Gold & silver as legal tender

[FireofLiberty]

Clearly, the Federal Reserve is Unconstitutional and the federal government only has the power to COIN, not PRINT money. However, I've always struggled with understanding the Constitutional argument that federally produced money must be gold or silver.

When people, including Ron Paul, say that the Constitution says that "only gold and silver are legal tender..." I don't understand how this applies to the federal creation of money because what the Constitution actually says, and what they're referring to, is this:

No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.

The keywords there are "NO STATE." This clause does not apply to the federal government, only the states, and the federal government is not bound by the gold and silver legal coin legal tender requirement for payment of debts in that clause.

So where am I wrong? Can someone make the Constitutional argument as to why the federal government is bound to that? Where the federal government is bound to only producing coins made out of gold or silver?

By the way, I absolutely believe that only gold and silver should be legal tender for a variety of reasons, I just don't see where in the Constitution it has to be (at federal level).

 

[IPSecure]

A little off base... Local Currency...

BerkShares are a local currency designed for use in the Southern Berkshire region of Massachusetts with issue by BerkShares, Inc., a non-profit organization working in collaboration with the Southern Berkshire Chamber of Commerce, participating local banks, local businesses, and local non-profit organizations.

The purpose of a local currency is to function on a local scale the same way that national currencies have functioned on a national scale—building the local economy by maximizing circulation of trade within a defined region. Widely used in the early 1900s, local currencies are again being recognized as a tool for sustainable economic development. The currency distinguishes the local businesses that accept the currency from those that do not, building stronger relationships and a greater affinity between the business community and the citizens of a particular place.

The people who choose to use the currency make a conscious commitment to buy local first. They are taking personal responsibility for the health and well-being of their community by laying the foundation of a truly vibrant, thriving local economy.

BerkShares will not, and are not intended to, replace federal currency. Their use will help strengthen the regional economy, favoring locally owned enterprises, local manufacturing, and local jobs, and reducing the region's dependence on an unpredictable global economy.

BerkShares

 

[hypnagogue]

I don't believe it's in the Constitution either. Perhaps it ought to be, but it isn't.

 

[Dr.3D]

Please read the coinage act of 1792.
http://www.constitution.org/uslaw/coinage1792.txt

There it tells what a dollar is and what coins are allowed.

 

[jonahtrainer]

The keywords there are "NO STATE." This clause does not apply to the federal government, only the states, and the federal government is not bound by the gold and silver legal coin legal tender requirement for payment of debts in that clause.

So where am I wrong? Can someone make the Constitutional argument as to why the federal government is bound to that? Where the federal government is bound to only producing coins made out of gold or silver?

The monetary provisions of the US Constitution are Art 1 Sec 8 Clause 5 and Art 1 Sec 10 Clause 1. The 9th and 10th Amendments also apply. These create essential checks and balances in the political machinery of the States and United States.

Legal tender is a Contract or Tort Remedy defined by Property law all of which branches are the domain of the States. As such no enumerated powers were granted by the People or the States to the Federal Government upon this issue except the ability to Coin Money and Regulate the value thereof and of Foreign Coin. The States retained the power to define Legal Tender however they consented to only being able to make gold or silver legal tender.

So, this is how it plays out. The States can, but do not have to, define Legal Tender but if they do it must be Gold and Silver. The Federal government can Coin Money, actually stamping at the Mint, and define the weights and measures (which is what it did in the 1792 Act making the definition of a Dollar as 371.25 grains of .999 fine silver). This is a power similar to making 1 pound equal to 16 ounces and also contained in the same Clause.

For a complete treatment see this video by Harvard trained lawyer Robert Landis. I would give you the precise time area but do not remember it off the top of my head. It is a very informationally dense video. Here is a short interview on the issue also.

No Implied powers, which were not intended as currently used anyway, apply such as Interstate Commerce or Necessary and Proper.

 

[BeFranklin]

IE: The federal government doesn't have the power to define legal tender in payment of debts only coin money. Most debt, such as civil suits, occur at the state level. For a State to require payment of taxes or judgments in FDR notes, instead of gold or silver, has to be unconstitutional. But it is the requirement of payment in those FDR notes at law, which are not gold and silver, that give them their actual value.

The words "legal tender for all debts" printed on FDR notes is unconstitutional and fraudulent, since it is clear they are not legal tender for all debts in the constitution itself.

 

[BeFranklin]

....

 

[buffalokid777]

Please read the coinage act of 1792.
http://www.constitution.org/uslaw/coinage1792.txt

There it tells what a dollar is and what coins are allowed.

Very good......

