AUSTIN, Texas (May 5, 2017) – Yesterday, the Texas House unanimously passed a bill that would facilitate the establishment and operation of the Texas Bullion Depository; helping to undermine the Federal Reserve’s monopoly on money.
Rep. Giovanni Capriglione (R-Keller) introduced House Bill 3169 (HB3169) in March.
The legislation includes various provisions for the operation and administration of the Texas Bullion Depository, to define the roles of depository agents, to direct the appropriation of money from depository fees, charges, penalties, and other amounts related to the depository. The bill also includes provisions to exempt precious metals in the depository from property taxes.
Passage of the bill would represent a major step forward in the process of establishing the Texas Bullion Depository and in facilitating sound money in Texas.
On April 20, the Investment and Financial Services Committee passed HB3169 by a 5-0 vote. It was fast-tracked to from there, and the full House passed it by a 143-0 vote yesterday.
Gov. Greg Abbot signed a law creating a state gold bullion and precious metal depository in the summer of 2015. Since then, the state has moved forward in establishing the depository.
Once operational, private individuals and entities will be able to purchase goods and services, using assets in the vault the same way they use cash today. Exemption from taxation of precious metals stored in the vault will further facilitate the use of stored bullion as money.
This would incentivize the use the Texas Bullion Depository. If they then start allowing checks and debit cards to be used in conjunction with the bullion accounts – likely the next step – it would essentially create a specie- and bullion-based bank introducing currency competition with Federal Reserve notes.
Constitutional tender expert Professor William Greene wrote a paper for the Mises Institute arguing that enough states start transacting business in sound money, it would effectively nullify the Federal Reserve and end the federal government’s monopoly on money.
“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 people 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.”
The Texas gold depository creates a mechanism to begin this process, and provides a blueprint for other states to follow.
HB3169 now moves to the Senate for further consideration.