Honest Money vs. Dishonest Money



Do we need to understand how money works?  I’m not talking about the laws of personal finance and thrift.  I’m talking about our system of money and systems of money in general.  The common attitude seems to be indifference and ignorance.  I’ve always been astounded by this since so much of our daily routine is wrapped up in issues about working, providing for ourselves and others; and the almost universal desire to prosper and achieve a certain standard of living.  Perhaps part of the seeming indifference is a sort of capitulation to the ever-growing hectic pace of life and fear that any kind of serious inquiry into how our money does or should work would only take away from the precious free moments we have while offering nothing in return.  It would be highly ironic indeed if the “fear of receiving nothing for our efforts” were the reason we never took the time to understand how our money does and should work.

I intend to show that no other contemporary issue relating to our liberties and way of life are more important than this one.  Be warned that any effort to understand money and our current system of money and credit can be a very difficult and frustrating experience.  I’ve made many attempts in the past and given up on it.  But after deciding that I absolutely had to understand these things and praying for help I believe I understand it sufficiently to explain most of our current problems.  I also believe that I can explain why a classic or 100% gold standard is the most advanced, sophisticated, simple, and honest system of money possible.  I will argue for this standard from an economic position (using basic math, history and natural law), a constitutional position (using the Constitution), and a moral position (using the scriptures).  In the economic portion I will dispel a lot of the misconceptions about the gold standard and refute some of the more common objections to it.

The conclusion I’ve come to in my studies, so far, is that our current system of money is complicated and difficult to understand because there is a presumption that the system is sensible and honest.  It is not.  Confusion and frustration come as you continue to look for something that is not there.  It is a way to turn people into slaves without them realizing it.  The people who benefit from this dishonest system must either convince us not to look at it, or control what we see and think when we do look at it to keep us from recognizing the bondage it puts us in.  The good news is that honest money is so simple and straightforward that understanding the one can be the key to rejecting the other view.

Honest money is based in light and by “light” I mean simplicity, clarity, and confidence.  Our current system is based in darkness and by “darkness” I mean confusion, intentional hyper-complexity for the purpose of obfuscation.  It is its inherent darkness that makes it so difficult to understand.  The good news is that light always dispels darkness.  My hope is that an explanation of honest money will expose the corruption and wickedness of our current system and lay a principled foundation of understanding for replacing it with a system of honest money.


Understanding our how our money does work versus how it should work matters because it directly affects our property rights.  The right to property is the right that protects all other rights.  As our right to property is encroached we become less able to defend other rights and reclaim lost ones because more and more of our limited time and energy must be expended to provide less and less of the basic necessities.  Since we all work for money we must be certain that the money we earn represents the real value that we believe it does when we give up our irreplaceable time and energy for it, otherwise we are being robbed through fraud.  Without understanding how our money does and should work we cannot be certain of this and are at the mercy of those who do understand how our money works.  Our current system of money does not provide the value that a free market would require in exchange for our goods and services.  It forces us to give up what we would not otherwise give up and diminishes our ability to enjoy the full extent of our property and it does this at an ever-increasing rate.  The more we lose our property rights through this corrupt system the more we become the property of those who control it.  This is a sin (D&C 101:79).

NOTE:  Much could be said about our current system and many books have been written on the subject.  Since it is my purpose to spend most of my efforts focusing on honest money I will only cover enough to show why our current system is corrupt.  I will simply state things as they are and not take the time to back up those claims or get into the history of how all this happened.  It is a very interesting story that reads like a Greek tragedy.  For those interested in learning more here are a few recommendations to help you get started:

(The Money Masters:  How Banks Create the Worlds Money — directed by Bill Still)

  • This is the 15th most viewed documentary on youtube of all time.  It is nearly 3.5 hours long and very informative.  Although I do not agree with his solution to our problem, for reasons I’ll explain later in this paper, his explanation of the problem is accurate and the historical detail he provides is very rich and useful.

(The Creature from Jekyll Island:  A Second Look at the Federal Reserve — by G. Edward Griffin)

  • Nearly 600 pages and the most in depth book I was able to find on the subject.  The book is well researched and thorough.  The author also has a better understanding and explanation of how truly honest money would work, therefore his offered solution is superior to the one offered by Bill Still.


“Are you honest in your dealings with your fellow man?”

The corruption of our current money system is comprised of five elements:  Fiat Money, Legal Tender Laws, Debt, Fractional Reserve Lending, and Arbitrary Inflation.  The purpose of this corrupt system is to control and manipulate the money supply.  Those who control and manipulate the money supply can control and manipulate everybody who uses money.


The first step to taking over the money supply is to issue a currency that does not have to represent anything of value.  This is called fiat currency.  Fiat means, by decree.  In other words you simply declare something to be so and voila that magically makes it so.  When individuals do this we call them insane.  When governments do this reactions vary depending on an individual’s ability to think critically.  Governments decree that a particular currency is now worth so much relative to actual goods and services.  But, since government has no more power to change reality than individuals do, nobody is willing to give up anything of real value in exchange for it.  For a fiat currency to work people must accept it in exchange for goods and services of real value.  The solution is to threaten them and force them to take it using the police and military powers of government.  Normally this would be called extortion, but when government does this it is called legal tender laws.

Usually in a free market it takes a superior product or service to drive out an inferior product or service, but with money it is just the opposite.  When people are forced to accept lower quality money for their goods and services then they become motivated to force other people to accept it by spending only the lower quality money.   Bad money drives out the good money and this is called Gresham’s Law.  It is a law of human behavior that is based on the fact that we all want to receive greater value for our goods and services when we make economic exchanges.

To take over the money supply it is not necessary to outlaw other forms of money initially, simply introduce the worst form of money possible and force other people to accept it using a legal tender law and eventually you’ll be the only show in town.  At this point, if you haven’t already, you can secure your position by outlawing all other forms of currency or money.  This is another kind of legal tender law that is harsher and more severe than the first.  [The infamous “mark of the beast” spoken of in Revelations is nothing more than a very harsh legal tender law (see Rev. 13:16–17)].  Once it is in place then total control over the money supply is complete.  The important thing to remember about how to take over the money supply is that it all starts with fiat currency, or money by decree in conjunction with legal tender laws that are also by decree.  These monetary decrees always hurt people with the least amount of money the most, because they are the most dependent on the small amount that they have for its quality.  In light of these facts I find the following scripture in Isaiah applicable:

Woe unto them that decree unrighteous decrees, and that write grievousness which they have prescribed;

To turn aside the needy from judgment, and to take away the right from the poor of my people that widows may be their prey, and that they may rob the fatherless!  (Isaiah 10:1–2)


Most people as they begin to inquire earnestly into how our current money works are very alarmed to discover that nearly all of it (90%) or more (basically the entire money supply except what can be found in coins) is borrowed at interest from a private bank called the Federal Reserve.  Our government does not issue any of the money we use in everyday life (except for our coins).  The Federal Reserve, at the request of our government, issues all of this money.  Our government prints up bonds (think bondage) and then exchanges these for a quantity of Federal Reserve Notes (cash/currency) in any amount they desire at any given time.  The bonds received by the Fed require the government to pay back all the money the Fed gives them plus interest at a certain time.  Taxpayers, via the income tax, pay the interest on these bonds.  The primary purpose of the income tax is to pay the interest on these bonds.  The debt accrued under this system is never paid off and the only payments that the Fed ever receives are the interest payments from taxpayers.  When the time to redeem the bonds arrives (pay back the principle with interest) the government simply refinances the loan into a much larger loan to account for any new money desired as well as the principle and any remaining interest on the old loan.  A larger loan generally means larger interest payments that eventually translate into tax increases.  The important thing to keep in mind is that over time more and more of our taxes go to pay interest on the national debt, while less and less go to pay the actual expenses of government; even though the expenses of government are increasing.  Wars, social programs, and even more basic services of government are paid using borrowed money and then the taxes collected go to pay the interest on these borrowed funds.

Where did the Federal Reserve get all this money to loan out?  It simply created it out of nothing.  This is called fiat currency.  Our government granted a special and exclusive privilege to the Federal Reserve, under the Federal Reserve Act, that allows them to do this.  But it gets more insane than that.  This newly created money is then loaned out at interest.   Since they have the sole privilege of issuing our money it is impossible to pay back the debt because every dollar in existence was borrowed into existence carrying with it an interest bearing liability!  This means that the total debt will always be greater than the total money supply.  This problem, as bad as it is, is made even worse by banks ability to lend out more money than they actually have (called fractional reserve banking).  Like all bank loans, these debts carry additional interest making them, on the aggregate, mathematically impossible to pay off. The important thing to remember about all of this is that the only way for anybody to eliminate one debt is for an even greater debt to be incurred by someone else.

If you can understand everything I’ve just written, but it seems hard to believe and you still don’t get it because it just doesn’t make sense then, in the words of Congressman Ron Paul; “you understand it just fine.”  Our entire money system is based on debt.  In fact, our money is debt because practically all of it was borrowed into existence.  Although it is conceivable that you could avoid some of this trap simply by not going into any kind of debt and refusing to pay your income tax or other taxes (ignoring for the moment that choosing this route would create a host of other problems for you).  However, even if you could get away with all this you would still be in the tar pit with the rest of us because there is no escaping the biggest problem of all:  arbitrary inflation.


Inflation is simply an increase in the money supply.  Under an honest system of money you could and most likely still would have inflation as well as deflation, but it would not be artificial, man-made inflation that can never accurately predict what the demand for money will be.  The supply of money should always be determined by the demand for money.  Man-made inflation is arbitrary and violates this principle for the unjust gain of a few at the expense of the many.  It also does this at the risk of currency disintegration and the destruction of our entire economy.

Arbitrary inflation eliminates the control you have over the value of your money and puts that control into the hands of those who control the money supply.  Every increase in the money supply without a corresponding increase in actual wealth (measured in more hard goods and services) eventually decreases the buying power of each unit of currency proportionately, but it doesn’t happen all at once.  Everyone does not feel this loss of purchasing power evenly.  In fact, whoever has access to the newly created money first actually experiences a significant increase in buying power, because they did not have to give any time or effort in exchange for it.  The further down the line you are before having access to the newly created money the more diluted and weak it becomes.  The last people to receive this money are harmed the most.  These are usually the poor, the old, the widows and the fatherless.  The important thing to remember about arbitrary inflation is that it increases the buying power of those who control it at the expense of those who do not.  And that power is limited only to the amount that can be stolen from others.  In other words, the wealth destroying/stealing power of arbitrary inflation is unlimited.

Inherent in this corrupt system is a forest fire of debt and taxes that can only grow until there is nothing left to destroy.  The system itself makes it impossible for these twin dangers of liberty to be reversed or even restrained.  This is a mathematical certainty based on incontestable proof.  Any politician who thinks or promises otherwise is either ignorant or lying.  What will be the consequence of all this?  Reflecting on this very question of public debt and taxation, Thomas Jefferson had this to say:

I am not among those who fear the people.  They, and not the rich, are our dependence for continued freedom.  And to preserve their independence, we must not let our rulers load us with perpetual debt.  We must make our election between economy and liberty or profusion and servitude.  If we run into such debts as that we must be taxed in our meat and in our drink, in our labors and our amusements, for our callings and our creeds, as the people of England are, our people, like them, must come to labor sixteen hours in the twenty-four, [and] give the earnings of fifteen of these to the government for their debts and daily expenses… have no time to think, no means of calling the mismanagers to account; but be glad to obtain subsistence by hiring ourselves to rivet their chains on the necks of our fellow sufferers…  This example reads to us the salutary lesson that private fortunes are destroyed by public as well as by private extravagance.  And this is the tendency of all human governments.  A departure from principle in one instance becomes a precedent for a second, that second for a third, and so on, till the bulk of the society is reduced to be mere automatons of misery, to have no sensibilities left but for sinning and suffering.  Then begins indeed the bellum omnium in ommnia (the war of all against all), which some philosophers, observing [it] to be so general in this world, have mistaken…for the natural instead of the abusive state of man.  And the fore horse of this frightful team is public debt.  Taxation follows that, and in its train wretchedness and oppression (The Making of America, Skousen, p.395)

The earnest warning contained in Jefferson’s prose makes clear the choice we must make “between economy and liberty or profusion and servitude.”  To choose frugality, self-sufficiency and liberty we must have honest money.

Who is to blame for all this?  Although it is the government that inflates it is we the citizenry that determine who are rulers in government will be.  Politicians have learned that to get elected they must make promises.  This is fine until people start listening to and believing promises that are lies.  All that a tyrant must do to turn people into slaves is to promise those same people that he can give them whatever they want and get them to believe that he can do this by making somebody else pay for it.  It is the unchecked greed and covetousness of the many that gives power to the greed and covetousness of the few.  It is our own greed, covetousness and disregard for justice that blinds us to the false promises of power seekers and turns us into their slaves.  When every man seeks to oppress his neighbor (Isaiah 5:3) we will all fall into the very pit we were digging for others.  At bottom, inflation is a moral problem that, in a democratically elected republic, can be traced back to the people.  To a large extent, we have the government we deserve.  Only a moral people can enjoy the benefits of honest money.


