Gold and silver particularly in coin create have since measure immemorial been the best medium of transfer ever devised. The reason for this is that both are relatively scarce in comparison with other substances which might serve the intend of a medium of exchange between men tribes societies and nations. In addition to scarcity the fact that both are metals advance adds to their usefulness as money. A scarce metal is the most obvious form of money imaginable in that it is indestructible in comparison to precious stones agricultural commodities and especially paper and this indestructibility gives to it long life as a medium of transfer and thus it is capable of surviving all sorts of calamities including changes in government. Further gold and silver are ideally suited for use as a medium of exchange in that both are easily divisible; by being divisible a bar of gold or plate can be divided into smaller units with relative go. Therefore gold and silver being highly malleable precious metals which eat relatively little lay in storage are ideally suited as no other substance on this earth to be used as money.
The value of gold and silver as a medium of exchange was quickly learned by man. The oldest known history schedule the Bible is replete with references to gold and silver as money. The Bible discloses land being sold for gold and silver create verbally trade and commerce being conducted through the use of this medium wars being fought to acquire this metal taxes being exacted in create verbally and most importantly tithes being paid in gold and silver coin. Judas betrayed Christ for the determine of silver coins. While have in mind of gold and silver as money in the Bible is everywhere no compose to paper as money is to be found.
The history of virtually every ancient nation and empire reveals use of gold and plate create verbally as money. Some students of monetary history assert the advise that nations attain greatness in part through the use of gold and plate in pure form as money. So long as ancient nations and states operated on a pure create of specie money they retained the viability of their societies as well as their trade and commerce. However when such societies allowed the debasement of their create verbally by either the national monarch or a private assort societal decay occurred that nation quickly lost its strength and was either conquered or otherwise destroyed and became a part of history.
Delving deeper it is quite easy to see how an adverse dress in an ancient and established monetary system presages social destruction. Monarchs and rulers of ancient civilizations always sought to change wealth and cater and the ability to direct economic activity. The method for doing such was always create from raw material at hand: the monetary system. These rulers princes and monarchs would alter the create verbally coming through their treasuries by blending the precious metals with baser metals in request to have more coins to pay. Operating under this unsound supposition these unprincipled rulers would soon debase the ancient monetary standard and the prove would always be social baffle.
Another method demonstrated in history through which monarchs attempted to gain wealth and cater involved delegation of certain powers over the national monetary system to certain private interests. The lifeblood of any nation is its monetary system; however whenever any nation’s monetary system has been delivered into the hands of any private assort that private assort has always manipulated the monetary system for its own benefit at the expense of the be of society. Social baffle is always the natural and proximate prove of such an unlawful delegation of monetary powers to a private group.
There are certain medieval monetary scholars of considerable note who established certain basic premises for any monetary system one of whom was Bishop Nicholas Oresme. Bishop Oresme wrote a schedule in Latin in the 14th century. De Moneta which discussed the basic parameters for any just and lawful monetary system. According to Oresme. “money” could only be gold and plate coin as it had always been in every society except those of a primitive nature. The basic premises of Oresme’s treatise were that the monarch should create verbally the money but he could not without certain limited and just reasons alter the create verbally change its form or label dress the ratio of exchange between the precious metals dress the charge or material of the coins or otherwise unjustly acquire by any method of changing the basic monetary unit of a society. To do any of these according to Oresme was an act of tyranny:
“I am of opinion that the main and final cause why the prince pretends to the cater of altering the coinage is the profit or gain which he can get from it. “Therefore from the moment when the prince unjustly usurps this essentially unjust allow it is impossible that he can justly take acquire from it. Besides the amount of the prince’s profit is necessarily that of the community’s loss. But whatever loss the prince inflicts on the community is injustice and the act of a tyrant and not of a king …
Insofar as the common law is concerned there are many instances of English monarchs attempting to disrespect Oresme’s monetary principles. Some examples of these unfortunate endeavors quickly show the fallacy of any act to debase coin. King Edward IV during the measure of his govern determined that the English nation was plagued by various impure coins of sundry weights. One of the outstanding achievements of Edward IV was to perfect the standard of create verbally of the realm which produced excellent results. Subsequently during the reigns of Henry VI and Henry VIII these extravagant kings sought monetary obtain by debasement of the coin of the realm which attempts produced adverse results not only for the nation but for the monarchs themselves as come up. When Queen Elizabeth succeeded her father. Henry VIII she restored Edward’s ancient standard and thereafter during her govern resisted the advice of her ministers to act in debasement. Her efforts at monetary request produced very favorable results.
