (an 8th Justice [the High Court only had 8 Justices at that time (please see the section within our site's Explanation of certain items in the Justices of the Supreme Court" Table re: RECONSTRUCTION for the reasons for this)]- Robert Grier- had resigned from the Court only the day before the decision in Hepburn was handed down) and the vote was 4-3 in favor of ruling that the authorization- by Congress- of payment, in paper money, of private debts incurred prior to the effective date of the Legal Tender Act of 1862 was unconstitutional.

Chief Justice Salmon Chase (who, interestingly, had been Secretary of the Treasury at the time the Legal Tender Act of 1862 had first been implemented) wrote the Opinion of the Court, with Justices Clifford, Field and Nelson concurring; Justices Davis, Miller and Swayne dissented. (As was the practice at the time, the Court convened to publicly read its opinions after [in this case, nearly a week after] the case had already been decided [nowadays, on the other hand, the date of a decision is considered to be that on which the Court publicly offers its Opinion(s) in the case]).

But President Ulysses S. Grant had two Supreme Court vacancies to fill at the time: not only the one caused by Justice Grier's resignation but also the seat vacated upon the death of Justice James Wayne back in 1867 and which Congress had prevented then-President Andrew Johnson from filling through manipulating the size of the Court by statute. Congress had, in fact, already passed (and President Grant himself had signed) legislation specifically setting the size of the Supreme Court at nine Justices (which it has maintained ever since, by the way).

To replace Justice Grier, Grant chose William Strong and, to fill the longstanding Wayne vacancy, he chose Joseph Bradley (both nominations were- coincidentally- announced by the White House on 7 February 1870, the same day the Court and dissenting Opinions in Hepburn were publicly read and both nominations were fairly quickly confirmed by the U.S. Senate [Strong's viva voce on 18 February and Bradley by vote of 46-9 on 21 March]).

Then, on 1 May 1871, the second set of Legal Tender cases (Knox v. Lee and Parker v. Davis [12 Wallace (79 U.S.) 457 (1871)]) were decided by the U.S. Supreme Court, this time by vote of 5-4: the two newest Justices siding with the dissenters in Hepburn to form a majority of the Court now voting to reverse that earlier decision (Chief Justice Chase and Justices Clifford, Field and Nelson- the majority in Hepburn- were now dissenters in Knox and Parker).

Those opposed to the ever-growing use of "greenbacks" in ordinary economic transactions were rather livid at this reversal and many of these openly accused President Grant of "packing" the Court in order to get a constitutional determination more to the liking of those who were pro-paper money (it also didn't help that Chief Justice Chase's Opinion of the Court in Hepburn had itself wandered into the realm of discussing whether or not Congress even had the power to make paper money legal tender to begin with [though this issue was not germane to the case at bar, which only dealt with whether or not a debt incurred prior to the Legal Tender Act of 1862 could be so payed off in "greenbacks"]).

The third, and final, Legal Tender case was to be Juilliard v. Greenman [110 U.S. 421 (1884)] in which a creditor was suing a debtor for repayment of most of a debt but had already refused to accept payment of the balance in "greenbacks". Here the question was, indeed, whether or not the statutory provision- by then codified in the 'Revised Statutes of the United States' as Section 3588 of same- to wit: United States notes shall be lawful money and a legal tender in payment of all debts, public and private, within the United States, except for duties on imports and interest on the public debt (it is from this provision- now codified [in since modified form] as Title 31, section 5103 of the United States Code [thus, 31 USC 5103]- that the words cited above as printed on American currency are derived) . By this time: only Justices Bradley, Field and Miller were left from the Court from the Knox and Parker era and only Field and Miller (who had been on opposite sides) were left from the Court that had decided Hepburn.

The vote on the case was 8-1 (as might be expected, Justice Field was the lone dissenter) and Justice Horace Gray wrote the Opinion of the Court upholding the constitutionality of Section 3588 and, once and for all, allowing for American dollar bills to, indeed, be- henceforth- "legal tender for all debts, public and private" (as the paper money in my wallet so tells me it is!).

Justice Gray's Opinion in Juilliard was primarily based on the power of Congress "[t]o borrow money on the credit of the United States" (as noted above: U.S. Constitution-- Art. I, Sec. 8, clause 2)-- how?-- because money itself is the very stuff of borrowing!

For what money really is is but a means of exchange... exchanging what?... exchanging already extended credit for payment of debts incurred!

