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Constitutional Money: Got Any?
In 1948, Howard Buffett, four-term Nebraska Congressman (R) and the
father of Warren Buffett, stated: "So far as I can discover, paper
money systems have always wound up with collapse and economic chaos.
If human liberty is to survive in America, we must win the battle to
restore honest money."
During the Revolutionary War (1776-1783) the Continental Congress
issued $225 million dollars of paper money to finance the war. These
"Continental paper dollars" were not redeemable into gold or silver
coins (specie) but they were to be "retired" in seven years through
taxes levied on the States. That never happened. As a result of this
massive increase in the money supply our nation experienced a
runaway price inflation. General
George Washington wrote in 1779 that "a wagon load of money will
scarcely purchase a wagon load of provisions." By the spring of 1781
the Continentals were virtually worthless, giving rise to the
phrase, "not worth a Continental."
This hyperinflation experience was fresh in the minds of the
delegates as they arrived in Philadelphia for the Constitutional
Convention in May, 1787. On August 16th, part of the agenda of that
day was to discuss the proposals concerning the monetary affairs for
the new nation. The proposal under consideration was: "The
legislature of the United States shall have power. to coin money. to
regulate the value of foreign coin. to borrow money and emit bills
on the credit of the United States. The ensuing debate, as recorded
by James Madison, the Father of the Constitution, is most telling.
Gouverneur Morris, delegate from Pennsylvania, moved to strike out
and emit bills on the credit of the United States." He went on to
say, "If the United States had credit such bills would be
unnecessary; if they had not, unjust and useless." Pierce Butler of
South Carolina seconded the motion. Later in the discussion he
remarked that "paper was a legal tender in no country in Europe." He
was "urgent for disarming the government of such a power." James
Mason of Virginia had a "mortal hatred to paper money" but was
unwilling to tie the hands of the legislature. A few others agreed
with him, but most of the delegates were vehement in their
opposition to irredeemable paper money.
Oliver Ellsworth of Connecticut "thought it was a favorable moment
to shut and bar the door against paper money." He went on to say,
"Paper money can in no case be necessary.
Give the government credit, and other resources will offer. The
power may do harm, never good." James Wilson of Pennsylvania
believed, "It will have a most salutary influence on the credit of
the United States, to remove the possibility of paper money." George
Read of Delaware "thought the words, if not struck out, could be as
alarming as the mark of the beast in Revelation." And John Langdon
of New Hampshire "had rather reject the whole plan (Constitution)
than retain the three words, and emit bills."
On the motion for striking out the phrase, nine state delegations
voted "aye" and two "no." New Jersey and Maryland were the "no"
votes. The New York delegates were not present. The next day, August
17th, the delegates adopted a measure to punish the counterfeiting
of coins and U.S. securities.
Then on August 28th, the delegates debated two articles concerning
the role of coinage and paper money for the States. During the
debate Roger Sherman of Connecticut expressed the view that, "this
is a favorable crisis for crushing paper money." The delegates
agreed. The vote was 8 to 1 (Maryland was divided and abstained) to
prohibit "bills of credit" (paper money) and 11 to 0 to require
States to pay their debts in gold or silver coin only.
On September 12 the committee of revision reported back to the
delegates a revised draft of the Constitution. It was not modified.
Therefore our Constitution, in regards to monetary affairs, reads as
follows:
Article I Section 8: The Congress shall have Power.
To coin Money, regulate the Value thereof, and of foreign Coin, and
fix the Standard of Weights and Measures; and To provide for the
Punishment of counterfeiting the Securities and current Coin of the
United States.
Article I Section 10: No State shall coin Money; emit Bills of
Credit; make any Thing but gold and silver Coin a Tender in Payment
of debts.
Such was the action of our Founders. Irredeemable paper money is
unconstitutional. Only the minting of coins is lawful.
Coinage Act of 1792
Our Second Congress (1791-1793) then implemented the Constitutional
requirements by passing the Coinage Act of April 2, 1792. It
established the U.S. Mint and defined and "regulated the coins of
the United States." (The complete Act can be found on the Internet
at: http://www.logoplex.com/shops/leaders/coinage1792.txt).
Black's Law Dictionary at the time defined "regulate" as meaning
"fix, establish, or control." The Act established or defined the
"dollar" as a weight of silver (371.25 grains (troy) of fine silver)
and then regulated the value of gold coins to it in a 15 to1 ratio,
that is, as 15 grains of silver to every grain of gold. The
regulation also included establishing the purity and the various
denominations.
Thus the Coinage Act gave the new nation three gold coins (the Eagle
or $10 gold piece, Half Eagle and Quarter Eagle); five silver coins
(the Dollar, Half Dollar, Quarter, Dime (originally spelled Disme),
Nickel (or half Disme); and two copper coins (the Cent and Half
Cent). This is Constitutional money. Moreover, the Act provided all
citizens access at the Mint to coin their gold, silver, and copper
(free coinage) and established any debasement of the coinage as a
capital offense!
Conclusion
We can now answer our question: What is a dollar? The "dollar of our
fathers" is a silver coin weighing almost one ounce. It was never to
be debased; it was never to be any weight less than 371.25 grains of
pure silver.
Today our "paper dollar" or Federal Reserve Note, once a silver and
gold certificate redeemable into "lawful" money before 1963, and
something our Founders hoped to banish from our nation, is an "IOU
Nothing." It is not redeemable into a fixed amount of silver or
gold, let alone the Constitutional amount. As a result it can be
reduced in value year by year by means of the printing presses. Our
20th century constantly-depreciating paper dollar has become a means
to big and bigger government, and to massive income and wealth
redistributive schemes - legal plundering - by our politicians,
contrary to Article I Section 8 of the Constitution.
Next spring, perhaps in May of 2000, the U.S. Mint will place into
circulation a new dollar coin. (See: www.usmint.gov) It will be
similar in size to the defunct Susan B. Anthony dollar coin but will
contain copper and nickel, yet appear to be a gold coin! Our
Founders, were they alive, would be undoubtly disappointed, perhaps
outraged. George Read of Delaware would likely view the new coin "as
alarming as the mark of the beast in Revelation." But Americans will
probably hail it as a beautiful, much-needed new coin.
Congressman Buffett understood what a Constitutional dollar was and
still is. Americans desperately need to know as well. That is why he
warned us in the strongest terms, "For if human liberty is to
survive in America, we must win the battle to restore honest money.
There is no more important challenge facing us than this issue - the
restoration of your freedom to secure gold (and silver) in exchange
for the fruits of your labors."
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