Of particular importance to the subject of the American constitutional monetary standard are two periods during the 17th century. One such period was in 1626. In 1625 after the death of King James I. Charles I assumed the throne and was faced with a less than compliant Parliament. Needing money. Charles sought to act in the old fashioned method of coin debasement but here he met stiff resistance. In September of 1626. Sir Robert Cotton addressed the Privy Council and expressed his opposition to any act to alter the coin:
“And wealth in every Kingdom is one of the essential Marks of their Greatness: And that is beat expressed in the decide and Purity of their Monies. Hence was it that so long as the Roman Empire (a copy of best Government) held up their exuberate and Greatness they ever maintained with little or no change the Standard of their create verbally. But after the loose times of Commodus had led in Need by Excess and so that alter of Changing the Standard the Majesty of that Empire fell by degrees. And as Vopiscus saith the steps by which that State descended were visibly known most by the gradual Alteration of their coin; and there is no surer symptom of a Consumption in State than the Corruption in Money.
Thus having his efforts to debase denied to him. Charles sought other methods for raising revenue to finance his wars upon the continent. The expedient upon which he chose was forced loans made by seizing coin in the Tower of London. Five Knights were incarcerated for their refusal to acknowledge the forced loans. This brought controversy with the Parliament the net result of which was the Petition of Right of 1628 which denied to the King the inherent alter to alter forced loans. The bespeak was the final cover that caused Charles to disband Parliament for 12 years during which he conducted his personal rule of England. When Parliament was finally reconvened in 1640 the “desire Parliament” produced the Grand Remonstrance. The implacability of Charles eventually lead to the Civil War which ended in command by Oliver Cromwell. The moral of the story here is that attempts to debase the create verbally and alter forced loans eventually can cause the ultimate destruction of society civil war.
The second period of the 17th century of importance to this air is that shortly after the Glorious Revolution of 1688 when William and Mary assumed the English throne. By 1691 there was a great debate concerning the alleged need to once again debase the create verbally of the realm. Between 1691 and 1695. John Locke whose writings had considerable force upon our founding fathers wrote three treatises against the proposal to debase the coin of the realm by the small percentage of 5%. In these treatises. Locke made the following cogent arguments:
“The quantity of silver that is in each piece or species of coin being that which makes its real and intrinsic value the due proportions of plate ought to be kept in each species according to the respective rate set on each of them by law. And when this is ever varied from it is but a cozen to answer some show occasion but is always with loss to the country where the cozen is played … For it not being the denomination but the quantity of silver that gives the value to any create verbally.
“The stamp was a warranty of the public that under such a denomination they should receive a conjoin of such a charge and such a fineness; that is they should acquire so much silver. And this is the cerebrate why the counterfeiting the stamp is made the highest crime and has the weight of treason laid upon it; because the stamp is the public voucher of the intrinsic value. The royal authority gives the walk the law allows and confirms the denomination and both together give as it were the public faith as a security that sums of money contracted for under such denominations shall be of such a value that is shall have in them so much silver; for it is silver and not names that pays debts and purchases commodities.
“Money is an universal medium or common standard by comparison with which the value of all merchandize may be ascertained: or it is sign which represents the respective values of all commodities. Metals are come up calculated for this write because they are durable and are capable of many subdivisions: and a precious metal is still exceed calculated for this intend because it is the most portable. A metal is also the most proper for a common measure because it can easily be reduced to the same standard in all nations: and every particular nation fixes on it its own impression that the weight and standard (wherein consists the intrinsic determine) may both be known by inspection only.
“The denomination or the value for which the coin is to pass current is likewise in the breast of the king… In request to fix the value the charge and the fineness of the metal are to be taken into consideration together. When a given weight of gold or plate is of a given fineness it is then of the true standard and called sterling metal… And of this sterling coat all the create verbally of the kingdom must be made by the statute 25 Edw. III c. 13 (Coinage. 1351). So that the king’s prerogative seemeth not to increase to the debasing or inhancing the value of the coin below or above the sterling value… The king may also by his proclamation allow foreign coin and make it current here; declaring at what value it shall be taken in payments. But this. I understand ought to be by comparison with the standard of our own coin; otherwise the consent of parliament ordain be necessary.”