Before making an economic argument for a classic gold standard it is important to understand what we mean by “economics.”  To give you an example of a lousy definition lets look at what a typical dictionary says:

The branch of social science that deals with the production and distribution and consumption of goods and services and their management

Perhaps a simpler definition would be the science of exchanges or the study of exchanges.  I should add:  between individuals.  The most important thing to remember about economics is that it studies a certain kind of human behavior, the kind of behavior we all exhibit when we go shopping, or selling, or working on something we intend to sell, or engage in any kind of trade with someone else.  Economic activity is human activity.

Also, before making an economic argument for the gold standard we should ask the question:  Who’s the expert?  How should we view the different economists who claim to be experts?  When they disagree, who is right?  Or, are they all wrong together?  In trying to answer these question it is helpful to understand some background into the different schools of economic thought that are most prevalent today.  There are at least three worthy of mention.

The first is the economic thought of John Maynard Keynes.  His thought is the most prevalent.  If you have a degree in economics or took a class in high school or college then this is the guy they crammed down your throat.  He believed in big government, deficit spending, public debt, and inflation.  He said these things were good and so people who like big government, debt, inflation, and all the rest like Keynes.  He validates the power grabs of many power seekers, so they promote him every chance they get.  Because of this, his ideas are the most widely known and believed among society at large.

The second school I want to mention is the Chicago School of economics, sometimes known as Monetarist school.  Its chief spokesman is Milton Friedman.  Generally the ideas that come from this school are much better than those promoted by Keynes, but they still promote ideas that have been proven false concerning money.  If you took a class or have a degree in economics then most likely these ideas were given to represent the “other side.”  At bottom they both believe in a certain amount of government intervention into the economy.  Government intervention into the economy equals forced exchanges.  Keynes believed in a lot of forced exchanges.  Friedman believed in less, but still believed in some.

The third school I’ll mention is the most important.  It is the Austrian School of economics.  Its chief spokesmen are Menger, Mises, Hayek, and Rothbard among others.  The reason this school is more important than the others is because they are the only ones who fully accept the implications that economic activity is human activity.  They desire to understand the science of how exchanges really take place between others without force or restraint.  To their thinking, any exchange that wasn’t completely 100% voluntary between the parties involved does not provide true insight into the understanding they seek.  To their mind any exchange that involved force or fraud was not really economics at all, but something else.  And any call for government (forceful) action by “economic experts” into the economy (other than to punish fraud) simply hinders our ability to achieve real economic understanding.

The reason we must talk about Keynes in this paper is because a lot of the misconceptions that people have regarding the gold standard are because of him, even though a lot of the people who have these misconceptions don’t know a lot about Keynes.  Keynesian thought is a lot like the ancient art of alchemy.  It was a pseudo-science that tried to turn lead into gold.  It was proven false and is no longer considered real science.  Like alchemy, the whole point and intent of Keynesian economic thought is to avoid and circumvent the natural laws that govern economic activity.  Because of this, it will always be ultimately useless in its ability to predict phenomena and therefore it cannot offer any useful suggestions and insights into how we should act.

Austrian economics, on the other hand, actually tries to understand things as they really are, and as they really will be, NOT as some individual or group of power seekers would want them.  Austrian economics acknowledges that there are natural laws that govern economic activity (i.e. the actions of men).  Although it’s not perfect, as a discipline it seeks to understand and apply these laws, not change or ignore them.


In addition to possessing integrity, understanding honest money requires at least two things:  A correct theory of value and correct knowledge of how money originates.


So exactly what is something worth?  How do you determine the value of the things you buy?  Some may say price equals value, but this is a mistake.  If I pay $5 for a hamburger and I value the $5 as much as the hamburger, then I am no better off after I’ve made the exchange.  In fact, if I view the value of my $5 and the offered hamburger as equal then I would have no motivation to go through the effort of making an exchange.  What would be the point?

As we think about these questions and consider why we buy the things we do, we discover that economic value is entirely personal and subjective.  It has always been this way and always will be.  The way we value things changes as our circumstances change.  Even if two people assign equal value to the same thing at the same time this coincidence does not change the fact that the value each person assigned was arrived at in a uniquely personal and subjective way.  A thirsty man will place greater value on a glass of water than a man who is not thirsty.  If I want to trade for something you have, I need something you value more. Trade occurs not because there is an equality of value between goods, but because there is a MUTUAL INEQUALITY of value. That is, I value what you have more and you value what I have more, so we become willing to exchange what we have for what we want. The total numbers of people who desire to trade at any given time are referred to as “the market,” and “market value” is simply an aggregate of all the individual and subjective values as they relate to any one commodity in a fixed amount.

Honest money requires an honest and free society where people allow each other to decide how much something is worth to him or herself without force or fraud.  In a free market some people will put greater or lesser value on a particular item or commodity than the overall “market value” will for the same item.  It is their right to do so.  We should never try to fix the “market value” because it is constantly changing based on peoples needs and desires.  It is hubris and foolishness to think that such a thing is even possible.  Nor should we force others to accept what the current “market value” is for their goods and services, because it may not reflect their value.  We should never fix economic values for others even if we choose to fix them for ourselves.  No matter how “fair” and “honest” government officials try to be when they issue fiat currency it always violates this principle.  Dishonest money ignores or rejects the right of individuals to determine for themselves the value of their own and others goods and services.  Dishonest money must, to a greater or lesser extent, arbitrarily fix and adjust economic values for all.  This is usually done through legal tender laws.


A correct knowledge of how money originates is essential to understanding honest money.  I am not talking about a historical knowledge of how money originated, but rather the general principle of how money would originate at anytime under any set of circumstances.

It is a historical fact that all money originated as a commodity that over time began to be valued more for its exchangeability than for its qualities as a mere commodity.  What we must know is could money have originated ANY OTHER WAY than as a commodity?  Is this possible?  The answer is no.  The reason is that before it (money) could be used as a medium of exchange it first had to be assigned a value relative to other commodities in the market place.  Money cannot simply appear on the scene out of nowhere with no introduction or explanation of value and then be accepted by everyone as a medium of exchange.  We wouldn’t know how to exchange it!  How can money be introduced or explained in terms of value without relating it to a desired commodity?  It cannot.

How then did such names as “dollar,” “franc,” “peso,” and “mark” originate and emerge in their own right as independent moneys?  The answer is that these names invariably originated as names for units of weight of particular money commodities (usually gold or silver).  The British pound sterling was originally just that:  a pound of silver.  “Dollar” originally applied to an ounce of silver. (The Case for a 100 Percent Gold Dollar by M.N. Rothbard, p.12)


Since money always originates as a commodity, any commodity has the potential to become used as money depending on the needs and demands of the market.  Honest money does not have to be gold or silver or any particular commodity or any particular combination.  The only requirement is that people voluntarily accept it in exchange for their goods and services.  For example:  If a farmer wants to issue bills of credit that guarantee to the bearer a certain amount of his crop, eggs, potatoes, milk, meat, whatever in exchange for the things he needs (fuel, seed, building materials, labor, etc.) he is free to do that.  People would be free to accept or reject his bills of credit, but if he had a good reputation and joined a co-op with other farmers and they formed a warehouse and a store that provided an even greater selection of commodities and finished goods, then people might be willing to trade their goods and services for these certificates realizing that they could use these certificates themselves or trade them to others for things not available at the farmers co-op.  Other co-ops or trade groups could develop and issue their own certificates for goods and services.

The previous example may not develop exactly as outlined in a free market, but the point is that people could adjust quickly to any system of money that they and the market desired.  Historically, market demand has put a greater emphasis on gold and silver, but where these things were scarce money still developed as other commodities.  The use of gold and silver in one area of the market did not at all hinder other parts of the market from choosing different forms of money.  This is a wonderful principle that provides tremendous flexibility and a nearly infinite possibility of opportunity by meeting the needs and desires of others.  This principle is called “free trade” and we all have a natural right to engage in it.

All money originates as honest money.  It becomes dishonest once it no longer represents an actual commodity.  For people to accept and trust dishonest money they must first see it as something detached and separated from actual goods and services.  Without this corruption of thought, dishonest money will never enjoy a high level of trust, even if it is forced on people through legal tender laws.


A classic gold standard will limit the amount of economic activity because gold is limited.

This is probably the most common misconception about a 100% gold standard.  There is zero evidence to support this.  “Economic activity” simply means the total number of exchanges or transactions taking place at any given time.  The fallacy lies in the belief that a limited supply of money necessitates a limited number of transactions.  This is not true.  Although gold is limited it can be divided an infinite number of ways.  Any supply of money can facilitate an infinite number of transactions.  If the supply of money increases while the total stock of real wealth stays the same or goes down then the amount of money necessary to complete a transaction simply increases.  If the supply of money decreases while the total stock of real wealth stays the same or goes up then the amount of money necessary to complete a transaction simply decreases.

The fact that gold is limited is the whole point for using it.  This eliminates arbitrary inflation.  So the fact that gold is limited is the solution, not the problem!

  • By the way, how do believers in the cult of fiat currency explain America’s prosperous and expanding economy for over a hundred years prior to leaving the gold standard?

A classic gold standard would require people to use gold and silver in their transactions because the money supply would be limited to gold.

As already noted previously, this would not be the case.  The only thing a classic gold standard requires is honesty in how money is represented through paper notes, tickets, claim checks, or other paper instruments.  This is why I use the term “honest money” more than I use the term “gold standard.”  The reason the term gold standard was so prevalent when it was practiced was because the market demand for gold as money was higher than for any other commodity.  Gold was usually more exchangeable than other forms of money and since other forms of money had to compete with gold, then gold became the money of choice where it was plentiful.  Where it was scarcer; silver, copper, beaver skins, bank notes or private bills of credit would appear in its place to facilitate trade.

A gold standard as honest money simply means no fractional reserve lending and no fiat currency.  It means that all forms of paper money and private bills of credit must be redeemable for 100% of whatever they make a claim for immediately upon demand by the bearer of the note.  Anyone issuing paper money or bills of credit that fail to do this will be guilty of fraud and punished according to the law.  A classic gold standard also means that everybody has the right to issue honest money in accord with market demand.  The free market would determine the money supply.  No government or banking cartel would have any control over the money supply and no legal tender laws would exist forcing others to accept any particular kind of money.  Each individual class of money would stand or fall on its own intrinsic merit, integrity, usefulness, flexibility and market demand.  The money with the greatest number of favorable qualities would receive the widest circulation.

Under a classic gold standard whoever owned all the gold would control the money supply.

It is true that under a gold standard there were wealthy and powerful individuals who tried to control the money supply by hoarding all the gold and refusing to spend it into circulation.  Being very wealthy they could sit back and wait longer than anybody else before they had to engage in trade to meet their needs.  Through this means they hoped to acquire even greater wealth with greater ease by waiting until even a small amount of gold could get them valuable commodities and lands. They calculated that the demand for gold would be high since its supply would be artificially limited.  But did this ever really work?

One can hoard gold to drive up its demand, but only to a point.  As we’ve seen, when gold is scarce people simply revert to silver and other kinds of money.  If people can get what they need and want without using gold, then even if gold is scarce it will not go up in value as money.  The reason being that the gold itself is no more useful as money when people are comfortable using silver, private bills of credit or other forms of money to get what they want.  In a free market the demand for money will simultaneously create the supply because people will negotiate, compromise, and innovate until a reliable and regular system of money becomes uniform.  For example:  In the early days of the Mormon pioneers in Utah, receipts for goods from the local Bishop’s store house would often circulate as money, both among Mormons and non-Mormons.  Even though the U.S. was on a gold standard at the time, gold was relatively scarce in Utah, at least at the beginning, and so other forms of money like this were developed.   The only way a “gold hoarding scheme” would work is if the people were required to use gold and all other forms of money were outlawed through a legal tender law.

Under a free market the ability to innovate and develop new forms of honest money are limitless, almost instant, and very flexible.  Under these conditions it is impossible for anyone or any group to control the money supply for all.  In fact, it is precisely because the “gold hoarding scheme” failed by those who tried it that the corrupt rich desired our current system under the Federal Reserve!  Only by using the powers of prostituted government can anybody gain control over the money supply.


The classic gold standard is the most sophisticated, simple and prosperous system of money available.  The reason it is superior to other proposed alternatives to our current system, such as those proposed by Bill Still in Money Masters, is because it solves the problem of how to regulate the money supply.  His proposal, along with every other that strays from the gold standard, advocates that the government issue all our currency and be the sole source of our money.  Even though his plan requires them to do this without charging interest, the government must still determine what the money supply should be.  The problem with this is that it requires an impossible economic calculation.  They must determine the correct money supply without knowing what the demand is.  To know the demand for money they would have to simultaneously know the needs and desires of every person participating in the market and how much of those needs and desires each person decides to meet for him or herself at any given time.  And they would have to know this all the time with all its constant changes and variations.  This is impossible for man and God himself does not govern in this way (D&C 93:30).

