The United States Constitution states, in Article I, Section 10, “No State shall… make any Thing but gold and silver Coin a Tender in Payment of Debts.”
When was the last time your state followed this? For most living humans – never. In recent years, though, a number of states have seen Constitutional Tender Acts introduced with the goal of righting this wrong. Passage would nullify federal legal tender laws that prevent states from abiding by Article I, Section 10 of the Constitution.
In the 2011 legislative session, Georgia will consider House Bill 3 (HB3), which states, in part:
The General Assembly finds that, as mandated by Article I, Section 10 of the United States Constitution, the state shall not “make any Thing but gold and silver Coin a Tender in Payment of Debts.” Federal Reserve Accounting Unit Dollars, having no redeeming value in gold or silver coin, shall not be made a tender in payment of debts by the state.
and further:
silver coins, silver eagles, and gold eagles shall be the exclusive medium which the state shall use to make any payments whatsoever to any person or entity, whether private or governmental. Such coins shall be the exclusive medium which the state shall accept from any person or entity as payment of any obligation to the state including, without limitation, the payment of taxes; provided, however, that such coins and other forms of currency may be used in all other transactions within the state upon mutual consent of the parties of any such transaction
The result? Bill Greene sums it up best in a recent Tenth Amendment Center op-ed:
Over time, as residents of the State use both Federal Reserve Notes and silver and gold coins, the fact that the coins hold their value more than Federal Reserve Notes do will lead to a “reverse Gresham’s Law” effect, where good money (gold and silver coins) will drive out bad money (Federal Reserve Notes). As this happens, a cascade of events can begin to occur, including the flow of real wealth toward the State’s treasury, an influx of banking business from outside of the State (as citizens residing in other States carry out their desire to bank with sound money), and an eventual outcry against the use of Federal Reserve Notes for any transactions.
You can download the Constitutional Tender Act template here:
http://www.tenthamendmentcenter.com/legislation/constitutional-tender/
Track Constitutional Tender legislation in the states at this link:
http://www.tenthamendmentcenter.com/nullification/constitutional-tender/
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“The Central Bank is an institution of the most deadly hostility existing against the Principles and form of our Constitution. I am an enemy to all banks discounting bills or notes for anything but coin. If the American people allow private banks to control the issuance of their currency, first by inflation, then by deflation the banks and corporations that grow up around them will deprive the people of all their property, until their children will wake up homeless on the continent their Fathers conquered.”
-–Thomas Jefferson
Article I, Section 10 also says that States may not coin money, so they wouldn't be able to mint the gold and silver coins themselves. The Constitutional Tender Act simply returns the State to using what the Constitution *requires* it to use (in this case, Gold Eagles, Silver Eagles, and pre-1964 silver coins, all official legal tender minted by the United States Mint). The State has to pay using gold and silver, and anyone paying the State has to use gold and silver. That nullifies federal legal tender laws regarding Federal Reserve Notes, as they relate to the State. And if one State passes this law, the rest will follow quickly, as fiat FRNs continue their inevitable rapidly-increasing decline in value.[youtube 9Cal4wfNeuU http://www.youtube.com/watch?v=9Cal4wfNeuU youtube]
The nature of precious metals is that they are the creators of their own value, not the mintng entity. The State did not give the gold or silver value, it gave it portability and standardization. A gold coin retains its intrinsic value no matter where it goes because it is its own authority.
@David, there is no reason why gold and silver coins would not circulate in other states. In the past, there were many mints, usually private; coins from mints with solid reputations traded at par; those from mints with bad reputations traded at a discount.
Gresham's Law ( bad money drives out good ) is true only when "legal tender" laws force people to treat bad money as if it were good. When people are free to choose, good money drives out bad.
If gold and silver coins are made and used in a state, does that mean that the coins could not be used outside that state?
I'm not completely sure about this, but as long as someone agrees to take them as payment, they could probably be used anywhere. I would certainly take gold or silver (in any form) in lieu of Federal Reserve Notes anyday.
Thanks for writing this. I have been saying for a long time that the States should coin gold/silver currency and nullify the federal reserve. Here is my take on political theory
Interesting take on politics in general and political theory in particular. The classic liberal vs the traditional conservative. Read it, leave a comment, follow, tell a friend to do the same. Become part of the solution by joining the revolution http://confederateunderground.blogspot.com/2010/1…
A state won't even have to do that since they can insist that payment be made in gold or silver. That gold and silver can be held in the person's hand or in already established gold accounts like the gold companies you see on television. Simply transfer the official ownership of the gold in those accounts from the taxed person to the state that wants the tax. Eventually the state's treasury will have its name on those gold bullion it holds.