to regulate the value of money by ed vieira

8/6/2019 To Regulate the Value of Money by Ed Vieira

http://slidepdf.com/reader/full/to-regulate-the-value-of-money-by-ed-vieira 1/36

"To Regulate The Value Of Money"An Analysis Of The Power Of Government To Create And Set A Value

On MoneyBy

Edwin Vieira, Jr.

Introduction

On its face, the present "legal" monetary system of the United States is

simple.1 The "legal" money supply consists of two parts:

(i) a paper currency-almost exclusively Federal Reserve Notes (FRNs),which are "issued at the discretion of the Board of Governors of the FederalReserve System for the purpose of making advances to Federal reserve

banks;”2 and

(ii) a metallic currency-primarily base-metallic coins, which circulate freelythrough the economy; and silver and gold coins, which people hold in

preference to FRNs and base-metallic coinage, perforce of Gresham's Law.3

Emphasis on the term "'legal' money supply" is necessary, because manyeconomists consider that the "'economic' money supply" includes all bank-deposits in addition to paper currency and coin. Legally, however, bank-deposits are actually only debts the banks owe their depositors, notmoney—which is always an asset in and of itself, never someone's

liability.4

If the structure of the present monetary system is simple, nevertheless thereare many peculiarities within it.

First, no statute of the United States defines FRNs as "money" in either a

legal or an economic sense.5 Title 12 of the United States Code - which,revealingly, deals with "banks and banking,” not "money" - refers to FRNsas "advances" to Federal Reserve Banks, and as "obligations of the UnitedStates" which are "receivable * * * for all taxes, customs and other public

dues,” and which "shall be redeemed in lawful money on demand at theTreasury Department of the United States or at any Federal Reserve bank.”6 Thus, the very statute providing for their issuance makes crystal clear that:

FRNs are not true "money,” because they are defined as "advances" toFederal Reserve Banks and "obligations of the United States"-that is,instruments of debt, not assets.

FRNs are not constitutional "Money"7— the medium of exchangehighest in contemplation of law because a statute is required to make

them "receivable * * * for all taxes, customs and other public dues" atall. And FRNs are not even "lawful money,” because they are "redeemable in

of 36To Regulate the Value of Money

5/7/2011http://www.fame.org/HTM/Vieira_Edwin_To_Regulate_the_Value_of_Money_EV-006. ...



lawful money,” which they could not logically be were theythemselves "lawful money.”

In Title 31 of the United States Code, which deals with money and finance,”FRNs are declared to be "legal tender * * * for all debts, public charges,

taxes and dues," along with all "United States coins and currency.”

8

Thishowever, makes FRNS, not legal "money,” but only a statutory substitutefor "money" denominated in "dollars,” in which units "United States money

is expressed.”9 That is, FRNs of a nominal face value in "dollars" can,perforce of the "legal-tender" law, be substituted by a debtor, over thecreditor's objection, for the "dollars" of money the debtor has obligated

himself to pay.10

Indeed, the "legal-tender" provision itself makes clear that the concepts"money" and "legal tender" have no necessary connexion, in that the statute

also declares that "[f]oreign gold and silver coins are not legal tender fordebts"-although the Constitution with equal clarity presumes that such coinsare "money,” when it delegates to Congress the power to "regulate the

Value * * * of foreign Coin;”11 and when it disallows the States from "mak [ing] any Thing but gold and silver a Coin Tender in Payment of Debt,”

without any distinction between domestic and foreign "Coin.”12

The question that naturally arises from all this is, "On what possible basisdo the American people think that FRNs are legally money'?"

Second, the interrelationship of silver, gold, and base metallic coins in themonetary statutes is, to say the least, anomalous. Depending on whichstatute one consults, Congress has seen fit to define a "dollar" as eight andone-tenth grams of coined copper and nickel, one-fiftieth of an ounce of

coined fine gold, or one ounce of coined fine silver."13 That all these coinsare "legally" (by virtue of statute, if not the Constitution) "money" may beaccepted for purposes of argument. The question nevertheless remains, "Onwhat basis can each coin of a radically different substance be at one and thesame time legally a single `dollar's'-worth of `money'?"

Third, most Americans who study the economy are aware that the FederalReserve System constantly concerns itself with manipulation of thepurchasing-power of FRNS, primarily through fixing interest rates or therequired levels of bank-reserves. The rationale for these activities is that the

central bank desires to maintain a "stable price level.”14 Historically, theFederal Reserve System has failed miserably in this endeavor, as thepurchasing-power of FRNs has dropped steadily since World War II in

terms of gold, silver, and all common commodities.15

However, almost everyone in the Establishment-from the Board of Governors of the Federal Reserve System, to Congress, to the President,even to supposed "hard-money" critics who argue that the Federal Reserve





System should "target" interest rates, the money-supply, or some othereconomic variable by reference to the price of gold-accepts the existence of a power in the central bank to change the purchasing-power of FRNs at will.The question nevertheless remains “What is the legal basis for the assumedpower of the Federal Reserve System to change-primarily to depreciate, butto alter in any direction-the purchasing power of its paper currency?"

After the fundamental question of "What is a dollar'?"16, the three mostimportant issues in the area of monetary law are:

1. What is the constitutional source and character of money?2. What is the constitutional rule for valuation of one form of money

against another? And,3. What authority--if any--does the government possess to manipulate

the purchasing-power of money?

All of these questions are answered in Article 1, Section 8, Clause 5 of theConstitution, which provides that Congress shall have the power "To coinMoney, regulate the Value thereof, and of foreign Coin, and fix theStandard of Weights and Measures;” and in Article 1, Section 10, Clause 1of the Constitution, which provides (in relevant part) that "no State shall * **coin Money; emit Bills of Credit; [or] "make any Thing but gold and silverCoin a Tender in Payment of Debts.”

Analysis

I. In analyzing the Constitution, the best place to start is at the beginning:the pre-constitutional common law of England and her American colonies.Pre-constitutional English common law is the most important legal-

historical source of the meaning of many constitutional provisions.17

During the late 1700s, Blackstone's Commentaries18 was the mostsatisfactory exposition of the common law of England available to

Americans.19 Blackstone's discussion of the English monetary powers wasdetailed:

Money is an universal medium, or common standard, bycomparison with which the value of all merchandize may beascertained: a sign, which represents the respective values of all commodities. Metals are well calculated for this sign,because they are durable and are capable of manysubdivisions: and a precious metal is still better calculated forthis purpose, because it is the most portable. A metal is alsothe most proper for a common measure, because it can easilybe reduced to the same standard in all nations: and everyparticular nation fixes on it its own impression, that the weightand standard (wherein consists the intrinsic value) may both beknown by inspection only.





The coining of money is in all states the act of the sovereign power; for thereason just mentioned, that its value may be known on inspection. And withrespect to coinage in general, there are three things to be considered therein;the materials, the impression, and the denomination.

With regard to the materials, sir Edward Coke lays it down, that the moneyof England must either be of gold or silver; and none other was ever issuedby the royal authority till 1762, when copper farthings and half-pence werecoined by King Charles the second * * * . But this copper coin is not uponthe same footing with the other in many respects * * * .

As to the impression, the stamping thereof is the unquestionable prerogativeof the crown * * *.

The denomination, or the value for which the coin is to pass current, islikewise in the breast of the king * * * . In order to fix the value, the weightand the fineness of the metal are to be taken into consideration together.When a given weight of gold or silver is of a given fineness, it is then of thetrue standard, and called sterling metal * * * . And of this sterling metal allthe coin of the kingdom must be made, by the statute 25 Edw. III c. 13. Sothat the king's prerogative seemeth not to extend to the debasing orenhancing the value of the coin, below or above the sterling value* * * .The king may also, by his proclamation, legitimate foreign coin, and makeit current here; declaring at what value it shall be taken in payments. Butthis * * * ought to be by comparison with the standard of our own coin;

otherwise the consent of parliament will be necessary.

20

Thusly, Blackstoneelaborated five monetary principles the common law--

First, the precious metals gold and silver are "proper" for money, the"universal medium, or common standard.”

Second, the "intrinsic value" of a coin consists of "the weight and standard,”that is, the amount of precious metal it contains.

Third, the "coin of the kingdom" must consist of gold or silver "of the truestandard,” in terms of weight and fineness. Or, under English common lawprior to 1789, the only true "money" possible was undebased "gold andsilver coin.” Copper could be coined; but "this copper coin was not upon thesame footing with the other [i.e., gold and silver]"-that is, did not have thesame legal basis.

Fourth, the common-law power to coin money by "impression" or"stamping,” and to "fix the value" or "denomination" thereof was an

executive, not a legislative power.21

Fifth, to “fix the value" of domestic or foreign money meant to establish its"intrinsic value" by comparing "the weight and the fineness of the[precious] metal" in a coin with "the true standard, * * * sterling metal.”





This procedure precluded "debasing or enhancing the value of the coin,below or above the sterling value.” Self-evidently it presumed a definite andfixed standard-for, if the standard itself could be changed at will, "debasingor enhancing the value of the coin" would follow automatically.

English common law also records the traditional method of furnishing thecountry with "Money": the "free coinage" of gold and silver. Free coinagehad a long history, extending from at least the rein of Henry V, duringwhich Parliament enacted "that all they that will come to the Tower of London, thereto have money of new coined, they shall have money coined,and thereof shall be delivered within eight days, according to the very valueof that that they shall bring thither, paying the seignorage and coinage [at

specified rates],and no more.”22 In the reign of Charles II, Parliament wenteven further. Finding "[t]hat the Plenty of current Coins of Gold and Silverof this Kingdom is of great Advantage to Trade and Commerce,” it decreed

that "whatsoever Person or Persons, Native or Foreigner, Alien or Stranger,shall * * * bring any Foreign Coin, Plate or Bullion of Gold or Silver, intohis Majesty's Mint* * * shall have the same there assayed, melted down andcoined with all convenient speed, without any Defalcation, Diminution orCharge for the Assaying, Coinage or Waste in Coinage,” the costs of such

coinage to be borne by special impositions on certain imports.23

By these statutes, Parliament surrendered all but its police power overmoney, retaining only the authority to certify by impression that domesticsilver and gold coins had a particular weight and fineness of precious

metal—in effect, applying to money the same control it exercised over thestandardization of weights and measures.24 The political and economicsignificance of this policy was immense:

The principle of free coinage has proved its practical worth asa deterrent to debasement and depreciation. Where coinage ison private account there is no profit to the state in tamperingwith the standard * * * . The circulation of coins of similarappearance and denomination but of uncertain standard, thearbitrary and unpredictable modifications in the standard of

autocratic government, the temptations to profit which wereconstantly dangled before despotic rulers—these were evilswhich had perplexed and harassed society and hindered thenatural growth of economy since the days when coined moneyfirst appeared. By a stroke they were swept away. At the sametime, the institution of free coinage, by giving stability andcharacter to one of the chief instruments of organizedeconomy, made possible a more vigorous and healthy

commercial life * * *25

Finally, pre-constitutional English common law teaches that the power overmoney includes no license to interfere with free trade in the precious metals,





or to confiscate silver or gold from their holders. This is important, becauseit strikes from the hands of government one means for manipulating thegeneral "price level"—namely, controlling the supply of the precious metalsavailable for circulation in the marketplace as "Money.”