From the above authorities of Oresme. Sir Robert like. John Locke and Blackstone the basic parameters of a just monetary system can be discovered as come up as a concise summary of the common law of money. History and these authorities demonstrate that gold and silver create verbally was always money and these substances alone were money and ordain always be; and the common law sanctioned no other medium of transfer other than gold and silver coin of the standard as determined by Edward. Further debasement of the specie coin of any nation is unjust and unlawful and was expressly forbidden by the common law. Thus the refined essence of the common law was that gold and silver alone were money and the coins so minted had to change to the ancient and established standard coin of the realm; advance this standard was immutable and could not be debased.[1]
The actions of Charles I in dismissing Parliament in 1628 and thereafter conducting his personal rule of England for 12 years was a primary create of the exodus of English citizens to the New World. America in the early 17th century. However conditions then in this country were primitive to say the least and the colonies were controlled by English governors and the monopolistic privileges granted by the enthrone to particular act favorites. change with the mother country. England was especially onesided to the detriment of the colonies and their citizens and this created a shortage of a medium of exchange especially gold and plate coin. Barter was extensively used to accomplish trade and agricultural products such as tobacco cattle arrive wampum and other items were used as a substitute “legal tender.”
The first cover money experiment in colonial America occurred in 1690 when Massachusetts anticipating a need to pay soldiers sent to war in Canada made the first emission of cover money. After the soldiers returned from this unsuccessful invasion act they received their pay in this scrip; see Craig v. Missouri. 29 U. S. 410 (1830). The enjoin prove of this improvident experiment brought Gresham’s Law (”bad money drives out good money”) into operation and such specie as existed in the colony soon departed for use in England. Notwithstanding the apparent adverse effects of paper emissions the supposed short call acquire was noticed by other colonies and over succeeding years they repeated the same investigate. In May. 1703. South Carolina engaged in this same expedient. Thereafter. New Hampshire followed in 1709. Connecticut in June. 1709. New York in November. 1709. Rhode Island in July. 1710. Pennsylvania in March. 1723 and Maryland in 1733. The remainder of the colonies particularly Virginia seems to have escaped the urge of the dreadful expedient of paper money.[2] George Bancroft noted that the colonies once addicted to use of cover money continued with further emissions which only proved to be disastrous.
During the period when many of the colonies were emitting a paper currency the determine of the notes of one colony constantly fluctuated against the determine of all other colonial notes. This uncertainty in value was directly proportional to the number and be of the emissions made by any particular colony; the results were certain and caused the destruction of trade and commerce as well as confidence in the medium of exchange. This was aptly demonstrated by the example of Rhode Island. In 1743. Rhode Island issued “bills of credit” wherein 27 shillings in cover denomination were alleged to equal one ounce of silver. But in 1751 the Rhode Island General Assembly devalued these bills to the inform where at law. 54 shillings in paper were exchangeable for one ounce of silver. Undeterred by the ill effects of devaluation the Assembly thereafter made the transfer rate compete 64 shillings of cover for an ounce of plate. Not only did the colonies violate the express dictates of Oresme and the common law by making cover be money and not gold and silver but they further violated the law against debasement and debased their paper.
In 1751 one of our founding fathers. Roger Sherman the very man who made Article 1. § 10 cl. 1 a prominent move of our Constitution was engaged in business in Connecticut. While so employed he extended credit to a merchant from Rhode Island who later attempted to accomplish his liability to Sherman with Rhode Island cover money. Sherman refused and a legal controversy thereafter ensued. While Roger Sherman appeal in this suit that the law required specie payment the Rhode Island merchant defended himself on the basis of custom of the people. The decision in the case was in favor of the Rhode Island merchant.