It is beyond the purpose of this paper to discuss in depth the problems that arise when the supply of money is either in excess of demand or deficient to meet it.  So I will simply say that too much money leads to inflation.  Not enough leads to recessions and depressions.  Either consequence leads to wealth destruction because individuals are no longer getting accurate information from the market on what decisions they should make to pursue their goals.  They make decisions based on faulty information.  Miscalculation breeds more miscalculation, and the miscalculations that started from the government become systemic.


There are three separate provisions in the Constitution that affect the issue of honest money.  The first, mentioned in Article I:  Section 8, is the right of Congress “to borrow money on the credit of the United States”.  Out of the three provisions affecting honest money this one is the trickiest.  To many this clause represents a defect in the Constitution.  The point is certainly debatable and Jefferson himself wished that an amendment could be passed to eliminate this power of Congress.  Why did the founders, who were so interested in personal liberty, include a provision that could be so dangerous to it?

The founders provided the Congress with the ability to borrow because they wanted to give the new government as many tools as possible to perform its functions properly.  They had just concluded a difficult and hard fought war. They wanted the new government to have more ability to function than the old one under like circumstances.  Since even the Articles of Confederation allowed the government to borrow and these articles were considered as insufficient in the powers they granted it is conceivable to see why they continued to include this power in the new Constitution.  The point of the Constitution was to broaden and strengthen federal power, not weaken it further.  But this does not mean that they were eager for our new government to use this power.   George Washington counseled that the best way for preserving public credit was to use it as sparingly as possible.

If we have a correct understanding of what real money is, then this provision becomes far less threatening to individual liberty.  When we realize that all real money is just another commodity that happens to be used more for purposes of exchange then actual use of the commodity itself then we can distinguish it from all forms of fiat currency.  No provision of the Constitution allows for the borrowing of fiat currency.

Provided we followed the Constitution as our founders intended and Congress found itself needing to borrow real money (most likely for a war or some other crisis), how would it work?  Thomas Jefferson had an ingenious answer to this question.  He admitted that during times of war the expense of the war may require more than what ordinary taxes could raise.  So, based on the fact that the expense of war will be borne by us all anyway, then the money to pay for it should be borrowed from the citizens, interest free, and not from a private bank.  Under his plan the federal government could issue treasury notes in whatever amount necessary to pay its expenses during a time of war.  A tax of comparable amount would be imposed to redeem the extra currency within a certain period of time.  This allows the government to raise the necessary funds quickly and pay back the loan gradually, when the war is over, avoiding any long-term inflation.  By promising to pay the holders of these notes back in gold or silver within 10 years or less Jefferson was confident that no legal tender law would be necessary for it to be accepted (See. Making of America, Skousen p.498).   Would these “treasury notes” be considered honest money?  The answer is yes for two reasons.  First, the notes would represent the commodity of gold or silver; only it would not be redeemable for such until the note expired.  Second, the notes themselves would represent all the facts of their redemption openly and people would not be forced to accept them.  If they wanted to pay their portion of war taxes some other way, then they would be free to do so.

The one major defect of the borrowing provision granted to Congress is that it does not require the borrowing to be restricted to times of war or national crisis.  Nor does it restrict the way Congress can borrow to that outlined by Jefferson.  They allowed ultimate flexibility to the Congress and counted on the people to choose wise administrators who would be sensible to the liberties of individuals in how this power was used.  We must concede that no matter how airtight the constitution is written it takes a moral people to enjoy and maintain honest money.

The next provision grants Congress the power “to coin money, regulate the value thereof, and of foreign coin, and fix the standards of weights and measures.” This power allows Congress to produce the national coin and prescribe its weight and purity or “value,” and specify the same with regard to foreign coin in terms of the national coin of the United States.  This provision, regardless of how some people have understood it, does not give to Congress the right to issue fiat or paper currency and assign it a value.  The phrase, “regulate the value thereof,” referred only to determining the purity or fineness and weight of the gold or silver coin that was to be issued by the Congress and to evaluate the same qualities in foreign coins.  This provision allows the federal government to issue only coins and not paper money.

Our founders were determined that we have honest money, but they did not feel any need to regulate its supply.  They were confident that private banks could fill the market demand for paper money backed by gold and silver.  Every bank would have the right to issue its own private notes based on its own stores of gold and silver.  Thus private bank notes would compete with other private bank notes based on the reputation of the bank issuing the notes.  The only role of government in this regard would be to regulate its weight and measure as well as to punish and discourage fraud. To ensure that everyone understood how important honest money was the Coinage Act of 1792 invoked the death penalty for anyone debasing the money.

The third provision in the Constitution affecting honest money was a restriction placed on the Sates as a condition for joining the Union under the new federal government.  “No State shall…coin money, emit bills of credit, make anything but gold and silver coin a tender in payment of debts, pass any…law impairing the obligation of contracts…” This restriction was a direct assault on the abuse of paper money through legal tender laws.  There are a couple of different ways of understanding this restriction based on how we read the word “tender.”  Both of them are useful.

One meaning that can be taken from this statement is that if the State wants to pass a legal tender law it can only apply to gold and silver.  In other words, if the state is going to force a creditor to take anything other than what he and the debtor have previously agreed to for elimination of the debt it MUST be gold and/or silver.  The state cannot require a creditor to give up his claim on a debtor for any other kind of payment than that previously agreed to or gold and silver.  This restriction does not require the State to make gold and silver a legal tender, only that if they have any ideas about engaging in legal tender foolishness, then it must respect only gold and silver.  Technically, if a State did pass a legal tender law with respect to gold and silver, forcing people to accept it from their debtors, then it is conceivable that this could impair the obligation of contracts.  If, for instance, I wanted apples in exchange for my eggs, and we had a contract that stated such, and you gave me gold instead, then, with these legal tender laws in place it would do me no good to try and sue you for breach of contract.  I would have to accept your gold instead of the apples.

Another meaning applies to the State itself and how it will retire its own debts.  This provision requires the State to pay its expenses in gold and silver.  Because of this we can see why, although not required to, the state may need to pass a legal tender law regarding gold and silver to ensure its gold and silver are accepted as payment for its debts. The founders felt that giving states the right to force others to accept gold or silver would not do any real damage to individual liberty, since historically the market has found gold and silver to be the most desirable and useful forms of money.  And this provision allowed them to be unequivocal in preventing states from being able to steal from their citizens through inflation schemes.  Such protection may not have been possible any other way.

The most important thing to keep in mind regarding this particular provision as it relates to honest money is that with the State being required to pay their debts in gold and silver they cannot be required to accept anything less from the federal government.  If the federal government violates its own principles, passes legal tender laws, and forces the States to accept something other than gold and silver then they are forced to pay their debts in unconstitutional money.  The only way for this provision to hold is for both the federal and state governments to stick to gold and silver.


Any study of American history at the time the Constitution was ratified and particularly the notes of the Constitutional convention will reveal that the founders had no desire to give government the power to issue paper money, with or without legal tender laws.  When the issue came up Gouverneur Morris, James Wilson, John Langdon, George Read, Pierce Butler, and Oliver Ellsworth all spoke out against it.  Ellsworth said the power to issue paper money was not necessary and that such a power may do harm, but never good.  Langdon said he’d “rather reject the whole plan than retain the three words ‘and emit bills.’”  Admittedly there where some members of the convention that wanted to make the emission of bills of credit an available resource to the congress if an emergency, such as war, should make them necessary.  But in the end the words “and emit bills” was left out.  The one thing they were all in agreement with, even those who thought the power to emit such bills may be necessary, was that no legal tender law should require anyone to accept such bills under any circumstances.  The entire recorded discussion can be read on pages 470-471 in the 1987 Norton paperback edition/Bicentennial Edition of Notes of the Debates in the Federal Convention of 1787 reported by James Madison.

Unfortunately, the issue of paper money did not go away because of the debatable defect in the Constitution already mentioned.  As stated previously, the Constitution gave Congress the power to borrow.  With this in mind, immediately after the Constitution was ratified, Alexander Hamilton went about to try and establish a national bank that would be able to issue paper currency and use these to make loans to the federal government.  Since the Constitution restricted the government’s ability to issue paper money, but gave them the power to borrow; Hamilton thought to get around this by having a bank loan the government paper money instead. (This is actually far worse than giving the government the power to issue paper money, because now a private bank can do it and they are just as likely to abuse paper money as the government.  Except now they can charge interest as well).  To the dismay of Jefferson, Madison, and others, Hamilton was successful. But eventually the banks charter was not renewed and the issue of whether the United States would and should have a central bank became a recurring conflict at various times throughout our history.


Since many supporters of central banking and fiat money justify their schemes as constitutional, based on Hamilton’s position, we must delve into Hamilton a little further.

With regard to Alexander Hamilton, who was also at the convention, it is astonishing to note that he did not speak up at all during the previously mentioned discussion.  Are we to assume that someone who was so eager to establish a central bank had no opinion on the issue of paper money? All we have from Hamilton, as far as the notes go, is his mysterious silence.  In fact he has almost no recorded comments at all by Madison during the entire course of the debates.  He is mentioned once at the beginning making a plea before the convention that they adopt a form of government identical to the British (with King and all).  Madison did not record his actual remarks.  All Madison says is that Hamilton’s speech was admired by all and agreed to by none.  Once the Constitution is completed Hamilton springs to life again and becomes one of its most ardent supporters during the ratification process.  His arguments for the Constitution in the Federalist Papers are brilliant and should be admired by all.  But once again this appears rather curious since he was so much more in favor of a British form and system of government.  Why was he so eager to defend something he had almost no active role in developing?

At this point I can only offer my opinion.  It is a fact that Hamilton wanted a central bank.  You cannot have a central bank with the authority to issue paper money for the whole country without a central government.  Although “central government” is not synonymous with “federal government.”  “Federal government” was all that Hamilton was going to get and he wouldn’t have gotten that if the States did not accept the Constitution.  This is why he was so vigorous in defending and promoting it during the ratification process.  He adopted the method so many power seekers use:  Secure whatever power you can.  Over time you can stretch it through influence, manipulation, interpretations, etc., to meet your ambitions.  Getting the Constitution ratified was phase one for Hamilton, getting the new congress to approve a national bank was phase two.  He would use a reinterpretation of the “coin money and regulate the value thereof” clause as well as the clause that gives congress the power to borrow, as a pretext for authority.

Hamilton believed that a national debt would be a national blessing and I’ve heard people justify government debt because of this.  However, just because he believed this does not make him right.  Nor can we be sure that he was sincere.  (After all he personally benefitted as one of the founders of the new bank).  I will not venture any further into postulating what Hamilton’s motives were for setting up a private central bank.  But for those who truly want to make a constitutional case for fiat currency and private central banks with congressional approval of monopoly status to control the money supply, why should Hamilton be given so much preferential treatment over the other founders and over the original understanding of the Constitution itself?  He was just one man and prone to miscalculation.  (Just ask Aaron Burr).

Regarding the national debt as a national blessing, Jefferson had this to say:

As the doctrine is that a public debt is a public blessing, so they [the supporters of state debt assumption] think a perpetual one is a perpetual blessing, and therefore wish to make it so large that we can never pay it off.

At the time we were funding our national debt, we heard much about ‘a public debt being a public blessing’; that the stock representing it was a creation of active capital for the ailment of commerce, manufactures, and agriculture.  This paradox was well adapted to the minds of believers in dreams…  If the debt which the banking companies owe be a blessing to anybody, it is to themselves alone, who are realizing a solid interest of 8 or 10 percent on it.  As to the public, these companies have banished all our gold and silver medium, which before their institution we had without interest, which never could have perished in our hands, in the hour of war; instead of which they have given us to hundred million of froth and bubble, on which we are to pay them heavy interest until it shall vanish into air…  The truth is that capital may be produced by industry, and accumulated by economy; but jugglers only will propose to create it by legerdemain tricks with paper (The Making of America, Skousen, p.394)

The purpose of the Constitution was to protect rights and perpetuate liberty, not enslave us to a system of money that ensures perpetual debt.  It is conceivable that the ability to borrow is a blessing, but to believe that the necessity of doing so and incurring a debt is also a blessing is a gross error.  Borrowing under any circumstances, no matter how little, no matter how temporary, involves risks and dangers and to do so when our need is urgent can be fatal.  The system of honest money advocated in our Constitution encourages thrift, savings, prudence and every virtue that tends to prevent the need for borrowing in the first place.


Surely this is the simplest argument to make in supporting a 100% gold standard.  We should be honest in our dealings with others.  An accurate representation of what we are giving up to the other person in return for what we are getting in any exchange is required.  The Lord commanded the Israelites of old:

Ye shall do no unrighteousness in judgment, in meteyard, in weight, or measure.