As early as 1663, for example, Parliament recognized that "severalconsiderable and advantageous Trades cannot be conveniently driven andcarried on without the Species of Money or Bullion,” and recounted thefinding of "Experience, that ['Money or Bullion'] are carried in greatestabundance (as to a Common Market) to such Places as give free Liberty forexporting the same.” Therefore, "the better to keep in and increase thecurrent Coins of this kingdom,” Parliament declared it "lawful to and forany Person or Persons whatsoever, to export * * * all Sorts of Foreign Coinor bullion of Gold or Silver, * * * without paying any Duty, Custom,

Poundage or Fee.”26 By this act, Parliament abandoned any claim to control

the money markets through intervention in the international flow of theprecious metals. Revealingly, Parliament explained this policy as in aid of "keep[ing] in and increas[ing] the current Coins of this Kingdom.”

Moreover, the Parliamentary statute providing for free coinage underCharles II indicated a further inherent limitation in governmental powerover money: the disability to seize the people's silver and gold. Realizingthe need "for the further Encouragement and Assurance of such as shallbring any Gold or Silver into his Majesty's * * " Mint * * * to be coined,”Parliament enacted "[t]hat no Confiscation, Forfeiture, Seizure, Attachment,

Stop or Restraint whatsoever shall be made in the said Mint * * * of anyGold or Silver brought in to be coined * * * upon any * * * Account or

Pretence whatsoever.”27 By this act, Parliament denied the King anyopportunity to misuse his prerogative over coinage to expropriate silver andgold from private citizens who had entrusted it to his custody for thepurpose of minting.

II. Such was the common law with respect to coinage when the Declarationof Independence removed Parliamentary control from the Colonies. Thenewly independent States immediately claimed full power to coin money, to

emit paper currency (or "bills of credit,” as paper money was then styled,redeemable in silver coin (generally, Spanish milled dollars), and to makesuch currency "legal tender" in payment of debts. In the Articles of Confederation, the first organic law of the United States, the Statesdelegated to the Continental Congress both

a power as to coinage—"the sole and exclusive right and power of regulating the alloy and value of coin struck by their own authority, orby that of the respective states,” and

a power as to paper currency—"to borrow money, or emit bills on the

credit of the united states.”28

Exercise of the power of the States and of the Continental Congress to emit





bills of credit resulted in economic disaster.29 In response, the Constitution

explicitly deprived the States of the power to "emit Bills of Credit,”30 and

implicitly deprived Congress of that power.31

The Continental Congress' exercise of the coinage and "regulating" power,

conversely, paralleled the common law. As early as 1776, Congress beganto create a national system of silver and gold coinage. Still optimisticallypresuming that "the holders of bills of credit * * * will be entitled * * * toreceive * * * the amount of said bills in Spanish milled dollars, or the valuethereof in gold and silver,” a committee of the Continental Congressrecognized that

the value of such dollars is different in proportion as they aremore or less worn, and the value of other silver, and of goldcoins, * * * when compared with such dollars, is estimated by

different rules, and proportions in these states, wherebyinjustice may happen to individuals, to particular states, or tothe whole Union * * * , which ought to be prevented bydeclaring the precise weight and fineness of the Spanish milleddollar * * * now becoming the Money-Unit or commonmeasure of other coins in these states, and by explaining theprinciples and establishing the rules by which * * * the saidcommon measure shall be applied to other coins * * * in order

to estimate their comparative value.32 The committee then suggested the "principle" that all silver coins * **ought to be estimated * * * according to the quantity of fine silver theycontain,” and "all gold coins * * * according to the quantity of fine goldthey contain and the proportion * * * which the value of fine gold bears to

that of fine silver" in the marketplace.33 By this "rule,” the committeeestablished a table of values of various silver and gold coins relative to the

Spanish milled dollar.34

In 1777, a congressional committee further recommended

That a Mint be forthwith established for coining money * * * [under] aproper plan for regulating the same * * * .

That as much Gold and Silver bullion as can be procured * * * bepurchased * * * , and that the bullion be coined into money, of suchvalue and denomination as shall hereafter be ordered by Congress.[And]

That any person who will bring gold and silver to the mint may have it

coined on their own account.35

In 1785, Congress considered a plan proposing the Spanish milled dollar asthe "Money-Unit,” and in favor of which it argued that "the Dollar * * *haslong been in general Use. Its Value is familiar. This accords with the natural





modes of keeping Accounts.36 Soon thereafter, Congress resolved "That the

money unit of the United States * * * be one dollar,”37 but did notdetermine the number of grains of fine silver that historically constitutedand defined the dollar. In 1786, the Congressional Board of Treasury"concluded that Congress * * * intended [by this resolution to adopt as the

'Money-Unit') the common Dollars that are Current in the United States,”and calculated that "[the Money Unit or Dollar will contain three hundredand seventy five grains and sixty four hundredths of a Grain of fine Silver,”and "will be worth as much as the New Spanish Dollars.” The Board alsodetermined "the Difference that Custom has established between CoinedGold and Coined Silver, in the United States" as a basis for establishing the

relative value between coinage of the two metals.38

Thus, the coinage-policy of the Continental Congress paralleled thecommon-law approach. First, the Continental Congress retained the

precious metals, silver and gold, as money. Second, it adopted a physicalmeasure of silver (the Spanish milled dollar), historically fixed in terms of weight and fineness (i.e., "current"), as the national "Money-Unit." Third, itregulated the values of all other coinage comparing the weight, fineness,and customary market exchange-ratios of that coinage to that of the"Money-Unit.” And fourth, it acknowledged the propriety of permitting themarket to trade freely in gold and silver, and to determine the quantity of money in circulation through the free coinage of those metals. In thismanner, the Continental Congress recognized the Spanish milled dollar as aconstant of weight, and refrained even from attempting to interfere with the

exchange-ratios among different types of money that the market set.

III. Against this historical background, the meaning of the coinage power inthe Constitution is—or at least should be—clear. Unfortunately, clarity isabout the last attribute of contemporary constitutional interpretation andmonetary policy.

A. The power "To coin Money"

Again, starting at the beginning is best. A correct interpretation of the power

"To coin Money" in Article 1, Section 8, Clause 5 is obviously essential tounderstand the monetary system the Constitution prescribes and which theUnited States should have today, because that is the only provision in theConstitution that refers to the creation of "Money.”

Nevertheless, contemporary constitutional interpretation is a veritable chaosof contending notions on this seemingly simple subject. Indeed, it is easy tofind people of all political persuasions who invoke the power "To coinMoney" to rationalize governmental creation of any kind of money-including coins of the precious metals (silver and gold), coins of base

metals (such as the cupro-nickel "sandwich" coins familiar in America),paper currency redeemable in gold coin (such as FRNs prior to 1933),irredeemable paper currency (such as contemporary FRNS), and even the





apparently oxymoronic "cashless" money (such as electronic bank-credits).These people theorize that the verb "coin" may be construed to mean "createby any means,” and that the noun "Money" is merely a label for whateverthe government whimsically decrees is "money" (a medium of commercialexchange, a medium of taxation, a "legal tender,” and so on). Nothing couldbe further from the truth.

The lineage of Congress' authority in Article I, Section 8, Clause 5 of theConstitution "To coin Money" traces directly to linguistically similar andoperatively identical language in the Articles of Confederation—"[t]heunited states in congress assembled shall * * * have the sole and exclusiveright and power of regulating the alloy and value of coin struck by their own

authority, or by that of the respective states"39—which was later modified

in the Federal Convention of 1787 to the power "To coin Money.”40 Self-evidently, the power of the Continental Congress "of regulating the alloy

and value of coin struck" could have applied only to coins, in the strictsense of metallic objects. And no historical basis exists for arguingotherwise.

Article I, Section 8, Clause 5 sets out the sole, express grant of power in theConstitution to bring "Money" into existence, and unmistakably limits thatpower to a single, specific means of achieving its end: the act of"coin[ing].”Nowhere in the Constitution or in any of its antecedents does or did anotherpower exist to "print,” "issue,” "emit,” "make,” "create,” or"declare whatshall be" "Money.” Therefore, on its face, the phrase "To coin Money" in

Article 1, Section 8, Clause 5 grants to Congress a power that that body canconstitutionally exercise only on "Money" that admits of being coined—andthereby constitutionally defines the "Money" of the United States, the

"Money" the United States may itself bring into existence, as coin alone.41 For, in constitutional interpretation, "[a]ffirmative words are often, in their

operation, negative of other objects than those affirmed.”42

Besides this legal doctrine of expressio unius exclusio alterius, basicconsiderations of constitutional federalism compel the same conclusion.One of the fundamental principles of American jurisprudence is that thevery existence of the Constitution necessarily implies the definite and

limited nature of the power of the government of the United States.43 Indeed, by legal hypothesis, the Constitution contains no "independent andunmentioned power[s];” for the contrary assumption would fatally "conflict

with the doctrine that this is a government of enumerated powers.”44 Congress—or any branch of the national government—enjoys no undefined

and general powers, that some "theoretical government" might possess.45 Instead, every claim of power must find direct support in a constitutional

grant, "either in terms or by necessary implication.”46 And the "burden of

establishing a delegation of power to the United States is upon those making

the claim.”47





This is especially true in the case of the power "To coin Money,” anauthority that belonged to the individual States before the Articles of Confederation, and then the Constitution, limited their monetary

urisdiction.48 Prior to adoption of the Constitution, the Framers recognizedonly three powers of the States related to money: (i) the power to "coin

Money;” (ii) the power to "emit Bills of Credit,” which were papercurrencies, redeemable in coin, that circulated in the economy as whatcontemporary economists would call "money substitutes" or "fiduciary

media of exchange;”49 and (iii) the power to declare things "legal tender"for debts denominated in "Money" (that is, to declare that debtors could

discharge their debts with things other than the money they owed).50 In thepre-constitutional period, no one admitted an inchoate, general authority inthe States to "print,” "issue,” "emit,” "make,” "create,” or "declare what isto be" "Money,” in addition to the specific authorities to "coin Money" andto "emit Bills.” This is obvious from the conjunction of two facts:

Article 1, Section 10, Clause 1 limits the States only with respect tothe powers "to coin Money" and to "emit Bills of Credit."

