New Hampshire made history this week. It is the first state since President Roosevelt's gold confiscation in 1933 to attempt the praiseworthy goal of returning to constitutional money -- gold and silver coin. I am honored that I had a small role to play in this laudable effort.
State Rep. Henry McElroy introduced HB 1342, which has been dubbed the New Hampshire Sound Money Bill. This bill enables people to transact with the state of New Hampshire in terms of U.S.-minted gold and silver coin. In other words, if this bill is passed and signed into law, people will be given a choice. People who needs to transact with state government can continue to transact with it in terms of fiat currency -- Federal Reserve dollars. Or they can demand that the state transact in gold and silver coin, as provided in Article I, Section 10 of the Constitution: "No State shall . make any Thing but gold and silver Coin a Tender in Payment of Debts."
Therefore, those who need to pay money to the state (in taxes, for example) and people who receive payments from the state (such as employees, suppliers, and contractors) could, under this bill, ask the state of New Hampshire to pay to them U.S.-minted gold and silver coin.
This bill would enable gold and silver coin to circulate once again as currency, at least in regard to transactions with the state.
The rate of exchange used in a transaction would depend on the prevailing market rate of exchange between Federal Reserve dollars and gold and silver at the time of the transaction. The dollar face value stamped onto the gold or silver coin (for example, the $50 "value" stamped on a U.S. gold eagle coin) would be ignored. The coin's value in exchange for Federal Reserve dollars would be determined solely by the weight of gold or silver in the coin.
Though it is clear from the Constitution that the states may use only gold and silver coin in the payment of their debts, this provision is ignored. Federal Reserve fiat dollars are now exclusively used by the states, which is being done in obvious contravention to this constitutional requirement.
But until now there has been no way under New Hampshire law to enforce the constitutional provision on the state.
In other words, this bill would remedy this deficiency in New Hampshire state law, which is the bill's objective and purpose. It would empower the people to force the state to deal in constitutional money.
Therefore, this bill not only is a step in the right direction not only for constitutional money but also shows that people can indeed require government to adhere to the law -- assuming of course that this bill is passed and signed into law. And though the bill has supporters among the state representatives, like all bills this one has to pass the New Hampshire House and Senate as well as be signed into law by the governor. So it is an uphill journey, but one worth taking.
This past Monday I participated in a press conference at the state Capitol in Concord to explain the difference between fiat Federal Reserve dollars and to announce my support for the bill, which was drafted by my good friend, Edwin Vieira, who is this country's leading scholar on legal and constitutional money issues. I have written in these letters before about his monumental book, "Pieces of Eight," which I said "will without any doubt stand throughout time as the definitive account of the descent in the United States from the sound money imparted by the Constitution to the unsound debt-contract that is the inferior, unconstitutional unit of account that today passes as the 'dollar'."
(See: http://www.fgmr.com/pieces8.htm )
Vieira has crafted a simple, straightforward bill. If you would like to read more about it, the following link provides an informative overview of it by answering 20 frequently asked questions about the bill:
Perhaps if New Hampshire is successful in enacting this bill into law, other states mindful and respectful of their constitutional obligations may choose to enact similar laws.
Of course, only time will tell how far and how fast this legislation proceeds. For example, a vote scheduled for this past Thursday has been delayed until the fall, mainly technical reasons. But that delay may actually be a good thing, because it gives more time to enable the legislators behind this bill to campaign for it. I'll be campaigning for it too.
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