Thursday, June 26, 2008

Larry Becraft responds to Jon Mosley about "COLONIAL ERA PAPER CURRENCY"

Jon Mosley,

In 1789, Peletiah Webster aptly described the social damage resulting from the experiments in paper money:

"Paper money polluted the equity of our laws, turned them into engines of oppression, corrupted the justice of our public administration, destroyed the fortunes of thousands who had confidence in it, enervated the trade, husbandry and manufactures of our country, and went far to destroy the morality of our people."

You, Jon, recently stated, among other contentions, as follows:

“The Framers clearly had in mind the possibility that paper currency and things other than gold and sliver [sic] can be money.”

This and other allegations you make clearly demonstrate that you know next to nothing about the legal history of money in this country, which is long and interesting.
The idea of paper money was clearly rejected by the Philadelphia Constitutional convention, and proof thereof is found in the several notes of the Convention. Furthermore, there are a large number of cases decided before the civil war that held that only gold and silver was money. For example, in Gasquet v. Warren, 10 Miss. 514, 517 (1844), that court stated:

"It means that which in fact and law is money, which is gold or silver coin. This in law is money and nothing else is."

Of the several decisions of the U.S. Supremes, perhaps the decision in United States v. Marigold, 50 U.S. (9 How.) 560, 567-68 (1850), demonstrates the thought of that court:

"They appertain rather to the execution of an important trust invested by the Constitution, and to the obligation to fulfill that trust on the part of the government, namely, the trust and the duty of creating and maintaining a uniform and pure metallic standard of value throughout the Union. The power of coining money and of regulating its value was delegated to Congress by the Constitution for the very purpose, as assigned by the framers of that instrument, of creating and preserving the uniformity and purity of such standard of value * * *.

"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  one possessing no intrinsic value  then the power conferred by the Constitution would be useless  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."

You may read this decision here:

I have a wide variety of cites to and quotes from cases of this period posted here:

Where did we get federal “legal tender paper money”? During the civil war, Chase was Treasury Secretary and he developed the idea (as published in the Annual Reports of the Treasury) of issuing federal notes to finance the war. Congress followed suit and issued those notes, later making them a legal tender. Chase was later appointed to the Supreme Court as Chief Justice, and I suspect that the reason for doing so was to insure he would uphold the constitutionality of those legal tender acts. However, he disappointed everyone when the Court took cert on a case from Kentucky; see Hepburn v. Griswold, 75 U.S. 603, 625 (1869). In this case, Chase concluded that his own acts of advocating legal tender paper were unconstitutional. I attach hereto a copy of the decision in Hepburn.

Only when the Court was packed with a couple of railroad lawyers did it decide to rehear this question. Then in the Legal Tender Cases, the power to issue such notes during war was upheld. That decision could not isolate where this legal tender power was found in the constitution; it merely pointed to the constitution and by fiat declared that such power was there.

This issue is long and complex. It would benefit you if you would at least minimally educate yourself about the legal history of this issue.


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