Since ratification of the Constitution, the States have never attemptedto "print,” "issue,” "emit,” "make,” "create,” or "declare what is to be"some form of "Money" other than coins or "Bills of Credit" (forexample, a State fiat, irredeemable currency)—a power which thesilence of Article I, Section 10, Clause I on that score arguably wouldallow them to exercise if such power had pre-existed the

Constitution.51 Indeed, the only example of a State's purporting toexercise monetary powers after ratification of the Constitution involved the emission of Bills of Credit, which the Supreme Court

declared unconstitutional.52

Also telling in this regard is that the Constitution—written by men who wellunderstood the prevailing law—denied the States the authority and grantedCongress the power only to "coin Money" in Article I, Section 10, Clause Iand Article 1, Section 8, Clause 5, respectively. This exact, literalcoincidence of prohibition and empowerment, in conjunction with the Tenth

Amendment,53

proves conclusively that Congress received only what theStates lost.

If the extent of the power of Congress to bring "Money" into existence self-evidently confines itself to coin, the substance of that power defines itself

with equal obviousness. Then,54 55 just as now," the verb "coin" in commonparlance denoted "fashion[ing] pieces of metal into a prescribed shape,weight, and degree of fineness, and stamp[ing] them with prescribed

devices, * * * in order that they may circulate as money.”56 And that theFramers intended the verb to be taken in its strict denotation, rather than insome other, loose connotation, the further reference to "foreign Coin" inArticle I, Section 8, Clause 5 renders inescapable, as does the distinction





Article I, Section 8, Clause 6 makes between the "Securities" (presumablynotes, certificates, and other paper evidence of indebtedness) and "currentCoin of the United States.”

Equally apparent from a comparison of the power of Congress "To coinMoney" in Article 1, Section 8, Clause 5 to the disabilities of the States to"coin Money" and to "emit Bills of Credit" in Article 1, Section 10, Clause Iis the inescapable constitutional distinction between "coin[ing] Money,” onthe one hand, and "emit[ting] Bills of Credit,” on the other. The power "Tocoin Money,” then, on its face does not include a power to generate "Billsof Credit" in addition to or in lieu of coin, even if those bills are ostensiblyredeemable on demand, unit for unit, in lawful coin. This reflects theFramers' understanding that, unlike "Money" itself, a "Bill of Credit"amounts only to a promise to pay "Money,” bottomed upon the

government's credit.57

Finally, taken in conjunction with the complementary disability of theStates, the power "To coin Money" compellingly imports an authority tofurnish and preserve, not to withhold or destroy, a sound system of coinage

based on "a uniform and pure metallic standard of value."58 Article 1,Section 8, Clause 5 does not say of what this "metallic standard" shouldconsist—although Article I, Section 10, Clause 1 emphasizes thepreeminent place the Constitution provides for silver and gold in itsmonetary schema; and both Article 1, Section 9, Clause 1 and the SeventhAmendment refer explicitly to the (silver) "dollar.” The heritage of the

coinage-power in English common law, moreover, indicates that the"Money" of the United States should be of the same "materials" as the"money of [pre-constitutional] England": "either * * * of gold or silver,”with the use of "copper coin" permitted in limited instances "not upon the

same footing with the other [precious metals].”59

Pre-constitutional English common law also indicates that the power "Tocoin Money" in Article I, Section 8, Clause 5 includes a power to providefor free coinage of silver and gold, financed either through traditional

minting-charges or by other special taxes or dues.60 If, therefore, the majorpurpose of the power "To coin Money" is to supply the nation with soundcoinage of silver and gold; and if the constitutional power "To coin Money"derives from English common law, with all the qualifications andlimitations of that law except as expressly modified in the Constitution—then the power "To coin Money" includes no authority to interdict free tradein coin or bullion of the precious metals.

Finally, under the pre-constitutional English common law, the King'scoinage-power included no power to seize the citizens' bullion or coinalready "in the said Mint,” and impliedly must also have disabled the King

from confiscating specie in private possession outside the mint.61 On thisbasis, the power "To coin Money" in Article I, Section 8, Clause 5 must





also impliedly disable Congress—"upon any * * * Account or Pretencewhatsoever"—from confiscating, forfeiting, seizing, attaching, stopping, orrestraining the people's silver and gold, whether in their own possession ortemporarily in the custody of the government.

In sum, under the unwritten English constitution, power over coinage waspart of the King's prerogative. Parliament, however, had authority to add to,or delimit, this power by statute-such enactments becoming part of theEnglish constitution as legislative definitions of the coinage-power undercommon law. The Founders transferred all this power to Congress by

enumerating it in Article 1, Section 8, Clause 5.62 Under the Englishconstitution, of course, Parliament retained the overriding authority tochange the coinage-power by statute. But once the Founders enumeratedthat power in the Constitution, they placed it beyond the ability of Congress

to transform by simple legislative enactment.63

B. The power "To * * * regulate * * * Value"

1. If the relatively simple power "To coin Money" is widely misunderstoodtoday, the ancillary power "To * * * regulate the Value thereof, and of foreign Coin" is even more subject to confused misconstructions. Peopleacross the political spectrum seem to believe that the power "To * * *regulate the Value" means the power to manipulate the purchasing-power of "Money,” in reference to the level of debt in society, to the level of economic activity, to the "price level,” or to some other economic or

political criterion or desideratum.

To some, the power "To regulate the Value" amounts to a power of rawinflationism: the power to generate sufficient "Money" (of whatever kind)"to enable the people to pay their debts" as the old saw of the cracker-barrelinflationists has it. In effect, this school of thought argues that thegovernment may use the monetary power "To * * * regulate the Value" as atool for redistribution of wealth between debtors and creditors, to theadvantage of the former. This theory is particularly appealing to politicians,as it rationalizes both surreptitious taxation and repudiation of public debt

through inflation, which enables the politicians to "spend and spend, andelect and elect" without appearing to "tax and tax.”

To others, the power "To * * * regulate the Value" amounts to a power tostimulate and support trade: the power to provide sufficient "Money" (of whatever kind) to grease the gears of finance—capitalism—specifically, byfacilitating credit-expansion by private banks making commercial loans.One fairly popular notion is that the government may use the power "To * ** regulate the Value" to create whatever supply of "Money" is necessary to

maintain low, fixed rates of interest in the markets for business loans.64

To yet others, the power "To regulate the Value" amounts to a power tomaintain so-called "economic stability": the power to control the "price





level,” either to keep prices at the same height forever, implying apermanently fixed purchasing-power for the monetary unit (which might becalled "decreeing the end of economic history"); or to allow a slow andsteady increase in prices, implying a parallel depreciation in the purchasing-power of the monetary unit (which might be called "fixing the direction of economic history downward").

Precisely why "economic stability" of just these two kinds and none other isdesirable is never made clear. Interestingly, next to no one in this schooladvocates a monetary policy resulting in a slow and steady decrease inprices and concomitant appreciation in the purchasing-power of themonetary unit (which would also be a species of "economic stability,” in thesense of predictability), although such would almost surely be theexperience under a true constitutional monetary system. This is peculiar, inthat wage-earners in society—who presumably have a great deal of politicalpower as voters—would stand to benefit most from a monetary system inwhich the unit steadily appreciated in purchasing-power. But even so-called"labor leaders" seem to have blinders on when it comes to monetary policy.And none of these people ever stops to ask the more general question of whether the best form of "economic stability" is an economy free from allarbitrary political intervention.

Each of these schools of thought shares three interrelated ideas:

First, they all employ the monetary power "To regulate the Value thereof [i.e., of 'Money']" to achieve some other, extremely broad non-monetaryeconomic, political, or social end: redistribution of wealth, stimulation of trade, manipulation of prices, et cetera. The underlying thought hereapparently is that one supposed power of the Constitution can be stretchedto fill in some perceived void in another power. For instance, if the "Powerto lay and collect Taxes * * * to * * * provide for the * * * general

Welfare"65 is legally too narrow (or politically too cumbersome orcontroversial) to enable the politicians to redistribute wealth from group Ato group B, then the monetary power is made to serve the purpose.

For another instance, if the power "To borrow Money on the credit of theUnited States,66 does not allow straightforward repudiation of public debt,then the monetary power is made to serve the purpose by depreciation of the

currency—with the connivance of the Supreme Court.67 For yet anotherinstance, if outright price-fixing under the guise of "regulating interstate

commerce"68 is too complicated a method to achieve "economic stability,”then the monetary power is made to serve the purpose-albeit in only a verycrude way, as the Federal Reserve System has never succeeded inmaintaining either a fixed or a slowly and steadily rising "price level.”

Apparently, none of the exponents of these theories ever stops to think that,if the powers to tax and spend, to borrow, and to regulate commerce do not





serve certain ends at all or well, it may be because the Founding Fathers didnot want those powers to be applied to those ends—and hardly wouldcountenance the twisting of some other power to fill in a void they intendedto remain empty. Also, apparently none of the exponents of these theoriesever considers paradoxical—or, more to the point, ridiculous—the notionthat the Founding Fathers, otherwise so careful in their crafting of theConstitution, thoughtlessly or secretly implied in the exceedingly specificlanguage of Article I, Section 8, Clause 5 powers that, in the aggregate,could suffice for totalitarian economic control of a modern industrial societythrough the exercise of that power by itself.

