The Constitution of the United States and Honest Money

By: Douglas V. Gnazzo | Sun, Oct 29, 2006
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Honest Money Gold & Silver Report

"Government by precedent, without any regard to the principle of the precedent, is one of the vilest systems that can be set up."


In the past two months we have presented seven papers - one on each of the seven monetary clauses within the Constitution; and one article on Legal Tender as it warranted further elaboration. This will be the final article in the series: a summary and conclusions.

To facilitate an easier rendering of the summary of the clauses, we will once again list the seven clauses for direct reference.

The seven clauses in the US Constitution that deal with the topic of money are:

We will next list each clause individually with a synopsis of the main points of importance. After the summary various conclusions will be given - derived therefrom.

The First Clause

Article I, Section 8, Clause 2. The Congress shall have Power...To borrow Money on the credit of the United States.

We have seen that Congress was granted the power to borrow money, i.e. gold and silver coin, on the credit of the United States. Such contractual obligations involving a creditor and a borrower must be voluntary on both parties accounts.

A gnawing question and point of issue is that if Congress was granted the power to create and issue money, why would they need the power to borrow money, as stipulated in Article I, Section 8, Clause 2.

Why borrow money when you can create all you want?

Artilcle I, Section 8, Clause 2 which grants the power to borrow money is strong evidence that the government has no power to create and issue money, otherwise why borrow it as well?

The Second Clause

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.

The first point is simply what the words express: the power to coin money. Recall that Congress only has powers expressly granted by the Constitution - all other powers are reserved for the States or for We The People.

The wording expresses the power to coin money - not to print money, not to issue money, not to create money, not to loan money - simply the power to coin money.

Also of major importance is that the government did not hold title to the gold and silver the people brought to the Mint to be coined. The people held title to their private property.

Which then raises the question: what is the meaning of to coin money, as used and understood in Colonial times?

The word coin at the time of the writing of the Constitution meant to form discs composed of specific weights and fineness of precious metals, and to then stamp them with marks denoting their weight, fineness, and the State/Nation that performed the minting.

To regulate means to adjust to some type of measure, rule, or standard. That which is adjusted already exists, in other words, the power to adjust does not express the creation of something new that is not already in existence.

Therefore to regulate refers to the adjustment of the value of coinage already in existence according to arranging the value to a system of order denoted by a measure, rule, or standard.

Hence we see the natural affinity and genesis of the term "and fix the Standard of Weights and Measures" that follows after " to regulate the value thereof" in Article I, Section 8, Clause 5, presently under review.

To regulate the value thereof means to compare the weight and fineness of the coin to the STANDARD of weights and measures, and by such comparison of weight to weight to determine the ratio or value the coin had in terms of the standard.

Now to find the concise definition of to fix the standard. We know that only coin is to be money. Furthermore we know that only gold and silver are to be coined as money.

Thus the standard, or that which all coins of precious metals are to be compared to, for compliance as to weights and measures, precludes that the standard itself must be some weight and fineness of gold or silver.

Clause Three

Article I, Section 8, Clause 6. The Congress shall have Power...To provide for the Punishment of counterfeiting the Securities and current Coin of the United States.

By the use of the word and, and the description of two separate entities, i.e. securities and current coin, the wording makes it clear that two DIFFERENT and DISTINCT objects are being listed as subject to counterfeiting: securities, and current coin.

Securities are listed separately from current coin, obviously they are different or they would not have been listed separately. The Constitution makes no mention of the punishment for counterfeiting paper bills of credit, or paper money, for the EXACT reason that anything but gold and silver coin is prohibited and disallowed to function as money to begin with.

Secondly, if Congress has the power to create or issue money, why would they need the power to borrow money? They would simply, and more cheaply, create all the money they needed, without paying any interest on loans. It is non-sensical to the point of comical.

The power granted to borrow money shows that there was an existent NEED to borrow money. Such a need would not exist if Congress had the power to create or issue money.

Furthermore, taken together the various componets of the clause show that:

Lastly we quote from the Coinage Act of 1792 which clearly explains the punishment for counterfieting. It does not appear that most members of Congress or the Federal Reserve have read this portion of the Mint Act.

Sec. 19. And be it further enacted, That if any of the gold or silver coins which shall be struck or coined at the said mint shall be debased or made worse as to the proportion of fine gold or fine silver therein contained, or shall be of less weight or value than the same ought to be pursuant to the directions of this act, through the default or with the connivance of any of the officers or persons who shall be employed at the said mint, for the purpose of profit or gain, or otherwise with a fraudulent intent, and if any of the said officers or persons shall embezzle any of the metals which shall at any time be committed to their charge for the purpose of being coined, or any of the coins which shall be struck or coined at the said mint, every such officer or person who shall commit any or either of the said offences, shall be deemed guilty of felony, and shall suffer death.

