I take it all back about SC

South Carolina will no longer recognize U.S. currency as legal tender, if State Rep. Mike Pitts has his way.

Pitts, a fourth-term Republican from Laurens, introduced legislation earlier this month that would ban what he calls “the unconstitutional substitution of Federal Reserve Notes for silver and gold coin” in South Carolina.

Of course there are scoffers:

“It violates a perfectly legal and Constitutional federal law, enacted pursuant to the Commerce Clause of the U.S. Constitution, that federal reserve notes are legal tender for all debts public and private,” the expert said. “We settled this debate in the early 1800s. I appreciate the political sentiment but the law is blatantly unconstitutional.”

Note that “the expert” is unnamed. I’d want to be unnamed too if I’d said anything so stupid, but really, how stupid is the Palmetto Scoop for demanding we trust an “expert” whose level of expertise we can’t evaluate? I’ll see your Commerce Clause and raise you Article II, Section 10 of the U. S. Constitution, which has not been amended:

No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.

Now I’m not a lawyer, but it seems obvious to me that it is in fact unconstitutional for the state to collect taxes in anything other than specie. One could argue that any law defining “tender” is a “Law impairing the Obligation of Contracts”, so it’s not entirely clear whether this section is not self-contradictory in terms of the obligations of citizens to each other. Also, since all contracts now in existence are in terms of Federal Reserve Notes, it might well be unconstitutional to demand fulfillment of the contracts in specie (and at what rate? The dollar gold rate when the contract was made, or when it was paid?). But one could reasonably, and I think Constitutionally, demand the payment of all new contracts in specie, if there is any validity to legal tender law at all.

The implementation of such a program would be a legal nightmare in that “dollar” has a meaning in specie, and a pre-fiat money  existence. If “dollar” in law now means “dollar” in specie, there’s an effective tax increase somewhere south of 1000%, which obviously isn’t going to fly. Also, somebody else would have to “coin” the money, since the state can’t do it. I hope they pass this though, as an act in support of sound money, and to settle the constitutional question. All we need are a few more cases of the SCOTUS declaring that the plain words of the Goddam Piece of Paper do not mean what they mean in English, and we can end this charade once and for all.


One Response to I take it all back about SC

  1. kishnevi says:

    I think legally you’re barking up the wrong tree here.

    Go back and read II-10. It’s a list of things that falls into two parts–actions which only the national government can do, like making treaties with other countries, and actions which the national government is elsewhere explicitly forbidden to do, such as passing Bills of Attainder. Making non-specie legal tender falls into the first category. (And incidentally, strengthens the status of FRNs. The Founders explicitly forbade the states to issue paper money, and could have done the same for the federal government, but they didn’t.)
    The real import of that clause was to keep the states from issuing paper money on their own. To some extent in the early 19th century states got around this via state chartered banks which issued paper money on their own account, sometimes with financial backing from the state government. But the clause does not mean that the state can’t collect taxes in anything other than coins; if anything it means that the states can’t pay their own debts with anything other than specie.
    And the clause has no impact on whether the states can legislate that everyone in the state must use specie, and is irrelevant to the question of whether the US government can legitimately issue paper money.

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