Just balances, just weights, a just ephah, and a just hin, shall ye have:  I am the Lord your God, which brought you out of the land of Egypt. (Lev. 19:35–36)

Thou shalt not have in thy bag divers weights, a great and a small.

Thou shat not have in thine house divers measures, a great and a small

But thou shat have a perfect and just weight, a perfect and just measure shalt thou have:  that thy days may be lengthened in the land which the Lord thy God giveth thee.

For all that do such things, and all that do unrighteously, are an abomination unto the Lord thy God. (Deut. 25: 13–16)

In addition to these verses there are at least 4 more specific references in the book of Proverbs to the use of just weights and measures in conducting trade with others.  A “floating,” “fluctuating,” fiat currency does not meet the required qualifications found in these verses for engaging in honest trade.

In addition to commanding the Israelites to be honest in their dealings with others the Lord forbade them to exact usury from each other.  Usury can mean merely interest charges or very high, excessive interest charges.  What do we call interest charges that are calculated so as to make them impossible to pay off?  Is it honest and moral to intentionally seek to bring others into bondage?  Honest money allows individuals in debt to pay their debts honestly through hard work and enterprise.  With honest money each individual retains his personal power and right to add to the money supply if his personal situation demands it.  This way, we do not have to rely on others to improve our situation.  Only a system completely free of any legal tender laws and where the right to trade and enter into contracts and covenants with others can qualify as a moral system of money.  The classic gold standard meets these qualifications and should be embraced and supported by all honest people.


The problems of money and economics are human problems and all human problems have spiritual solutions.  At bottom, the problems of dishonest money are those of fraud and force.  The “fraud” of dishonest money commences the moment it becomes detached from any kind of commodity or claims to represent more than it actually does.  The “force” must follow in the form of legal tender laws.  These things violate human agency and bring with them every destructive consequence.  Like so many other difficult and complex human issues, when we cut to the core we see that all the problems result from force or fraud, and that the required solution always begins with respecting the agency of others.  May we respect the agency of others by choosing honest money and enjoy the liberty and prosperity that will surely follow.

Image: Tax CreditsCC BY 2.0


  1. Fantastic post! I have read all of the above-quoted works, but still loved reading every line–Liberty is a subject to me that never dulls. If I may, add two tiny details to your argument: The legal tender laws are only applicable as far as taxes are concerned, i.e. dollars (in the u.S) must be used to pay taxes, but there is no law on the books that ‘contracts and payments must be in such and such money’…they just circumvent that annoying fact by targeting users of other commodities for fraud, terrorism, ect.. Oh. And no court will actually uphold the terms of a contract if it is denominated in gold, silver or other precious metal money. Of course to discourage their use. So, since people ‘have’ to pay their taxes above all else, that immediately makes the fiat dollars the most demanded “commodity”, and the money of choice.
    The other was I was really looking forward to an explanation (so often left out of the gold-as-money argument!) of the elasticity of the prices of goods relative to the quantity of money. You really only alluded to such an effect.:( I know, I’m a dork. But thanks again for all of the obvious hard work you put into this piece. Can’t wait for the inevitable disagreeing comments from people who can’t trust their fellow men enough to utilise their agency to incorporate sound money into society!

    1. Thanks for your comments. I certainly agree that liberty is a subject that never dulls. I’m sorry I wasn’t able to cover every angle in the article. It is a tricky subject and I wanted to keep it as simple as possible. The truth is I’m still learning myself. The main thing I hope people get from this article is that every individual has a natural right to “issue their own money,” whether it’s gold or whatever; (a truth that did not occur to me until working on this article). You seem to get that. Hopefully the idea spreads.

    2. Aaron, I like your points, about legal tender, taxes, contracts, and fraud discrimination. I just want to explode the notion that US laws are not unfavorable to non-dollar contracts. You are correct that there is no law explicitly prohibiting contracts in any form of money (except maybe if you count cocaine, hehe). The economic reality, however, is that there are laws from which comes an effective prevention of the use of non-legal tender. The payment of taxes is just one small factor that encourages fiat use at the discouragement of other, more honest monies. In fact you cited one of the biggest legal encumberements to alternative monies, which is that no US court will uphold or enforce any contracts not demoninated in US dollars. This *is* a direct result of legal tender laws on the books, which basically declare that no money will be rendered tenderable by the courts except US dollars. Contracts have become no contracts at all, but mere line items in the laundering of arbitrary inflation. There is no interest in upholding obligations in the courts, the only interest is in the use of their money, as far as “contracts” are scantly recognizable as such.

      You _can_ use other monies in your arrangements, but you must have either great faith in the other parties intent to repay or liquidate all arrangements synchronously. The monetary situation is crafted to make such arrangements too rare to be common, and common is a prerequisite of any money, hence any individual’s ability to make such exchanges has been extinguished before it began.

      For example, I bought a nice used Cannon DSLR camera one Christmas. I lobbied the idea of payment in silver to the seller. The idea was so foreign to him (not _common_) that he only nervously chuckled a negative response to the effect of “probably not”. Had I taken him to numerous websites and stock tickers on the value of the silver, and offered a 10%, even 20% premium, he likely still would have lacked the confidence in such an arrangement to accept it without considerable thought and research for his own sake, an effort far beyond the marginal benefits of a simple camera sale. The easy, “safe”, way is to accept the known money. The irony being that such is the very cancerous danger that will be the eventual end of all such exchanges.

      In the end, I simply hope the exposure to the mere suggestion of a silver sale will pique such a novel curiosity that he may at some future exchange (most likely not with myself, alas) be open or even keen on a silver exchange. I wish I had more occasions to plant such seeds.

      1. Absolutely right! I too have dreamt of the day when we as a society and individuals could use honest money indiscriminately. I even went as far as to design, bottom-up, a free, honest specie bank, for popular use. One thing deterred me: Taxes. Yes, as the tax system exists, the use of specie is likened to investment activity, and so taxed. Therefore any money that operated solely on specie would have an automatic 10-15% tax on either side of the transaction. Not too conducive for a money, which has to enjoy nearly effortless acceptance and convenience to be viable. Keep preachin’ that gospel, Brother!

  2. I’m please to see some of us are trying to understand and searching for truth about our monitory systems. There is a lot of information and some good thought provoking argument here but I think that Mr. Petersen is overcomplicating the possible solutions. If anyone who reads this has not seen Bill Still’s “THE SECRET OF OZ” they should do so and pay particular attention to the proposed solutions he presents.
    We do have some very good examples of what can be done to bring things back into balance. Listen to what he says about “Tally Sticks” and consider that we need honest men to regulate a fairly simple system rather than try to figure out every little posible nuance of our economy. Trade will regulate itsself if we deal one with another honestly, so the key seems to be returning to a state of integrity and decency rather than what kind of monitory system or medium of exchange we use.

    ANY medium of exchange we use will not overcome our state of enslavement to those that seek to control us.

    1. “…and consider that we need honest men to regulate a fairly simple system…”

      Why do we need one group of men regulating a system (simple or not) for others?

      My argument is that we can and should regulate ourselves (i.e. each individual regulating himself by being honest in his dealings). This is all that is necessary for an economy to function. I don’t see this as “overcomplicated,” but just the reverse.

      I’ve watched Bill Still’s “The Secret of Oz” several times (I own it). I actually like his proposal for paying off the debt, and I have no problem with his proposed solution if it does not include a legal tender law requiring me to accept a particular kind of money. But he talks repeatedly about the state having the right to control and regulate the money supply. This is where I disagree with him. The only thing that should control the money supply should be the money demand. How exactly is the state (or anybody else) supposed to figure out the demand for money? The beauty and simplicity of what I’m suggesting does not require this. All I have to figure out is what my demand for money is and act accordingly. Everyone else will do the same and “the market” and “society” will take care of itself when each individual is taking care of themselves.

      “Trade will regulate itsself if we deal one with another honestly…”

      Agreed, but this contradicts your earlier statement about “needing honest men to regulate a fairly simple system [for others]…”

      “ANY medium of exchange we use will not overcome our state of enslavement to those that seek to control us.”

      You are right if the focus is only on a particular medium of exchange (i.e. gold, silver, or whatever). The monetary freedom we seek lies not in a particular medium of exchange but in the absence of legal tender laws and state regulations. This is why I prefer the term “honest money” to “the gold standard.” People get hung up on the word “gold” and think that a classic gold standard requires the use of gold. It does not.

      Thanks for your comments!

  3. Hey Tremain,

    Great article! The Aaron Burr reference made me laugh out loud. I mentioned that you should submit this on the Alt-market website. However, you may want to scrub the LDS scripture references to appeal to a larger crowd. For this topic, you can still get the point across just fine using the KJV Bible. Well researched and thought out.

    1. I already sent Brandon Smith an email, but I’ve not heard back from him. So we’ll just have to wait and see. Thanks for your encouragement!

    2. I already sent Brandon Smith an email, but I’ve not heard back from him. So we’ll just have to wait and see.

  4. Tremain,

    Great article–very informative.

    I understand the importance of honest money (such as commodity based money) and the crippling effect of fiat money. However, unfortunately your article didn’t cover what I was most looking for–in our current situation, how do we go back to honest money? What steps should we take, in roughly what order? Seems like it’s a delicate situation; if we switch back overnight, our economy would probably crash–anyone with savings or investments in lending money would suddenly lose everything they worked for, and anyone with debt suddenly wouldn’t have to pay it back… So how do we move back to honest money while still maintaining order?

    1. Great question. I had a lengthy musing with my brother once about not this point, but kind of the reverse. If (or when) our economy crashes down from this “delicate situation”, it will be our readiness to pick up an alternative currency quickly and flexibly that will most gracefully and swiftly remedy such a catastrophe.

      IOW, the question isn’t how do we make a transition without crashing, but rather how do we make the transition from a crash least troublesome. If in the process of such steps and preparations, we are able to avert the crash altogether, all the better!

    2. This is a great question, and you’re not the only one who has asked it. The thing we have to constantly keep in mind when we are talking about economic activity is that we are dealing with humans. How much of human behavior is predictable? The more common the situation the more easy it will be to predict (in my opinion). Much of our current situation with regard to our monetary and political situation is so unprecedented that any answer offered will include a certain amount of conjecture and speculation.

      The best way to approach the problem and avoid a crash (if that is still possible) is to begin by eliminating all legal tender laws. People will still use federal reserve notes because we’re so used to them, but by not being forced to accept them other forms of money would begin to circulate and people could start accumulating higher quality money. Eventually old fiat currencies would disappear. Fiat currencies cannot exist without the “fiat.”

      Your concern: “–anyone with savings or investments in lending money would suddenly lose everything they worked for, and anyone with debt suddenly wouldn’t have to pay it back…”

      We must remember that these very problems are ALREADY occurring, but most people are simply not aware of it. The crash that we all dread will simply make apparent to everyone what only a few where previously aware of. The sooner people can withdraw from this corrupt system and begin participating in an honest one the less severe and shorter any collapse of the corrupt system will be felt. It all begins with the elimination of legal tender laws. People must be free to trade “for” whatever they want “with” whatever other people want. As these exchanges are made freely and honestly then people quickly discover that their ability to produce is greater than their personal consumption needs. We will all experience greater prosperity.

  5. My question is regarding fractional reserve banking. I can see the evil of dishonest money, and the other four elements you list are definitely dishonest, but I don’t see the problem with fractional reserve banking. If one person wants to store their gold in a warehouse and pay storage fees, that should be their right. I would rather store it in a bank that makes commercial loans and pays me interest. What is fraudulent about that?

    1. The only thing (IMO) that is fraudulent about fractional reserve banking is the promises (contractual agreements) that are made and not kept.

      If you make interest on your bank deposits, then absolutely the bank should be able to lend that money out in order to make something from it to pay you that interest. But the terms of such an arrangement should be clear and understood. I remember as a kid being aware of such things – like withdrawal limits and penalties. These are part of the “your money is lent out” arrangement. It is NOT all available for immediate withdrawal on demand. Now days all deposits are treated as if they really are available on demand, but there is no possible way such arrangements can be kept for any appreciable amount of people withdrawing a large portion of their deposits.

      In fact, there is no possible way for these fractional reserve banks to meet their normal daily withdrawal ebbs and flows, because they’ve lent out soooo much more than they’ve “promised” to keep. They have somewhere around 10% available as they’re claiming, to you, the account holder, 100% availability of your funds at any moment. This *is* fraudulent.

      That’s where the federal reserve comes in. Every time a bank runs short of funds for what was withdrawn that day (and they’ve agreed to meet any amount of withdrawals for anybody and everybody’s [checking] deposits up to 100%) and could not on their own furnish the funds for said withdrawals, they turn around and borrow funds from the federal reserve to pad the difference. The federal reserve which gets all it’s gravy from government (taxpayer) subsidy. So in effect, our taxes are subsidizing the ability of banks to be irresponsible with our money and never able to fulfill their agreements with us, and when they DO fail (and they do regularly) they wave their hands and say “it’s all right, I have some of your hard earned tax money to give you back instead!” It’s all very transparent to the one withdrawing, but that is exactly what goes on.

