Source: http://www.constitution.org/mon/moneybrief.html
Timestamp: 2019-04-20 04:50:44+00:00

Document:
"No State shall * * * coin Money; Emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts."
"For an ounce of silver, whether in pence, groats, or crown-pieces, stivers, or ducatoons, or in bullion, is, and always eternally will be, of equal value to any other ounce of silver, under what stamp or denomination soever.
"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 silver 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 trick to serve some present occasion, but is always with loss to the country where the trick is played * * * For it not being the denomination, but the quantity of silver, that gives the value to any coin.
"The denomination, or the value for which the coin is to pass current, is likewise in the breast of the king * * * In order to fix the value, the weight and the fineness of the metal are to be taken into consideration together. When a given weight of gold or silver is of a given fineness, it is then of the true standard, and called sterling metal * * * And of this sterling metal all the coin 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 extend to the debasing or inhancing the value of the coin, below or above the sterling value * * * The king may also, by his proclamation, legitimate foreign coin, and make it current here; declaring at what value it shall be taken in payments. But this, I apprehend, ought to be by comparison with the standard of our own coin; otherwise the consent of parliament will be necessary."
The actions of Charles I in dismissing Parliament in 1628 and thereafter conducting his personal rule of England for 12 years was a primary cause 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 Crown to particular court favorites. Trade with the mother country, England, was especially one sided to the detriment of the colonies and their citizens, and this created a shortage of a medium of exchange, especially gold and silver coin. Barter was extensively used to consummate trade, and agricultural products such as tobacco, cattle, land, wampum and other items were used as a substitute "legal tender."
The first paper 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 paper money. After the soldiers returned from this unsuccessful invasion attempt, they received their pay in this scrip; see Craig v. Missouri, 29 U.S. 410 (1830). The direct result 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 term benefit was noticed by other colonies and over succeeding years, they repeated the same experiment. 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.  George Bancroft noted that the colonies, once addicted to use of paper money, continued with further emissions which only proved to be disastrous.
"But if what is us'd as a Medium of Exchange is fluctuating in its Value it is no better than unjust Weights and Measures, both which are condemn'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 live; we should be always exposed to have them taken from us by Fraud at the Pleasure of our Government, who have no Right of Jurisdiction over us.
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 declare any thing, especially paper, a legal tender. As the Continental Congress did not possess the power to declare a legal tender, it was compelled to enlist the aid of the sovereign States, which thereafter declared the Continental Notes, along with their own notes, a legal tender for debts.  As time and the war passed, more and more paper notes were put into circulation and the constant increase in this quantity caused the decline in value of all outstanding notes. This process is commonly referred to as "inflation."
"One hundred dollars printed in September of 1777 was worth only twenty-four a year later and but four in 1779. By March 1780 it took $3732 to buy what could have been bought for $100 in late 1777. Sherman had run up a bill of $99 at the barber's; he owed for eight bottles of wine at $58 each and two barrels of 'cyder' at $100 apiece; 'washing for self and servant $639; for 15 weeks 4 days board self and waiter, $8330; 1 pair silk hose, $300; mending watch, $210; 1 pair leather breeches, $420.'"
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 task 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 "Report on the Subject of a Mint."  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 equal to 371.25 grains of pure silver and he suggested an exchange ratio, established by the market, between gold and silver as 1 to 15. Based upon Hamilton's Report, Congress adopted "The Coinage Act of 1792," 1 Stat. 246, which found that a "dollar" was equal to 371.25 grains of pure silver. This Act of Congress, therefore, immutably set the value 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 power to ever debase this standard.
"We are told they were such as grew out of the general 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 tender in payment of debts; and the time of payment, stipulated in the contract, 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.
"If the Legislature of a State attempt to make the notes of any bank a tender, the act will be unconstitutional * * *, " 11 Peters, at 316.
"They acted upon known facts and not theories, and meant, by prohibiting the States from emitting bills of credit, to prohibit any issue in any form, to pass as paper currency or paper money, whose basis was the credit, or funds or debts, or promises of the states * * * They knew that whatever paper currency is not directly and immediately, at the mere will of the holder, redeemable in gold and silver, is, and forever must be liable to constant depreciation," 11 Peters, at 339.
