📜 The Texualist’s Dilemma: the Gold Standard and the U.S. Constitution

The following is an except from my book Monetarism and the Constitution: Making Paper Money Fit the Framers’ Intent:

Judge Robert Bork, a well-known proponent for strict constitutional interpretation, stated during his Supreme Court nomination hearings that “this Nation has grown in ways that do not comport with the intentions of the people who wrote the Constitution.”  Nevertheless, Bork admitted that “it is simply too late to go back and tear…up” much of the legal precedent that has been created: “I cite to you the Legal Tender cases….Scholarship suggests that the framers intended to prohibit paper money.  Any judge who today thought he would go back to the original intent really ought to be accompanied by a guardian rather than be sitting on a bench.”[1]

Judge Bork’s statements show the dilemma faced by constitutional textualists who disagree with legal tender laws.  Textualists must either concede defeat of the Constitution and work to improve what they believe is unconstitutional precedent (i.e., the Legal Tender cases) or they can stay faithful to the Constitution and advocate changes that are both impractical and unrealistic, such as eliminating paper money and returning to the gold standard.  This latter course of action, despite its seeming futility, does have its adherents.

Dr. Edwin Vieira, for instance, in his article The Forgotten Role of the Constitution in Monetary Law, asks “Why…do so many monetary reformers act as if the Constitution were irrelevant to their concerns?”  The answer, he believes, “maybe that these ‘non-constitutional’ monetary reformers consider a campaign for constitutional reform hopelessly quixotic.  Indeed, many people scoff that any variety of constitutional reform is ultimately delusive, inasmuch as modern-day politicians, legislators, judges and bureaucrats have successfully (and apparently with public approbation) set aside the original intent of the Constitution and substituted a ‘living’ Constitution.”  To Vieira, “the only delusion here is in the minds of those espousing such cynical views.”[2]  What, then, is the Doctor’s solution?

Vieira suggests that “only a few articles in prestigious journals should be necessary to establish beyond any further debate what a constitutional dollar is.  And, once established as a silver coin, the dollar cannot, without amendment of the supreme law, be redefined.”[3]

While probably no one would suggest that Dr. Vieira “ought to be accompanied by a guardian,” many would likely find his ideas a bit farfetched.  It is almost impossible to believe that a few journal articles could return this country to a commodity-based currency.  And, supposing they could, would a commodity-based currency be either feasible or desirable?  The answer is no, according the noble-prize-winning economist Milton Friedman.

Dr. Friedman readily acknowledges the framers’ intent to create a commodity-based currency: “When the Constitution was enacted, the power given to Congress ‘to coin money, regulate the value thereof, and of foreign coin’ referred to a commodity money: specifying that the dollar shall mean a definite weight in grams of silver or gold.” [4] But, despite the framers’ intent, Friedman believes that today “[i]t is neither feasible nor desirable to restore a gold- or silver-coin standard.”[5]

This is because paper money, though incongruent with the Constitution, has become universally accepted as our economy’s medium of exchange.  As Friedman argues, “each person accepts [paper money] because he is confident that others will.  The pieces of paper have value because everybody thinks they have value.  Everybody thinks they have value because in his experience they have had value.”  And this acceptance is vital since “[t]he United States could not operate at more than a small fraction of its present level of productivity without a common and widely accepted medium of exchange.”[6]  Thus, pulling the rug out from under this system, as Dr. Vieira suggests, could greatly damage Americans’ confidence in their currency and could lead to irreparable economic harm.

Nevertheless, the constitutional problem still remains.  Paper money, though universally accepted and vital for the efficient exchange of goods, still violates the Constitution.  And the honest few who still value and respect the Constitution, men such as Dr. Vieira, will continue to remind us of this.  But what can be done?  How can we remedy the constitutional problems caused by paper money without hurting our economy?  To attempt to answer these questions, we must turn again to Milton Friedman.

[1] The Supreme Court of the United States Nominations 1916-1987, vol. 14 pages 292-293 (Mersky & Jacobstein)

[2] Edwin Vieira, Jr., The Forgotten Role of the Constitution in Monetary Law, 2 Tex. Rev. Law & Pol. 78, 123 (1997)

[3] Id.

[4] Milton Friedman, Free to Choose, (Harcourt, Inc., 1990), 307

[5] Id. at 308

[6] Id. at 249

Check out my book Monetarism and the Constitution: Making Paper Money Fit the Framers’ Intent available now on amazon.com.