If you are able to hold an American dollar bill- legitimately received by you into your own possession- in your own hands, you are, in reality, a creditor of the Federal Reserve Bank of the United States of America (I'll get back to the ever-hammered upon "Fed" shortly) in the amount of $1US. Because you are a creditor, you can transfer the $1 credit due (the dollar bill being legal proof of such credit) to someone else in payment of a debt...

thus, I can walk down to the local convenience store in town and pick up a copy of today's edition of the newspaper with the largest circulation in my State of New Jersey (which happens to have a newsstand price of $1, by the way), walk up to the cash register and hand over- to the cashier- this "proof of credit" as payment for the (admittedly, very short-term) debt incurred as a result of what is- in actuality- a legal contract between myself and the storekeeper (as pointed out in my piece for this website on Corporate Personhood, when one purchases something from a store: there is, indeed an Offer [what is on the store's shelves being presented to the buyer], an Acceptance [the buyer picks the desired item off the shelf] and an Exchange [of something of value, literally "sealing the deal" legally: the buyer pays for the item]-- all Anglo-American Contract Law 101!): I discharge the debt immediately by transferring my proof of credit in the form of a dollar bill to the store, after which I can then take the paper out of the store without having to be at all worried about being charged with the crime of Petty Larceny!

The very reason that a dollar bill is called- in America- a bill is because what, nowadays, are 'Federal Reserve Note's are lineal descendants of Bills of Exchange going back to Renaissance Italy: where (to here use modern terminology) retailer A owed wholesaler B an amount that could not immediately be paid in cash (because retailer A was still waiting for Singora Lapido to pay off her tab with said retailer), B could do up a bill- drawn against that which A owed B- which B could then transfer to supplier C as at least part of a payment for, say, a consignment of goods... all *I* did whilst spending my dollar bill to buy the morning paper in town today was pretty much the very same thing: I'm in the position of B- the United States of America is A (for the "Fed" ever owes me a buck for as long as I keep that dollar bill)- and I have merely transferred what A owes B (myself) to C (the store from which I purchased the newspaper)... in other words: I have transferred my credit to offset a debt via which I have exchanged my credit for a newspaper!

What makes this possible? A series of Congressional statutes going back to-- yes-- that aforementioned Legal Tender Act of 1862.

Concomitant with this particular piece of Federal legislation were two others: the National Currency Act of 1863 [12 Stat. 665 (signed into law by President Abraham Lincoln on 25 February 1863, exactly a year to the day after he had signed the earlier Legal Tender Act)] and the National Banking Act of 1864 [13 Stat. 99 (signed into law by Lincoln on 3 June 1864)]-- these laws are often grouped together as the National Banking System Acts (of 1863 and 1864, respectively):

The 1863 law created the office of the Comptroller of the Currency within the U.S. Treasury Department and also mandated a national currency by requiring banks (all chartered by their respective States of the Union, by the way) that wished to be considered "national banks" to invest a certain set percentage of United States securities (in essence, a proportion of a national bank's capital was deposited with the Comptroller of the Currency)- such banks could thereafter issue notes backed by the Federal Treasury, but printed by the Federal Government itself, up to the amount of the banks' capital so deposited, which would make up the "legal tender" as defined by the earlier Legal Tender Act; meanwhile, the second (1864) law provided for the chartering of said national banks by the Federal Government (it is from this that one hears of financial institutions such as the 'First National Bank' or 'Second National Bank' of such-and-such a place, by the way).

But such national banks- no less than any other bank- were still prone to failure during severe economic downturns during the remainder of the 19th Century and on into the early 20th (most notably, the "Panics" of 1873 and 1893 and, finally, one in 1907)- with obvious detrimental effects as regarded the overall stability of American currency- and it was, at least in part, to address this concern that the Federal Reserve Act of 1913 [aka the Owen-Glass Act: 38 Stat. 251 (signed into law by President Woodrow Wilson on 23 December 1913)] was adopted:

Owen-Glass was actually pretty much a "federalization" of an earlier Republican-backed concept known as the "Aldrich Plan" (named for Senator Nelson Aldrich of Rhode Island [his grandson- a Governor of New York and, later, Vice-President of the United States- was named for him: Nelson Aldrich Rockefeller; Aldrich's great-grandson currently sits in the United States Senate: 'Jay' Rockefeller (D- West Virginia)]): the Aldrich Plan would have created a public-private partnership 'National Reserve Association' made up of regional branches stocked with directors culled from the banking profession itself-- its principal purpose would be to loan money, from out of reserves to which member banks would contribute, to national currency-issuing banks that might otherwise default during a financial "panic".

But the Democrats were in control of both houses of Congress and the Presidency after the 1912 Elections!... thus, the Federal Reserve Act.

Owen-Glass set up regional Reserve Banks overseen by a Federal Reserve Board (that which "Fed chairman"- as he is colloquially called- Ben Bernanke chairs today): while, yes, the primary purpose of the "Fed" was to do that which the Aldrich Plan had also sought to do (tide national banks [which were now required to contribute to the reserve fund being thus created (under 'Aldrich', membership was to be optional)] over during economic crisis), Owen-Glass also created the modern 'Federal Reserve Note's- those very dollar bills of various and sundry denominations currently filling my own wallet: 'bills of exchange'/'proofs of credit' that were now to be an obligation of the United States Treasury itself, rather than private "national banks" per se.

