Bills of Credit


Also found in: Dictionary, Financial.

Bills of Credit

Non-interest-bearing promissory notes issued by the government and backed by its faith and credit to be paid when presented by their holders, which are in the form of currency and are intended to be circulated and exchanged in the community as money.

The federal government, acting through the federal reserve banks, issues bills of credit in the form of dollar bills that are promises to pay the specific denominations indicated on them to the bearer of such paper on demand. Article I, Section 10 of the Constitution, in order to provide a uniform standard of money throughout the United States, prohibits states from issuing their own bills of credit for circulation as currency.

References in periodicals archive ?
316) Other Antifederalists used the purported congressional power to issue bills of credit as a reason to oppose the Constitution.
For though no state can emit bills of credit, or pass any law impairing the obligation of contracts, yet the Congress themselves are under no constitutional restraints on these points.
At the Pennsylvania ratifying convention, Federalist Jaspar Yeates essentially conceded Finley's point, agreeing that "Congress alone" would be able to exercise powers such as emitting bills of credit.
Constitution prohibits the states from issuing paper currency by barring them from "emit[ting] bills of credit," it is silent on whether the federal government may issue such bills.
The first case to sustain the issuance of bills of credit relied on post-constitutional practice, and did not address the original understanding.
And it is settled by the uniform practice of the government and by repeated decisions, that Congress may constitutionally authorize the emission of bills of credit.
Thomas Hutchinson, Comments on Massachusetts Banking and Bills of Credit (1769), in BANKING AND CURRENCY, infra note 344, at 72, 73.
THOMAS HUTCHINSON, A LETTER TO A MEMBER OF THE HONOURABLE HOUSE OF REPRESENTATIVES, ON THE PRESENT STATE OF THE BILLS OF CREDIT (1736), reprinted in 3 COLONIAL CURRENCY REPRINTS, infra note 344, at 151, 152.
In 1740, a Boston writer called bills of credit "the only Money passing among us.
GOVERNOR THOMAS HUTCHINSON COMMENTS ON MASSACHUSETTS BANKING AND BILLS OF CREDIT (1769), reprinted in BANKING AND CURRENCY, infra note 344, at 72, 82.
See also Governor Thomas Hutchinson Comments on Massachusetts Banking and Bills of Credit, (1769), reprinted in BANKING AND CURRENCY, infra note 344, at 72, 81-84 (providing another account).
See NEWMAN, infra note 344, at 249 (reproducing two such bills of credit, issued in 1769).