      1. If you want to store your money at a bank and you have an agreement with the bank that allows them to loan out your money and charge interest so that you both earn interest, then that is your right. However, this is not “fractional” reserve lending. This would be “full” reserve lending. Fractional reserve lending is dishonest because the bank is lending out more money than it actually has. This is only possible when people accept bank notes redeemable for gold (or some other commodity) instead of the commodity itself. For a bank note to be honest the demands of that note must be met the instant the bearer of the note presents it to the institution that issued the note in the first place. When a bank engages in “fractional” reserve lending they only keep a fraction of the commodity on hand (usually silver or gold) to meet the actual demand of all the notes they have loaned out. This makes it impossible to redeem all the notes at any given time, which makes what is written on the note a lie. The rationalization is usually something like: “yeah, but that hardly ever happens.” My reply to that is: “So what, it could happen and that’s a big risk to the people holding those notes. These people are most likely counting on those notes to fulfill their needs and obligations. They’ve given up something real and tangible in the form of good, services, labor, time, etc. What they receive in exchange should be represented honestly. If the bank wants to give them a “fractional reserve note” then they should explain the risk and the note should not say “payable upon demand,” but rather “redeemable upon demand if the banker still has some gold or silver or something useful left, otherwise your out of luck.” If people want to accept that risk then that is up to them, but the money must be represented honestly for it to qualify as honest money. And if they do accept such a shaky note they are not likely to get anybody else to accept it, therefore it would likely not be very useful as money.

  6. There are currently 62 different currencies in America, one of the oldest being the Ithaca Hour, which supposedly represents the value of one hour of unskilled labor. But the secret combination running our government will never voluntarily relinquish the Federal Reserve System because it allows them to buy the loyalty of our politicians, and it facilitates the laundering of narco profits on Wall Street. Catherine Austin Fitts, former assistant secretary of HUD in the Pappa Bush administration, discovered that approximately 30% of all money invested on Wall Street by the big banks and investment houses is narco profits, mostly from the sale of Columbian cocaine. So the only way we will ever return to sound money is as an eventual outcome of the coming economic collapse, and/or enough of us deciding to follow Jefferson’s advice by discontinuing our “contributions” until the liars, thieves, and murderers in our nations capital are forced to once more respect and abide by the Constitution.

  7. I am certainly a friend of sound money but you have made some errors in Constitutional Law. You are on the right track but Constitutionally speaking we were never on a gold standard. We deal in unit’s called “Dollars”.

    What Is A “Dollar”?


    The question “What is a ‘dollar’?” may seem trivial. Everyone knows what a “dollar” is – or, at least almost everyone thinks he does. In fact, however, very few people could correctly define a “dollar.” And even fewer know why a correct definition is vital to their continued economic and political well-being.


    1. Why is a correct definition of the term “dollar” important?

    The United States has a highly advanced free-market economy. In a free- market economy, the prices of almost all goods and services are stated in units of money. Under present law – and, as will be described below, from the very beginnings of this country – “United States money is expressed in dollars * * * .”1 Moreover, all “United States coins and currency (including Federal Reserve Notes * * *) are legal tender for all debts, public charges, taxes and dues.”2 Thus, all “coins and currency (including Federal Reserve notes * * * )” that are “expressed in dollars” are both money and legal tender. For this reason, accurately defining the noun “dollar” is mandatory, in order to know what is supposedly the official “Money” of the United States and what constitutes “legal tender for all debts, public charges. taxes and dues.”3

    2. Do the present monetary statutes intelligibly define the “dollar'”?

    Unfortunately, the present monetary statutes do not define the “dollar” in an intelligible fashion.

    a. Federal Reserve Notes. Most people associate the noun “dollar” with the Federal Reserve Note (“FRN”) “dollar bill,” engraved with the portrait of President George Washington. This association is mistaken.

    No statute defines – or ever has defined – the “one dollar” FRN as the “dollar,” or even as a species of “dollar.” Moreover, the United States Code provides that FRNs “shall be redeemed in lawful money on demand at the Treasury Department of the United States * * * or at any Federal Reserve bank.”4 Thus, FRNs are not themselves “lawful money” – otherwise, they would not be “redeemable in lawful money.” And if FRNs are not even “lawful money,” it is inconceivable that they are somehow “dollars,” the very units in which all “United States money is expressed.”5

    People are confused on this point because of the insidious manner in which FRNs “evolved” – actually, degenerated is a more appropriate verb – from the late 1920s until today. FRNs of Series 1928 through Series 1950E carried the obligation “The United States of America will pay to the bearer on demand [some number of] dollars.” Prior to 1934, the notes carried the inscription “Redeemable in gold on demand at the United States Treasury, or in gold or lawful money at any Federal Reserve Bank.” After 1934, the notes carried the inscription “this note * * * is redeemable in lawful money at the United States Treasury, or at any Federal Reserve Bank” (post-1934). Starting with Series 1963, the words “will pay to the bearer on demand” no longer appear; and each FRN simply states a particular denomination in “dollars.”

    With and after Series 1963, the promise of redemption also vanished from the face of each note.6 Thus, on their faces FRNs became, in the apt description of banking expert John Exter, an “I.O.U. Nothing” currency. This change in the mere language printed on FRNs could not transform their legal character, however. If FRNs were not “dollars” when they explicitly promised to pay in gold or “lawful money,” they did not magically become “dollars” when they stopped explicitly promising to pay in anything at all.7

    b. United States coins. The situation with coinage is more complex, but equally (if not more) confusing. The United States Code provides for three different types of coinage denominated in “dollars”: namely, base- metallic coinage, gold coinage, and silver coinage.

    (1) The base-metallic coinage consists of “a dollar coin,” weighing “8.1 grams,” “a half dollar coin,” weighing “11.34 grams”; “a quarter coin,” weighing “5.67 grams”: and “a dime coin,” weighing “2.268 grams.”8 All of these coins are composed of copper and nickel.9 The weights of the dime, the quarter, and the half dollar are in the correct arithmetical proportions, the one to each of the others.10 But the “dollar” is disproportionately light (or the other coins disproportionately heavy). In this series of base metallic coins, then, the questions naturally arise: Is the “dollar” a cupro-nickel coin weighing “8.1 grams”? Or is it two cupro- nickel coins (or four or ten coins) collectively weighing 22.68 grams? Or is it both? Or is it neither, but something else altogether, to which the weights of these coins are irrelevant?

    (2) Similarly, the gold coinage consists of “[a] fifty dollar gold coin” that “weighs 33.931 grams, and contains one troy ounce of fine gold”; “[a] twenty-five dollar gold coin” that “contains one-half ounce of fine gold”; “[a] ten dollar gold coin” that “contains one fourth ounce of fine gold”; and “[a] five dollar gold coin” that “contains one tenth ounce of fine gold.”11 The “fifty dollar,” “twenty-five dollar,” and “five dollar” coins are in the correct arithmetical proportions each to the others. But the “ten dollar” coin is not. Therefore, is a “dollar” one-fiftieth or one-fortieth of an ounce of gold? Or both? Or neither?

    And what is the logical, economic, or other relationship between a “dollar” that contains “8.1 grams” of copper and nickel, and a “dollar” that consists of 0.679 grams of gold alloy?12

    (3) Finally, the silver coinage consists of a coin that is inscribed “One Dollar,” weighs “31.103 grams,” and is supposed to contain one ounce of .”999 fine silver.”13

    What is the rational relationship between this “dollar” of “31.103 grams” of “.999 fine silver,” a “dollar” containing 0.679 grams of gold alloy, and a “dollar” containing “8.1 grams” of base metals? Obviously, these are not the amounts of the metals that exchange against each other in the free market – that is, the different weights of different metals do not reflect equivalent purchasing powers. So, on what theory are each of these disparate weights, and purchasing powers, equally “dollars”?

    c. Currency of “equal purchasing power” The United States Code provides no answer to this perplexing question. Indeed, it mandates that the question should not even be capable of being asked. For the Code commands that “the Secretary [of the Treasury] shall redeem gold certificates owned by the Federal reserve banks at times and in amounts the Secretary decides are necessary to maintain the equal purchasing power of each kind of United States currency.14

    One need be no expert in currency transactions to know that a “fifty-dollar” gold coin has significantly more purchasing power than a “fifty-dollar” FRN or than fifty cupro-nickel “dollars,” and that a “one-dollar” silver coin has significantly more purchasing power than a “one-dollar” FRN or one cupro-nickel “dollar.” Thus, one need be no expert in administrative law to realize that the Secretary of the Treasury has defaulted on his obligation to keep allforms of “United States currency” at parity with each other – that is, to maintain a “dollar” of the same purchasing-power, whether it be composed of gold, silver, or base metals.

    The Secretary’s default cannot be traced to a lack of power to perform his duty. For example,

    “With the approval of the President, the Secretary of the Treasury may – (A) buy and sell gold in the way, in amounts, at rates, and on conditions the Secretary considers most advantageous to the public interest; and (B) buy the gold with any direct obligations of the United States Government or United States coins and currency authorized by law * * *.”15

    “The Secretary may buy silver mined from natural deposits in the United States that is brought to a United States mint or assay office within one year after the month in which the ore from which it is derived was mined.”16
    “The Secretary may sell or use Government silver to mint coins * * * . The Secretary shall sell silver under conditions the Secretary considers appropriate for at least $1.292929292 a fine troy ounce.”17
    “Except to the extent authorized in regulations the Secretary of the Treasury prescribes with the approval of the President, the Secretary may not redeem United States currency (including Federal reserve notes * * *) in gold. * * * When redemption in gold is authorized, the redemption may be made only in gold bullion bearing the stamp of a United States mint or assay office in an amount equal at the time of redemption to the currency presented for redemption.”18
    Thus, the United States Code simply presents another unanswered question: “Why has the Secretary of the Treasury failed ‘to maintain the equal purchasing power of each kind of United States currency’?”

    In sum, the present monetary statutes of the United States do not define the noun “dollar” in an unique way. Instead of monetary law – which, by hypothesis, requires clearly defined terms and rational relationships among those terms – the country’s present monetary code smacks of political psychosis – in which completely different things have the same name, things unequal to each other are treated as equivalent, and things that should have the same characteristics (e.g., “equal purchasing power[s]”) are quite different.

    3. What do American history and the Constitution identify as the “dollar”?

    Reference to history clears away the confusion of present-day politics, by showing beyond cavil that the “dollar” is a specific coin, containing 371.25 grains (troy) of fine silver, and nothing else.

    a. The “dollar” in the Constitution. Both Article 1, Section 9, Clause 1 of and the Seventh Amendment to the Constitution refer explicitly to the “dollar” – in the one case, permitting “a Tax or duty * * * not exceeding ten dollars for each Person” the States saw fit “to admit” prior to 1808; and, in the other, guaranteeing trial by jury “[i]n suits at common law, where the value in controversy shall exceed twenty dollars.” The Constitution does not define this “dollar.” But, in the late 1700s, no explicit definition was necessary: Everyone conversant with political and economic affairs knew that the word imported the silver Spanish milled dollar.

    Indeed, had not such an understanding been catholic, powerful contending forces might never have agreed to support the Constitution at all. For example, the traditional interpretation of Article 1, Section 9, Clause 1 is that it elliptically refers to the slave-trade, and represents a compromise between pro- and anti-slavery forces that was vital to ratification of the Constitution.19 Self-evidently, those in the pro-slavery faction would never have accepted the “Tax or duty” phrase unless they already knew that the “dollar” identified as the measure of the “Tax” had a fixed value, and what its value was. Otherwise, by monetary manipulation aimed at increasing the purchasing-power of the “dollar,” anti-slavery forces in Congress might have eliminated the slave-trade altogether.

    Similarly, the proponents of the fundamental right to jury-trial in the Seventh Amendment would never have accepted the “dollar”-limitation on jury- trials unless they already knew that the “dollar” had a fixed value, and what its value was. Otherwise, monetary manipulation might have eliminated common-law juries altogether. Yet both these groups also were aware of the doctrine that, if Congress had discretion to change the value of the unit of money, there could be no legal limits to the changes it might make.20 Therefore, their support of these provisions inferentially establishes what a literal reading of them straightforwardly suggests: to wit, that the noun “dollar” refers, not to a mere name applicable to whatever Congress whimsically might decide thereafter to call a “dollar,” but instead to a particular coin so familiar in American experience as to be beyond political transmogrification.

    An interpretation of the term “dollar” as signifying merely the label the Constitution gives to whatever Congress decides to make the unit of money, if consistently applied to other undefined terms in the document, would render the Constitution nonsensical. For example, the noun “Year” appears repetitively in Article I – particularly in Section 2, Clause 1 (“The House of Representatives shall be composed of Members chosen every second Year”), and Section 3, Clause I (“The Senate of the United States shall be composed of two Senators from each State, chosen by the Legislature thereof, for six Years”).