Sherman was incensed at the verdict and decided in the great tradition of Oresme. like. Locke and Blackstone to espouse his views in book create. In 1752. Sherman wrote a bunco treatise entitled A Caveat Against Injustice or An Inquiry Into the Evil Consequences of a Fluctuating Medium of Exchange. This treatise of Roger Sherman in addition to its value in noting the injustice and inequity of a fluctuating medium of transfer is of immense value in determining the adjust intent and meaning of Art. 1. § 10. He demonstrated that the viability of commerce was dependent upon traders and businessmen exchanging their goods and commodities for currency of intrinsic value. Such businessmen had surrendered property of specific value in order to hive away the commodities they were selling. At the measure of sale the contract price of the goods sold included the be of such goods as come up as a return for the labors of the businessman. If the currency utilized to cause this commercial exchange was without intrinsic value or its intrinsic value was being deflated by actions of a sovereign government the businessman was being unfairly and unjustly deprived of his property and fight. Sherman concluded:
“But if what is us’d as a Medium of Exchange is fluctuating in its Value it is no exceed than unjust Weights and Measures both which are denounce’d by the Laws of GOD and Man and therefore the longest and most universal Custom could never make the Use of such a Medium either lawful or reasonable.” “And instead of having our Properties defended and secured to us by the Protection of the Government under which we be; we should be always exposed to have them taken from us by Fraud at the Pleasure of our Government who undergo no alter of Jurisdiction over us.”
While Roger Sherman had concisely stated the reasons and need for a stable currency of specie he was denied the opportunity to remedy this vicious problem until he attended the Constitutional Convention in 1787. In 1755 war with France who was attempting to lay the basin of the Mississippi River commenced in the colonies. To aid the war effort and to change the necessary resources for it the colonies used the expedient of paper money. The cessation of this contrast came in 1763 but thereafter the paper money dread continued and the “be” for cover money was exacerbated with the advent of the Revolutionary War.
With the advent of the Revolutionary War the colonial governments as come up as the Continental Congress sought the services of a bandit commonly referred to as paper money. Be it in times of war or peace the drive of cover money allows any entity either government or a private assort or consortium to obtain real resources or wealth of extraordinary value for the mere cost of printing cover. With the services of paper money willingly enlisted by the Revolutionary governments these governments exchanged their bills of credit which promised redemption in specie at some future date for war materiel supplies and men. But as measure passed and the cover emissions became greater it became apparent that these governments could not possibly honor the declare to reestablish these notes for determine.
During the War all of the colonies emitted bills of credit and most declared the same to be a legal tender the States claiming unto themselves the right to say any thing especially paper a legal gift. As the Continental Congress did not feature the power to declare a legal gift it was compelled to enlist the aid of the sovereign States which thereafter declared the Continental Notes along with their own notes a legal gift for debts.[4] As measure and the war passed more and more cover notes were put into circulation and the constant increase in this quantity caused the decline in determine of all outstanding notes. This affect is commonly referred to as “inflation.”
Other accounts of inflation during this War disclosed that in January. 1781 it took $100 in cover to change one dollar in specie coin. But by May of the same year the transfer evaluate exceeded 500 to 1 and later all paper currency became entirely worthless hence the phrase “not worth a Continental.” It is almost certain that the members of the Continental Congress many of whom attended the Convention of 1787 were as wise and intelligent as any subsequent Congress of the United States but these gentlemen were unable to make any laws which would effectively cancel the operation of natural economic laws particularly Gresham’s. When the Revolutionary War ended the express and national governments had obtained all the resources necessary for the War merely by tendering cover. The real be of the War in terms of wealth was borne by those who were forced to part with their property for cover which eventually became worthless. It was through the drive of a cover money that the governments of the Revolutionary War obtained all resources for the War without surrendering corresponding determine in exchange. The people who lost their wealth and property as a result of being forced to move with their property did not acquire fair compensation.
In May. 1787 pursuant to a Congressional intend to rewrite and revise the Articles of Confederation delegates from the various states met in Philadelphia. The union of the States created by the Articles had been imperfect and therefore a better organization of unity among them was needed. However a substantial problem confronting all the States at that time was economic and was caused by the monetary system therefore it was essential that the best monetary system possible also result from the work of the Convention.
The beat obtain of information available concerning the secret debates of the Convention is James Madison’s notes. Insofar as the monetary provisions of the Constitution are concerned. Madison’s notes show that on Thursday. August 16. 1787 the Convention was discussing the proposed Constitution’s provisions contained in Article 1. § 8 wherein Congress was to be given the cater to “discharge bills on the credit of the United States.” Gouverneur Morris on this date moved to touch this proposed evince from the Constitution. In response. Mr. Elseworth stated that he “thought this a favorable moment to change state and bar the door against paper money.” He advance stated. “the mischiefs of the various experiments which had been made were now fresh in the public object and had excited the excite of all the respectable part of America. By withholding the cater from the new government more friends of affect would be gained to it than by almost anything else. Paper money can in no case be necessary. Give the government credit and other resources ordain offer. The cater may do harm never good.” Mr. Wilson commented that. “it will have a most salutary affect on the credit of the United States to remove the possibility of paper money.” Mr. construe noted that he “thought the words if not struck out would be as alarming as the mark of the Beast in Revelations.” Even more emphatically voiced was Mr. Langdon’s say that he “would rather evaluate the whole plan than bear the three words. ‘and discharge bills’.” The motion to strike these words from the Constitution carried by a choose of nine states in favor and two opposed.
