Gold & Silver Certificates: The Story Behind The Story Part 3

By: Douglas V. Gnazzo | Mon, Jul 17, 2006
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Honest Money Gold & Silver Report

"So it always happens that whenever a wrong principle of conduct,
political or personal, is adopted on a plea of necessity, it will be afterwards
followed on a plea of convenience." [1]


The following paper is the third in a series on Gold and Silver Certificates. The papers are in response to several paragraphs taken from Wikipedia, the on-line encyclopedia, that appeared in the June 24th Precious Metals Timing Report.

The focus of this the third article, will be on the quoted paragraph below, as it appeared in the above referenced report; and as it appears in the Wikipedia encyclopedia.

"In 1928, the United States Treasury decided to reduce the size of its currency in order to speedup transactions, and also to cut costs. By this time, the Federal Reserve had taken over much of the currency market, and the prices of gold and silver had risen greatly. For Series 1928, only $1 Silver Certificates were produced.

Fives and tens of this time were mainly Federal Reserve Notes, which were backed by and redeemable in gold. All this would change, however, with the beginning of the Great Depression in October 1929. The United States was plunged into an economic disaster of profound proportions. Many citizens blamed the fluctuating price of gold, which directly affected the U.S. dollar because it was pegged to the value of gold." [2]

We have seen in the previous papers that the Constitution clearly states that nothing but gold and silver coin is to circulate as currency. We have also seen that the Constitution states that no bills of credit are to be issued. Furthermore, we have seen the Supreme Court rule that the Treasury Note issuance of 1844 was unconstitutional. See Gold & Silver: The Story Behind the Story and Gold & Silver Certificates: The Story Behind the Story Part 2 for a more detailed account.

Yet in one fell swoop, the article under review, jumps from 1878 to 1928, which is half a century, and by omission, acts as if no other important monetary policy occurred during that entire period, as none is mentioned. As we said last week: a lot of information has been left out.


From 1844 to 1861, Congress fully adhered to the hard currency system of the Constitution and the Coinage Act of 1792. Aside from the Treasury Notes of 1815 and 1844, which the Supreme Court ruled unconstitutional, Congress did not sway from the constitutional path until the Civil War broke out.

The urgent need to fund the war pressured Salmon P. Chase to issue Treasury Notes that were unconstitutional: the infamous Greenbacks. Later, as a Supreme Court Justice, Chase himself ruled that his act of issuing Greenbacks was unconstitutional: one of the court's greater moments of justice. The decision was later overturned: one of the court's many moments of vainglory.


The second sentence in the paragraph under discussion reads:

"By this time, the Federal Reserve had taken over much of the currency market, and the prices of gold and silver had risen greatly." [3]

According to the Constitution, nothing but gold and silver coin were to circulate as money. The constitutional dollar was defined as one ounce of silver - a silver dollar coin.

If such a system is adhered to, the statement "By this time, the Federal Reserve had taken over much of the currency market, and the prices of gold and silver had risen greatly," would make no sense, as such an occurrence is constitutionally impossible.

The dollar of the Constitution is a weight of silver: 371.25 grains. Silver has no price that can be expressed as a number of paper bills known as Federal Reserve Notes or dollar bills. Such renderings are those of the temple magicians, whose job it is to deceive the common people with falsehoods and lies, predicated upon illusion and delusion.

Our monetary system is still on the silver standard, as only a constitutional amendment can change it, and one has never occurred. Whether the standard is adhered to and followed is another matter, that has to do with We The People's choice versus our elected representative's choice.

Freedom must be desired more than one's care for by the State, otherwise one becomes a subject - an objective: a ward of the State - paid for, signed, sealed and delivered.

The Silver Dollar of the Constitution is not a dollar bill or a Federal Reserve Note.

To confuse the two as being the same is mere sophistry. To enact a monetary system based on such illusion is not only unconstitutional, it is a fraud, and arguably embezzlement as well.


The next sentence of import from the report to be reviewed reads:

"Fives and tens of this time were mainly Federal Reserve Notes, which were backed by and redeemable in gold". [4]

The date that this is said to have been referring to was 1928. Once again the amount of information not mentioned is more important than what was said, which is nevertheless, in part, misleading and wrong.

According to the above quoted sentence, Federal Reserve Notes were backed by, and redeemable in gold. This is not true in aggregate.

The largest amount of gold backing that ever existed for Federal Reserve Notes was 40%, and this was in 1913, the year the Federal Reserve Act of December 23, 1913 was authorized. Thereafter, it was continually reduced to the point of non-existence.

"Every Federal reserve bank shall maintain reserves in gold or lawful money of not less than thirty-five per centum against its deposits and reserves in gold of not less than forty per centum against its Federal reserve notes in actual circulation, and not offset by gold or lawful money deposited with the Federal reserve agent...." [5]

To leave so many crucial facts out of a description of our monetary system, and to instead use broad and sweeping generalities that euphemistically provide a picture of a much sounder monetary system then actually existed, is to naively succumb to the illusions of the wicked witch of the East, and to be taken to the Land of Oz - where the wizard awaits behind his make believe façade. See The Wonderful Wizard of Oz for the real story behind the story of Oz.


The next sentence of import reads:

"Many citizens blamed the fluctuating price of gold, which directly affected the U.S. dollar because it was pegged to the value of gold." [6]

Once again this statement is very misleading, as the complete story remains untold.

We have seen that a dollar of the Constitution (silver dollar coin) is not the same as a dollar bill or a Federal Reserve Note.

However, what is meant by the U.S. dollar in the above-quoted sentence is the U.S. dollar bill or Federal Reserve Note, otherwise such a reference would mean that gold was being pegged to itself.