"If the medium which the government was authorized to create and establish could immediately be expelled, and substituted by one it had neither created, estimated, nor authorized ï¿½ï¿½ one possessing no intrinsic value ï¿½ï¿½ then the power conferred by the Constitution would be useless ï¿½ï¿½ 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, bound to perform; 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 bound 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."
"A promissory note, payable in money, cannot be discharged, by the act of the debtor, without the co-operation of the creditor, unless in gold and silver coin. Const. U.S. art. 1 sec. 10. Bank notes are not a legal tender, if the creditor objects to receive them."
"But the constitution here interposes, and declares that a 'just compensation' shall be made for the property so appropriated ï¿½ï¿½ that the injured party may have his damages assessed by a jury of the country; and it will not be disputed that when they are so assessed, they become a 'debt' in the constitutional sense of the word, and being so, the constitution of the United States restrains the state from enforcing their payment in any thing but gold and silver," 8 Blackf., at 249-50.
"And we think we hazard nothing in saying, that a law authorizing compulsory payment for real estate or damage thereto, when appropriated by the State or its authority, in any thing but gold and silver, would not make adequate provision for a just compensation * * * Nothing short of gold and silver, the value of which is comparatively certain and changeless, and with which, better than with any thing else, can at any time be commanded what the possessor may desire, can adequately compensate a proprietor for what he is compelled to surrender to the public use," 8 Blackf., at 251.
"The 1st clause of the 10th section of the 1st article of the Constitution of the United States, provides that 'No State shall make any thing but gold and silver coin a tender in payment of debts * * * "
"These terms import either, first, gold or silver coin, which is constitutional currency of the United States, the 'tender money' of the several states of the Union. * * * "
"If the agreement had respected the continental bills of credit, and no legal tender had been pleaded, the court would not suffer the paper emitted by Congress to be paid into court, but only its specie value when the agreement was entered into * * * It does not appear to us, that the bills of credit offered to be paid into court, are a legal tender, and therefore we cannot admit them to be brought into court," 3 Yeats, at 323.
"No principle is better established nor more necessary to be maintained than that bank notes are not money in the legal sense of the word. * * * Coins struck at the Mint or authorized by act of Congress are alone lawful money. They possess a fixed and permanent value or, at least as nearly so as human affairs admit of. Bank notes are merely promissory notes for the payment of money; ordinarily, it is true, convertible into coin on demand at the bank where they are issued."
"At common law, only gold and silver were a legal tender. * * * In this State, where the common law has been expressly adopted, anterior to all legislative and constitutional provisions on the subject, gold and silver were the only legal tenders," 2 Nott. and McC., at 521.
"First, then, let us take into consideration Art. 1, section 10, of the Constitution of the United States: 'No State shall * * * emit bills of credit or make anything but gold and silver coin a tender in payment of debts. * * * ' The first two sentences respect tender laws and paper money; the construction to be put on them should repress and prevent the evils they were intended to obviate; and what these are, must be understood by the actual evils which paper money and tender laws produced in the time of the colonial governments," 7 Tenn., at 2-3.
"No state is authorized to coin money, or pass any law whereby anything but gold and silver shall be made a legal tender in payment of debt. * * * This conventional understanding that bank bills are to pass as money is founded upon the solvency of the bank and upon the supposition that the bills are equivalent in value to specie and are, at any time, convertible into specie at the option of the holder. Upon no other ground do bank bills, by common consent, pass as money," 11 Ver., at 580.
With the advent of the Civil War in 1861, the alluring call of the "Sirens" beckoning further experiments with that expedient thief, paper money, was heard by both governments north and south of the Mason-Dixon 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 Flag been flown from Montgomery than that ill-fated rebellious government reached for the ever ready tool of wealth expropriation, paper money. It was through the services of paper money that the Confederacy obtained everything necessary for war without surrendering anything of comparable value in exchange.
Treasury Secretary Chase, later to become Chief Justice of the U.S. Supreme Court, began the call for paper money to meet the exigent expenses of war. In Congress, the debate concerning this proposal was extremely heated.  Some Congressmen condemned the act to make Treasury notes a legal tender as unconstitutional while others argued in its favor. In the end, Congress, obviously as an act of desperation and expedience, passed the Legal Tender Act of 1862, 12 Stat. 345. With the passage of this act, Congress ignored both the lessons of history and the plain intent of the framers of the U.S. Constitution.
