SC Congressional Rep Pushes for Outlawing Federal Reserve Notes

by | Feb 18, 2010 | Headline News | 2 comments

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    A new movement seems to be in the making, as Mike Pitts’ (R-SC) proposed Bill would ban federal currency in SC:

    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.

    If the bill were to become law, South Carolina would no longer accept or use anything other than silver and gold coins as a form of payment for any debt, meaning paper money would be out in the Palmetto State.

    Pitts said the intent of the bill is to give South Carolina the ability to “function through gold and silver coinage” and give the state a “base of currency” in the event of a complete implosion of the U.S. economic system.

    “I’m not one to cry ‘chicken little,’ but if our federal government keeps spending at the rate we’re spending I don’t see any other outcome than the collapse of the economic system,” Pitts said.

    But one legal expert told The Palmetto Scoop that, even if it were passed, Pitts’ bill would quickly be ruled unconstitutional.

    “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.”

    The federal government will naturally oppose such a law, but passage would at least allow the Supreme Court to review the constitutionality of states being allowed to coin their own money.

    In our view, it couldn’t be all that bad to allow states to introduce their own currencies, backed by gold and silver within their treasuries. There may be a slight inconvenience of having to exchange currencies as you move from one state to another, unless coinage was standardized with specific silver and gold content – which seems like an excellent solution.

    Perhaps if enough states banded together, they could work to pass a constitutional amendment to outlaw a federal currency altogether.

    Hat tip Chris C.


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      1. Comments…..Why would this legislation necessarily  mean the states had to coin their own money in order to make it effective? Why couldn’t they simply utilize previously issued Federally recognized historical currencies such as pre 64 coinage, silver eagles, and gold eagles? I do believe Georgia passed a similar law which allows for gold/silver coinage to be used in commerce without banning FRN’s. It is the FRN which is unconstitutional. Where the hell are the scholars on this one? LOL

      2. Thanks for posting this Mac. I think it stirs up some interesting points of discussion on the legality/Constitutionality of gold and silver as accepted forms of payment.

        Though I am by no means a Constitutional scholar I am convinced that some interesting things may happen SHOULD a case like this ever reach the Supreme Court. My guess is it won’t – look what happened to JFK (he tried to pass an executive order to have the US Treasury print its own currency backed by silver – why didn’t he try to pass a law through Congress to do the same?).

        What this legal expert says may be true, but from where I stand its only part of the story. The Commerce Clause of the Constitution (Article I Section 8 clause 3) simply gives Congress the powe:

        To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;

        Part of the problem is the definition of regulate (and commerce for that matter) is very broad and open to interpretation. Now, if there is another Federal law pursuant to this clause which authorizes the use of Federal Reserve notes, then does that necessarily negate Section 10 Clause 1 of the Constitution:

        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;

        Whether it does or it does not, shouldn’t the “make any Thing but gold and silver Coin a Tender in Payment of Debts” have been retracted through an amendment? What good is the US Constitution if we can choose to ignore certain parts and have future laws written to “re-interpret” certain clauses without the addition of amendments for clarification?

        Furthermore, if the representative wanted simply to use gold and silver coins, that right is certainly guaranteed in the Constitution. He just can’t coin them as that is prohibited by the above clause. Unless of course this additive Federal law that came later strictly forbids it – does anyone know?

        By saying that a law in the Constitution is blatantly unconstitutional smacks of double-speak and is an insult to the Founding Fathers and what this country stands for.

        I do worry about Greisham’s Law a little however in a state with competing currencies (bad one drives out the good). If gold/silver has to compete with Federal Reserve notes and at the same time the dollar value of gold/silver rises, the people may be more inclined to sock that away and just use FRNs. However, if it gets to the point where confidence erodes quickly and we need ever increasing amounts of FRNs to buy food and other basic necessities, then I can clearly see which of the competing currencies will be the winner.

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