Second, each of these schools of thought rests implicitly on some notion of central economic planning: namely, that the government knows the bestdistribution of wealth, the government knows the best cost and level of credit, the government knows how far, how fast, and in what directionprices should move, ad nauseam. This, of course, is an example of perverse"cultural conditioning": reading back into the Constitution a modern-dayprejudice. Many people today—the collapse of the Soviet Unionnotwithstanding—still believe, or want or profess to believe, that

government can and should "plan" the economy.69 So they retroject thisprejudice into the Constitution, without asking whether the FoundingFathers' language, understood as the Founders understood it when theyenacted the Constitution, is capable of such an interpretation.

Third, each of these schools of thought rejects out of hand what might be

called in political parlance the "liberty interpretation,” or in economicparlance the "free-market interpretation,” of the monetary power. This, too,is the product of perverse cultural conditioning. Many people in thistotalitarian age gratuitously assume that a power of the government existsonly to force individuals to behave in some non-market fashion. Thesepeople do not realize that a governmental power may be defined in such away as to amount to a disability that prevents the government from acting ina non-market way.

Thus, if the government is empowered only to coin silver and gold as

official "Money"—through "free coinage,” and with the "dollar" as thefixed constitutional standard—and has no power to emit "Bills of Credit" orto declare "legal tender" other than silver and gold coins, then theConstitution has created a free-market monetary system that the governmentis required to respect and protect. Under this interpretation, the monetarypower of the government is as much a statement of individual liberty as

anything in the Bill of Rights.70

2. What, then, does the power "To coin Money, regulate the Value thereof,and of foreign Coin" actually mean? First, it is important to pay attention to

what the Constitution says in haec verba. The verb "regulate" refersexplicitly to two things, and two things only: (i) the "Money" Congress"coin[s]" and (ii) "foreign Coin.” Thus, on its face, Article 1, Section 8,





Clause 5 grants Congress a power that that body can constitutionallyexercise on coinage, and on coinage only. Second, it is also important to payattention to what the Constitution does not say. Nowhere in the Constitution does any power exist to "regulate the Value" of "currency,” "securities,”

"bills,” "notes,” or anything other than coin.71 Thus, on its face, the entire

Constitution makes clear that the power "To * * * regulate the Value" doesnot include some general, undefined power to declare what shall have"Value" as "Money,” or shall be "Money.”

In the late 1700s, "regulate" meant (as it does today) "[t]o adjust by rule or

method" or "[t]o adjust, in respect of some standard.”72 "The wordordinarily implies not so much the creating or establishment of a new thing,as the arranging in proper order and controlling that which already

exists."73 For the most important example, in his Commentaries Blackstoneoutlined the English common law concerning "[t]he denomination, or the

value for which the coin is to pass current":

In order to fix the value, the weight and the fineness of themetal are to be taken into consideration together. When agiven weight of gold or silver is of a given fineness, it is thenof the true standard, and called sterling metal * * * . And of this sterling metal all of the coin of the kingdom must be made* * * . The king may also * * * legitimate foreign coin, andmake it current here; declaring at what value it shall be takenin payments. But this * * * ought to be by comparison with the

standard of our own coin * * * .74

Interestingly, Blackstone equated "the value for which the coin is to passcurrent" (i.e., at its full lawful face value) simply with its "denomination,”or mere name—thereby indicating that the process of "fix[ing] the value" of both domestic and foreign coins under English common law was amechanical and objective comparison of the weight and fineness of preciousmetal in a particular "denomination" to the "the true standard" of that metal,rather than an attempt to give the coins some arbitrary value, or tomanipulate the coins' purchasing-powers according to some arbitrary policy.

Blackstone wrote of "fix[ing] the value" of coins; but he could just as easilyhave written "regulat[ing] the Value thereof,” the verbs "fix" and "regulate"

being reasonably synonymous in this context.75 An early example of suchusage appears in Queen Anne's Proclamation of 1704, and theParliamentary Act of 1707, wherein the Queen referred to "a Table of theValue of the several foreign Coins which usually pass in Payments in oursaid Plantations, according to their Weights, and the Assays made of themin our Mint, thereby showing the just Proportion which each Coin ought to

bear to the other,” and then commanded that various foreign coins "standregulated, according to their Weight and Fineness, according and in

Proportion to the Rate before limited and set.”76





About seventy years later, the Continental Congress proceeded in the samemanner. As noted above, the Articles of Confederation, under which theContinental Congress operated, contained a power similar to that in Article

1, Section 8, Clause 5 of the Constitution.77 In 1776, a committee of theContinental Congress "appointed to * * * ascertain the value of the several

species of gold and silver coins current in these colonies, and theproportions they ought respectively to bear to Spanish milled dollars,”prepared a table of "rates,” showing the name and weight of the various

coins, and their "Value in Dollars.”78 The similarity of this procedure tothat in the English act of 1707—even to the use of the nouns "proportion,”"rate,” and "value,” and of the verb "ascertain"—is both striking and hardlyaccidental.

Later in 1776 (as noted above), another committee of the ContinentalCongress submitted a more detailed report on the same subject. The

committee defined its task as, first, "declaring the precise weight andfineness of the * * * Spanish milled dollar * * * now becoming the Money-Unit or common measure of other coins in these states;” and, second,"explaining the principles and establishing the rules by which * * * the saidcommon measure shall be applied to other coins * * * in order to estimate

their comparative value.”79

Having stated the weight of the Spanish milled dollar, "as it comes from themint, new and unworn" (that is, "current"), the committee then set out therules for regulating the value of silver and gold coins: (i) "[A]ll * * * silver

coins * * * ought to be estimated * * * according to the quantity of finesilver they contain." And (ii) "all gold coins * * * ought to be estimatedaccording to the quantity of fine gold they contain and the proportion * * *which the value of fine gold bears to that of fine silver in those foreignmarkets at which these states will probably carry on commerce,” "theseveral proportions at the said markets * * * [being] averaged.”

Although it found this average to be "nearly as one to fourteen and * * *one half,” the committee nevertheless recognized that, "as in long tracts of time the proportional values of gold and silver at market are liable to vary,

whenever such variation shall have become sensible, this house [i.e., theContinental Congress] ought to make a corresponding change in the rates attheir treasury.” It then presented a table of "values,” showing the varioussilver and gold coins, their "Proportion of fine metal,” "Weight,” amount of

"Fine metal,” and "Value in Dollars" (to six decimal places!).80

The Continental Congress' conception of "fix[ing]" or "regulat[ing]" thevalue of coinage was widely understood among the public as well. Forinstance, Adam Smith noted how,

as people become gradually more familiar with the use of different metals in coin, and consequently better acquainted





with the proportion between their respective values, it has inmost countries * * * been found convenient to ascertain thisproportion, and to declare by a public law, that a guinea (of gold), for example, of such a weight and fineness, shouldexchange for one and twenty shillings (of silver) or be a legaltender for a debt of that amount. In this state of things, andduring the continuation of any one regulated proportion of thiskind, the distinction between the metal which is the standard,and that which is not the standard, becomes little more than a

nominal distinction.81

In sum, the power "To * * * regulate the Value [of United States coin],and of foreign Coin" consists solely of a power of comparison anddeclaration: (i) comparing the amount of fine silver in particular silvercoins to that contained in the "Money-Unit or common measure of other

coins in these states" (the "dollar"), and declaring this proportion in"dollar"-values; or (ii) ascertaining the amount of fine gold in particulargold coins, calculating the market-equivalent of fine silver, comparing thelatter amount to the "Money-Unit,” and declaring this proportion in"dollar"-values.

Thus, under the power "To coin Money,” Congress has discretion to set theweight, purity, form, and impression of all silver, gold, and copper coins itmints (excepting, of course, the intrinsic value of the "dollar" itself).Whereas, under the power "To * * * regulate the Value,” it has a duty

accurately to determine the proportions of market value between the fixed"Money-Unit" and the coinage it, and foreign nations, mint.

Insofar as the proportions of market value between various gold coins andthe (silver) "dollar" are concerned, it may have been reasonable in the late1700s and immediately thereafter to declare by statute the exchange-ratiocustomarily prevailing in the market between gold and silver—thetransmission of financial information throughout the country, let alone theworld, being both slow and uncertain. Even so, the Continental Congressrecognized that, because "the proportional values of gold and silver at

market are liable to vary,” the government had a duty "whenever suchvariation shall have become sensible, * * * to make a corresponding change

in the rates.”82

Today, with almost instantaneous transmission of sound market-dataavailable, any rigid statutorily declared ratio of value between gold and

silver is unreasonable, and therefore unconstitutional.83 Rather, inexercising the power "To * * * regulate * * * Value" under contemporaryeconomic circumstances, the government should simply permit the value of domestic and foreign gold coinage to "float,” as against the silver "Money-

Unit" (the dollar), from one market level to another, as changing exchange-rates become "sensible" in commerce.





The Framers' consistent association of the power "To * regulate Value" withthe power "To * * * fix the Standard of Weights and Measures,” then, was

no mere caprice.84 Although the purchasing-power of money varies witheconomic conditions, and ultimately is beyond the government's power to

control,85 at any particular point in time the relationship of money to

economic values parallels that of weights and measures to physicalquantities. Just as the Constitution gave Congress the power "To * * * fixthe Standard of Weights and Measures" in order to establish uniformity

therein throughout the country,86 so, too, did it confer the power "To * * *regulate Value" in order (as much as possible in economic life) "to produceuniformity of value throughout the Union, and thus to preclude us from the

embarrassments of a perpetually fluctuating and variable currency.”87 "[F]luctuating and variable,” that is, in terms of political phenomena impingingon the market.