    Self-evidently, the Framers used this term with the presumption that everyone would implicitly understand it to mean the time the earth actually requires for one complete revolution around the sun – rather than a mere empty shorthand for a unit of time within the discretion of Congress to adopt or change. Yet, if the word “dollar” need have no fixed, historically ascertainable meaning, neither need the word “Year.” The principle of constitutional interpretation is precisely the same in both cases. And if the noun “Year” need have no meaning more fixed than the noun “dollar” does in present-day monetary statutes (as discussed above), then Congress could enact laws “redefining” the “Year” so as to extend, for instance, the terms of the House and Senate to ten, twenty, one hundred, or any other number of earthly revolutions.

    Of course, Congress may, with constitutional propriety, appoint astronomers, physicists, and other qualified experts to determine with scientific precision what the “Year” actually is. Congress lacks authority, however, to decide for itself what the “Year” ought to be, or to declare the “Year” to be whatever Congress may arbitrarily desire from time to time. Analogously, Congress may, with constitutional propriety, appoint economists, monetary historians, and other experts to determine with clinometric accuracy what the “dollar” actually was in the late 1700s. In fact, this is what Congress did do, under both the Articles of Confederation and the Constitution (as described below). Congress has no authority, however, to decide for itself what the “dollar” ought to be.

    Besides constitutional history and logic, economic analysis and history support an interpretation of the noun “dollar” as referring to a specific thing the character of which was an ascertainable historical fact that Congress was obliged to determine, rather than as constituting merely a political label that Congress could assign to whatever it deemed expedient. The nominalistic view that would treat the term “dollar” as simply a convenient, historically vacuous term for whatever Congress chooses to declare to be “money,” and set up as the “unit of value,” is incapable of answering the question: “What is an abstract ‘unit of value’?,” and passes over in silence the question: “Before ratification of the Constitution, was the ‘dollar’ something that it ceased to be thereafter?”

    Economically, of course, “abstract” (or “objective”) value does not exist, in monetary matters or elsewhere. In general, the notion that value is objective is “[a]n inveterate fallacy”; and the allied concept that value is measurable in terms of some definedly fixed unit is a “spurious idea.” Simply put, “[t]here is no method available to construct a unit of value.” More specifically, “money is not a standard for the measurement of prices; it is a medium whose exchange ratio varies in the same way * * * in which the mutual exchange ratios of the vendible commodities and services vary.” Furthermore, money can never arise ex nihilo. “The acceptance of anew kind of money presupposes that the thing in question already has, previous exchange value on account of the services it can render directly to consumption or production.”21 In short, no governmental edict can make something with no previously existing purchasing power either a “unit of value,” or “money” in the economic sense.

    Prior to ratification of the Constitution, no one conversant with economics and commercial practices conceived of monetary values as abstractions. Rather, “money” was generally synonymous with known weights of the precious metals, gold and silver, and (to a lesser degree) the base metals, such as copper. In particular, Anglo-American monetary history records that merchants traditionally tendered and accepted coins, the standard monetary instruments of the times, not by tale without consideration of those coins’ qualities. but only as pieces of precious metal of specific weights and fineness.

    Where commercial practice accepted payment of coins by tale, it was always with the definite belief that those coins’ stamps assured them to be of the correct weights and usual fineness for their types. Absent grounds supporting this assumption, merchants regularly resorted to weighing and chemical analyses. Thus, commercial practice always insisted that the “value” of coins was not their face-values as abstract governmental tokens, but only their market-values as pieces of actual metal. And whenever circumstances indicated that a stamp no longer reflected a coin’s physical content, merchants ceased relying on the official monetary “value,” and substituted their own system for measuring the coin’s market-worth in precious metal.

    From an early day, the law applicable to America conformed to this age- old commercial understanding. Queen Anne’s Proclamation of 1704, for example, spoke not of abstract values, but of “the value of * * * coins which usually pass in payment in our said plantations [in America], according to their weight, and the assays made of them in our mint,” and specifically referred to the “Sevil, Pillar, or Mexico pieces of eight” (various forms of Spanish silver dollars) as having “the full weight of seventeen penny-weight and an half” – thereby recognizing that the value” of a coin lay in its “weight” and “assay” according to a fixed standard, or “full weight.”22

    Thus, at the time of ratification of the Constitution, no person with any understanding of law and monetary affairs would have attributed to the noun “dollar” a meaning other than (for example): “a silver coin with a value of such-and-so grains of precious metal when at full weight.”23

    b. Adoption of the “dollar” as the unit of money prior to ratification of the Constitution. The actions of the Continental Congress itself prove that the foregoing analysis is correct.

    The Founding Fathers did not need explicitly to adopt the “dollar” as the national unit of money or to define that noun in the Constitution – because the Continental Congress had already performed that task.

    I. Use of the dollar as a standard coin and monetary unit did not begin with the Continental Congress, however. Monetary historians generally first associate the dollar with one Count Schlick, who began striking such silver coins in 1519 in Joachim’s Thai, Bavaria. Then called “Schlickten thalers” or “Joachimsthalers,” the coins became known simply as “thalers,” which transliterated into “dollars.” Interestingly, the American Colonies did not adopt the dollar from England, but from Spain. Under that country’s monetary reforms of 1497, the silver real became the Spanish money-unit, or unit of account. A new coin consisting of eight reales also appeared.

    Variously known as pesos, duros, piezas de a ocho (“pieces of eight”), or Spanish dollars (because of their similarity in weight and fineness to the thaler), the coins quickly achieved predominance in financial markets of the New World because of Spain’s then-important commercial and political position.24 Indeed, by 1704, the “pieces of eight” had in fact become a unit of account of the Colonies, as Queen Anne’s Proclamation of 1704 recognized, when it decreed that all other current foreign silver coins “stand regulated, according to their weight and fineness, according and in proportion to the rate before limited and set for the pieces of eight of Sevil, Pillar, and Mexico.”25

    By the War of Independence, the Spanish dollar was, for all practical purposes, rapidly becoming the monetary unit of the American people as a matter of economics. Not surprisingly, the Continental Congress first used, and then took formal steps to adopt, that dollar as the nation’s standard of value. On 22 May 1776, a Congressional committee reported on “the value of the several species of gold and silver coins current in these colonies, and the proportions they ought to bear to Spanish milled dollars.” And on 2 September of that year, a further committee-report undertook to “declar[e] the precise weight and fineness of the * * * Spanish milled dollar * * * now becoming the Money-Unit or common measure of other coins in these states and to “explai[n] the principles and establish the rules by which * * * the said common measure shall be applied to other coins * * * in order to estimate their comparative values.”26

    Meanwhile, Congress and its agents were carefully exploring the basis of, and possible structures for, a national monetary-system. In his letter to Congress of 15 January 1782, Robert Morris, Superintendent of the Office of Finance, commented that, “[a]lthough most nations have coined copper, yet that metal is so impure, that it has never been considered as constituting the money standard. This is affixed to the two precious metals [i.e., silver and gold], because they alone will admit of having their intrinsic value precisely ascertained.” “Arguments are unnecessary to shew that the scale by which every thing is to be measured ought to be as fixed as the nature of things will permit,” wrote Morris, concluding that”[t]here can be no doubt therefore that our money standard ought to be affixed to silver.” Although Morris personally favored creating an entirely new standard coin, he recognized that “[t]he various coins which have circulated in America, have undergone different changes in their value, so that there is hardly any which can be considered as a general standard, unless it be Spanish dollars.”27

    In a plan first published on 24 July 1784, Thomas Jefferson strongly concurred that “[t]he Spanish dollar seems to fulfill all * * * conditions” applicable to “fixing the unit of money.” “Taking into our view all money transactions, great and small,” he ventured, “I question if a common measure, of more convenient size than the dollar, could be proposed.” “The unit, or dollar,” he wrote equating the one with the other, “is a known coin, and the most familiar of all to the minds of people. It is already adopted from south to north: has identified our currency, and therefore happily offers itself as an unit already introduced. Our public debt, our requisitions and their apportionments, have given it actual and long possession of the place of unit.”28

    Yet Jefferson recognized the necessity of certain practical steps to adopt the dollar as the “Money-Unit”: “If we determine that a dollar shall be our unit, we must then say with precision what a dollar is. This coin as struck at different times, of different weight and fineness, is of different values.” This, though, Jefferson saw as a problem for economic science to solve through objective measurement, not as a matter for politics to dictate according to arbitrary policy. “If the dollars circulating among us be of every date equal, we should examine the quantity of pure metal in each, and from them form an average for our unit. This is a work proper to be committed to the mathematicians as well as merchants, and which should be decided on actual and accurate experiments.” “The proportion between the value of gold and silver,” he added, “is a mercantile problem altogether.” Given “[t]he quantity of fine silver which shall constitute the unit,” and “the proportion of the value of gold to that of silver,” Jefferson went on, “a table should be formed * * * classing the several foreign coins according to their fineness, declaring the worth * * * in each class, and that they should be lawful tenders at those rates, if not clipped or otherwise diminished.”29

    Concluding, he encouraged Congress:

    To appoint proper persons to assay and examine, with the utmost accuracy practicable, the Spanish milled dollars of different dates in circulation with us.
    To assay and examine in like manner the fineness of all the other coins which may be found in circulation within these states.
    To appoint also proper persons to enquire what are the proportions between the values in fine gold and fine silver, at the markets of the several countries with which we are or probably may be connected in commerce; and what would be a proper proportion here, having regard to the average of their values at those markets * * * .
    To prepare an ordinance for establishing the unit of money within these states * * * on the * * * principle[:]
    That the money-unit of these states shall be equal in value to Spanish milled dollar, containing so much fine silver as the assay * * * shall shew to be contained on an average in dollars of the several dates in circulation with us.30
    Jefferson’s cogent and straightforward analysis of the problem of selecting and defining a unit of money should be compared – contrasted, really – with the present mishmash of monetary statutes that leave the definition of the “dollar” in a state of hopeless confusion today.

    First, for Jefferson, the “unit” was to be “a known coin” that was “familiar” to the people because it was “already adopted” in the marketplace. None of the coins that Congress now authorizes – be it of silver, gold, or base metals – was (before its authorization) a “known coin” “familiar” to anyone in the United States, even in terms of its content of metal.
    Second, having settled on the “dollar” as the “unit,” for Jefferson the problem of fixing the standard “unit” reduced to determining “what a dollar is” in terms of “the quantity of pure metal” [i.e., silver] contained in “an average” coin that actually circulated in the marketplace. Thus, for Jefferson it was not the prerogative of Congress to create the “dollar” ex nihilo, but the responsibility of Congress to determine what the “dollar” in common use among the people actually was. Today’s Congress assumes that it may declare anything a “dollar,” and then impose that ersatz, political pseudo- “dollar” on the people whether they want it or not.
    Third, for Jefferson, to settle the relative values of silver and gold coins was also a matter of studying actual economic relationships in the marketplace: to wit, “the proportion of the value of gold to that of silver” in the various coins in circulation. For today’s Congress, economic relationships between silver and gold are irrelevant. And, of course, there is no rational economic relationship between the coins of base metals and the coins of precious metals, either. Moreover, even within the sets of gold and base-metallic coins themselves, rational economic relationships are irrelevant to Congress!
    Obviously, Jefferson’s free-market, scientific approach is a world apart from the arbitrary way in which Congress has set up the mutually incompatible and internally irrational sets of silver, gold, and base- metallic coins that exist today.

    On 13 May 1785, a committee presented Congress with “Propositions Respecting the Coinage of Gold, Silver, and Copper,” which referred to the “Plan which proposes that the Money Unit be One Dollar.” “In favor of this Plan,” the committee reported, is “that a Dollar, the proposed Unit, has long been in general Use. Its Value is familiar. This accords with the national mode of keeping Accounts.” Later, the report referred to the “dollar” as the “Money of Account,” thereby equating that term with the term “Money-Unit.”31

    On 6 July 1785, Congress unanimously “Resolved, That the money unit of the United States be one dollar.”32 Almost another year elapsed until, on 8 April 1786, the Board of Treasury reported to Congress on the establishment of a mint:

    Congress by their Act of the 6th July last resolved, that the Money Unit of the United States should be a Dollar, but did not determine what number of grains of Fine Silver should constitute the Dollar.
    We have concluded that Congress by their Act aforesaid, intended the common Dollars that are Current in the United States, and we have made our calculations accordingly.
    * * * * *

    The Money Unit or Dollar will contain three hundred and seventy five grains and sixty four hundredths of a Grain of fine Silver. A Dollar containing this number of Grains of fine Silver, will be worth as much as the New Spanish Dollars.33
    Shortly thereafter, on 8 August 1787, Congress adopted this standard as “the money Unit of the United States.34

    Again, stark and striking is the contrast between how the committee of the Continental Congress – composed of the Founding Fathers – approached the problem of fixing the unit of money, and how the modern Congress deals with the same matter. The committee determined that an American”dollar” should contain a known, unchangeable weight of silver, and would be “worth as much as the New Spanish Dollars” because it actually contained this weight of precious metal, not simply because Congress said it was a “dollar.” Today’s Congress, however, assumes that the “dollar” need have no rational relationship to a weight of silver, of gold, or even of base metals. Thus, today’s Congress assumes that the value of money has nothing to do with the substance that composes a coin, but is merely the product of a political decree. In today’s Washington, D.C., might not only makes right, but also creates economic value!