You have made an excellent point.....

The constitution only requires states use gold and silver for coinage......

But for those who see this as an unlimited licencse for the federal governent to use fractional reserve banking and non backed currency........

Show us what legislation overturned the coinage act of 1792 which was made by congress.......If you have no answer.....the coinage act of 1792 MUST STAND AS LAW......

 

[BeFranklin]

Very good......

You have made an excellent point.....

The constitution only requires states use gold and silver for coinage......

But for those who see this as an unlimited licencse for the federal governent to use fractional reserve banking and non backed currency........

Show us what legislation overturned the coinage act of 1792 which was made by congress.......If you have no answer.....the coinage act of 1792 MUST STAND......

Nope, only the States determine legal tender. Legal Tender is not coin making. Coin Making is making sure a 1 oz Gold Coin has 1 oz of gold in it. It is similar to the function to determine weights and standards. Legal Tender is what a state can require (force) a payment in, for instance court judgments when you lose a case or taxes to be collected. The vast majority of all things requiring legal tender decisions on an individual occurs at the state level. States determine legal tender.

"Legal tender - Wikipedia, the free encyclopedia
Legal tender or forced tender is payment that, by law, cannot be refused in settlement of a debt (debtor cannot successfully be sued for non-payment). ..."

The only way paper money has any value is to require it to have value by legal force, or in other words to make it legal tender. However, despite what Federal Reserve Notes say, they are not constitutionally legal tender for all debts public or private, because the Constitution forbids States from requiring it in taxes or judgments.

Likewise, the Constitution never gave the federal government the right to make legal tender, thereby it has to defer to what the States are using; which is by default gold and silver. This makes perfect sense, because any suit by a citizen of one State against a citizen of another State, are using gold and silver as legal tender to begin.

The right to make legal tender is completely different than the right to coin. It is the right to declare what a forced tender of payment is. A very dangerous right if it is entwined with a paper money that is worthless - because then it becomes the right to force theft on everyone.

 

[buffalokid777]

Nope, only the States determine legal tender. Legal Tender is not coin making. Coin Making is making sure a 1 oz Gold Coin has 1 oz of gold in it. It is similar to the function to determine weights and standards. Legal Tender is what a state can require (force) a payment in, for instance court judgments when you lose a case or taxes to be collected. The vast majority of all things requiring legal tender decisions on an individual occurs at the state level. States determine legal tender.

"Legal tender - Wikipedia, the free encyclopedia
Legal tender or forced tender is payment that, by law, cannot be refused in settlement of a debt (debtor cannot successfully be sued for non-payment). ..."

The only way paper money has any value is to require it to have value by legal force, or to make it legal tender. However, despite what Federal Reserve Notes say, they are not constitutionally legal tender for all debts public or private, because the Constitution forbids States from requiring it in taxes or judgments.

Likewise, the Constitution never gave the federal government the right to make legal tender, thereby it has to defer to what the States are using; which is by default gold and silver. This makes perfect sense, because any suit by a citizen of one State against a citizen of another State, are using gold and silver as legal tender to begin.

The right to make legal tender is completely different than the right to coin. It is the right to declare what a forced tender of payment. A very dangerous right if it is entwined with a paper money that is worthless - because then it become the right to force theft on everyone.

Unless any legislation has been passed since 1792......that overturns that legislation.....the coinage act of 1792 is still the law of the land.......and since the federal reserve does not adhere to the coinage act of 1792....it is unconstitutional as the coinage act of 1792 was passed by congress..........since the federal resreve act of 1913 did not not do away with the coinage act of 1792 in its legisalation.....the coinage act of 1792 is still the law of the land in my view......that is my judgement......the federal reserve act of 1913 only created the federal reserve.....it did not do away with any of the old laws the federal reserve must adhere to based on the coinage act of 1792

 

[BeFranklin]

Ron Paul
http://www.goldmoney.com/en/commentary/2003-08-27.html
The drafters of the Constitution were well aware of how a government armed with legal tender powers could ravage the people's liberty and prosperity. That is why the Constitution does not grant legal tender power to the federal government, and the states are empowered to make legal tender only out of gold and silver (see Article 1, Section 10). Instead, Congress was given the power to regulate money against a standard, i.e., the dollar. When Alexander Hamilton wrote the Coinage Act of 1792, he simply made into law the market-definition of a dollar as equaling the silver content of the Spanish milled dollar (371.25 grains of silver), which is the dollar referred to in the Constitution. This historical definition of the dollar has never been changed, and cannot be changed any more than the term "inch," as a measure of length, can be changed. It is a gross misrepresentation to equate our irredeemable paper-ticket or electronic money to "dollars."

