Fiat Money: Constitutionally Suspect and Unsound
By Casey Beres, Oct. 2013
This year being the 100th anniversary of the Federal Reserve Act that established the Federal Reserve, long the subject of constitutional debate, I thought it appropriate to write on the unsoundness and unconstitutionality of fiat money. Fiat money is paper money that is not backed by any specie of value; the federal government dictates its worth. The Constitution, in Article 1 Section 8 Clause 5 allows Congress the sole power to “coin” money, regulate its value, and “fix the standard of weights and measures.” Nowhere in the Constitution is Congress given the express ability to emit paper money or create a central banking authority like the Federal Reserve that can emit paper money. Indeed, the wording gives us the clues necessary to come to this obvious conclusion; not only is Congress not given express authority, but the authority it is given denies it the ability to emit paper money. Congress is given the power to “coin” metal of value into money, but not “print” paper as currency. Coining is defined in the Oxford English Dictionary as: “[t]o make (money) by stamping metal;” in Webster’s 1828 dictionary as: “[t]o stamp a metal, and convert it into money; to mint;” in Samuel Johnson’s 1755 dictionary as: “To mint or stamp metals for money.” “To coin,” in no way allows for the printing of paper as currency.
Additionally, Article 1 Section 10 Clause 1 of the Constitution says that “[n]o state shall…coin money; emit bills of credit; make anything but gold and silver coin a tender in payment of debts…” Not only is Congress specifically prohibited from emitting paper money by lack of express delegation of this power and by its expressly given power denying such ability, but the states are prohibited from doing so and are required to make only gold and silver legal tender. Why would the American people deny this power to print paper money to the states when they used it before 1787 to wreak havoc on contracts, property, and economy, yet give this same power to Congress so it could do the same for the nation?
Some may say that the Supreme Court (SCOTUS) has said paper money is lawful, and thus it is so. But SCOTUS is not God. SCOTUS could say that gravity now ceases to exist, that the all heavenly bodies revolve around the earth, or that the earth is now flat. But such judicial decrees by SCOTUS wouldn’t make them so because all evidence and reason proves otherwise. The same goes for Fiat money. All evidence in the Constitution and America’s history points to its illegality and danger. Remember, SCOTUS once said blacks couldn’t be citizens of the U.S. and that slavery was lawful, despite the words of liberty in the Constitution. The Supreme Court is far from infallible. Indeed, in 1870 in Hepburn v. Griswold, SCOTUS ruled paper money to be unconstitutional while in 1871 in Knox v. Lee SCOTUS reversed its own ruling of one year before! It is the sad experience of mankind that in morally decaying societies, the study of law more often than not becomes the study of corrupt law and the how to corrupt it.
Not only is the U.S.’s fiat money constitutionally suspect, but in principle is dangerous at best. Thomas Paine, in 1786, wrote on paper money in “Dissertations on Government; The Affairs of the Bank; And Paper Money,” which contains much wisdom on the subject.
1.) Hepburn v. Griswold (1870) http://scholar.google.com/scholar_case?case=1625167705624716975&q=hepburn+v.+griswold&hl=en&as_sdt=2,45&as_vis=1
2.) Paine’s “Dissertations”
3.) Murray Rothbard’s “Conceived in Liberty,” Vol. 4, Part VIII, Ch. 67
4.) Joseph Smith, Jr.’s views
Fiat Money: Constitutionally Suspect & Unsound
“I remember a German farmer expressing as much in a few words as the whole subject requires; ‘money is money, and paper is paper.’—All the invention of man cannot make them otherwise.
“It [gold] has, therefore, all the requisite qualities that money can have, and is a fit material to make money of; and nothing which has not all those properties, can be fit for the purpose of money.
“Paper, considered as a material whereof to make money, has none of the requisite qualities in it. It is too plentiful, and too easily come at. It can be had any where, and for a trifle.
“…when an assembly undertake to issue paper as money, the whole system of safety and certainty is overturned, and property set afloat.”
~Thomas Paine, 1786
“Not only has 'money' meant metallic money, but, upon looking at the public history of the times (which this court has established as a proper guide to the construction of the Constitution),8 we find that in the history of the country there was no period in which 'money' was more distinctly understood and meant to be hard money than at the period when the Constitution was framed and adopted. 'Its framers had just passed through all the horrors of an unredeemed paper currency.'”
~ Clarkson Nott Potter, Hepburn v. Griswold (1870)
“Besides there is so much uncertainty in the solvency of the best of banks, that I think it much safer to go upon the hard money system altogether.”
~Joseph Smith, Jr., 1843