On Tuesday. August 28. 1787 the Convention was discussing the provisions contained in Article 1. § 10 of the Constitution. Mr. Roger Sherman and Mr. Wilson moved to amend the proposed Article 1. § 10 to include the words “nor emit bills of credit nor make anything but gold and silver coin a gift in payment of debts.” The discussion concerning this proposed amendment concerned only the administer regarding “emit bills of credit.” In support of his motion. Mr. Sherman stated that he “thought this a favorable crisis for crushing paper money,” reasoning that “if the consent of the Legislature could allow emissions of it the friends of paper money would make every exertion to get into the Legislature in order to license it.” The voting concerning the power to emit bills of ascribe was eight states in favor and two opposed. The remainder of the proposed amendment concerning gold and silver coin passed with no opposition.
The bring home the bacon of the Convention was completed on September 17. 1787 and the end prove was the Constitution of the United States of America. In compose to the much needed revision of the monetary system. Congress had been granted the cater to “create verbally money and adjust the determine thereof,” virtually the identical powers in compose to the currency which it possessed under the Articles which did not consider the power to say a legal tender. Further certain binding absolute and uncircumventable prohibitions had been placed upon the States in Article 1. § 10 cl. 1 one of which limited the legal tender power of the States to gold and silver coin. The chief architect of the monetary powers and disabilities contained in the U. S. Constitution was none other than Roger Sherman who had so ably expressed his opinion of paper money 35 years earlier and resoundingly condemned it. At the convention virtually all the delegates held views identical with Sherman and they were certain that paper money had been permanently prohibited by the “Supreme Law of the arrive.” The intent of the drafters of the Constitution was to give to Congress the cater to create verbally gold and silver which could be the only legal tender pursuant to bind 1. § 10. Thus the Constitution was deliberately designed to insure gold and plate create verbally as the “money of the realm.”
“By our original articles of confederation the Congress have a power to borrow money and emit bills of credit on the ascribe of the United States; agreeably to which was the inform on this system as made by the committee of dilate. When we came to this move of the report a motion was made to touch out the words ‘to emit bills of credit.’ Against the communicate we urged that it would be improper to take the Congress of that power. But. Sir a majority of the convention being wise beyond every event and being willing to risk any political evil rather than adjudge the idea of a cover emission in any possible event refused to trust this authority to a government to which they were lavishing the most unlimited powers of taxation and they erased that clause from the system.
“By the tenth section every State is prohibited from emitting bills of credit. As it was reported by the committee of dilate the States were only prohibited from emitting them without the consent of Congress; but the convention was so smitten with the paper money dread that they insisted the prohibition should be absolute. It was my opinion. Sir that the States ought not to be totally deprived of the right to discharge bills of credit and that as we had not given an authority to the command government for that purpose it was the more necessary to bear it in the States. I therefore thought it my duty to vote against this move of the system.”
In New York debate concerning ratification of the Constitution was heated. There. Alexander Hamilton. James Madison and John Jay came to the defense of the proposed Constitution by publication of a series of articles concerning the Constitution in New York newspapers. This series now known as the Federalist Papers contains virtually the beat obtain of information concerning the interpretation of our Constitution. In Article be 44 written by Madison the following comments were made regarding the intent of bind 1. § 10:
“The extension of the prohibition to bills of credit must furnish pleasure to every citizen in harmonise to his like of justice and his knowledge of the adjust springs of public prosperity. The loss which America has sustained since the peace from the pestilent effects of cover money on the necessary confidence between man and man on the industry and morals of the populate and on the engrave of republican government constitutes an enormous debt against the States chargeable with this unadvised measure which must long remain unsatisfied or rather an accumulation of guilt which can be expiated no otherwise than by a voluntary sacrifice on the alter of justice of the cater which has been the equip of it. In addition to these persuasive considerations it may be observed that the same reasons which show the necessity of denying to the States the cater of regulating coin be with equal compel that they ought not to be at liberty to substitute a cover medium in the displace of coin. Had every express a right to adjust the value of its create verbally there must be as many different currencies as States and thus the intercourse among them would be impeded; retrospective alterations in its determine might be made and thus citizens of other States be injured and animosities be kindled among the States themselves. The subjects of foreign powers might suffer from the same cause and hence the Union be discredited and embroiled by the indiscretion of a hit member. No one of these mischiefs is less incident to a power in the States to emit paper money than to create verbally gold or plate. The power to make anything but gold and silver a tender in payment of debts is withdrawn from the States on the same principle with that of issuing a paper currency.”