Now, a "Standard of Weigh[t]" must itself be a weight and a "Standard of ** * Measur[e]" a measure. So, too to regulate * * * Value" implies theexistence of a unit of "Value.” Here, the two phrases "fix the Standard" andregulate * * * Value" subtly diverge in shades of meaning, if not in ultimateintent: The phrase "fix the Standard" empowers Congress to define the basicunits of weights and Measures;” whereas, the phrase "regulate the Value"empowers Congress only to apply the basic unit of "Value,” which theConstitution elsewhere explicitly identifies as the "dollar,” a known,

historically fixed weight of silver.88

Moreover, whereas the verb "fix" as applied to "Weights and Measures"

implies "stability and confirmation,”89 the verb "regulate" as applied tocoinage implies adjustment. Here, then, is another striking example of theFramers' linguistic precision, in one phrase selecting the verb that connotesthe establishment of permanent "Standard[s],” without which a system of "Weights and Measures" could not serve its purpose; and, in the other,choosing the synonym that connotes a process of inter-comparisons amongchanging forms of coinage, according to a set "Money-Unit,” without whicha monetary system involving both gold and silver could not achieve its end.

In short, the Framers interpreted the constitutional "Value" of "Money" assomething not subject to the vagaries of governmental edict—but rather, asBlackstone taught, as something identical with "the weight and standard

(wherein consists the intrinsic value).”90

C. The disability to debase "Money" below the constitutional standard

The power to "regulate the Value [of Money]" is distinct from the power todebase its value. For example, to "regulate the Value" of a silver coin means

to compare the weight of pure silver it contains to the weight of pure silverin the monetary standard (the "dollar"), and to declare the coin's value interms of that standard. Thus, if a silver coin contains 185.625 grains of fine





silver, and the standard "dollar" contains 371.25 grains of silver, then the"Value" of the former coin, properly "regulate[d],” is one half of a "dollar.”Conversely, to debase a silver coin means to declare its value withoutproper reference to the standard, or to lower the silver-content of thestandard. Thus, as possible instances of this practice, the hypothetical silvercoin in the previous example would be debased if minted of only 150 grainsof silver, yet still declared to be one half of a "dollar;” if minted of 185.625grains of silver, yet declared to be one "dollar;” or if minted of 185.625grains of silver, and declared to be one "dollar,” based upon a phony

"dollar" decreased from 371.25 to 185.625 grains of silver.91

From time to time, the Kings of England did engage in the practice of

debasing coinage.92 Whether they rightfully enjoyed the power to do sounder the unwritten English constitution, however, is highly questionable(as discussed below). In any event, even if the Kings actually had this

authority under English law, the people of the United States clearly deniedit to Congress under the Constitution. The Framers of the Constitution explicitly enumerated the coinage-power in Article 1, Section 8, Clause 5because: (i) under common law, that power had been executive in nature(i.e., the power of the King); and, therefore, (ii) without enumeration amongthe legislative powers of Congress in Article 1, it might have passed to the

Executive by implication among the general powers in Article 11.93 Andthis result, of course, the Framers sought to forfend.

The Framers, after all, were conversant with the dolorous history of

excesses various English monarchs had perpetrated, and were aware how"in former ages" the crown had "greatly abused" its prerogative of coinage:"for base coin was often coined and circulated by its authority, at a value farabove its intrinsic worth, and thus taxes of a burdensome nature were laid

indirectly on the people.”95 Therefore, the Framers made clear by theplacement of the coinage-power that Congress, not the Executive, was toexercise it. And they made equally clear by the language of that power thatit included no authority to debase "Money,” but only to "regulate [its]Value" according to a fixed standard. Indeed, the sole power concerningthe "Value" of Money is the power in Article 1, Section 8, Clause 5 to"regulate"—which (as described above) at common law meant only theprocess of properly comparing the coin needing regulation to themonetary standard, not falsifying that comparison or changing thestandard.

And the monetary standard itself the Constitution fixes in historicallyunmistakable terms as the "dollar.” Thus, even if the English Kings hadtaken advantage of Parliamentary pusillanimity and successfully debasedthe coinage by falsely certifying its intrinsic value, or permuting themonetary standard, contrary to common-law tradition, the Constitution denied any such license to Congress, by permitting it only to "regulate theValue [of Money],” according to a legislatively unchangeable standard.





This limitation upon the so-called "sovereign prerogative" over coinage isparticularly fitting under a republican Constitution that prohibits the "depriv[ation] of * * * property without due process of law" and the "tak[ing]" of

"private property for public use without just compensation.”96 Especiallyduring the reign of the profligate Henry VIII, a major purpose of

debasement had been to secure revenue for the King's expenses, many of which were purely personal in nature (that is, inflation was a device fordirect redistribution of wealth from the people to the King as an individual).

"The United States,” however, "do not and cannot hold property, as a

monarch may, for private or personal purposes,”97 and may not apply anyof its powers to such ends. If, therefore, the authority of the English King todebase the coinage (assuming arguendo it existed at all) rested in largemeasure on his need to augment his own personal income; and if,conversely, Congress (or any other branch of the United States government)

has no such monarchical powers of a personal nature; then, logically,Congress has no need for or any authority to debase the national coinage—and the absence of that authority from the Constitution reflects the inherentdissimilarity between the English and American forms of government.

The assumption that the English King ever enjoyed a constitutionalauthority to debase the coinage is fallacious, though, at least in the contextof the late 1700s and early 1800s. For, by then, the "abuses of the Coinage"of Henry VIII and others had "[f]or over two centuries * * * ceased on the

part of the English government.”98 And the great commentators on the

common law at that time rejected any notion that this long cessation of abuse constituted merely an historical hiatus in a legitimate practice, ratherthan the recognition of a constitutional prohibition. Blackstone, forexample, contented himself with the simple statement that "the king'sprerogative seemeth not to extend to the debasing or enhancing the value of

the coin, below or above the sterling value.”99 Chitty discussed the issue inmore detail:

Whether the King can legally change the established weight oralloy of money, without an Act of Parliament, seems to bequite clear. By the statute of 25 Ed. 3 st. 5c. 13. it is "accordedand established that the money of gold and silver which nowrunneth, shall not be impaired in weight nor in alloy; but assoon as a good way may be found that the same be put in theancient state as in the sterling." Lord Coke, in his comment of articuli super cartas, ch. 20, 21. cites, among other acts andrecords, this statute of the 25 Edw. 3. and the Mirror of Justices, ch. 1 8. 3. ("Ordein fuit que nul roy de ce realme ne

poit changer sa money ne impayre ne amender ne autre

moneyfaire que de or ou d'argent, sans assent de touts sescounties,") in support of his opinion against the King's right toalter money in weight or alloy. Lord C.J. Hale differs with





Lord Coke, and relies 1st upon the 'case of mixt monies;' 2dly,on the practice of enhancing the coin in point of value anddenomination, which he observes has nearly the same effect asan embasement of the coin in the species; and lastly, on theattempts which have been made to restrain the change of coinwithout consent of Parliament. In the case reported by Sir JohnDavies, it appears that Queen Elizabeth sent into Ireland somemixed money, and declared by proclamation that it should becurrent and lawful Irish money. This money was certainly heldto be legal coin of Ireland; but it is most probable that as thecase was in Ireland, the statute 25 Edw. 3. and the other Actscited by Lord Coke, were not considered in discussing it; as itis clear from one of Poyning's laws they might have been. Asit is fair presumption that those statutes were not broughtbefore the Court, no mention being made of them, though Sir.M. Hale himself admits that the statute of Edw. 3. is againsthis opinion. As to the practice mentioned by Lord Hale of enhancing the coin in point of value and denomination, thatseems very distinguishable from altering the species ormaterial of coin, by changing its weight or alloy. Evenadmitting the existence of a practice to imbase coin in thealloy, still little importance will be attached to it, when it isremembered how frequently some Kings have endeavored toextend the limits of their prerogatives. The attempts whichhave been made to restrain the change of coin without consent

of Parliament, prove but little in favor of Lord Hale's opinion;for those attempts might have been so made in order to restrainthe exercise of a prerogative which was denied, and it does notappear that they were made in order to overturn a prerogative,the legal existence of which was admitted. The authority of SirWm. Blackstone may perhaps turn the scale in favor of LordCoke's opinion, if that opinion required it. * * * It need only beadded, that the statute of 14 Geo. 3. ch. 92. seems to furnish aninference that the standard weight of the gold and silver coin

of the kingdom is unalterable, but by Act of Parliament.100

To like effect were the contemporary exegeses of Hawkins and East.101 And even those few who admitted a broad kingly prerogative to alter thecoinage conceded that "[t]he policy in relation to the coin is, that the valueremains unalterable, for the standard cannot be varied without manifest

injustice.”102

Of course, from Chitty's statement that "the standard weight of the gold andsilver coin of the kingdom is unalterable, but by Act of Parliament" couldfollow the inference that Parliament perhaps retained a power to alter thecoinage through statutory debasement. This possibility is irrelevant to theissue of what powers Congress may exercise pursuant to the Constitution,however. For the Constitution itself fixes the monetary standard as the





(silver) "dollar,” beyond any legislative authority to alter without

constitutional amendment.103

In sum, under English common law, the King exercised all power to coinand regulate the value of money. By the late 1700s, Parliament had defined

this royal prerogative as not including the authority to debase the coinage,either directly or by changing the "sterling" standard. The Constitution transferred this executive power to the legislative branch of government inArticle 1, Section 8, Clause 5. Simultaneously, it removed from legislativecontrol the monetary standard itself (the "dollar"). Thus, the Constitution outlawed the debasement of "Money" by enjoining Congress properly to"regulate the Value thereof" against the standard, and by precludingCongress from tinkering with that standard under any legislative pretextwhatsoever.

D. The power to declare "Money" a legal tender

Some of the people who favor a broad power of government over thesubstance and purchasing-power of money may admit that the Constitution limits actual "Money" to coin, and requires "regulat[ion of] the Value" of such coin according to the standard silver "dollar.” But, these people argue,the Constitution allows Congress to create "legal tender" for "dollars"—thatis, things that debtors can require creditors to accept in lieu of the "dollars"the debtors owe. Under this theory, a "legal tender" need not be "Money,”but is merely a substitute for "Money" that Congress compels creditors toaccept at the option of debtors.

Obviously, if Congress creates a "legal tender" less valuable than the"dollars" for which it may be substituted, redistribution of wealth occursevery time a debtor pays a creditor with that "legal tender" instead of the"dollars" he owes. Thus, the power to create "legal tender" (if it exists) canhave economic effects as consequential as the power (which does not exist)directly to debase the coinage.