FYI: I disagree that the free market as mentioned in the above article (the full article, not the quoted section) can determine what a legal tender is as far as what a government decides to tax or make judgments of in its court system is - that, because it is a government action, is by definition not a free market. Hence, why legal tender was restricted to gold and silver in the Constitution to begin with.

[as mentioned in the full article linked above, but probably not the point that what was intended - just sloppy wording]

 

[BeFranklin]

Unless any legislation has been passed since 1792......that overturns that legislation.....the coinage act of 1792 is still the law of the land.......and since the federal reserve does not adhere to the coinage act of 1792....it is unconstitutional as the coinage act of 1792 was passed by congress..........since the federal resreve act of 1913 did not not do away with the coinage act of 1792 in its legisalation.....the coinage act of 1792 is still the law of the land in my view......that is my judgement......the federal reserve act of 1913 only created the federal reserve.....it did not do away with any of the old laws the federal reserve must adhere to based on the coinage act of 1792

A) If the federal reserve is actually a private entity, it is not that it is not acting constitutional, but that it is acting fraudulently. (I admit to shades of blending between the two, but still fraud comes to mind, and unconstitutional collusion of the federal government with a private entity).

B) The federal government may not be required to mint any coins that are legal tender (ie gold and silver). If this is actually the case, in letter but not the spirit of the constitution, than the States must, to be constitutional, make gold and silver weights or their equivalent from private minters legal tender. IE I owe 1 oz silver in taxes, which I pay with a coin from my local private (not a state run) mint. If the federal government refuses to make coins that are legal tender (silver and gold), the States really have no choice in the matter. They have to go elsewhere to make something a constitutional legal tender.

 

[buffalokid777]

FYI: Ron Paul
http://www.goldmoney.com/en/commentary/2003-08-27.html
The drafters of the Constitution were well aware of how a government armed with legal tender powers could ravage the people's liberty and prosperity. That is why the Constitution does not grant legal tender power to the federal government, and the states are empowered to make legal tender only out of gold and silver (see Article 1, Section 10). Instead, Congress was given the power to regulate money against a standard, i.e., the dollar. When Alexander Hamilton wrote the Coinage Act of 1792, he simply made into law the market-definition of a dollar as equaling the silver content of the Spanish milled dollar (371.25 grains of silver), which is the dollar referred to in the Constitution. This historical definition of the dollar has never been changed, and cannot be changed any more than the term "inch," as a measure of length, can be changed. It is a gross misrepresentation to equate our irredeemable paper-ticket or electronic money to "dollars."

I disagree that the free market as mentioned in the above article can determine what a legal tender is as far as what a government decides to tax or make judgments of in its court system is - that, because it is a government action, is by definition not a free market. Hence, why legal tender was restricted to gold and silver in the Constitution to begin with.

[as mentioned in the full article linked above, but probably not the point that what was intended - just sloppy wording]

While I appreciate your arguments........

Legal Tender was clearly defined in the coinage act of 1792......

If there is any legislation I am unaware of that overturned the coinage act of 1792......my ears are open.......

But if there is none.....

The coinage act of 1792 is STILL the law of the land.........as it was passed by congress.........

 

[BeFranklin]

While I appreciate your arguments........

Legal Tender was clearly defined in the coinage act of 1792......

If there is any legislation I am unaware of that overturned the coinage act of 1792......my ears are open.......

But if there is none.....

The coinage act of 1792 is STILL the law of the land.........as it was passed by congress.........

I'm trying to tell you, the federal government can't make legal tender. Legal tender is defined in the United States Constitution, which is the highest law of the land.

The minting acts have been amended many times, but it isn't necessary to go down that path, since this argument is either shown to be weak, or another argument is shown to be stronger. That other argument I'm only continuing from another earlier poster, trying to show examples and how it works to clarify it.

The federal government does not now nor has it ever had the power to make anything legal tender. That power is reserved to the states or people respectively, and it makes sense that its so (as already shown).

The words "legal tender for all debts.." on Federal Reserve Notes is untrue. Something to chew on.

 

[Zippyjuan]

The Coinage Act was not in the Constitution and it has been modified over the years. One example was the Coinage Act of 1873 http://www.answers.com/topic/coinage-acts
There have been other modifications as well.