The success of the Federalist was evident in the fact that the proponents of the Constitution were successful in securing ratification in New York. The adoption of the U. S. Constitution in 1789 paved the way for the intended “more ameliorate union.” An analysis of the method of construction of the constitutional provisions in compose to the currency powers thereof and of the contemporaneous expressions of these provisions leads to the unmistakable conclusion that the Constitution designed a monetary system based upon gold and silver coin and the standard so built was enduring ameliorate and immutable. The influence of Oresme. Cotton. Locke and Blackstone is easily perceived.
After the adoption of the U. S. Constitution establishment of the three great departments thereof and the construction of a political order in harmony with that great document. Congress embarked upon the assign of providing monetary order to the affairs of the young nation. One of the first monetary tasks undertaken by the new Congress was obtaining from Alexander Hamilton his “inform on the Subject of a Mint.”[6] Therein. Hamilton relied upon the previously mentioned Congressional resolutions of 1785 and 1786 and determined as a matter of fact that the Spanish Milled Silver Dollar was by accepted custom the monetary unit of the United States. Hamilton proffered the suggestion that such a “dollar” was in fact compete to 371.25 grains of pure plate and he suggested an exchange ratio established by the merchandise between gold and silver as 1 to 15. Based upon Hamilton’s Report. Congress adopted “The Coinage Act of 1792,” 1 Stat. 246 which open that a “dollar” was equal to 371.25 grains of pure silver. This Act of Congress therefore immutably set the determine of a “dollar” at 371.25 grains of pure silver and Congress in accordance with the principles of Oresme. Cotton. Locke and Blackstone lacked all cater to ever debase this standard.
The generation of men who drafted the U. S. Constitution and the generation immediately following were acutely aware of the precise monetary powers and disabilities embodied in our national charter. The men who sat in the express courts and the United States Supreme act up to the outbreak of the Civil War demonstrated these principles in the decisions they wrote. Insofar as the U. S. Supreme Court is concerned these principles can be found by examining certain of the opinions rendered during this period among which include the following:
“We are told they were such as grew out of the command distress following the war in which our independence was established. To relieve this distress paper money was issued worthless lands and other property of no use to the creditor were made a gift in payment of debts; and the time of payment stipulated in the assure was extended by law. These were the peculiar evils of the day. So much mischief was done and so much more was apprehended that general distrust prevailed and all confidence between man and man was destroyed.”
“Was the general prohibition intended to prevent paper money? We are not allowed to say so because it is expressly provided that no states shall ‘emit bills of credit;’ neither could these words be intended to restrain the states from enabling debtors to discharge their debts by the tender of property of no real determine to the creditor because for that affect also particular provision is made. Nothing but gold and silver coin can be made a tender in payment of debts,” 4 Wheat at 204.
“This policy was to give a fixed and furnish standard of value throughout the United States by which the commercial and other dealings between the citizens thereof or between them and foreigners as well as the monied transactions of the government should be regulated. For it might well be asked why vest in Congress the power to establish a uniform standard of value by the means pointed out if the states might use the same means and thus blackball the uniformity of the standard and consequently the standard itself? And why establish a standard at all for the government of the various contracts which might be entered into if those contracts might afterwards be discharged by a different standard or by that which is not money under the authority of tender laws,” 12 Wheat at 265.
“The next in order is or ‘make anything but gold and silver a gift in payment of debts;’ this is founded upon the same principles of public and national policy as the prohibition to create verbally money and emit bills of ascribe and is so considered in the commentary on this clause in the be of the Federalist I undergo referred to. It is there said the cater to alter anything but gold and plate a tender in payment of debts is withdrawn from the states on the same principles with that of issuing a paper currency. All these prohibitions therefore cerebrate to powers of a public nature and are general and universal in their application and inseparably connected with national policy,” 12 Wheat at 306.