The question the people in favor of Congressional "legal tender" must

answer, however, is: "Where in the Constitution does such a power reside?"Article I, Section 8, Clause 5 neither grants a power to declare, nor evenmentions, "legal tender.” Indeed, the term "Tender" appears in theConstitution only in Article 1, Section 10, Clause 1—reserving to the Statesa portion of their pre-constitutional "legal-tender" authority for "gold andsilver Coin" alone. Analysis of the nature of "legal tender" andconstitutional "Money" explains this situation.

To understand the concept "legal tender" requires distinguishing between"money" in the economic sense, as the common medium of exchange, and"money" in the juristic sense, as the common medium of payment (orsettlement of debts). In a market-economy, something can become amedium of payment only by virtue of already being a satisfactory medium





of exchange. In theory, the law can assign the character of a medium of payment ("legal tender") to anything, including the three forms of money:

"commodity money,” "credit money,” and "fiat money.”104 But grantingsuch juristic character to something is insufficient to make that something"money" in the economic sense. In a market-economy, things become

media of exchange only through their use as such in commercialtransactions. Commerce, of course, may adopt as media of exchange such

things as the law declares to be media of payment; but it need not do so.105

Article I. Section 8, Clause 5 of the Constitution evidently uses the noun"Money" in its economic, as well as its juristic sense, for two reasons. First,linguistically, the clause refers to a "Money" capable of being "coin[ed]"—which, of necessity, identifies that "Money" as "commodity money,” not"credit money" or "fiat money.” Second, historically, the "commoditymoney" of England and America for hundreds of years prior to ratification

of the Constitution consisted only of silver, gold, and (to a lesser degree)copper—which became "money" through the course of trade, not throughthe dictates of government, and to which government merely extended"legal-tender" character in recognition and adoption of establishedcommercial practices. Therefore, presumptively, whatever commoditycould serve as "Money" under Article 1, Section 8, Clause 5 could also andconsequentially serve as "legal tender,” because (as traditionally was thecase) the medium of payment that contracting parties intended incommercial agreements creating monetary obligations was the medium of exchange extant in the community; and this medium was generally

satisfactory for fulfilling obligations not contracted in money, too.

Reference to common law establishes what commodities can serve as"Money" under Article 1, Section 8, Clause 5. At common law, "the moneyof England" had to be of either gold or silver, with ‘copper coin * * ' notupon the same footing;” and coin of the precious metals was, merely uponits coinage and even without explicit declaration to that effect, "legal

tender" for its intrinsic value (i.e., its weight of fine silver or fine gold).106 Because the power "To coin Money" derived from the common-lawcoinage-power, it must also include an implied power to give "legal-tender"

character to all silver and gold coins properly "regulate[d]" in "Value" asagainst the "Money- Unit"—but, as well, an implied disability to makebase-metal coins a full "legal tender,” or even to impose gold or silver coinsas such when improperly "regulate[d]" in "Value.”

Of decisive importance here, of course, are the explicit constitutionalreferences to the (silver) "dollar" in Article 1, Section 9, Clause 1 and theSeventh Amendment-which references establish the "dollar" as the nation'smonetary unit. Obviously, if the Constitution itself identifies the "dollar" asthe "Money-Unit" of the nation's coinage system, then that "dollar"—the

dollar of 371.25 grains fine-silver content—will necessarily be a "legaltender" for all contracts denominated in "dollars,” and for all judgments of governmental courts payable in money.





The apparent problem of "legal tender" arises only because Congress mayconstitutionally coin "Money" other than the constitutional "dollar" itself.Now, if Congress coined silver and gold coins other than the "dollar,”"regulat[ing] the Value thereof" in proper proportion to the "dollar"according to the market exchange-ratio between the precious metals, all of

these coins would be equally available as economically equivalent means of paying debts. Under such circumstances, if a contract explicitly specifiedthe medium of payment as one or another of these standard silver or goldcoins, then that specified coin alone would be "legal tender" for satisfactionof the contractual obligation, even absent any explicit statutory orconstitutional authorization.

The question is whether, in satisfaction of a contractual obligationdenominated generally in undefined "dollars" (as opposed to "silverdollars") other standard coins might not also serve as "legal tender" to the

extent of their intrinsic values in weight of precious metal. For, if properly"regulate[d],” these other coins in proportionate amounts would have theselfsame economic worth (exchange-value or purchasing- power) as thecontractually specified "dollars.”

The issue in such a case would be whether the contracting parties used thedesignation "dollar" literally, to identify that silver coin as the unique meansof payment, or merely figuratively, to symbolize a certain exchange-valueof "Money" in a general sense. In the former circumstance, only the silver"dollar" could be a "legal tender,” consistent with the Fifth and Fourteenth

Amendments' Due Process Clauses; whereas, in the latter circumstance, thepayment of actual "dollars,” or of their market-equivalent in some othercoin, would satisfy the contractual obligation for a determinable value of money" in the economic sense.

On the other hand, where a debt arose in a non-contractual setting (such asdamages adjudicated in a common-law tort action), the economic value of that judgment-debt would be the same whether denominated and paid in(silver) "dollars" or in any other properly "regulate[d]" silver or gold coin.Therefore, in cases of this kind, all forms of constitutional "Money" would

be capable of functioning as "tender" in the economic sense, the choiceamong them in the juristic sense being that of the adjudicating agency.Indeed, as long as governmental courts exist, capable of summoningdefendants before them by coercive process and imposing damage-udgments against those defendants, government will necessarily have a

limited "legal-tender" power, in the sense of the authority to conduct a trialat which the finder of fact establishes the compensation to which thecomplaining party is entitled ("tender" in the economic sense), and todeclare what shall constitute the medium of payment for such judgments("tender" in the juristic sense).

Of course, under the injunction to provide "just compensation" pursuant to

the Due Process Clauses of the Fifth and Fourteenth Amendments,107





government can declare as a juristic tender only what in fact provides thecomplaining party with full economic recovery ("fair market value") for his

damages.108 So, the government's "legal-tender" power in these cases,rightly understood, amounts at most to the declaration of which amongvarious media of payment equally suitable in economic terms is most

convenient for use by the courts (or other agencies of adjudication). Yet, aslimited as this power may be, it nevertheless is inherent in a system of governmental courts. Indeed, even if government decreed that it wouldrecognize as "legal tender" in each specific case whatever medium of exchange the complaining party desired, in the final analysis governmentwould none the less be imposing that tender on the defendant, just as

government would impose the damage-judgment itself.109

The implicit reservation of the States' "legal-tender" authority respecting"gold and silver Coin" in Article 1, Section 10, Clause 1 supports the

interpretation that all properly "regulate[d]" coins of the precious metals canequally serve as media of payment. The Framers understood that, even if acommon-law "legal-tender" power for silver and gold coins were implicit inArticle 1, Section 8, Clause 5, Congress nevertheless received no authorityin any constitutional provision under the federal system to interfere with the

inherent governmental powers and duties of the States.110 Yet they alsoknew that the States would often amass debts in the performance of thosepowers and duties-and might well, as experience during the War of Independence taught, attempt to default on those debts by tendering to theircreditors "Thing[s]" other than "gold and silver Coin.” To preclude thiswithin the federal structure, the Framers included in Article 1, Section 10,Clause 1 the prohibition against "mak[ing] any Thing but gold and silverCoin a Tender in Payment of Debts,” so as to constitutionalize for the Statesin their governmental capacities the monetary rule otherwise applicable tothe national government and the people generally through Article 1, Section8, Clause 5. This, however, reciprocally shows that the Constitution doestolerate "gold and silver Coin" as "Tender in Payment of Debts"—presumably at the properly "regulate[d]" intrinsic value in relation to the(silver) "dollar.”

In conjunction with the Tenth Amendment111 and Article VI, Clause 2 (the

Supremacy Clause),112 Article 1, Section 10, Clause 1 provides furtherevidence that silver and gold—and only silver and gold—mayconstitutionally function as governmentally declared "legal tender.” Underthe Tenth Amendment, there are three possibilities: (i) If a power is"delegated to the United States by the Constitution,” it is not "reserved tothe States * * * or to the people.” (ii) If a power is "reserved to the States orto the people,” it is not "delegated to the United States.” And (iii) if a poweris "prohibited by [the Constitution] to the States,” it is either "delegated to

the United States" or "reserved * * * to the people.” Article 1, Section 10,Clause 1 refers to two complementary powers: explicitly, the power to"make any Thing but gold and silver Coin a Tender in Payment of Debts;”





and implicitly, the power to make "gold and silver Coin" itself such a"Tender.”

The clause prohibits the first of these powers, and reserves the second, tothe States. Now, self-evidently, if the Constitution reserves power to make

"gold and silver Coin a Tender" to the States, then perforce of the TenthAmendment it does "not delegat[e]" a "legal-tender" power to the UnitedStates-or, it does not delegate that power to the United States in any formthat could conflict with the reserved authority of the States. Therefore, if theUnited States has any constitutional privilege to declare a "legal tender,”that "tender" must consist of the same "gold and silver Coin" the States may"make * * * a Tender.” Congress, of course, has exclusive power underArticle 1, Section 8, Clause 5 to "regulate the Value" of domestic andforeign "Coin.” So, overall, both Congress and the States have concurrentauthority to declare as full "legal tender" gold and silver coins at the

properly "regulate[d]" "Value[s]" that Congress sets (or should set, in theexercise of its constitutional duties)."113

Conversely, Article 1, Section 10, Clause I prohibits the States from "mak [ing] any thing but gold and silver Coin a Tender.” And Article VI, Clause 2shows that the Constitution did not delegate this power to the United States.If Congress had authority to declare something other than gold and silvercoin a "legal tender,” while at the same time the States were declaring suchcoin a "tender" (presumably for the selfsame debts.), then an insolubleconstitutional conflict would ensue. For the Supremacy Clause enjoins that

"[t]his Constitution, and the Laws of the United States which shall be madein pursuance thereof shall be the Supreme Law of the Land.”

If the States could declare specie a "tender" pursuant to their explicitreservation of constitutional power in the Constitution itself, and Congresscould declare something else a "tender" in a statute enacted pursuant to aclaimed implicit delegation of constitutional power, which declarationwould be "the Supreme Law of the Land"? Simple constitutional logiccompels the conclusion that the exercise of the power set out explicitly inthe Constitution must override the exercise of a power claimed only to be

implicit therein.