"It was the intention, by the Federal Constitution, to withhold this power of supplanting natural money from the general government, and to strip the states of it, and thus extinguish it, and insure to the people and nation a sound currency forever. Of this we have not the slightest doubt. Money should be to values, what weights and measures are to quantities, the exact measure, and a uniform, stable one. The States were prohibited from making anything but gold and silver a tender for debts, and the general government was authorized, touching this subject, only 'to coin money, regulate the value thereof, and of foreign coin,' * * * It will be observed that while the States are forbidden to make anything but gold and silver a tender, Congress is empowered to coin money, without being limited to the two kinds of coin to which the States are restricted," 22 Ind., at 306.
"Now, the power is no where expressly given to Congress to make even coin a legal tender, but the prohibition to the States to make anything but gold and silver such tender, goes upon the assumption that the power over the subject of legal tender is possessed by the States; * * * and the Constitution restricts them to two articles, either or both of which they may make thus; and the general government has not the power to make anything a legal tender except as an incident to the power to coin," 22 Ind., at 307-08.
"The power to coin 'money' is the only moneymaking power delegated to Congress. Without express grant, Congress could have had no power whatever over money. The only grant made is specific and well-defined, and beyond this Congress can have no express authority to go; and any attempt to go further would defeat the great purpose of defining and establishing coin as the money of the United States; and, therefore, and also because no such substantive power could be implied, Congress can have no implied power to make any thing else than coin money. Knowing that Congress could have no power over money except so far as delegated, the people chose, for national reasons, to delegate the single power 'to coin money,' and there stopped. And anxious to maintain coin as the only money, they tied the hands of their own Legislature, and not only abandoned all their inherent power over money, except a qualified power over the legal tender, expressly restricted to gold and silver, but, for the same immutable reason, withheld from Congress any power over tender. That renunciation of their absolute power and reservation of a qualified power over tender, is itself, and alone, sufficient proof of a constructive and purposeful denial to Congress of any power over it," 63 Ky., at 34.
Of related importance to the issue of legal tender Treasury notes is the issue of the lawfulness of the Confederacy's paper money. At the commencement of the Civil War, the C.S.A. had issued paper money to obtain resources for the war effort, and the emissions of this paper were virtually constant. Payment of these notes was based upon a contingency, the contingency being the ratification of a peace treaty between the C.S.A. and the U.S.A. With the surrender of that great soldier, Gen. Robert E. Lee, the Confederacy ceased to exist. The downfall of the rebellion thus presented to the federal courts the serious problem of how to treat debts contracted before and during the war in the South which debts had been partially paid with Confederate money.
"The design of all this minuteness and strictness in the regulation of coinage is easily seen. It indicates the intention of the legislature to give a sure guaranty to the people that the coins made current in payments contain the precise weight of gold or silver of the precise degree of purity declared by the statute. It recognizes the fact accepted by all men throughout the world, that value is inherent in the precious metals; that gold and silver are in themselves values, and being such, * * * are the only proper measures of value; that these values are determined by weight and purity; and that form and impress are simply certificates of value worthy of absolute reliance only because of the known integrity and good faith of the government which gives them.
"The Legal Tender Acts do not attempt to make paper a standard of value. We do not rest their validity upon the assertion that their omission is coinage, or any regulation of the value of money; nor do we assert that Congress may make anything which has no value ï¿½ money. What we do assert is that Congress has power to enact that the government's promises to pay money shall be for the time being equivalent in value to the representative of value determined by the coinage acts or to multiplies thereof. It is hardly correct to speak of a standard of value * * * It is, then, a mistake to regard the Legal Tender Acts as either fixing a standard of value or regulating money values, or making that money which has no intrinsic value," 79 U.S., at 553.
The Federal Reserve Act as promoted to the American public by its proponents gave the outward appearance that the "Money Trust" was being destroyed and was being replaced by a governmental agency which would operate for the benefit of the public. It was necessary that the American people be defrauded and deceived because the Act did not dethrone the "Money Trust" but in fact granted to that Trust thereto fore vast and unknown powers. As noted at the beginning of this brief, private groups have always desired to have the power to provide currency to a nation and this act in fact gave the Juilliard powers of Congress to a private, powerful, financial group.