But what the Federal Reserve Bank system did- perhaps more than anything else- was to facilitate the flow of credit, as well as stabilize the currency: the reason for this is shown by one of the simplest exercises in Monetary Theory:

The "Fed" pays person A X dollars (this might be, say, for some service rendered to the Government-- let's make A an active-duty soldier home on leave and X is his military pay)... A deposits his entire pay into bank B, a national bank also- by law- a member bank of the Federal Reserve system... B has to deposit a stated portion of X (per its "reserve rule": we'll call this f [for "fed"]) with the "Fed" and is allowed to then loan- should it wish to do so- the remainder (which we'll call Y: Y=X-f) to, say, a client C who, instead of immediately using Y for his own purposes, deposits it in bank D (also a bank legally required to then send a stated portion as a "reserve" to the "Fed" [we'll call this r (for "reserve")], leaving bank D with Z (which is, of course, equal to Y-r).

X is- in Monetary Theory- M0, that is: base money- the total liabilities of the "Fed" (its assets, in cash, plus the required reserves of member banks on deposit with it) from which X had to be paid out in the first place; the total of X+Y+Z, on the other hand, is M1, aka narrow money- money in circulation (which includes so-called "demand deposit" accounts, such as a checking account on which one [say, C in our example (let's pretend- just for sake of this argument- A, for some reason, has only a savings account) can do up a draft entitling the bearer of same to "demand" payment in the amount of the check [yet another way, in the modern world, to transfer credit in order to satisfy a debt and, thereby, exchange said credit- in the form of money- for goods and services], hence the very term "demand deposit"):

say the soldier's pay is $500 and say both banks B and D are required to deposit 15% in reserves with the "Fed": M0 was $500 but M1 is $1286.25 (X+(X-f)+([X-f]-r where X=500 or, put another way, X+(X-[.15X])+([X-.15X]-.15[X-.15X])... it is easy to see (here assuming a closed system that does not really exist) how such "fractional reserve banking" facilitates the flow of credit through such concomitant increases in "money supply" (though it is also equally easy to see how- were such a closed system to actually exist- that same money supply would contract rather suddenly once soldier A begins to draw down the $500 he originally deposited: in order to pay soldier A, bank B would have to then call in the loan to C which would, in turn, require bank D to pay C!)

Actually, such a "closed system" does exist... it is just that it is far larger than the four entities (soldier A, bank B, borrower C and bank D) in the admittedly simplistic illustration above... and this closed system happens to be called "the Global Economy".

My admittedly flippant reference to Mr. Ruhl's "space aliens visit[ing] earth" in my Commentary of 29 December last was intended to convey the idea that the notion that the United Nations might itself want to take over the American money supply/currency is itself largely based on a mere, albeit strong, belief that the UN (whatever that means! [for just which entities, institutions or persons within the UN seemingly desire such a thing?-- and, more to the point, where such desire might even exist, on what basis would this even be practicable (putting aside likely American resistance to this, as already opined earlier in this response [even with the fact that Americans ever have the constitutional right to not so resist]?) even wants to do so in the first place- a belief, in essence, that is not inherently different than that of my long-ago protagonist in college to the effect that "space aliens" want so badly to come to (even, perhaps, take over) this planet!

But I could have used the concept of "space aliens" in another manner relative to this discussion-- in defense of the following maxim:

No one on Earth trades with anyone other than other persons!... that is: nobody is doing business with space aliens!

The flow of money- which, again, is merely a flow of credit in payment after payment after payment after payment (etc. etc. ad infinitum ad nauseam) of debt after debt incurred- is itself, then, a closed system. Money, even where exchanged for other currencies and then re-exchanged and re-exchanged until it is back in the form of American dollars, never leaves this here third planet from the Sun!

I owe money to my friend Joe who owes money to his friend Jim who, in turn, owes money to a friend of mine, Bob, who owes me money (or, at least, very likely will)...

I buy a newspaper from a storekeeper who takes my $1 and uses it as part of a payment for rent of his retail space: his landlord takes what was- so recently- my $1 'credit' and uses it to pay his quarterly property tax bill from which my municipality (utilizing such property taxes in the form of local revenue) pays the Public Works guys who are re-paving my street so that I don't have to then "work out the Road Tax" through exchanging my labor (me and my neighbors paving the street ourselves) for a smooth street surface on which to drive my car out of my neighborhood so I can go about my daily business!...

the United States of America owes money to the People's Republic of China which owes money to the European Union which owes money to... my goodness!... the United States of America!

("Here's some money-- pass it on!")

Money may not, in fact, make the world go round... but it sure as hell goes around the world!...

and there is no other reason to even have money (although it be true that a few do hoard money for sole sake of so hoarding it and there are those who collect coins and currency that might well fetch a hefty sum were they to be sold on the open market, yet these coins and currency are not being sold at the moment)!