In Section 8, where it defines the powers of Congress, the Constitution grants the Congress the powers

To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;

To provide for the Punishment of counterfeiting the Securities and current Coin of the United States;

"To coin money" does not necessarily mean that all monies must be coins. "To coin'" can mean to produce or manufacture. It gives Congress the power to set the value of the money and create it- it does not specify what that value has to be- ie. a certain amount of gold equal to one dollar or whatever. The makeup of money is not spelled out in the Constitution but is left for Congress to regulate. This section of the Constitution closes with this: Congress shall have the power to

To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof.

Article I section 10 does say :

Section 10. No state shall enter into any treaty, alliance, or confederation; grant letters of marque and reprisal; coin money; emit bills of credit; make anything but gold and silver coin a tender in payment of debts; pass any bill of attainder, ex post facto law, or law impairing the obligation of contracts, or grant any title of nobility.

It does not say that the Congress cannot have money which is not gold or silver. It specifically is discussing states here. At the time of the Constitution, states often had their own money issued. A little history:
http://www.moneyfactory.gov/newmoney/main.cfm/currency/history/

 

[sratiug]

The Coinage Act was not in the Constitution and it has been modified over the years. One example was the Coinage Act of 1873 http://www.answers.com/topic/coinage-acts
There have been other modifications as well.

In Section 8, where it defines the powers of Congress, the Constitution grants the Congress the powers


"To coin money" does not necessarily mean that all monies must be coins. "To coin'" can mean to produce or manufacture. It gives Congress the power to set the value of the money and create it- it does not specify what that value has to be- ie. a certain amount of gold equal to one dollar or whatever. The makeup of money is not spelled out in the Constitution but is left for Congress to regulate. This section of the Constitution closes with this: Congress shall have the power to



Article I section 10 does say :

It does not say that the Congress cannot have money which is not gold or silver. It specifically is discussing states here. At the time of the Constitution, states often had their own money issued. A little history:
http://www.moneyfactory.gov/newmoney/main.cfm/currency/history/

It's just that if Congress coined anything other than gold and silver nobody could be forced by legal tender law to accept it for debts. It's a good thing Guttenburg invented the coining press so we can coin enough constitutions so everybody can read it themselves... I'm going to coin this thread on my printer to read it later since it has so much valuable information. I think I'll coin the constitution again too and blow up the coin really big in the sections we're discussing to see if it can be more OBVIOUS WHAT IT MEANS.

By the way, what coining is The Manifesto in now? Anybody know?

 

[Dr.3D]

It's just that if Congress coined anything other than gold and silver nobody could be forced by legal tender law to accept it for debts. It's a good thing Guttenburg invented the coining press so we can coin enough constitutions so everybody can read it themselves... I'm going to coin this thread on my printer to read it later since it has so much valuable information. I think I'll coin the constitution again too and blow up the coin really big in the sections we're discussing to see if it can be more OBVIOUS WHAT IT MEANS.

By the way, what coining is The Manifesto in now? Anybody know?

I believe you are confusing coining with printing. There is a big difference.
Coining is something a government does with metal not paper and ink.

 

[jonahtrainer]

"To coin money" does not necessarily mean that all monies must be coins. "To coin'" can mean to produce or manufacture. It gives Congress the power to set the value of the money and create it- it does not specify what that value has to be- ie. a certain amount of gold equal to one dollar or whatever. The makeup of money is not spelled out in the Constitution but is left for Congress to regulate.

To 'coin money' is very clear on its face. That is the physical act of stamping metal into a coin. Any other reading is outside the four corner of the contract (Constitution) and would be an example of modifying the terms beyond their original meaning. If the Framers wanted the federal government to have the ability to 'print money' they would have written it in there.

Article I section 10 does say :

It does not say that the Congress cannot have money which is not gold or silver. It specifically is discussing states here. At the time of the Constitution, states often had their own money issued. A little history:
http://www.moneyfactory.gov/newmoney/main.cfm/currency/history/

The Federal government is not given the power to define legal tender. If the Framers wanted them to have that power it would be somewhere in Art 1 Sec 8. It is nowhere in there. All they gave was the power to define the weights and measures. Francs, Pounds, Marks and Dollars were all monetary weights and measures. They defined a (1) weight of a (2) metal and a (3) purity. This is the only enumerated power given to the federal government and is akin to the ability to define 'a kilogram' as '1000 grams'.

All rights not specifically enumerated and granted to the federal government are reserved to the States or the People themselves. As the Constitution does speak on Legal Tender and places it within the domain of the States it is extremely clear that the Framers did not want the Federal government to have the power to define Legal Tender either in the States or in the Union.

The intent was to have a free market in the currency market, as foreign coins often circulated as currency, but only gold or silver (which was often foreign coin) could be Legal Tender by the States. The Dollar was just a Spanish monetary measure.

