AUSTIN, Tex. (Mar. 17, 2015) A bill legalizing the constitution by authorizing the use of gold and silver as legal tender was introduced in the Texas state Senate last week.
Introduced by State Sen. Konni Burton (R-10) on March 11, Senate Bill 1245 (SB1245) re-affirms gold and silver as legal tender in the state of Texas on a voluntary basis. Under the bill, individuals would be free to “use gold or silver coin or gold or silver bullion as legal tender in this state for the payment of any private or public debt.”
This bill would mark the first step toward currency competition. If sound money is given a foothold in the marketplace against Federal Reserve notes, the people would be able to choose the time-tested stability of gold and silver over the central bank’s rapidly-depreciating paper currency. The freedom of choice expanded by SB1245 can allow Texas residents to secure the purchasing power of their money.
SB1245 works hand-in-hand with another bill filed in the state Senate this year. Introduced by Burton and Sen. Lois Kolkhorst, Senate Bill 989 (SB989) would create a state bullion depository. It reads, in part:
Sec. 2116.002. TEXAS BULLION DEPOSITORY.
(a) The Texas Bullion Depository is established as an agency of this state in the office of the comptroller.
(b) The depository is established to serve as the custodian, guardian, and administrator of certain bullion and specie that may be transferred to or otherwise acquired by this state or an agency, a political subdivision, or another instrumentality of this state.
What the bill essentially does is create a means for intergovernmental transactions to occur in precious metals. Taxes could be paid in precious metals and it would allow people who receive payments from the government to elect precious metals for payment. It would also allow normal citizens to open an account and deposit their precious metals in the state depository. They could then use the electronic system to make payments to any other business or person who also hold an account.
In short, it will help establish a system whereby people will be able to more easily conduct day-to-day transactions by gold and silver, an essential step in the promotion and use of sound money.
“The key is to make it so people can use gold and silver instead of fiat paper money,” said Michael Boldin of the Tenth Amendment Center. “Working together, these bills won’t nullify the Fed on their own, but they’re an important step forward in that direction.”
Currently, all debts and taxes in Arizona must either get paid with Federal Reserve Notes (dollars), authorized as legal tender by Congress, or with coins issued by the U.S. Treasury — very few of which have gold or silver in them.
But 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.”
The Constitutional tender act takes a step towards that constitutional requirement, ignored for decades in every state. Such a tactic would undermine the monopoly the Federal Reserve system by introducing competition into the monetary system.
Professor William Greene is an expert on constitutional tender and said when people in multiple states actually start using gold and silver instead of Federal Reserve Notes, 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.
Once things get to that point, Federal Reserve notes would become largely unwanted and irrelevant for ordinary people. Nullifying the Fed on a state by state level is what will get us there. The passage of SB1245 would mark the first step toward that ultimate goal.
The bill has yet to receive a committee assignment at the present time. It must pass through a committee successfully before it can receive a vote in the full Senate.