But, then, where in the Constitution resides the "legal tender" power thatArticle 1, Section 10, Clause 1 prohibits to the States and Congress? TheTenth Amendment answers this question, by identifying the locus of thelatter authority as "reserved * * * to the people.” The States cannot makeanything but gold and silver coin a "Tender" because of Article 1, Section10, Clause 1. Congress cannot make anything but gold and silver coin a"tender" because of Article VI, Clause 2 (in addition to the common-lawinterpretation of Article 1, Section 8, Clause 5). And, therefore, only the

people—through voluntary contractual arrangements among themselves—can make anything but gold and silver coin a "tender.” (And, of course,through such contracts they can stipulate for payment in gold and silver





coin, too.)

In the most fundamental sense, then, the power to declare what shall be a"legal tender" resides in the people, not in the government. By contract,individuals can stipulate whatever they will as "tender" in payment of debtsamong themselves. Congress and the States may declare properly "regulate[d]" gold and silver coins as "legal tender" for the "Value" of those coins.But, for example, any private contract that called for payment of (say)"$1,000 silver dollars" would as much determine the "legal tender" forfulfillment of that agreement as would the government. Certainly neitherCongress nor any State could constitutionally require the creditor in such acontractual situation to accept 1,000 pieces of leather (or other basematerial) stamped "dollars,” or 1,000 gold or silver coins improperly"regulate[d]" with respect to the (silver) "dollar.”

Conclusion

The foregoing analysis proves that there is no constitutional basis for usingthe power "To * * * regulate the Value" of "Money" for stimulation of theeconomy, redistribution of wealth, stabilization of the purchasing power of money, creation of "legal-tender" substitutes for real "dollars,” or for any of the other sundry monetary nostrums that politicians and their unelected"expert" advisors have foisted, and continue to foist, on the Americanpeople. The sooner the people recognize this, the sooner something may bedone to rectify the situation. If, however, the people remain ignorant,

apathetic, and inactive, the politicians will "regulate the Value" of Americanmoney to zero-just as one fiat currency after another, throughout the courseof Western history, has collapsed into worthlessness-with all the seriouseconomic, political, and social consequences such a collapse will entail.

NOTES

1 The adjective "legal" is necessary, because the present monetary system isnot the monetary system the Constitution requires.

2 See 12 U.S.C. § 41 1, which states that "Federal reserve notes, to beissued at the discretion of the Board of Governors of the Federal ReserveSystem * * * are authorized.” The Secretary of the Treasury may also issuea small amount of United States currency notes. 31 U.S.C. § 5115. Anyonewho deals regularly in cash is aware that vanishingly few, if any, suchcurrency notes are in circulation.

3 The coinage is defined in 31 U.S.C. §§ 5111-13. Gresham's Law isusually stated as: "bad money drives good money out of the market.” Amore descriptive way of putting it is: "people prefer to hold good money in





preference to bad money, and to spend bad money in preference to goodmoney.”

4 On the peculiar status of bank "deposits" as debts, see M. Rothbard, TheCase Against the Fed (1994), at 40-45.

5 In a strictly economic sense, of course, FRNs are treated as "money," i.e.,as a medium of exchange in day-to-day transactions.

6 12 U.S.C. § 411 (emphasis supplied).

7 See U.S. Const. art. 1, § 8, cls. 2 and 5; art. I, § 10, cl. 1.

8 31 U.S.C. § 5103

9 31 U.S.C. § 5101.

10 This assumes, of course, that the debtor has not contracted to pay insilver or gold coin, or some other specifically defined "dollars,” in whichcase the legal-tender law is inapplicable. See 31 U.S.C. § 5118(d)(2) andBronson v Rodes, 74 U.S. 7 Wall. 229

11 U.S. Const. art. I, § 8, cl. 5.

12 U.S. Const. art. I, §10, cl. 1 (emphasis supplied)

13 31 U.S.C. §§ 5112(a)(1), 5112(a)(7), 5112(e).

14 That this rationale is grossly deficient, because the concept of a "stableprice level" is economically questionable, has never deterred the centralbankers and other government money-managers from using it. See M.Rothbard, Man, Economy and State: A Treatise on Economic Principles(1970), at 727-44.

15 Of course, also possible is that the true policy of the Federal Reserve hasbeen simply to depreciate the paper currency in order to "stimulate" the

economy and fund governmental deficits by the hidden tax of inflation.

16 See National Alliance for Constitutional Money Monograph No. 6, Whatis a "dollar"? An historical analysis of thee fundamental question inmonetary policy.

17 Eg., Moore v. United States, 91 U.S. 2705 274 (1876); Ex parte Bain,121 U.S. 1, 12 (1887); Smith v. Alabama, 124 U.S. 465, 478-79 (1888);Pollock v. Farmers' Loan & Trust Co., 157 U.S. 429, 570-72 (1895); UnitedStates v. Wong Kim Ark, 169 U.S. 649, 654-55 (1898); Schick v. United

States, 195 U.S-65, 68-70 (1904); South Carolina v. United States, 199 U.S.437, 449-50 (1905); Kansas v. Colorado, 206 U.S. 46, 94-95 (1907); Pattonv. United States, 281 U.S. 276, 287, 290 (1930); Dimick v. Schiedt, 293





U.S. 474, 476-82, 487 (1935); United States v. Wood, 299 U.S. 123, 133-39(1936). See J. Story, Commentaries on the Constitution of the United States(5th ed. 1891), Vol. 2, § 1339, at 212. Story's Commentaries are recognizedas a standard work on constitutional law. E.g., Field v. Clark, 143 U.S. 649,670-71 (1892).

18 W. Blackstone, Commentaries on the Laws of England (Amer. ed., 4vols. & App., 1771-1773).

19 "At the time of the adoption of the Federal Constitution, [theCommentaries] had been published about twenty years, and it has been saidthat more copies of the work had been sold in this country than in England,so that undoubtedly the framers of the Constitution were familiar with it."Schick v. United States, 195 U.S. 65, 69 (1904).

20 Commentaries, Vol. 1, at 276-78.

21 Blackstone could have substituted for his language "fix the value" theequivalent phrase "regulate the Value,” as later appeared in Article 1,Section 8 Clause 5 of the Constitution. For the two verbs are synonyms.Eg., Black's Law Dictionary (4th ed, rev. 1968) defines "regulate" as "[t]ofix, establish, or control."

22 All men may resort to the King's exchanges, or to the Tower, to havenew money coined, 1421, 9 Hen. V, Stat. 2, ch. 2.

23 An Act for encouraging of Coinage, 1666, 18 Car. 11, ch. 5, §§ 1, VI-IX.

24 On the close connection between the standardization of money and of weights and measures, see An Act for regulating and ascertaining theWeights to be made use of in weighing the Gold and Silver Coin of thisKingdom, 1774, 14 Geo. III, ch. 92.

25 E. Groseclose, Money and Man: A Survey of Monetary Experience (2ded. 1967), at 172.

26 An Act for the Encouragement of Trade, 1663, 15 Car. 11, ch. 7, § XII.

27 An Act for Encouraging Coinage, 1666, 18 Car. 11, ch. 5, § V.

28 Arts. of Confed'n art. IX.

29 See E. Vieira, Jr., Pieces of Eight.- The Monetary Powers andDisabilities of the United States Constitution (1983), at 10-15.

30 U.S. Const. art. I, § 10, cl. 1.

31 The Constitution delegated to Congress only the power "to borrowMoney on the credit of the United States,” not the power "to borrow money,





or emit bills" that existed in the Articles of Confederation. On thesignificance of this change, see Vieira, Pieces of Eight, ante note 29, at 70-77.

32 Journals of the Continental Congress, 1774-1789 (W. Ford ed. 190S),

Vol. 5, at 724-25.

33 Id. at 725.

34 Id. at 726. See id., Vol. 4, at 381-83.

35 Id., Vol. 7, at 138.

36 Id., Vol. 28, at 355.

37 Id. Vol. 29 at 499-50

38 Id., Vol. 30, at 162-63. See id., Vol. 31, at 503-04. After ratification othe Constitution, Congress caused a more accurate valuation of the "current'Spanish milled dollar to be made, fixing it at 371.25 grains of fine silver.Act of April 1792, ch. XVI, § 9, 1 Stat. 246, 248.

39 Arts. of Confed'n art. IX.

40 Documents in the records of the Committee of Detail contain severalversions of the power: viz., (i) "S & H.D. in C. ass. shall have the exclusive

Right of coining Money;” (ii) "10. * * I The exclusive right of coiningmoney;” (iii) "The Legislature of U.S. shall have the exclusive Power * * *of coining Money;” (iv) "to coin Money.” The Records of the FederalConvention of 1787 (M. Farrand ed. 1966), Vol. 2, at 136, 1449 158-59,167. The Reports of the Committees of Detail and Style both contain thelanguage: "To coin money.” Id. at 182, 595.

41 In the late 1700s, the standard definition of "money" was "[m]etal coinedfor the purposes of commerce.” S. Johnson, A Dictionary of the EnglishLanguage (1755).

42 Marbury v. Madison, 5 U.S. (1 Cranch) 137, 174 (1803).

43 Marbury v. Madison, 5 U.S. (1 Cranch) 137, 176-80 (1803); Kansas v.Colorado, 206 U.S. 46, 89-90 (1907); Myers v. United States, 272 U.S. 52,23031 (1926)(McReynolds, J., dissenting).

44 Kansas v. Colorado, 206 U.S. 469 88-89 (1907).

45 Kansas v. Colorado, 206 U.S. 46, 81 (1907); Myers v. United States, 272

U.S. 52@ 230 (1926)(McReynolds, J., dissenting).

46 Kansas v. Colorado, 206 U.S. 46,83-84 (1907); Downes v. Bodwell, 182





U.S. 2449 288 (1901).

47 Bute v. Illinois, 333 U.S. 640, 653 (1948).

48 See Arts. of Confed'n art. IX and U.S. Const. art. 1, § 10, cl. 1.

49 See, e.g., Craig v. Missouri, 29 U.S. (4 Pet.) 410, 431-32 (1830); Briscoev. Bank of Kentucky, 36 U.S. (II Pet.) 257, 312-14, 318-19 (1837).

