Chief Justice Chase contemplated the circumstances of Griswolds case against Hepburn. The decision could have far-reaching consequences, at the center of which was the legality of a fiat currency issued by the federal government. Chase considered four particular questions:

1.Had the circumstances of 186165 truly justified the creation of the greenback as legal tender? Chief Justice John Marshall in the 1819 case of McCulloch v. Maryland had set the precedent that new federal powers could be justified under the necessary and proper clause of the Constitutionand that though the Constitution may have specified a particular activity, it was not the only policy. He wrote, Let the end be legitimate, let it be within the scope of the constitution, and all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consist with the letter and spirit of the constitution, are constitutional.

2.What was the greenback, anyway? In the eyes of some people, it was simply currency: a payment medium or store of value. But some speculators seemed to behave as if greenbacks were an investment medium, a claim on the future delivery of gold. The speculators seemed to assume that the greenbacks would eventually be redeemed for gold coins by the Treasury Department. Did it matter how one viewed the greenback?

3.How had the greenback performed? Chase noted that it traded at a discount to the gold dollar (see Exhibit 9). Did the discount reflect national revulsion to the greenback, or fears that it would never be redeemed for specie, or inflation? The premium seemed to vary significantly upon war news, political news, and news of financial developments. Which kinds of news mattered more in explaining the changing discounts on the greenbackand why?

4.How would the continued use of the greenback currency serve the public welfare? Surely, sound money was a cornerstone of economic prosperity. Yet to revert entirely to the gold standard would trigger a massive economic adjustment and place the nations finances at the behest of the money centers of Europe, particularly London