For a more in-depth treatment see either The Case for a 100% Gold Dollar or the legendary Pieces of Eight by Dr. Edwin Veiera, J.D.

 

[Zippyjuan]

The intent was to have a free market in the currency market, as foreign coins often circulated as currency, but only gold or silver (which was often foreign coin) could be Legal Tender by the States. The Dollar was just a Spanish monetary measure.

The intent was to have a single standard of money within the states- not competing currencies which they already had. States issued money. Some cities issued their own money. Spanish and English and French currencies and coins were used. The First Bank of the United States was founded in 1791- two years after the Constitution and it issued not coins but paper money.

Paper money is not specifically prohibited in the Constitution which gives Congress the explicit power to coin money -not just to mint coins but money- and "To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers".

Jefferson argued against allowing paper money and wanted a specific ban on in in the Constitution. Madison was not against possible paper money. Others argued on both sides and it was decided not to include a ban on paper money. The Supreme Court upheld the legality of paper money in their decisions on Legal Tender of 1871 and Julliar v. Greenman. http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=US&vol=110&invol=421

By the constitution of the United States, the several states are prohibited from coining money, emitting bills of credit, or making anything but gold and silver coin a tender in payment of debts. But no intention can be inferred from this to deny to congress either of these powers. Most of the powers granted to congress are described in the eighth section of the first article; the limitations intended to be set to its powers, so as to exclude certain things which might otherwise be taken to be included in the general grant, are defined in the ninth section; the tenth section is addressed to the states only. This section prohibits the states from doing some things which the United States are expressly prohibited from doing, as well as from doing some things which the United States are expressly authorized to do, and from doing some things which are [110 U.S. 421, 447] neither expressly granted nor expressly denied to the United States. Congress and the states equally are expressly prohibited from passing any bill of attainder or ex post facto law, or granting any title of nobility. The states are forbidden, while the president and senate are expressly authorized, to make the treaties. The states are forbidden, but congress is expressly authorized, to coin money. The states are prohibited from emitting bills of credit; but congress, which is neither expressly authorized nor expressly forbidden to do so, has, as we have already seen, been held to have the power of emitting bills of credit, and of making every provision for their circulation as currency, short of giving them the quality of legal tender for private debts, even by those who have denied its authority to give them this quality. It appears to us to follow, as a logical and necessary consequence, that congress has the power to issue the obligations of the United States in such form, and to impress upon them such qualities as currency for the purchase of merchandise and the payment of debts, as accord with the usage of sovereign governments.

Congress, as the legislature of a sovereign nation, being expressly empowered by the constitution 'to lay and collect taxes, to pay the debts and provide for the common defense and general welfare of the United States,' and 'to borrow money on the credit of the United States,' and 'to coin money and regulate the value thereof and of foreign coin;' and being clearly authorized, as incidental to the exercise of those great powers, to emit bills of credit to charter national banks, and [110 U.S. 421, 450] to provide a national currency for the whole people, in the form of coin, treasury notes, and national bank bills; and the power to make the notes of the government a legal tender in payment of private debts being one of the powers belonging to sovereignty in other civilized nations, and not expressly withheld from congress by the constitution; we are irresistibly impelled to the conclusion that the impressing upon the treasury notes of the United States the quality of being a legal tender in payment of private debts is an appropriate means, conducive and plainly adapted to the execution of the undoubted powers of congress, consistent with the letter and spirit of the constitution, and therefore within the meaning of that instrument, 'necessary and proper for carrying into execution the powers vested by this constitution in the government of the United States.'

Such being our conclusion in matter of law, the question whether at any particular time, in war or in peace, the exigency is such, by reason of unusual and pressing demands on the resources of the government, or of the inadequacy of the supply of gold and silver coin to furnish the currency needed for the uses of the government and of the people, that it is, as matter of fact, wise and expedient to resort to this means, is a political question, to be determined by congress when the question of exigency arises, and not a judicial question, to be afterwards passed upon by the courts. To quote once more from the judgment in McCulloch v. Maryland: 'Where the law is not prohibited, and is really calculated to effect any of the objects intrusted to the government, to undertake here to inquire into the degree of its necessity would be to pass the line which circumscribes the judicial department, and to tread on legislative ground.' 4 Wheat. 423.

It follows that the act of May 31, 1878, c. 146, is constitutional and valid, and that the circuit court rightly held that the tender in treasury notes, reissued and kept in circulation under that act, was a tender of lawful money in payment of the defendant's debt to the plaintiff.

Judgment affirmed. [110 U.S. 421, 451]

FIELD, J., dissenting.