50 The States had claimed a general power to declare "legal tender" whichwas not limited to "Money" or "Bills of Credit.” That is why Article I,Section 10, Clause 1 denies the States power "to make any thing but goldand silver Coin a Tender in Payment of Debts" (emphasis supplied).

51 A pre-constitutional general power to create "Money" (in the sense of a

legally authorized medium of exchange) that survived Article 1, Section 10,Clause 1 might allow the States to emit a paper currency (which would notbe a "Coin") that was not redeemable in coin (and therefore not a "Bill of Credit"), and that was receivable in payment of taxes (which are not"Debts"). If the State initially paid out this currency only to creditors willingto receive it, and other individuals then voluntarily accepted this currency innormal marketplace exchanges because of its usefulness for paying Statetaxes, the State would have created a form of "Money" that arguably doesnot offend the Constitution.

52 Craig v. Missouri, 29 U.S. (4 Pet.) 410 (1830).

53 U.S. Const. amend. X: "The powers not delegated to the United States bythe Constitution, nor prohibited by it to the States, are reserved to the Statesrespectively, or to the people."

54 Johnson, Dictionary, ante note 41, defined the verb "coin" as "To mint orstamp metals for money.”

55 Oxford English Dictionary (compact ed. 1971), Vol. 1, defines the verb

coin" as "To make (metal) into money by stamping pieces of definite weightand value with authorized marks or characters * * * ."

56 Black's, ante note 21, at 326.

57 Craig v. Missouri, 29 U.S. (4 Pet.) 410, 431-32 (1830); Briscoe v. Bank of Kentucky, 36 U.S. (11 Pet.) 257, 318 (1837); Woodruff v. Trapnall, 51U.S. (10 How.) 190, 205 (1851); Darrington v. Bank of /Mabama, 54 U.S.(13 flow.) 12, 1-5-17 (1851).

58 United States v. Marigold, 50 U.S. (8 How.) 560, 566-69 (1850).

59 See ante, pages 6-8.





60 See ante, pages 8-10.

61 See ante, page 1 1.

62 W. Crosskey, Politics and the Constitution in the History of the UnitedStates (1953), at 411-14, 421. See also C. Thach, Jr., The Creation of thePresidency, 1775-1789 (1923), at 86-87, 173.

63 Eg., United States v. Bricrnoni-Ponce, 422 U.S. 873, 877-78 (1975);Miranda v. Arizona, 384 IJ.S. 436, 491 (1966).

64 Eg., the government supplies whatever amount of "Money" is necessaryso that it can loan to private banks at (say) 2%, and the banks can then makecommercial loans at (say) 6% to everyone who desires to borrow. In someof these schemes, the government then "absorbs" through an income orother tax any "excess purchasing power" that may arise, creating a "circularflow" of money out of and then back into the public treasury. These notionsof "money as plumbing" seem to be especially popular with people whohave backgrounds in physics, engineering, or applied physical sciences, andwho assume that economic systems can be "wired" as if they were circuit-diagrams.

65 U.S. Const. art. I, § 8, cl. 1.

66 U.S. Const. art. 1, § 8, cl. 2.

67 See Perry v. United States, 294 U.S. 330 (1935).

68 See U.S. Const. art. 1, § 8, cl. 3, as construed in Yakus v. United States,321 U.S. 414 (1944).

69 Most American politicians and pundits do not use that negatively loadedterm, of course, or openly advocate "five year plans.” Today's "planning"occurs back-handedly, through the so-called "loopholes" of the tax codes;governmental subsidies and transfer payments; health, safety, consumer,and environmental regulations; and so on.

70 Of course, reasoning of this kind caused many of the Founding Fathersto say, correctly, that a Bill of Rights was unnecessary. If the Constitution were properly construed, they argued, the government would have nopowers that could abridge the natural rights of the people. So, for example,if Article 1, Section 8, Clause 5 were correctly interpreted, there would beno need for the prohibition in the Fifth Amendment against the taking of property without due process of law in the area of money. For thegovernment would be unable to take property at all through exercise of themonetary powers.

71 The only reference to anything relating to "currency" in the Constitution is the power in Article 1, Section 8, Clause 6 "To provide for the





Punishment of counterfeiting the Securities and current Coin of the UnitedStates" (emphasis supplied).

72 Compare Johnson, Dictionary, ante note 41, with Oxford EnglishDictionary, ante note 44, and Black's, ante note 20.

73 State er rel. Hollywood Jockey Club v. Stein, 133 Fla. 530, 543, 182 So.863, 868 (1938).

74 Commentaries, ante note 18, Vol. 1, at 278 (footnotes omitted).

75 Eg., Black's, ante note 21, defines "fix" as to "[a]djust or regulate,” anddefines "regulate" as to "fix, establish, or control.”

76 An Act for ascertaining the Rates of foreign Coins in her Majesty's

Plantations in America, 6 Anne, ch. 30, § I (emphasis supplied).

77 Arts. of Confed'n art. IX: " congress * * * shall * * * have the sole andexclusive right and power of regulating the alloy and value of coin struck bytheir own authority, or by that of the respective states.” In the Constitution,Congress' power to "regulate the Value" was extended to "foreign Coin,”and the reference to "coin struck by * * * the respective states" was deleted,as the States were prohibited from coining Money under Article I, Section10, Clause 1.

78 Journals of the Continental Congress, ante note 32, Vol. 4, at 381-82.

79 Id., Vol. 5, at 725.

80 Id. at 725-26.

81 A. Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (1776), Book I, ch. 5 (emphasis supplied).

82 Journals of the Continental Congress, ante note 32, Vol. 5, at 726.

83 That the application of constitutional principles (albeit not the principlesthemselves) may change with changes in economic and social facts is acommonplace of constitutional law. Eg., Brown v. Bd. of Educ., 347 U.S.483, 493-95 (1954); Block v. Hirsh, 256 U.S. 135, 155 (1921).

84 This association was common in English common-law monetarypractices. E.g., An Act for regulating and ascertaining the Weights to bemade use of in weighing the Gold and Silver Coin of this Kingdom,1174,14 Geo. 111, ch. 92.

85 See Ludwig von Mises, Human Action: A Treatise on Economics (3rdrev. ed., 1963), at 408-12.





100 J. Chitty, Jr., A Treatise on the Law of the Prerogatives of the Crown;and the Relative Duties and Rights of the Subject (1820), at 197-99(footnotes omitted). Chitty was quite correct to dismiss as unreliable theopinions of Lord Hale. For Hale's Pleas of the Crown "exude his ultra-royalist sentiments, and have been condemned as "brief and inaccurate.”

Dictionary of National Biography (1917), Vol. 8. at 905.

101 W. Hawkins, A Treatise on the Pleas of the Crown; or, A System of thePrincipal Matters Relating to that Subject, Digested Under Proper Heads (J.Curwood, 8th ed., 1824), Vol. 1, ch. III, pt. 11, § 16 at 43; E. East, ATreatise of the Pleas of the Crown (Anier. ed. 1806), at 148.

102 M. Bacon, A New Abridgement of the Law (C. Dodd., 7th ed. 1832),Vol. 6, at 414. This commentary, though, erroneously relies on Hale. seeante, note 100.

103 See U.S. Const. art 1, § 9, cl. 1 and amend VII.

104 "Commodity money" is money that is simultaneously a non-monetarycommercial commodity, such as silver or gold. The "money" is the metalitself. "Credit money" is money that consists of a claim not both payable ondemand and absolutely secure. The "money" is the promise to pay at afuture time. "Fiat money" is money composed of otherwise essentiallyvalueless things that neither have a commercial use nor constitute a claimagainst anyone, but do have a special legal qualification. The "money" is

not the material bearing the stamp of authority, but the stamp alone.

105 Typically, if the law attempts to force commerce to accept as media of exchange things that commerce finds unacceptable, commerce goesunderground, into the so-called "black market,” and operates outside thelaw.

106 Compare Blackstone, Commentaries, ante note 18, Vol. 1, at 277, with,e.g., Dixon v. Willoughs, 2 Salk. 446, 91 Eng. Rep. 387 (1696).

107 U.S. Const. amend V ("No person shall be * * * deprived of * * *property, without due process of law; nor shall private property be taken forpublic use without just compensation"), amend. XIV ("No State shall * * *deprive any person of * * * property, without due process of law"). TheFourteenth Amendment, unlike the Fifth, contains no explicit "justcompensation" clause. But that requirement has been held implicit in theFourteenth Amendment's due-process guarantee. Eg., Chicago, B. & Q.R.R.v. City of Chicago, 166 U.S. 226, 236-37 (1897); Penn CentralTransportation Co. v. New York City, 428 U.S. 104, 122 (1978).

108 Eg., compare Monongahela Navigation Co. v. United States, 148 U.S.3129 324-25, 327-28 (1893), with United States v. New River Collieries,262 U.S. 241, 343-44 (1923).





109 Cf. Shelley v. Kraemer, 334 U.S. 1 (1948).

110 Lane County v. Oregon, 74 U.S. (7 Wall.) 71, 76-77 (1869).

111 U.S. Const. amend. X provides that "[t]he powers not delegated to theUnited States by the Constitution, nor prohibited by it to the States, are

reserved to the States respectively, or to the people.”

112 U.S. Const. art. VI, cl. 2 provides in pertinent part that "[t]hisConstitution, and the Laws of the United States which shall be made inPursuance thereof * * * , shall be the supreme law of the Land.”

113 Compare and contrast Passenger Cases, 48 U.S. (7 How.) 282, 399-400(1849)(opinion of McLean, J.), with id. at 418-19 (opinion of Wayne, J.).Only Congress, of course, has power to declare base metals such as copper"legal tender"-but, as Blackstone put it, "not upon the same footing with

[gold and silver].”

©1993 - National Alliance for Constitutional Money, Inc.

CONTACT INFORMATION

Larry Parks, Executive DirectorFAME,501(c)(3)

Box 625, FDR StationNew York, New York 10150-0625

Phone:212-818-1206Fax: 212-818-1197

[email protected]
