Friday, September 30, 2016

Constitutional Money

Constitutional Money
Thomas Allen

    The April issue of The Gold Standard had an article about the governor of Arizona vetoing a bill that would have treated gold as money. When the governor vetoed this bill, he violated his oath of office to uphold and defend the U.S. Constitution. Likewise, all State and federal officeholders who stand in the way of gold being money have violated their oath of office. The Constitution recognizes only two things as money: gold and silver.
    Article I, Section 10, Clause 1 of the Constitution prohibits the States from making anything except gold and silver a tender for payment of debt. Therefore, States cannot constitutionally make federal reserve notes legal payment for debt. That any State has to consider making gold money is absurd and ridiculous and shows how far that the United States have degenerated.
    Moreover, for Congress to declare federal reserve notes to be legal tender money is also unconstitutional. In spite of what judges who base their rulings on political expediency instead of the Constitution may declare, Congress has no authority to issue paper money. Moreover, Congress has no authority declare anything legal tender; it can only declare what it will accept in payment of taxes. Under the Constitution, only States may declare an item to be legal tender. Thus, as the States may only make gold and silver legal tender, only gold and silver can be legal tender.
    Furthermore, Congress may not constitutionally delegate powers that it does not have. Thus, it may not authorize the federal reserve banks to issue legal tender notes. (Also, the Constitution grants Congress no power to create a bank. Therefore, it has no constitutional authority to create the Federal Reserve System.)
    The original draft of the Constitution contained a clause that allowed Congress to emit bills of credit (to issue paper money). The Constitutional Convention removed this clause and it was not part of the Constitution adopted by the States. When the Convention removed this clause, it was convinced that it had denied Congress the power to issue paper money and making paper money legal tender.
    Some argue that the prohibition against States making anything except gold and silver legal tender does not apply to the U.S. government. However, based on a Supreme Court ruling involving the Fourteenth Amendment, the restrictions that the Constitution places on the States are also placed on the U.S. government.[1] Therefore, since the Constitution prohibits the States from making anything  gold and silver a tender for payment of debt, it also prohibits the U.S. government for making anything but gold and silver a tender for payment of debt.
    The Constitution mentions three units of measure: the dollar, mile, and year. Article I, Section 8, Clause 5 grants Congress the power to coin money and regulate the value thereof. When the Constitution was adopted, people understood that the dollar meant the weight of silver in a Spanish milled dollar. Thus, when Congress regulates the value of money, it finds the weight of silver in a Spanish milled dollar and declares the U.S. dollar to be a monetary unit that contains this weight of silver. If Congress may change the well-understood definition of the dollar on a whim, it may likewise change the well-understood definition of a year from being one revolution around the sun to be 100 revolutions — and in effect give its members life terms.
    From the adoption of the Constitution until President Roosevelt suspended the gold standard, bank notes, which is what Federal Reserve notes are, were never legal tender. Only after the gold standard was abandoned did Federal Reserve notes become legal tender. The 1934 series of Federal Reserve notes was made legal tender for all debts, but it promised redemption in lawful money. The previous series, the 1928 series, was not legal tender and promised redemption in gold. The 1963 series declared itself to be legal tender with no promise of redemption in anything.
    Whenever a State considers anything, including Federal Reserve notes, other than gold or silver to be legal tender for the payment of debt, it is acting unconstitutionally. (A more detailed argument on the unconstitutionality of paper legal tender money is found in Reconstruction of America’s Monetary and Banking System: A Return to Constitutional Money by Thomas Allen.)

Martin A. Larson, The Federal Reserve and Our Manipulated Dollar, p. 269. Paul Bakewell, 13 Curious Errors About Money, pp. 92-93.

Copyright © 2015 by Thomas Coley Allen.

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