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