Texas Opts for Constitutional Money

Call it a Texas-sized step toward constitutional money. Governor Abbott just signed into law a measure that “makes gold and silver functional money in Texas,” as the bill’s top backer in the state legislature, Representative Mark Dorazio, puts it. At a time when the gold value of America’s fiat dollar has fallen to less than a 3,300th of an ounce, the push to restore a monetary role for specie — which the Framers saw as the basis of value — is newsworthy.The new law gives Texans the option to “use gold and silver they hold in the state’s bullion depository” to make purchases, “likely through a mobile app or debit card system,” Dallas’s Morning News reports. The measure goes into effect, the News adds, as “Republican lawmakers around the country are pushing more broadly to move away from dependence on fiat currency,” defined as money backed not by gold but by the government’s pledge.The Texas plan is based on consumers storing gold in the state’s bullion depository. Goods will be priced in terms of a weight of gold. Consumers will have the option to use a kind of debit card to buy goods by deducting the applicable weight of gold or silver from their accounts in the depository. This is not the same as a traditional gold standard, in which a currency is defined in terms of the monetary metal. It’s the direct use of specie to make transactions. The logic of this monetary reform project centers on gold as the historic basis of value, even if America and other nations abandoned the gold standard that was the basis of low-inflation economic growth. When President Nixon took America off the gold standard in 1971, the dollar was convertible into the monetary metal at the rate of a 35th of an ounce. Since then, the dollar has fallen some 99 percent. Gold held its value, while the fiat dollar plummeted. It’s no wonder, then, that lawmakers across America are turning to gold as a store of value and a medium in which to make transactions. Related reform efforts include calls to drop sales and capital gains taxes on buying and selling the metals. Lawmakers “in at least 11 states,” the News reports, “have introduced bills that declare gold and silver as legal tender.” Texas, whose economy ranks as the world’s eighth largest, is the most notable of these states. The new law would “recognize gold and silver as legal tender in Texas,” the News reports, “with the caveat that the state’s recognition must also align with currency laws laid out in the U.S. Constitution.” Seeing as how the Framers intended for America’s money to be defined in terms of the monetary metals of silver and gold, that determination would appear to be a lead-pipe cinch — but Texans are reportedly awaiting a court ruling on that head.It’s hard to envision the courts objecting to the wider use of gold and silver, if the Constitution is any guide. The Framers, after all, wrote the founding charter with the inflationary experience of America’s Revolutionary-era governments — nearly undone by the overuse of fiat paper money — as a cautionary tale. That’s why the Constitution forbids the states to “make any Thing but gold and silver Coin a Tender in Payment of Debts.”Congress was granted authority to “coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures.” Using that power, Congress in 1792 put America on a specie standard in which the dollar was defined by a fixed weight of gold and silver. For nearly 180 years, that standard served as the sine qua non of a constitutional dollar, until Nixon severed the greenback’s tie to gold, ushering in the fiat money era.Which brings us back to Texas’s monetary reform. Jp Cortez of the Sound Money Defense League tells us of his concern that “the usefulness of a state-managed payment system is uncertain.” It’s a reminder that while it may be constructive for states to restore an economic role for gold and silver, an approach at the federal level would be better still, via a monetary commission tasked with setting a course back to a constitutional dollar.

Texas Opts for Constitutional Money

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