Editor Pensacola Journal.
Every dollar of paper money ever put into circulation in the United States is unconstitutional and void, unless the legal tender United States paper note is an exception, for the reason they are “emitted bills of credit.”
It is painful, as an attorney at law, to make this statement, but I cannot avoid it. It is true. The Supreme Court holds “The constitution is the supreme law of the land and upon its adoption the sovereignty of the states ceased to exist as to all matters confided to the federal government. (Dodge v. Woolsey 18 How. S31).
Before the adoption of the constitution the colonies, and independent states, exercised the sovereign power to coin money and emit bills of credit for their especial use and benefit. This sovereign power was taken from the states. “No state shall coin money or emit bills of credit.” Only a part of this power taken from the states was conferred upon congress: “Congress shall have power to coin money, and regulate the value thereof. The constitution is my authority.
The power to emit bills of credit was not granted to congress. Before March 4, 1789, under the articles of confederation: “Congress shall have power to borrow money or emit bills on the credit of the United States.” After March 4, 1789, under the constitution: “Congress shall have power to borrow money on the credit of the United States, the words “or emit bills were stricken out. See Juilliard vs. Greeman (110 U. S. 421.) The constitution says: All legislative power herein granted shall be vested in a congress, etc. if the power “to emit bills” was stricken out and not granted, what is stricken out, becomes an important question.
In Craig vs. Missouri (4 Peters 410) Chief Justice Marshall, speaking for the court, said: “What is a bill of credit? What did the constitution mean to forbid? To emit bills of credit conveys to the mind the idea of issuing paper intended to circulate as money, which paper is redeemable at a future day. Congress and the states have no constitutional power (and never have had since March 4. 1789) to circulate a promise to pay gold for money. Congress was given the unlimited power, the sole power, to make money. Why then permit them or anyone else to circulate a promise to pay money for money?
Whether the people, who made the constitution and took from the states the power to make money and granted the sole power to make money to congress, were wise or foolish, is not the question. They did it!
Whether the people were wise of foolish, to take from both the states and the nation the power to emit bills of credit, is not the question. They did it!
It was wise financially to place the sole power in one body, so that the money would be good in all the states. One money instead of 48 kinds of money; but whether it was wise to have granted to and vested in congress that power, in view of their failure for 123 years to comprehend what “to coin money” means, is the paramount political issue in 1912. The wisdom of wiping out the “emission of bills of credit” a promise to pay money for money is self-evident. The people who made the constitution were honest, expert financial students who regarded the rights of the debtors as well as the creditors and their work shows it. It will look well in history.
They also must have known that money is created by law or they never would have granted to the legislative power the power to make money. The science of money — the quantitive theory of money — demands that money good enough to loan and induce men to run in to debt, shall be good enough to pay the debt.
In the case of Briscoe vs. Bank of Kentucky (11 Peters 257) the court refers to Chief Justice Marshall’s definition of “a bill of credit” and says: “A definition so general as this would certainly embrace every description of paper money which circulates as money. This doctrine is startling, because it strikes a fatal blow against the state banks, which have a capital of near $400,000,000 and which supply almost the entire circulating medium of the country.”
The Craig case was decided in 1830 and the Briscoe case in 1837. Since then the state “bank note” has been destroyed. That is why every dollar of paper money since March 4. 1789, being a promise to pay a dollar and not a dollar, is unconstitutional and void, unless the, $460,000,000 legal tender United States notes are an exception.
The redemption was suspended for 17 years, and the law of legal tender made them money and the courts have sustained that kind of lawful paper money. If congress may suspend the redemption of paper in gold for 17 years and be sustained by the Supreme Court why not suspend it 1700 years, or why not make the promise to pay gold at all.
If congress had made money, before 1821, 1830, 1837, for the use and benefit of all the states as empowered to do, the states would never have at tempted to do so, and the private bank note could never have been dreamed of in this nation.
The $400,000,000 bank notes forced the courts into a corner and they surrendered, but their surrender did not amend the constitution. It is the same today as it was March 4, 1789, and every “emission of bills of credit” since then by the nation, by the state or by a bank’ authorized by the nation or the states, 13 unconstitutional and void.
It is just as unconstitutional and void in 1912 as it was in 1830. It is far more startling in 1912 than it was
in 1837, because there is more than four times $400,000,000 of bank notes now outstanding. The National Monetary Commission sees the bank note defects. They see the deluge, and ‘now they implore congress to do what congress has no constitutional right to do: make the bank notes into actual lawful money by the law of legal tender for the use and benefit of one bank for only 50 years.
The objection is not to the application of the law of legal tender to paper, but it is to making money for the sole use and benefit of the banks, and especially reducing it to one bank as required by the so-called “National Reserve Association.”
When congress exercises the constitutional power to make money by law the seigiorage on the money so made belongs in the treasury of the United States. Gold being the unit of value since 1873, there is no seiguiorage on gold, but about one half the value of silver money is seiguiorage, and nearly all the value of paper money is seiguiorage. Seiguiorage is the difference between the face value of the money and what it costs to make it.
There are more than 17 defects in our present money system and the “National Monetary Commission” need educating. Of course they are honest or the doors of the treasury would never have been unlocked for their benefit. The seiguiorage on the bank note hereafter is to be pocketed by one bank. The sovereign power to make money in the United States is not an individual power. It is not a bank power. It is not even a state power. But in view of congressional money laws for 123 years past, it may be necessary to amend the constitution and take away from congress the power to make money and restore that power to the states. Congress has failed.
Each state the citizens thereof, the taxpayers are just as much entitled to their share of money made by congress as they would be if made by the state. Making money for the treasury of the United States is making money for the entire people of the United States. The tariff is a tax, on nearly everything men, women and children of this nation eat and wear, and that tax goes to fill the treasury.
If the money made by law passed through the treasury, the necessity for a tariff would be materially lessened. Money is the paramount issue, and silence does not make any the less so. In my next, I will tell your readers about the Missouri money tragedy of 1821.
Henry P. Lason
DeFuniak Springs, Fla.
Article first appeared in The Pensacola Journal on February 12, 1912 (Here)
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