Clause Four

Article I, Section 9, Clause 1. states that "the Migration or Importation of such Persons as any of the States now existing shall think proper to admit, shall not be prohibited by the Congress prior to the Year one thousand eight hundred and eight, but a Tax or duty may be imposed on such Importation, not exceeding ten dollars for each Person."

The pro-slavery advocates had to pay a ten dollar fee for each "person" in order for slavery to be allowed. This provision would not fly if the slave traders were not able to know the exact definition and value of the dollar that they had to pay.

In other words the dollar had to have a fixed value, otherwise the anti-slavery faction could force the slave trader's hand by increasing the purchasing power of the dollar. Thus more monetary value or purchasing power would exchange per imported person according to the stipulated rate of ten dollars.

Now the importance of the definition of a dollar is more easily seen. Not only is there an economical and monetary reason as to why the dollar should have a fixed standard of value - there was also the profit issue of slave trading, and the quantity and value of tax to be paid per person, i.e. ten dollars.

The question then is: what is a dollar according to the Constitution? As we said in the first paper - there is no exact or specific definition of a dollar spelled out in the Constitution. However, as Jefferson wrote and Hamilton included in the Coinage Act of 1792:

"To prepare an Ordinance for establishing the Unit of Money within these States; for subdividing it; and for striking coins of gold, silver, and copper, on the following principles:

That the Money Unit of these States shall be equal in value to a Spanish milled dollar containing so much fine silver as the assay, before directed, shall show to be contained, on an average, in dollars of the several dates in circulation with us."

Clause Five

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

Drawn from the Treasury is fairly self-explanatory, as it means withdrawing money that has been deposited with the Treasury. Money is silver and gold coin. The clause says that no money can be drawn from the treasury without being in "Consequence of Appropriations."

Thus no money can be drawn from the treasury without being in consequence of appropriations. The question then arises: who has the authority to appropriate money from the Treasury?

The Treasury does - if it is first authorized by Congress, as the powers were granted to Congress, not to the Treasury.

This is where it the crux of the issue falls, and is most important and telling. As we have seen above, no money can be withdrawn from the Treasury, by the Treasury, unless in consequence of appropriations.

The Treasury can only withdraw money if it has first been authorized to do so by Congress - as a consequence of appropriation made by law.

In other words, Congress must authorize all withdrawals of money, and only as a consequence of appropriations made by law. When was the last time this was done - perhaps the first time, whenever that was.

Clause Six

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

The first observation to note is that a distinction is made between to coin as money; and to emit bills of credit; and to make anything but gold and silver coin a tender in payment of debt.

Once again we find the Constitution stating an absolute prohibition: that no State shall emit bills of credit.

Prior to the Constitution the Articles of Confederation allowed bills of credit to be issued IF nine States approved of such measures. This power was purposefully left out of the Constitution.

Legal tender denotes the difference between money as an economic medium to exchange for goods and services in the marketplace, and the legal or juristic use of money to tender in payment of debt.

Money used according to its economic meaning refers to what society has agreed upon to be the common medium of exchange, that which is used to procure all other goods and services in the market place.

Money as legal tender refers to the medium that society, through its system of jurisprudence, recognizes and accepts as the legal medium in the payment of debt.

This is especially true in regards to what the government accepts and uses for the payment of debt, as well as for taxes, although taxes are not a debt in the pure sense of the word.

Clause Seven

The seventh amendment reads: " In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved."

This clause is very similar to Article I, Section 9, Clause 1, as they both make reference to DOLLARS. It is this reference to dollars that gives the clause monetary meaning and importance.

The Constitution, by the statements in the seventh amendment and in article I, Section 9, Clause 1, make it abundantly clear that dollars are the unit of account and unit of money of the United States. And the Coinage Act of 1792 leaves room for no doubt:

DOLLARS OR UNITS -- each to be of the value of a Spanish milled dollar as the same is now current, and to contain three hundred and seventy-one grains and four sixteenth parts of a grain of pure, or four hundred and sixteen grains of standard silver."


So there we have a reiteration of the most critical issues contained within the seven monetary clauses of the Constitution, including a discussion of legal tender thrown in for good measure. We will now offer a "list" of summary points.

