Article printed in the February 1986 issue of “The Constitution,” a monthly magazine published by The National Center for Constitutional Studies.

Article I - Section 8: “The Congress shall have Power … To coin Money, regulate the Value thereof …

Article I - Section 10: “No state shall … coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts …”

There is no amendment to the Constitution that has in any way altered these provisions.

“PAPER IS LIABLE TO BE ABUSED, HAS BEEN, IS, AND FOREVER WILL BE ABUSED, IN EVERY COUNTRY IN WHICH IT IS PERMITTED.” – Thomas Jefferson

Records of the Constitutional debates clearly show that the Founders specifically DENIED CONGRESS THE POWER to print paper money. We can be certain of this because the original draft of Article I, Section 9 included the words “and emit bills of credit of the United States”. “Bills of credit” were understood by all to mean “paper money”. James Madison’s record states: “This was a favorable moment to shut and bar the door against paper money,” and the Founders firmly rejected the phrase, and by an overwhelming vote, struck it from the Constitution.

Later, when Article I, Section 10 was debated, the Founders further barred the door on paper money. The original draft wording read only, “No State shall … coin Money … ”. Madison’s account here is brief. “Mr. Wilson and Mr. Sherman moved to insert after the words ‘coin money’ the words ‘NOR EMIT BILLS OF CREDIT, NOR MAKE ANY THING BUT GOLD AND SILVER COIN A TENDER IN PAYMENT OF DEBTS,’ making these prohibitions absolute … ”.

To understand fully the actions of the Founders, we must examine the history of money. As Jefferson said, paper money has been abused in every country in which it has been permitted. Even in America, in the years just prior to the adoption of the Constitution, the Continental Congress issued bills of credit, which were nothing more than fiat money, or paper currency. The inflated paper currency imposed a cruel tax on the citizens, just as it has in all other countries, and they lost their fortunes. “NOT WORTH A CONTINENTAL” describes perfectly the dollar, which in 1779, was worth only a penny.

A further reason for the Founders’ action was their desire to restrain the state governments from flooding the country with unbacked paper money. Some states were already issuing bills of credit - some, like Rhode Island, even forced its circulation by attempting to punish citizens for refusal to use it. Josiah Quincy wrote to George Washington, “there never was a paper pound, a paper dollar, or a paper promise of any kind that ever yet obtained (became) a general currency but by force or fraud, generally by both.”

Inflation, deflation, depression… all had brought misery to the new nation, prompting Washington to write: “Good God! Who could have foreseen, or predicted the disorders which have arisen in these states!” (1787 letter to Gen. Knox). It is at this point that the Constitutional Convention convened in Philadelphia. Those who had experienced such trauma were determined to do something to restrain their government from issuing paper money and forcing it into circulation.

Thus it was that on August 16, 1787, they approved Section 8 of the Constitution barring Congress from the right to print paper money, and on August 18, they framed Section 10 prohibiting the “friends of paper money” from going through the State Legislatures.

Soon after the adoption of these two Articles, the tide turned and the nation began to prosper! Its economic ills began to disappear. Its leaders rejoiced! In 1790, George Washington said that revenues “were considerably more productive than it was imagined they would be … spirit of enterprise prevails.” And exclaimed, “our public credit stands on that high ground which three years ago it would have been considered … madness to have foretold the United States enjoys a sense of prosperity and tranquility under the new government that could hardly have been hoped for.”

The Pennsylvania Gazette on December 16, 1789, declared: “Since the federal constitution has removed all danger of our having a paper tender, our trade is advanced fifty percent. Our … people can trust their cash … and have brought their coin into circulation.”

The Founders lifted the nation from economic depression to prosperity and progress. They did it by a Constitutional mandate for a sound currency – one which the government could not manipulate, one that had intrinsic value for the citizens holding it. The Constitution protected the individual’s right to own precious metals and to use them as a medium of exchange. And the results were amazing – even to Mr. Washington.

1836 – “It is apparent from the whole context of the Constitution as well as the history of the time which gave birth to it, that it was the PURPOSE OF THE CONVENTION TO ESTABLISH A CURRENCY CONSISTING OF THE PRECIOUS METALS. These were adopted by a PERMANENT RULE EXCLUDING THE USE of a perishable medium of exchange … or the STILL MORE PERNICIOUS EXPEDIENT OF PAPER CURRENCY.” (Andrew Jackson – 8th Annual Message to Congress)