    Many of the same people who served in the Continental Congress participated in the Federal Convention that drafted the Constitution. And even those members of the Convention who had not served in the Continental Congress knew what that Congress had done. Therefore, when the Convention used the noun “dollar” in Article 1, Section 9. Clause I of the Constitution, it was with the tacit understanding of all the history surrounding that noun. Thus, the lesson here is clear: The constitutional “dollar,” the constitutional “Money-Unit” or “Money of Account” of the United States, is an historically determinate, fixed weight of fine silver in the form of a coin – in essence, a unit of measure – adopted, not created, first by the American market and then by the Continental Congress well before ratification of the Constitution.

    c. Adoption of the “dollar” as the unit of money immediately after the ratification of the Constitution. Upon ratification of the Constitution. Congress and the Executive began work on a national monetary system.

    (1) Alexander Hamilton’s Report on the Mint. On 28 January 1791, Secretary of the Treasury Alexander Hamilton presented to Congress his Report on the Subject of a Mint. “A plan for an establishment of this nature,” he wrote, “involves a great variety of considerations intricate, nice, and important.” Indeed, the erection of a mint was essential to the continued integrity of the nation’s coinage:

    The dollar originally contemplated in the money transactions of this country [i.e., the silver Spanish milled dollar], by successive diminutions of its weight and fineness [in the Spanish mints], has sustained a depreciation of five per cent, and yet the new dollar has a currency in all payments in place of the old, with scarcely any attention to the difference between them. The operation of this in depreciating the value of property depending upon past contracts, and * * * of all other property, is apparent. Nor can it require argument to prove that a nation ought not to suffer the value of the property of its citizens to fluctuate with the fluctuations of a foreign mint, or to change with the changes in the regulations of a foreign sovereign. This, nevertheless, is the condition of one which, having no coins of its own, adopts with implicit confidence those of other countries.
    * * * * *

    It was with great reason, therefore, that the attention of Congress, under the late Confederation, was repeatedly drawn to the establishment of a mint; and it is with equal reason that the subject has been resumed * * * .35
    To form “a right judgment of what ought to be done,” Hamilton posed two questions, “lst. What ought to be the nature of the money unit of the United States?,” and “2d. What the proportion between gold and silver, if coins of both metals are to be established?”36

    Recognizing that “[a] pre-requisite to determining with propriety what ought to be the money-unit of the United States” is “to form as accurate an idea as the nature of the case will admit, of what it actually is,” Hamilton referred to the resolutions of the Continental Congress on the subject, noted that they had resulted in “no formal regulation on the point,” and concluded that “usage and practice * * * indicate the dollar as best entitled to that character.” As to “what kind of dollar ought to be understood; or, * * * what precise quantity of fine silver,” he surveyed the various pieces in circulation over the years, and recommended that “[t]he actual dollar in common circulation has * * * a much better claim to be regarded as the actual money unit.”37

    Hamilton recognized that “[t]he suggestions and proceedings hitherto have had for object the annexing of [the title of ‘money unit’] emphatically to the silver dollar.” Yet, his personal view was that “a preference ought to be given to neither of the metals for the money unit” – at least “[i]f each of them be as valid as the other in payments to any amount.” He realized, of course, that adopting equivalent, interchangeable “money units” of both silver and gold would pose practical problems “from the fluctuations in the relative [market-]value of the metals”; but he suggested that this could be overcome “if care be taken to regulate the proportion between them with an eye to their average commercial value.”38

    Turning to “the proportion which ought to subsist between [gold and silver] in the coins,” Hamilton proposed two “option[s]”: namely, “[t]o approach as nearly as can be ascertained, the * * * average proportion * * * in * * the commercial world”; or “[t]o retain that which now exists in the United States.” The first alternative “requir[ing] better materials than are possessed, or than could be obtained without an inconvenient delay,” he recommended instead the domestic market-ratio of “about as 1 to 15.” “There can hardly be a better rule in any country for the legal than the market proportion,” he explained, “if this can be supposed to have been produced by the free and steady course of commercial principles. The presumption in such a case is that each metal finds its true level, according to its intrinsic utility, in the general system of money operation.”39

    In the course of determining the method by which the government would defray the expenses of coining silver and gold brought to the mint byprivate parties (the system of “free coinage”40), Hamilton restated the traditional policy against monetary debasement in emphatic terms:

    [R]aising the denomination of the coin [is] a measure which has been disapproved by the wisest men in the nations in which it has been practiced, and condemned by the rest of the world. To declare that a less weight of gold or silver shall pass for the same sum, which before represented a greater weight, or to ordain that the same weight shall pass for a greater sum, are things substantially of one nature. The consequence of either of them is to degrade the money unit; obliging creditors to receive less than their just dues, and depreciating property of every kind.
    * * * * *

    The quantity of gold and silver in the national coins, corresponding with a given sum, cannot be made less than heretofore without disturbing the balance of intrinsic value, and making every acre of land, as well as every bushel of wheat, of less actual worth than in time past. * * *
    [A debasement would cause] a rise of prices proportioned to the diminution of the intrinsic value of the coins. This might be looked for in every enlightened commercial country; but, perhaps, in none with greater certainty than in this; because in none are men less liable to be the dupes of sounds; in none has authority so little resource for substituting names for things.
    A general revolution in prices * * * could not fail to distract the ideas of the community, and would be apt to breed discontents as well among those who live on the income of their money as among the poorer classes of the people, to whom the necessaries of life would * * * become dearer.
    Among the evils attendant on such an operation are these: creditors, both of the public and of individuals would lose a part of their property, public and private credits would receive a wound; the effective revenues of the Government would be diminished. There is scarcely any point, in the economy of national affairs, of greater moment than the uniform preservation of the intrinsic value of the money unit. On this the security and steady value of property essentially depend.41
    In sum, Hamilton recommended two equivalent statutory money-units based on weight, a gold coin of 24.75 grains of fine gold, and a silver coin of 371.25 grains of fine silver. “[N]othing better,” he wrote, “can be done * * * than to pursue the track marked out by the resolution [of the Continental Congress] of the 8th of August, 1786.”42

    Hamilton’s Report thus restated the traditional monetary principles of American law, as the Continental Congress applied them, and as the Federal Convention embodied them in the Constitution. Congress, Hamilton urged, should adopt silver and gold as the nation’s monetary substances, at an exchange-ratio representing the average proportionate value between the metals in the domestic free market. Congress should continue on “the track marked out” under the Articles of Confederation and the Constitution by employing the “dollar” as the “money-unit,” or “money of account” – a silver “dollar” derived directly from the Spanish milled dollar, and a new gold coin containing a silver-“dollar’s” worth of gold. The government should provide “free coinage” of both silver and gold for the public. And it should guarantee the preservation of the intrinsic value of the coinage.

    Of enduring importance is Hamilton’s admonition that “[t]here is scarcely any point, in the economy of national affairs, of greater moment than the uniform preservation of the intrinsic value of the money unit. On this the security and steady value of property essentially depend” Apparently, however, although Hamilton’s statue stands before the Department of the Treasury, his words have been forgotten in contemporary Washington, D.C.

    (2) The Coinage Act of 1792. Little more than a year after Hamilton’s Report, Congress enacted its principles into law. The Coinage Act of 179243 initiated a new statutory system embodying the constitutional principles that Hamilton had reaffirmed. First, Congress followed consistent American common-law tradition by continuing the use of silver, gold, and copper as “Money.”44 Second, it reiterated the judgment of the Continental Congress and the Constitution that “the money of account of the United States shall be expressed in dollars or units,”45 and defined the “DOLLARS OR UNITS” in terms of weight, as “of the value of a Spanish milled dollar as the same is now current, and to contain three hundred and seventy-one grains and four sixteenth parts of a grain of pure * * * silver.”46

    Recognizing that to adopt Hamilton’s suggestion of a “gold dollar” would cause confusion and require constant governmental supervision to “regulate * * * Value[s],”47 Congress created no such coin, instead mandating the coinage of “EAGLES,” “each to be of the value of ten dollars or units,”48 that is, of the weight of fine gold equivalent in the marketplace to 3,712.50 grains of fine silver. Following Hamilton’s recommendation, though, it fixed “the proportional value of gold to silver in all coins which shall by law be current as money within the United States” at “fifteen to one, according to quantity in weight, of pure gold or pure silver.”49 And it made “all the gold and silver coins * * * issued from the * * * mint * * * a lawful tender in all payments whatsoever, those of full weight according to the respective values [established in the Act], and those of less than full weight at values proportional to their respective weights.”50

    Thus, Congress did not establish a “gold dollar,” or enact a “gold standard,” as the popular misconception holds. For example, the Encyclopaedia Britannica erroneously reports that the “dollar * * * was defined in the Coinage Act of 1792 as either 24.75 gr. (troy) of fine gold or 371.25 gr. (troy) of fine silver.”51 The Act did no such thing. It explicitly defined the “dollar” as a fixed weight of silver, and “regulate[d] the Value” of gold coins according to this standard unit (or money of account) and the market exchange-ratio between the two metals. Nowhere did the Act refer to a “gold dollar,” only to various gold coins of other names that it valued in “dollars.”52

    Congress also provided free coinage “for any person or persons,”53 and affixed the penalty of death for the crime of debasing the coinage.54

    Thus did the first Congress – which knew what the Constitution meant if any Congress ever did – rigorously apply the Constitution’s mandate: It determined as a fact “the value of a Spanish milled dollar as the same is now current,” and thereby permanently fixed the constitutional standard of value, or “money of account,” as a unit of weight consisting of 371.25 grains of fine silver in the form of coin. It coined American “dollars” as “Money,” containing this intrinsic value of silver. It coined American “eagles” as “Money,” containing a fixed weight of pure gold – and regulate[d]” their “Value” at so-many “dollars” by comparing their intrinsic value in (weight of) fine gold to the market-equivalent of silver. It gave both the silver and gold coins legal-tender character for their intrinsic values in all payments. It opened the mint to free coinage of the precious metals. And it outlawed debasement of the nation’s new “Money.”

    The handiwork of the statesmen who drafted and approved these measures is more than a merely coincidental embodiment of the traditional principles of Anglo-American common law, the experiences of the Continental Congress, and the explicit provisions of the Constitution. Rather, taking into account the vicissitudes of the time, the Coinage Act of 1792 perfectly reflects what the common law and the law under the Articles of Confederation had been before ratification of the Constitution, and what the constitutional law was then and remains today.55 It is a definitive interpretation, elaboration, and application of the Constitution – with, in some of its sections at least, a clearly constitutional character of its own: in particular, Sections 9 (definition of the “dollar”), 14-15 (free coinage of silver and gold), 16 (legal-tender character for silver and gold coins),56 and 20 (“dollar” identified as the “money of account”).57

    Most importantly, Congress’ determination of the proper weight of the “dollar” is, for all practical purposes today, a statement of constitutional law unalterable except by amendment of the Constitution itself. For, at the remove of almost two centuries, to check the accuracy of the conclusion that 371.25 grains (troy) of fine silver best represents an average weight of the various Spanish milled “dollars” in circulation in the United States in 1792 is most probably impossible.


    In the light of this history, the present monetary provisions of the United States Code demonstrate that official Washington, D.C., has no conception of what a “dollar” really is. The reason for this self-imposed ignorance is obvious. By reducing the “dollar” to a political abstraction, the national government has empowered itself to engage in limitless debasement (depreciation in purchasing power) of the currency. A “dollar” that contains – and must perforce of the Constitution contain – 371.25 grains of fine silver cannot be reduced in value below the market exchange value of silver for other commodities. A pseudo-“dollar” that contains no fixed amount of any particular substance per “dollar” can be reduced in value infinitely. As debasement of currency amounts to a hidden tax, Congress’ silent refusal to recognize the constitutional “dollar” amounts to the usurpation of an unlimited power to tax through manipulation of the monetary system. Thus, modern “money” has become a means for the total confiscation of private property by the government.

    More ominously, this scheme of surreptitious confiscation remains hidden from the vast majority of Americans, who seem blissfully unconcerned about the issue most important to the soundness of the country’s monetary system: namely, the character of the monetary unit. One need not be overly pessimistic to predict that misuse by politicians of the fictional, constantly depreciating pseudo-“dollar” to expropriate unsuspecting citizens will continue until an economic crisis finally shocks an increasingly impoverished American people out of its slumber, and forces the people to ask the simple question: “What is a ‘dollar’?” At that time, the answer will be no different from what it is today, and has been since 1704 – but the opportunity to use that knowledge to prevent a catastrophe may be long gone.