It is not gold that lost its value - it is the Federal Reserve Note that lost value, and the elite moneychangers made it appear that gold was at fault: gold is their lackey - their whipping boy.

Once again, to confuse the dollar bill (FRN) with the dollar of the Constitution is utter folly, which is the intended purpose: to confuse the public into accepting that which is unacceptable: paper fiat debt-money or Federal Reserve Notes.

Only when the constitutional hard currency system is not adhered to, is it possible to speak of a fluctuating price of gold in paper dollar bills, precisely because the gold is priced in dollar bills, which is not what the Constitution mandates to be the case.

It is the purchasing power of the dollar bills that is changing, not that of gold. The system has been turned inside out and upside down. It is utter nonsense, akin to the Tower of Babel, from which all elite moneychangers appear to be descended.

If the original hard currency system of silver and gold coin is adhered to, there is no such thing as a price for gold expressed in Federal Reserve Notes, as they are not constitutional dollars, which is a specific weight of silver: 371.25 grains - one Silver Dollar Coin.


The constitutional system of gold and silver allowed for the exchange of gold and silver to occur ONLY by exchange rates or ratios according to WEIGHT - Honest Weights and Measures, not according to a number of some fictitious paper bills of credit that is not constitutionally authorized. As Justice Field most clearly stated:

"For nearly three-quarters of a century after the adoption of the Constitution, and until the legislation during the Civil War, no jurist and no statesman of any position in the country ever pretended that a power to impart the quality of legal tender to its notes was vested in the general government. There is no recorded word of even one in favor of its possessing the power. All conceded, as an axiom of constitutional law, that the power did not exist." [7]


Although not mentioned in the quoted passages under discussion, the Gold Standard Act- March 14, 1900 is most germane to the issues at hand.

"Be it enacted... That the dollar consisting of twenty-five and eight-tenths grains of gold nine-tenths fine, as established by section thirty-five hundred and eleven of the Revised Statutes of the United States, shall be the standard unit of value, and all forms of money issued or coined by the United States shall be maintained at a parity of value with this standard, and it shall be the duty of the Secretary of the Treasury to maintain such parity." [8]

This is the gold standard usually mentioned in most writings and articles on the subject. Congress declared that "the dollar consisting of 23-22/100 grains of fine gold, as established by the Coinage Act of 1873", was to be the "standard unit of value".

So once again Congress declares the gold dollar to be the standard. Buried within the many provisions of the Act of 1900, however, are several issues that raise perhaps more questions then are answered.

In section III we read: "That nothing contained in this Act shall be construed to affect the legal tender quality as now provided by law of the silver dollar, or of any other money coined or issued by the United States".

Elsewhere it is stated, "all forms of money issued or coined by the United States shall be maintained at a parity of value with this standard."

In light of the above two sanctions the following provisions are most curious. We find that the United States Notes (Greenbacks) and Treasury Notes, are no longer to be redeemed in either silver or gold coin, but only in gold of the new standard, thus excluding silver.

Next - what basically amounts to a general refunding of the national debt is stated - as existing outstanding bonds that were previously payable "in coin" (both silver & gold) - were now to be exchangeable for new bonds that were payable in gold and gold alone.

And finally, the act also authorized the issuance of silver and gold certificates, however, once again we find a most curious and puzzling provision - the prohibition of the gold certificates from being used for private debts.

The contradictions and incongruities of the Coinage Act of 1900 beg human comprehension and understanding, and most notable is the lack of any semblance of honest disclosure. The Constitution on the other hand is most clear, precise, and honest:

Article I, Section 8, Clause 5. The Congress shall have Power...To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures.

Article I, Section 9, Clause 7. No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.

Article I, Section 10, Clause 1. No State shall...coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debt. [9]

More will be forthcoming.

Come visit our new website: Honest Money Gold & Silver Report
And read the Open Letter to Congress


[1] 110 US
[2] Precious Metals Timing by Ron Rosen
[3] Same as above
[4] Same
[5] Federal Reserve Act of 1913
[6] Precious Metals Timing by Ron Rosen
[7] 110 US at 451
[8] Gold Standard Act of 1900
[9] The United States Constitution



Douglas V. Gnazzo

Author: Douglas V. Gnazzo

Douglas V. Gnazzo
Honest Money Gold & Silver Report

Douglas V. Gnazzo is the retired CEO of New England Renovation LLC, a historical restoration contractor that specialized in the restoration of older buildings and vintage historic landmarks. Mr. Gnazzo writes for numerous websites, and his work appears both here and abroad. Just recently, he was honored by being chosen as a Foundation Scholar for the Foundation of Monetary Education (FAME).

Disclaimer: The contents of this article represent the opinions of Douglas V. Gnazzo. Nothing contained herein is intended as investment advice or recommendations for specific investment decisions, and you should not rely on it as such. Douglas V. Gnazzo is not a registered investment advisor. Information and analysis above are derived from sources and using methods believed to be reliable, but Douglas. V. Gnazzo cannot accept responsibility for any trading losses you may incur as a result of your reliance on this analysis and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities. Do your own due diligence regarding personal investment decisions. This article may contain information that is confidential and/or protected by law. The purpose of this article is intended to be used as an educational discussion of the issues involved. Douglas V. Gnazzo is not a lawyer or a legal scholar. Information and analysis derived from the quoted sources are believed to be reliable and are offered in good faith. Only a highly trained and certified and registered legal professional should be regarded as an authority on the issues involved; and all those seeking such an authoritative opinion should do their own due diligence and seek out the advice of a legal professional. Lastly, Douglas V. Gnazzo believes that The United States of America is the greatest country on Earth, but that it can yet become greater. This article is written to help facilitate that greater becoming. God Bless America.

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