Sound Money & Constitutional Banking
Article 1, Section 8, Clause 5 of the Constitution grants only to Congress the power “To coin Money [and] regulate the Value thereof“, with no provision for such power to be delegated to any other group.
Congress began immediately to fulfill this obligation with the Mint Act of 1792, establishing a US Mint for producing Gold and Silver based coin, prescribing the value and content of each coin, and affixing the penalty of death to those who debase such currency.
Article 1, Section 10 states that “No State shall … coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts“.
During the 1787 Constitutional Convention, the Founding Fathers debated the issue of paper money. James Madison’s Journal of the Federal Convention clearly indicates their “original intent” to preclude the Nation from suffering under a paper money supply. Noting the experience in the early history of this Nation, and of nations in Europe, it was suggested that allowing the government to print paper money “would be as alarming as the mark of the Beast in Revelation.” It was also noted that the entire proposed constitution would be a failure if the power to print money was allowed. The Convention voted in favor of preventing the issue of unbacked paper money. (See James Madison, Journal of the Federal Convention, Vol.2, p.541-543 [Thursday 16 August 1787]) Later debates in the Convention confirm the concerns held about paper money. (See James Madison, Journal of the Federal Convention, Vol.2, p.620)
Also, in Federalist Papers 42 and 44, James Madison briefly touches upon the issue of paper money.
Brevity necessitates that only a few statements by the Nation’s Founders be noted:
George Washington wrote:
“I am well aware that appearances ought to be upheld, and that we should avoid as much as possible recognizing by any public act the depreciation of our currency; but I conceive this end would be answered, as far as might be necessary, by stipulating that all money payments should be made in gold and silver, being the common medium of commerce among nations.” (To the President of Congress. Fitzpatrick 11:217. ).
“Every other effort is in vain unless something can be done to restore [the currency’s] credit… The liberties and safety of this country depend upon it; the way is plain; the means are in our power. But it is virtue alone that can effect it.” (To Edmund Pendleton. Fitzpatrick 17:52. ).
“Experience has demonstrated the impracticality long to maintain a paper credit without funds for its redemption. The long depreciation of our currency was in the main a necessary effect of the want of those funds.” (To John Laurens. Fitzpatrick 21:106. ).
Thomas Jefferson also felt it critically important to keep the Nation’s monetary system on a sound footing, saying:
“One of the great advantages of specie as a medium is that, being of universal value, it will keep itself at a general level.…[quoting Adam Smith, Jefferson notes] that ‘the commerce and industry of a country cannot be so secure when suspended on the Daedalian wings of paper money as [when] on the solid ground of gold and silver.’” (To John W. Eppes. Bergh 13:412. ).
“Specie is the most perfect medium, because it will preserve its own level; because, having intrinsic and universal value, it can never die in our hands; and it is the surest resource of reliance in time of war.…The trifling economy of paper as a cheaper medium, or its convenience for transmission, weighs nothing in opposition to the advantages of the precious metals.…[Paper money] is liable to be abused, has been, is, and forever will be abused, in every country in which it is permitted.” (To John W. Eppes. Bergh 13:430. (1813]).
Founding Father Noah Webster defined “specie” (in the first dictionary, Webster’s 1828 Dictionary) thus:
SPECIE, noun spe’shy. Coin; copper, silver or gold coined and used as a circulating medium of commerce.
He also defined “coin” thus:
COIN, noun Primarily, the die employed for stamping money. Hence,
1. Money stamped; a piece of metal, as gold, silver, copper, or other metal, converted into money, by impressing on it marks, figures or characters. To make good money, these impressions must be made under the authority of government. That which is stamped without authority is called false or counterfeit coin Formerly, all coin was made by hammering; but it is now impressed by a machine or mill.
COIN, verb transitive
1. To stamp a metal, and convert it into money; to mint.
These are the terms and definitions that were used by the American Founding Fathers as they defined their money system.
Thus, the Constitution forbade the States from accepting or using anything other than a Gold and Silver based currency. Money functions as both a medium of exchange and a symbol of a nation’s morality.
The Founding Fathers established a system of “coin” money that was designed to prohibit the “improper and wicked” manipulation of the nation’s medium of exchange while guaranteeing the power of the citizens’ earnings. The federal government has departed from the principle of “coin” money as defined by the U.S. Constitution and the Mint Act of 1792 and has granted unconstitutional control of the nation’s monetary and banking system to the private Federal Reserve System. The Constitution Party recommends a substantive reform of the system of Federal taxation. In order for such reform to be effective, it is necessary that the United States:
- Return to the money system set forth in the Constitution;
- Repeal the Federal Reserve Act, and reform the current Federal Reserve banks to become clearing houses only; and
- Prohibit fractional reserve banking.
It is our intention that no system of “debt money” shall be imposed on the people of the United States. We support a debt free, interest free money system.