The original act establishing the Federal Reserve System authorized the issuance of Federal Reserve Notes which were to be redeemed in "lawful money of the United States;" see 12 U.S.C. § 411. Prior to its repeal in 1994, 12 U.S.C. § 152 defined "lawful money" to be gold and silver coin, and therefore the act called for specie redemption of such notes. The fact that such notes were also deemed "obligations" of the United States conclusively shows that the Juilliard powers of Congress were conveyed to the System, since such powers were ostensibly derived from the Congressional power to "borrow money."
By June 1, 1933, a Congressional Joint Resolution, number 192, was proposed to make it against public policy to pay any obligation in gold. It was during the debate on this resolution that the fact was made known that the Federal Reserve Banks possessed virtually all the federal gold clause bonds to mature within the next 6 months.  This resolution was enacted on June 5, 1933, and notwithstanding the fact that it was only a joint resolution, it was accorded the force of law. On August 28, 1933, Roosevelt issued another Executive Order which required information returns for gold ownership and prohibited possession of gold except by license. Failure to file the required returns and possession of gold without license were made criminal offenses. All the fervent work by Roosevelt to outlaw gold and make the federal government the biggest "hoarder" of gold put American currency on the light, inconvertible currency standard. Such a standard was deemed "modern" like the architecture of the 1930s and the "boat tail" Duesenbergs, Auburns, and Cords.  The final piece of legislation secured by Roosevelt in his war upon gold ownership by American citizens was the Gold Reserve Act of January 30, 1934, 48 Stat. 337. In the tradition used to obtain the Emergency Banking Act of 1933, this legislation was likewise railroaded through Congress. Throughout this period, Roosevelt and Congress used an alleged "national emergency" as the predicate for the hasty legislation and orders so issued.
As a direct and proximate result of the far reaching changes made in monetary law in 1933 and 1934, litigation on these points arose. The 3 major Supreme Court decisions made as a consequence were Norman v. Baltimore and O. R. Co., 294 U.S. 240, 55 S.Ct. 407 (1935), Nortz v. United States, 294 U.S. 317, 55 S.Ct. 428 (1935), and Perry v. United States, 294 U.S. 330, 55 S.Ct. 432 (1935). Norman, supra, dealt with a railroad bond payable in gold coin; Norman sought payment of $38.10 on a bond payable in the amount of $22.50, his basis for asking for more arising from the change made in the statutory gold dollar. Seeing the inherent justice in denying relief to a person seeking more than he was entitled, the Supreme Court in Norman denied the relief sought. In Nortz, a plaintiff seeking similar relief got similar judgment as Norman. Nortz had $106,300 in gold certificates and was forced to exchange the same for inconvertible currency of the light standard. Based upon a higher market value of gold than legal value of the same, Nortz instituted suit to recover $64,334.07, the alleged difference between the market price of gold and the legal price. The Court denied his request for unjust enrichment. In Perry, the issue concerned a federal gold bond and the method of its payment in light of the June 5, 1933, Joint Resolution. Although the Court in Perry held the Joint Resolution to be unconstitutional insofar as it applied to federal bonds, it ultimately determined that Perry had neither alleged nor proven any damage in his breach of contract action and was therefore not entitled to any. In this trilogy of cases, all parties were seeking a gain or benefit as a result of the monetary changes caused by the President and Congress. The Joint Resolution of June 5, 1933, has no significance today because it has been effectively repealed; see 91 Stat. 1229. For cases explaining the end of HJR 192's application in 1977, and the validity of gold clause contracts today, see Fay Corp. v. BAT Holdings I, Inc., 646 F. Supp. 946 (W.D.Wash. 1986), affirmed at Fay Corp. v. Frederick & Nelson Seattle, Inc., 896 F.2d 1227 (9th Cir. 1990), Wells Fargo Bank v. Bank of America, 32 Cal.App.4th 424, 38 Cal.Rptr.2d 521 (1995); Trostel v. American Life & Casualty Insurance Company, 133 F.3d 679 (8th Cir. 1998); Nebel, Inc. v. Mid-City National Bank, 329 Ill. App.3d 957, 769 N.E.2d 45 (2002); and 216 Jamaica Ave. v. S & R Playhouse Realty Co., 540 F.3d 433 (6th Cir. 2008).