The above are the main points that most "experts" in this subject would agree upon as being the main acceptable points denoting our constitutional monetary system. Now we will discuss a few points that we disagree with conventional monetary historians and theorists on.


Title To Private Property

The Coinage or Mint Act of 1792 allows for free coinage of We The People's silver and gold. All citizens could bring raw silver and gold bullion to the Mint and have it minted into the various coins listed in the Coinage Act of 1792 (Mint Act).

It is most important to note that all silver and gold brought to the Mint for minting was private property of the citizens. The people held title of ownership to the money - NOT THE GOVERNMENT.

The main means by which the money supply could increase or decrease was according to the minting of We The People's silver and gold bullion, or the melting down of coin back into bullion. In either case the important point is that the people held title to the money - not the government.

By Whose Authority

The government did, however, come into possession of money, i.e. gold and silver coin, in the payment of taxes, and by the minting of the production of publicly owned mines, and or the confiscation of private property according to eminent domain, as well as by borrowing it.

However, such actions presupposes that the government has the authority, and therefore the right, to tax its citizens, and to own or hold title to public lands on behalf of its citizens, as well as to seize property by eminent domain.

Obvious this is not the place or time to discuss these issues in their particulars, however, for the record we want to state that a case can easily be argued that sees no authority to tax or sieze private property from the citizenry, as such are coercive acts.

Coercive acts implies force, just as legal tender implies force. Any forced behavior is not free behavior and is arguably not in pursuance of the Constitution. Any law not in pursuance of the Constitution is null and void, as if it never occurred.

Public Trust

The supposed right of the government to hold title to public lands is questionable as well, especially in its finer points. For example, is not the government of the people, by the people, for the people?

The Constitution is a trust document. Within the trust, We The People gave Congress certain powers in order to run the government under contractual obligations, as a fiduciary entity.

Congress and the government were entrusted with the management of public property - not with the ownership or holder of title of public property. A fiduciary does not own its clients holdings - it manages the holdings which belong to the client.

We The People came first, the Constitution came second, and the government came third or last. Ownership of public anything resides with the people - not with the government. The government may maintain or oversee public property, but this is not the same as holding title to the public property.

The question can easily be asked - by whose authority? The question rarely gets asked - and even of more rarity is an honest answer.

This also involves the meaning of legal, lawful, and constitutional. Do all three mean the same? Is one more powerful then another? Can something be legal but not lawful? Can something be lawful but not constitutional? Which is the higher standard?

Legal, Lawful, & Constitutional

Which brings us to the last point of difference: legal tender. As far as we are concerned legal tender is coercive - it is forced obiediance to a central form and power that assumes it has rights over and above the people.

This is the exact reason why the Revolutionary War had just been fought - to break away from the rule by others by coercive means. This goes to the difference between being a subject and being a free citizen.

Also, we have seen that legal tender creates a distinction, or takes advantage of a distinction, between the juristic interpretation of money, and the economic meaning of money. Sound money should be able to function as both - simulataneously, equally, and fairly.

Yet this is not what transpired according to the legal tender laws. Legal tender laws created a split - a dichotomy in our monetary system, a weakness that was then slowly worked on by the elite bankers until the "crack" in the system became as wide as the Cumberland Gap and the Grand Canyon.

Inherent Flaw

One cannot fix a weight of silver of 371.25 grains as THE STANDARD of the entire monetary system, AND also say that gold and silver are to exchange at 15 to 1 according to legal tender laws - knowing full well that in the marketplace the economic definition and exchange value of gold to silver would change daily.

This allowed Gresham's Law to wreak havoc on our monetary system - first driving one metal dearer and the other farther, and then vice versa. This allowed the elite bankers to take advantage of such differences, especially regarding international exchange rates that differed even further.

The Games

The games began to be played before the ink had time to dry on the Constitution - it is most evident and clearly seen by those who take the time and trouble to look.

This is why legal tender laws need to be addressed by a constitutional amendment - to right the wrong that has existed from the start - before the finish comes all too quick for those swift of foot. The day draws closer - by the hour.


We are not of the opinion that the Constitution degovernmentalized money. It may have looked that way on the surface - by design, but beneath the surface lay in waiting a most vile and pernicious thing: greed and lust for power - a sinister force waiting to be unleashed, and so it was. Absolute power corrupts - absolutely. And so it has.

The Final Balancing

But all things get weighed in the balance, and those found wanting are corrected, or cease to be. Such has it been written. Such will it be - until it is no more. The circle remains unbroken.



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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