One of the most important aspects of restoring sound money to our country is the need for people to “wrap their heads around” the idea that gold and silver are money, and not just commodities. The Constitutional Tender Act does that by returning the State back to obedience to the Constitution’s Article I, Section 10 negative mandate (“No State shall… make any Thing but gold and silver Coin a Tender in Payment of Debts”).
By doing this, as I explained in a recent article, precious metal coinage could return, because the State would be required to only use gold and silver coins (or their equivalents, such as checks or electronic transfers) for payments of any debt owed by or to the State. All contracts, tax bills, etc. would be required to be denominated in legal tender gold and silver U.S. coins. All State-chartered banks, as well as any other bank that is a depository for State funds, would be required to offer accounts denominated in those types of gold and silver coins, and to keep such accounts segregated from other types of accounts such as Federal Reserve Notes.
The State would use gold and silver coins as money; the public and businesses would start using gold and silver as money, in addition to Federal Reserve Notes; and the use of sound money would return to America, one State at a time.
But with all of that said, one of the most interesting things to come out in the State legislative committee hearings that the Constitutional Tender Act received when it was first introduced in Georgia, was the idea in those legislators’ heads that gold and silver simply could not be USED as money, PERIOD. We heard comments like these:
- “Where would the State keep all of its gold and silver coins?” (Answer: Where does the State keep all of its Federal Reserve Notes? In a BANK, of course – just like they would under this Act.)
- “How would people be able to carry around all of those heavy gold and silver coins?” (Answer: How do they carry tens of thousands of dollars in Federal Reserve Notes around? They DON’T – they carry checkbooks and debit cards – just like they would under this Act.)
- “How would people buy things at the grocery store?” (Answer: How do people buy things at the grocery store now? With physical cash, or with a check, or with a debit card, or with a credit card – just like they would under this Act.)
What do all of these kinds of questions have in common? They’re based on a narrow view of what money is. Too many people have simply gotten used to the idea that pieces of green paper with dead presidents’ pictures on them, and that aren’t backed by anything of value, are “money,” and gold and silver are “commodities.” But that’s a rather new idea, historically speaking; fiat money (pieces of paper backed by nothing, and declared “legal tender” by the government) was very much frowned upon by our Founders – which is why they explicitly denied to the States the power to use it. Until the past century or so, you could always pay for things with actual gold and silver coins. But, the general population has been trained by our “modern” government to throw that notion away, and to keep using those pieces of paper that lose more and more of their value every day… while gold and silver keeps its value.
Which brings me to the reason for this post: If you look back, I’ve written before about the coming of ATMs that exchange paper fiat money for actual gold. This is just a precursor — a taste — of what I’m talking about here: modern banking based on sound money. And those gold ATMs aren’t just in a single location; one company alone has place them in cities all over the world, including within the United States.
Like I said, this is just a “taste” of the modern specie-based banking we can look forward to, if we implement ideas like the Constitutional Tender Act. But that’s why this idea is key: the more we get used to the notion of gold and silver being money, the sooner we’ll finally return to sound money that holds its value — and the sooner we can save our trashed economy.
William Greene is the author of the original Constitutional Tender Act, a bill template that can be introduced in every State legislature in the nation, returning each of them to adherence to the United States Constitution’s actual legal tender provisions. He is an Assistant Professor of Political Science at South Texas College.