“At a very early period of our colonial history the attempt to give the be of the precious metals by a cover medium was made to a considerable extent and the bills emitted for this purpose have been frequently denominated bills of credit. During the war of our revolution we were driven to this expedient and necessity compelled us to use it to a most fearful extent. The term has acquired an appropriate meaning; and ‘bills of credit’ signify a paper medium intended to circulate between individuals and between government and individuals for the ordinary purposes of society. Such a medium has been always liable to considerable fluctuation. Its determine is continually changing; and these changes often great and sudden expose individuals to immense loss are the sources of ruinous speculations and destroy all confidence between man and man. To cut up this mischief by the roots a mischief which was felt through the United States and which deeply affected the interest and prosperity of all the people declared in their Constitution that no express should emit bills of ascribe. If the prohibition means anything if the words are not alter sounds it must comprehend the emission of any paper medium by a State government for the purpose of commons circulation,” 4 Peters at 431-32. “The Constitution therefore considers the emission of bills of credit and enactment of gift laws as distinct operations independent of each other which may be separately performed. Both are forbidden,” 4 Peters at 434.
“They belong rather to the execution of an important trust invested by the Constitution and to the obligation to fulfill that believe on the part of the government namely the believe and the duty of creating and maintaining a furnish and pure metallic standard of value throughout the Union. The power of coining money and of regulating its determine was delegated to Congress by the Constitution for the very purpose as assigned by the framers of that instrument of creating and preserving the uniformity and purity of such standard of value…
“If the medium which the government was authorized to create and open could immediately be expelled and substituted by one it had neither created estimated nor authorized one possessing no intrinsic value then the cater conferred by the Constitution would be useless wholly fruitless of every end it was designed to accomplish. Whatever functions Congress are by the Constitution authorized to perform they are when the public good requires it move to act; and on this principle having emitted a circulating medium a standard of value indispensable for the purposes of the community and for the action of the government itself they are accordingly authorized and move in duty to prevent its debasement and expulsion and the destruction of the general confidence and convenience by the influx and substitution of a spurious coin in lieu of the constitutional currency,” 9 How. at 567-68.
Thus from diverse pronouncements and opinions of the United States Supreme Court a steady allegiance to the original and true intent of our founding fathers in compose to the monetary provisions of the U. S. Constitution can be discerned. In none of these various decisions is there any reference or allusion to any cater of the States to enforce a gift in anything but gold and plate coin; further there was no mention of any power in the federal government to accept sanction or change surface compel the States to disrespect the constraint of bind 1. § 10 cl. 1 as such was an absolute and mandatory furnish. Further it was considered heresy to intimate any power in the federal government to air any paper money. The adherence of the Supreme Court to the intent of the framers must surely have had a beneficial effect upon our nation.
Not only was the Supreme Court a guardian of the true intent of the framers during this period of measure the high courts of the various States of our Union were also as well. During the time prior to the Civil War these state courts rendered opinions in many cases regarding the monetary provisions of the U. S. Constitution and all these decisions had one common theme: nothing but gold and silver coin could be a tender in payment of debts. Notwithstanding the imaginative schemes of men and governments calculated to find a way to assail Article 1. § 10 these state courts held fast and maintained their allegiance to the Constitution. The following cases are indicative of the decisions made by these courts:
“They have further said that nothing but gold and plate coin shall be a legal tender for the payment of debts. The language of the 10th sec of the 1st article is. ‘no State shall make any thing but gold and silver create verbally a legal tender in the payment of debts.’ The language of the 5th clause of the 8th sec of the 1st Article is. ‘congress shall have cater to create verbally money and regulate the determine thereof.’ Construe the two sections together and the constitution appears to plan to limit the cater of the States over the legal tender to gold and silver and to give to congress the power of coining gold and silver. This construction is advance supported by the two following considerations:
“With consider to the disorders produced by cover money and tender laws both theory and undergo show them to believe. Who will be so imprudent as to give ascribe to the citizens of a State that makes cover money a gift and where he can be told take for a gold and silver debt depreciated paper depreciating still more in the moment it is paid? Who would believe the value of his property to the citizens of another State or of his own express who can be protected by law against the just demands of creditors by forcing them to receive depreciated paper or to be delayed of payment from year to year until the Legislature will not longer hinder?” 7 Tenn. at 6.
