Fiat money notes (‘bills of credit’) are forbidden.Only gold or silver coins and currency (specie-backed banknotes) can be legal tender.The basic unit is the dollar, a silver coin containing 371.25 grains of pure silver.1), we can identify five monetary policies that are constitutionally requisite in the United States: Read in conjunction with the Ninth and Tenth Amendments, and the obligation-of-contracts clause (Art. In suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved.No state shall coin money, emit bills of credit, or make any thing but gold and silver coin a tender in payment of debts.The migration or importation of such persons as any of the states now existing shall think proper to admit, shall not be prohibited by the Congress prior to the year one thousand eight hundred and eight, but a tax or duty may be imposed on such importation, not exceeding ten dollars for each person.No money shall be drawn from the Treasury, but in consequence of appropriations made by law.Congress shall have power to provide for the punishment of counterfeiting the securities and current coin of the United States.Congress shall have power to coin money, regulate the Value thereof, and of foreign coin, and fix the standard of weights and measures.Congress shall have power to borrow money on the credit of the United States.I’ve modernized the punctuation for readability. Properly interpreted, these seven clauses together form a system of rules that strongly protects economic prosperity and political liberty.įour of the clauses include the word ‘money,’ three include the word ‘coin,’ and two include the word ‘dollars.’ /1īelow is the text of each of the clauses, followed by some definitions and comments. Seven clauses of the United States Constitution touch on questions that might be described as relating to monetary policy. McCulloch (1819) in the Shadow of the CompromiseĬonclusion.They protect liberty and prosperity - when we follow them. More Than a Constitutional RerunĬhapter Six. “The Great Regulating Wheel” and Institutional ConversionĬhapter Four. “Banco Mania” and Institutional DriftĬhapter Three. Varieties of Strict InterpretationĬhapter Two. Introduction: Getting the Ship out of the BottleĬhapter One. He concludes the book by explaining why a more robust account of the national bank controversy can help us understand the constitutional basis for modern American monetary politics. This includes the emergence of the Coinage Clause-which gives Congress power to “coin money, regulate the value thereof”-as a novel justification for the institution. Lomazoff documents how these three dimensions of the polity changed over time and traces the manner in which they periodically led federal officials to adjust their claims about the Bank’s constitutionality. During that time, three forces-changes within the Bank itself, growing tension over federal power within the Republican coalition, and the endurance of monetary turmoil beyond the War of 1812 -drove the development of our first major debate over the scope of federal power at least as much as the formal dimensions of the Constitution or the absence of a shared legal definition for the word “necessary.” These three forces-sometimes alone, sometimes in combination-repeatedly reshaped the terms on which the Bank’s constitutionality was contested. With Reconstructing the National Bank Controversy, Eric Lomazoff offers a far more robust account of the constitutional politics of national banking between 17. The controversy was much more dynamic than a two-sided debate over a single constitutional provision and was shaped as much by politics as by law. Our standard account of the national bank controversy, however, is incomplete. The Bank of the United States sparked several rounds of intense debate over the meaning of the Constitution’s Necessary and Proper Clause, which authorizes the federal government to make laws that are “necessary” for exercising its other powers.
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