Money is only useful when it is actually being used: sure, one can save it for the proverbial "rainy day" but, eventually, it will rain!

The simplistic placards reading 'END THE FED'- admittedly just about as prevalent at 'Occupy' rallies as at more than a few "tea party" functions and Ron Paul campaign whistlestops- are the very reason such as my conservative Republican retired bank loan officer Dad do not support the candidacy of Congressman Paul (or, for that matter, the 'Occupy Wall Street'ers coming from the other side of the American ideological divide), for so "ending the Fed" would be an altogether destabilizing force, not only on the American currency/money supply (and such scarcity of money would- per the laws of Supply and Demand re: Price Equilibrium- have an upward impact upon the very value of money itself but also on the flow of credit [which is, in and of itself, the very essence of what money actually is] in general, both here at home as well as abroad [hence my own reference to Hyperinflation: those that already have would, if only theoretically, be better off but money (in the form of credit [which, again, is money]) would be harder to come by for those who would, in fact, need it but not be so easily able to get it-- the very flow of credit would then be most adversely impacted: for what happened in early 1920s Germany when something that once cost 30 marks would cost thousands of marks (yet one still only had 30 marks from but a short time back when- as one might have then pined- "30 marks was still 30 marks")? If a car costs $16,000 but I only have $30 to my name-- well------ but it would be the same if I had but $16,000 and the same car cost over $8.5 million!] ...

by the way: do those supporting Congressman Paul even use money?

Reminds me of a joke that was making the rounds during Ron Paul's previous presidential campaign- four years ago now:

<<Three friends regularly go out to lunch together-- but one of them is a Ron Paul supporter who never picks up the tab because 1. he doesn't believe Federal Reserve Notes are constitutionally legal tender and 2. he never seems to ever carry his gold and silver nuggets around with him in any event">>

(Yes... I am being facetious here [if only to further my point]... for I well know Congressman Paul's supporters [some of whom are friends of mine-- yes, they do pick up their share of the bar tab ;-)] use money in its more ordinary form, too!)

The gold standard, for example, was abandoned precisely because it is so restrictive of trade (and money is valueless without trade, for there is no need for credit where one is not going to ever incur debt [even in the form of ordinary everyday spending]): because it was an attempt (of, yes, long-standing-- but an attempt nonetheless) to link currency (by extension, all currencies on the face of the Earth) to a single commodity (here in the form of precious metal[s]) which then forced a choice (ultimately, the proverbial "Hobson's" one) upon national economic and political leadership between movement of capital and an autonomous monetary policy.

Then again, maybe we don't even want movement of capital across our own international borders...

but we Americans, denizens of what is so often described as "the last remaining Superpower", tend to so often forget (or, at least, don't want to think)- in many different arenas and fields of endeavor (not just economics or geopolitics)- that, while- yes- we can always (as well as at any time) "pick up our ball and go home" (indeed, it is our constitutional right- under our own sovereign Constitution- to do so), others "out there" will be provided a new ball with which to continue to play the "game". And, yes, we Americans do have the ability, as well as the right, to thereafter "look out the window" while watching the others so play while ever repeating, to ourselves, the mantra that 'hey, we didn't really ever want to play anyway'...

perhaps- just perhaps- if we repeat this to ourselves more than enough times, we might even come around to actually believing it, too!

When I hear those who longingly pine for the return of the gold (or other similar) standard, I also see those who are fervently urging people to come together in order to catch a train that has already long left the station for its faraway destinations: for the direct link between money and precious metal has for so long already been broken (hell... I went to the gas station the other day, used my bank-issued debit card in payment for the gasoline and didn't even *see* any "money" [in quotes here because I am purposely using the word in its colloquial sense, as a synonym for "cash, in coin or bills" instead of the way I've been using it in most of this response]!)...

I also hear the echoes of the long-ago famous words of William Jennings Bryan before the 1896 Democratic National Convention (albeit, admittedly, for very different reasons [for Bryan, unlike myself herein, was arguing in favor of substituting (or at least making equivalent) a different precious metal- silver, in his case- for gold]):

If they dare to come out in the open field and defend the gold standard as a good thing, we shall fight them to the uttermost, having behind us the producing masses of the nation and the world; having behind us the commercial interests and the laboring interests and all the toiling masses, we shall answer their demands for a gold standard by saying to them: you shall not press down upon the brow of labor this crown of thorns; you shall not crucify mankind upon a cross of gold.

In the real world of- now- the early 21st Century, you also shall not crucify the trade (all that money really is at all good for in the first place) of mankind ("space aliens" need not apply! [;-)]) upon a cross of either gold or silver or any other precious metal, gem or stone... for the world itself has already moved along so far from these!