Since the monetary changes of the 1930s, the federal government has unilaterally ceased fulfilling its monetary responsibilities required by the Constitution (its Marigold duties) and has allowed the function of providing currency to the nation to be assumed by the Federal Reserve System. The minting of dollars of silver ceased in the 1930s, and the gold reserves so violently taken from the American people were used to support greater and greater quantities of notes as the gold reserve requirement was lowered over a span of many years.
Since the debacle of the 1930s, the "Fed" has provided monumental amounts of credit to the Federal government to finance World War II, the Korean War, and the vast increase in social programs enacted by Congress. The increasing quantities of credit provided to the federal government has enabled it to acquire more and more control over the G.N.P. of our nation.
Any analysis of the current monetary system must, of necessity, begin with an examination of the instruments of this system, which consist of the "clad" coin, Federal Reserve Note and demand deposit. It is through these instruments, this media of exchange, that the commerce of this nation is consummated. The apparent infirmity of all these instruments arises from the fact that each is virtually worthless and cannot by any stretch of the imagination be considered a standard of value. The cost to produce a "clad" coin is reputed to be less than 10% of the face value. The penny is made of zinc with a copper coating for purposes of deception; being some of the most common elements of the earth, they have relatively little value. The "higher" coins are likewise made of the cheap, plentiful elements of copper and nickel. In reference to the Federal Reserve Note, the cost to print the same is alleged to be $25.00 per 1000 bills, regardless of denomination. The substance of that note is paper, made of extremely plentiful wood. The only redeeming quality of that note consists of its fancy engraving, at least in comparison with other notes of the world. Notes used in other nations such as England and Saudi Arabia have a "comic book" or bathroom tissue quality or appearance.  While clads and notes have an actual existence, the same cannot be stated in reference to that "instrument" which plays the major role in our currency system, the demand deposit. The demand deposit does not exist in reality, it having no physical form. Such a deposit cannot be brought to court and placed into evidence. A demand deposit is nothing more than a chose in action; it is nothing more than a claim against a financial institution such as a private commercial bank. It exists, if at all possible, only as an electronic "glitch" in the memory of the computer terminals of the banks of our nation. While the quantity of clad coins and paper notes in circulation is somewhat limited by resources and production, the total amount of demand deposits which can be produced is virtually endless.
Perhaps the most reprehensible feature of our currency system arises from the fact that this currency originates by being loaned into circulation. An apt example of this process is a fictional card game. Assume the existence of 4 card players who borrow their playing cards from another person. The players execute and deliver notes promising to repay 13 cards plus 1 in the way of interest in exchange for 13 cards with which to play. This process put into circulation among the players the total sum of 52 cards. However, the aggregate liabilities of all the players is 56 cards, thus it is impossible for all players to extinguish the debt to the card owner. By loaning the cards into circulation, greater liabilities were created than there were cards in circulation. The card owner-creditor will surely acquire the collateral of the players through foreclosure.
The above are the principle defects of our currency system. This system is not designed to insure justice and promote domestic tranquility. It is designed for the exact opposite. This system is not just unconstitutional, it is anti-constitutional. The last refuge of the American people from sure and swift destruction at the hands of this monetary system is through the judiciary of our nation. And a little known and totally unused law is ready and waiting to be used for this purpose. That law is embodied in the "Supreme Law of the Land;" it is found in Article 1, § 10, cl. 1 of the U.S. Constitution.
The knowledge and experience gained by the central bankers in the 30's was put to use in the 1960s when a very silent war against silver was conducted, which resulted in the obliteration of all connections between this precious metal and our currency. While the attention of the American public was focused upon the preparations for sending men to the moon, one of the deadliest social diseases ever known to man, fiat money, was introduced to our nation.
7. People v. Lawrence, 124 Mich.App. 230, 333 N.W.2d 525 (Mich.App. 1983).
8. Leitch v. Oregon Dept. of Revenue, 519 P.2d 1045 (Or.App. 1974).
10. Middlebrook v. Miss. State Tax Comm., 387 So.2d 726 (Miss. 1980).
23. De Jong v. County of Chester, 98 Pa. Cmwlth. 85, 510 A.2d 902 (1986).
24. Baird v. County Assessors of Salt Lake & Utah Counties, 779 P.2d 676 (Utah 1989).

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