    Therefore, those few who do know what a “dollar” is, and why that definition is important, need to inform as many of their fellow-citizens as possible. If time has not already run out for re-education of the American people in this area, it is racing towards the historic exit. Under these circumstances, silence by the friends of sound money and honest government is not “golden,” but potentially fatal.


    Excerpts from the Coinage Act of 1792
    Act of 2 April 1792, 1 Statutes at Large 246
    [246] CHAPTER XVI. – An Act establishing a Mint, and regulating the Coins of the United States.

    SECTION 1. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, and it is hereby enacted and declared, That a mint for the purpose of a national coinage be, and the same is established * * * .

    * * * * *

    [248] SEC. 9. And be it further enacted, That there shall be from time to time struck and coined at the said mint, coins of gold, silver, and copper, of the following denominations, values and descriptions, viz., EAGLES – each to be of the value of ten dollars or units, and to contain two hundred and forty-seven grains and four eights of a grain of pure, or two hundred and seventy grains of standard gold. HALF EAGLES – each to be of the value of five dollars, and to contain one hundred and twenty-three grains and six eights of a grain of pure, or one hundred and thirty five grains of standard gold.

    QUARTER EAGLES – each of be of the value of two dollars and a half dollar, and to contain sixty-one grains and seven eights of a grain of pure, or sixtyseven grains and four eights of a grain of standard gold. DOLLARS or UNITS – each to be of the value of a Spanish milled dollar as the same is now current, and to contain three hundred and seventy one grains and four sixteenth parts of a grain of pure, or four hundred and sixteen grains of standard silver. HALF DOLLARS – each to be of half the value of the dollar or unit, and to contain one hundred and eighty-five grains and ten sixteenth parts of a grain of pure, or two hundred and eight grains of standard silver.

    QUARTER DOLLAR – each to be of one fourth the value of the dollar or unit, and to contain ninety-two grains and thirteen sixteenth parts of a grain of pure, or one hundred and four grains of standard silver. DISMES – each to be of the value of one tenth of a dollar or unit, and to contain thirty-seven grains and two sixteenth parts of a grain of pure, or forty-one grains and two sixteenth parts of a grain of standard silver. HALF DISMES – each to be of the value of one twentieth of a dollar, and to contain eighteen grains and nine sixteenth parts of a grain of pure, or twenty grains and four fifth parts of a grain of standard silver. CENTS each to be of the value of the one hundredth part of a dollar, and to contain eleven penny-weights of copper. HALF CENTS – each to be of the value of half a cent, and to contain five penny-weights and a half penny-weight of copper.

    SEC. 12. And be it further enacted, That the proportional value of gold to silver in all coins which shall by law be current as money within [249] the United States, shall be as fifteen to one, according to quantity in weight, of pure gold or pure silver; that is to say, every fifteen pounds weight of pure silver shall be of equal value in all payments, with one pound weight of pure gold, and so in proportion as to any greater or less quantities of the respective metals.

    SEC. 12. And be it further enacted, That the standard for all gold coins of the United States shall be eleven parts fine to one part alloy; and accordingly that eleven parts in twelve of the entire weight of each of the said coins shall consist of pure gold, and the remaining one twelfth part of alloy; and the said alloy shall be composed of silver and copper, in such proportions not exceeding one half silver as shall be found convenient; to be regulated by the director of the mint, for the time being, with the approbation of the President of the United States, until further provision shall be made by law. * * *

    SEC. 13. And be it further enacted, That the standard for all silver coins of the United States, shall be one thousand four hundred and eighty-five parts fine to one hundred and seventy-nine parts alloy; and accordingly that one thousand four hundred and eighty-five parts in one thousand six hundred and sixty-four parts of the entire weight of each of the said coins shall consist of pure silver, and the remaining one hundred and seventy- nine parts of alloy; which alloy shall be wholly of copper.

    SEC. 14. And be it further enacted, That it shall be lawful for any person or persons to bring to the said mint gold and silver bullion, in order to their being coined; and that the bullion so brought shall be there assayed and coined as speedily as may be after the receipt thereof, and that free of expense to the person or persons by whom the same shall have been brought. And as soon as the said bullion shall have been coined, the person or persons by whom the same shall have been delivered, shall upon demand receive in lieu thereof coins of the same species of bullion which shall have been delivered, weight for weight, of the pure gold or pure silver therein contained: Provided nevertheless, That it shall be at the mutual option of the party or parties bringing such bullion, and of the director of the said mint, to make an immediate exchange of coins for standard bullion, with a deduction of one half per cent, from the weight of the pure gold, or pure silver contained in the said bullion, as an indemnification to the mint for the time which will necessarily be required for coining the said bullion, and for the advance which shall have been so made in coins.

    * * * * *

    [250] SEC. 16. And be it further enacted, That all the gold and silver coins which shall have been struck at, and issued from the said mint, shall be a lawful tender in all payments whatsoever, those of full weight according to the respective values herein before described, and those of less than full weight at values proportional to their respective weights.

    SEC. 17. And be it further enacted, That it shall be the duty of the respective officers of the said mint, carefully and faithfully to use their best endeavours that all the gold and silver coins which shall be struck at the said mint shall be, as nearly as may be, conformable to the several standards and weights aforesaid

    SEC. 19. And be it further enacted, That if any of the gold or silver coins which shall be struck or coined at the said mint shall be debased or made worse as to the proportion of fine gold or fine silver therein contained, or shall be of less weight or value than the same ought to be pursuant to the directions of this act, through the default or with the connivance of any of the officers or persons who shall be employed at the said mint, for the purpose of profit or gain, or otherwise with a fraudulent intent, * * * every such officer or person who shall be guilty of any * * * of the said offenses, shall be deemed guilty of felony, and shall suffer death.

    SEC. 20. And be it further enacted, That the money of account of the United States shall be expressed in dollars or units, dismes or tenths, cents or hundredths, and milles or thousandths, a disme being the tenth part of a dollar, a cent the hundredth part of a dollar, a mille the thousandth part of a dollar, and that all accounts in the public offices and all proceedings in the courts of the United States shall be kept and had in conformity to this regulation.

    APPROVED, April 2, 1792.


    1 31 U.S.C. § 5101 (emphasis supplied). See Act of 2 April 1792, ch. XVI, § 9, 1 Stat. 246, 248.

    2 31 U.S.C. § 5103.

    3 Use of the modifier “supposedly” is necessary, because not everything that Congress may declare by statute to be “money” may qualify as the “Money” Congress may “coin” or “borrow” under the Constitution. See U.S. Const. art. I, § 8, cls. 2 and 5.

    4 12 U.S.C. § 411.

    5 31 U.S.C. § 5101.

    6 See Hewitt-Donlon Catalog of United States Small Size Paper Money (M. Hudgeons ed., 14th ed., 1979), at 66-153.

    7 The adverb “explicitly” deserves careful attention, because no matter what FRNs do not state on their faces, they are required by law to be “redeemed in lawful money.” 12 U.S.C. § 411.

    8 31 U.S.C. § 5112(a)(1-4).

    9 31 U.S.C. § 5112(b).

    10 One half dollar equals five dimes. One half dollar equals two quarters. And one quarter equals two and one-half dimes.

    11 31 U.S.C. § 5112(a)(7-10).

    12 Based on this set of coins, a “dollar’s”-worth of coined gold is one-fiftieth of the weight of the “fifty dollar” gold coin (“33.931 grams”), or 0.679 grams.

    13 31 U.S.C. § 5112(e).

    14 31 U.S.C. § 5119(a) (emphasis supplied).

    15 31 U.S.C. § 5116(a)(1).

    16 31 U.S.C. § 5116(b)(1).

    17 31 U.S.C. § 5116(b)(2).

    18 31 U.S.C. § 5119(a).

    19 E.g., 2 J. Story, Commentaries on the Constitution of the United States (5th ed. 1891), § 1335, at 211 & n.2.

    20 See, e.g, McCulloch v. Maryland. 17 U.S. (4 Wheat.) 316, 425-33 (1819).

    21 L. von Mises, Human Action: A Treatise on Economics (3rd rev. ed.
    1963), at 203-04, 351-52, 411. See also 1 M. Rothbard, Man, Economy, and
    State: A Treatise on Economic Principles (1970), at 237.

    22 See An Act for acertaining the rates of foreign coins in her Majesty’s plantations in America, 1707, 6 Anne, ch. 30, § I (emphasis supplied in part).

    23 Cf NLRB v. Amax Coal Co., A Division of Amax, Inc., 483 U.S. 322, 329 (1981): “Where Congress uses terms that have accumulated settled meaning under * * * the common law, a court must infer, unless the statute otherwise dictates, that Congress means to incorporate the established meaning of these terms.”

    24 See Sumner, “The Spanish Dollar and the Colonial Shilling,” 3 Amer. Hist. Rev. 607 (1898).

    25 Note 22, ante.

    26 4 Journals of the Continental Congress, 1777-1789 (W. Ford ed. 1905), at 381-82; 5 id. at 725.

    27 Propositions respecting the Coinage of Gold, Silver, and Copper (printed folio pamphlet presented to the Continental Congress 13 May 1785), at 4, 5.

    28 “NOTES on the Establishment of a MONEY MINT, and of a COINAGE for the United States,” The Providence Gazette and Country Journal, Vol. XXI, No. 1073 (24 July 1784), in Propositions, ante note 27, at 9, 10.

    29 Id. at 11, 12.

    30 Id. at 12.

    31 28 Journals of the Continental Congress, ante note 26, at 355, 357.

    32 29 id. at 499-500.

    33 30 id. at 162-63. After ratification of the Constitution, Congress made a more accurate determination of the value of the dollar, setting it at 371.25 grains of fine silver (as described post).

    34 31 Journals of the Continental Congress, ante note 26, at 503.

    35 Hamilton’s observation that it requires no “argument to prove that a nation ought not to suffer the value of the property of its citizens to fluctuate with the fluctuations of a foreign mint, or to change with the changes in the regulations of a foreign sovereign” should serve as a warning to those who rashly advocate a new “one-world” currency-system in which the United States would participate.

    36 2 The Debates and Proceedings in the Congress of the United States (J. Gales compil. 1834), Appendix, at 2059, 2060, 2061.

    37 Id. at 2061-63.

    38 Id. at 2064-65. This is the source of the (unfulfilled) modern duty of the Secretary of the Treasury “to maintain the equal purchasing power of each kind of United States currency.” 31 U.S.C. § 5119(a). See ante, pp. 5-7.

    39 Appendix, ante note 36, at 2066, 2068, 2069.

    40 See Act of 2 April 1792, ch. XVI, §§ 14-15, 1 Stat. 246, 249-50.

    41 Appendix, ante note 36, at 2071-73.

    42 Id. at 2082.

    43 Act of 2 April 1792, ch. XVI, 1 Stat. 246. See the Appendix hereto.

    44 § 9, 1 Stat. at 248.

    45 § 20, 1 Stat. at 250.

    46 § 9, 1 Stat. at 248.

    47 See U.S. Const. art. I, § 8, cl. 5.

    48 Coinage Act of 1792, § 9, 1 Stat. at 248.

    49 § 11, 1 Stat. at 248-49.

    50 § 16, 1 Stat. at 250.

    51 Vol. 7, “Dollar” (1963 ed.) at 558.

    52 For the correct interpretation of the Act, see, e.g., A. Hepburn, History of Coinage and Currency in the United States and the Perennial Contest for Sound Money (1903), at 22.

    53 Coinage Act of 1792, §§ 14-15, 1 Stat. at 249-50.

    54 § 19, 1 Stat. at 2.50.

    55 Section 11 of the Coinage Act was clearly constitutional in 1792, representing as it did a reasonable means of “regulat[ing] the Value” of gold coins as against the (silver) “dollar” in an era in which financial data were uncertain and difficult to communicate with dispatch. Today, such a statutorily fixed exchange-ratio for the precious metals would be unreasonable. Given the technical sophistication of existing financial institutions, Section 11 of a parallel modern act ought to read, perhaps, “That the proportional value of gold to silver in all coins which shall by law be current as money within the United States, on any particular day or days, shall be the proportion between pure gold and pure silver, according to quantity in weight, existing at the beginning of the business day or days in [here Congress would identify a financial market], or, if the particular day or days is or are not a business day or days, on the last preceding business day or days.” Cf. H.R. 6054, 97th Cong., 2d Sess. (1982), § 4.

    56 See U.S. Const. art. 1, § 10, cl. 1.

    57 1 Stat. at 248, 249, 250-51.

    1. Thank you for your contribution. I was using the term “gold standard” loosely to mean only that any money issued by government should be fully backed by gold or silver. I prefer the term “honest money” to “gold standard” because of the misunderstanding that “gold standard” sometimes engenders and I would prefer it if we replaced the term “dollar” with the “ounce of silver” or some other fixed weight and then referred to that monetary unit by it’s weight. Your point about the word “dollar” and “year” in the Constitution was a great one. Thanks again for sharing.

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