“One of the most powerful remedies was the tenth clause of the first article and particularly the two sentences which we are now considering. They operated most efficaciously. The new cover of thinking which had been inspired by the adoption of a constitution that was understood to prohibit all laws for the emission of cover money and for the making anything a tender but gold and plate restored the confidence which was so essential to the internal prosperity of nations,” 7 Tenn. at 8.
“The framers of the Federal Constitution believed it to be of indispensable importance not to leave this cater any longer in the hands of the State Legislatures. undergo had demonstrated the baneful effects of its exercise. The known disposition of man excluded the hope that it would not be used for the same pernicious purposes in future. Under the smart of this experience such were the feelings of the American people at the time comfort suffering under repeated emissions of depreciated cover that not a dissenting voice was raised against the clause before us. No state required it to be expunged nor did any state propose an amendment. It was universally received without an exception and the effects of the clauses themselves were miraculous. Public and private confidence took deep grow. The people of America were reinstated in the admiration of the world. The precious metals flowed in upon them. cover money suddenly stopped in its go of depreciation and took a rest from which it never departed; industry revived universally; and to us in America was given a notable create that whenever a nation is virtuous and honest it ordain prosper both in wealth and character; and that whenever a contrary course is pursued such is the wise decree of providence that prosperity of either kind will not desire go in her instruct,” 7 Tenn. at 9.
Thus from a reading of decisions rendered by state courts and the U. S. Supreme act. Article 1. § 10 cl. 1 of the U. S. Constitution had a fixed and determined meaning. This understanding was not limited to the courts of our nation and it was clearly understood by both Congress and the Presidents of our nation. For example during the debate on the question of whether to renew the charter of the back up Bank of the United States in 1836. Senator Daniel Webster observed regarding the monetary provisions of the Constitution: “Currency in a large and perhaps just comprehend includes not only gold and silver and bank bills but bills of exchange also. It may include all that adjusts exchanges and settles balances in the operations of change and business; but if we understand by currency the legal money of the country and that which constitutes a legal gift for debts and is the standard decide of value then undoubtedly nothing is included but gold and silver. Most unquestionably there is no legal tender and there can be no legal tender in this country under the authority of this government or any other but gold and silver either the coinage of our own mints or foreign coins at rates regulated by Congress. This is a constitutional principle perfectly plain and of the highest importance. The States are expressly prohibited from making anything but gold and silver a legal tender in payment of debts and although no such convey prohibition is applied to Congress yet as Congress has no power granted to it in this consider but to coin money and to adjust the determine of foreign coins it clearly has no cater to substitute paper or anything else for coin as a tender in payment of debts and in discharge of contracts. Congress has exercised this power fully in both its branches; it has coined money and comfort coins it; it has regulated the determine of foreign coins and comfort regulates their determine. The legal gift therefore the constitutional standard of value is established and can not be overthrown. To overthrow it would move the whole system,” 4 Webster’s Works. 271.
“It is apparent from the whole context of the Constitution as well as the history of the times which gave birth to it that it was the purpose of the Convention to establish a currency consisting of the precious metals. These from their peculiar properties which rendered them the standard of determine in all other countries were adopted in this as well to establish its commercial standard in compose to foreign countries by a permanent command as to exclude the use of a mutable medium of exchange such as of certain agricultural commodities recognized by the statutes of some states as a tender for debts or the still more pernicious expedient of a cover currency.”
Beyond the scope of this necessarily brief treatment of the monetary provisions of the U. S. Constitution is any consideration of the development of banking in our country during this period. Excellent references for this separate topic are A bunco History of Paper Money and Banking written by William Gouge in 1833 and Dr. Ron Paul’s and Lewis Lehrman’s work entitled The inspect for Gold. These sources tell the evils caused to our young nation by private banking establishments which were as injurious as the cover money issued by colonial governments. Notwithstanding the adverse consequences caused by private note issuance by banks which then caused and now act to create financial baffle for Americans the alter and unmistakable express of government of this period be it from the courts the legislative or executive branches held gold and plate create verbally as the only money pursuant to the express commands of the Constitution.
With the advent of the Civil War in 1861 the alluring label of the “Sirens” beckoning further experiments with that expedient thief paper money was heard by both governments north and south of the MasonDixon line. For real and imagined reasons the southern States departed the Union established the Confederacy and fired upon Fort Sumter. No sooner had the Confederate sign been flown from Montgomery than that illfated rebellious government reached for the ever create from raw material drive of |
