Fiat money has taken over the world. There is nothing really good about it either (unless you work for the government). The inflationary tendencies of fiat money are a hidden form of taxation. The lack of any commodity backing leaves the value of our money at the whim of the U.S. Government and the Federal Reserve (which is neither federal, nor a reserve).
Thus, I wrote the following in support of
House Bill 853, which establishes a commission to study the effects of fiat money on the wealth of New Hampshire citizens. The commission, as written, would only study the effects on wealth; I think we need to also look into the constitutional questions surrounding fiat money:
Fiat Money: “Legal tender, especially paper currency, authorized by a government but not based on or convertible into gold or silver.” – American Heritage Dictionary
“No State shall…make any Thing but gold and silver Coin a Tender in Payment of Debts” – Constitution of the United States, Article I, Section 10
Article I, Section 10 of the Constitution provides that the states may only pay off debts with gold and silver coin. The definition of debt from West’s Encyclopedia of American Law: “A sum of money that is owed or due to be paid because of an express agreement; a specified sum of money that one person is obligated to pay and that another has the legal right to collect or receive.” All of the State of New Hampshire’s expenditures can be thought of as debt.
Furthermore, the article says that States may not use “any Thing but gold and silver” for payment of these debts. “Any Thing” can in no way be construed to mean Federal Reserve Notes or any other fiat money.
Therefore, all money, except for gold and silver, is prohibited from use as payment of debts. The State of New Hampshire should do all in its power to return to Constitutionally-sound money.
“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…” - Coinage Act of 1792, Section 9
The Coinage Act of 1792 was the first act related to money after the passage of the Constitution. It can be reasonably asserted that all the money referenced in the Coinage Act is in line with the Constitution, given that both documents were greatly influenced by many of the same authors.
All money to be minted was made of gold and silver, except cents and half-cents, which were copper. The coinage and money referenced in the Constitution is the same money that is prescribed for in the Coinage Act.
One denomination of money mentioned in the Coinage Act was a “dollar”. Today’s Americans would almost certainly associate the word dollar with the Federal Reserve Note that bears the likeness of George Washington. However, this association is wrong.
The Federal Reserve “dollar” is not the dollar that is provided for in the Constitution. The Constitution references the word “dollar” twice. The Coinage Act defines a dollar as follows:
“Dollar - 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.”
In fact, the use of the Spanish milled dollar in America far out dates our Constitution. Queen Anne of England issued the Proclamation of 1704 (passed by Parliament in 1707) that declared the Spanish milled dollar as the standard for money used in the American colonies.
The dollar, in its constitutional context, is based on the silver Spanish milled dollar, and has nothing to do with today’s Federal Reserve “dollar”.