[Congressional Record (Bound Edition), Volume 153 (2007), Part 11]
[Extensions of Remarks]
[Pages 16066-16067]
[From the U.S. Government Publishing Office, www.gpo.gov]




                  INTRODUCTION OF THE HONEST MONEY ACT

                                 ______
                                 

                             HON. RON PAUL

                                of texas

                    in the house of representatives

                         Friday, June 15, 2007

  Mr. PAUL. Madam Speaker, I rise to introduce the Honest Money Act. 
The Honest Money Act repeals legal tender laws that force American 
citizens to accept fiat money in their economic transactions.
  Absent legal tender laws, individuals acting through the market will 
determine what is money. Historically, when individuals have been free 
to choose their money they have selected items that are portable, 
widely accepted, and have a stable value. Having the market, rather 
than the government, define money is integral to the functioning of a 
free economy. As Edwin Vieira, perhaps the Nation's top expert on 
constitutional monetary policy says, ``. . . a free market functions 
most efficiently and most fairly when the market determines the quality 
and the quantity of money that's being used.''
  While fiat money produced by the State is portable and, thanks to 
legal tender laws, widely accepted, it is certainly not of stable 
value. In fact, our entire monetary policy is predicated on the 
government's ability to manipulate the value of the currency. Thus, 
absent legal tender laws, many citizens would refuse to accept 
government money for their transactions.
  Legal tender laws disadvantage ordinary citizens by forcing them to 
use inferior money, which they would otherwise refuse. As Stephen T. 
Byington put in the September 1895 issue of the American Federationist: 
``No legal tender law is ever needed to make men take good money; its 
only use is to make them take bad money. Kick it out!''
  It may seem surprising that the Mr. Byington's well-phrased attack on 
legal tender laws appeared in the publication of the American 
Federation of Labor. However, enlightened union leaders of that time 
recognized that ways in which workers where harmed by the erosion of 
the value of money which inevitably follows when governments pass legal 
tender laws.
  Legal tender laws may disadvantage average citizens but they do help 
power-hungry politicians use inflationary monetary policy to expand the 
government beyond its proper limits. However, the primary beneficiaries 
of legal tender laws are the special interests who are granted the 
privilege of producing and controlling the paper money forced on the 
public via legal tender laws. Legal tender laws thus represent the 
primary means of reverse redistribution where the wealth of the working 
class is given, via laws forcing people to use debased money, to well-
heeled, politically powerful bankers.
  The drafters of the Constitution were well aware of how a government 
armed with legal tender powers could ravage the people's liberty and 
prosperity. This is why the Constitution does not grant legal tender 
powers to the federal government. Instead, Congress was given powers to 
establish standards regarding the value of money. In other words, in 
monetary matters the Congress was to follow the lead of the market. 
When Alexander Hamilton wrote the coinage act of 1792, he simply 
adopted the market-definition of a dollar as equaling the value of the 
Spanish milled silver coin.
  Legal tender laws have reversed that order to where the market 
follows the lead of Congress. Beginning in the 19th century, Federal 
politicians sought to enhance their power and enrich their cronies, by 
using legal tender powers to change the definition of a dollar from a 
silver-or-gold-backed unit whose value is determined by the market, to 
a piece of paper produced by the State. The ``value'' of this paper may 
be normally backed in part by gold or silver, but its ultimate backing 
is the power of the State, and its value is determined by the political 
needs of the State and the powerful special interests who influence 
monetary policy.
  Unfortunately, the Supreme Court failed to protect the American 
people from Congress' unconstitutional legal tender laws. Supreme Court 
Justice, and Lincoln Treasury Secretary, Salmon Chase, writing in 
dissent in the legal tender cases, summed up the main reason why the 
Founders did not grant Congress the authority to pass legal tender 
laws: ``The legal tender quality [of money] is only valuable for the 
purposes of dishonesty.'' Justice Chase might have added dishonesty is 
perpetrated by State-favored interests on the average American.
  Another prescient Justice was Stephen Field, the only justice to 
dissent in every one of the legal tender cases to come before the 
Court. Justice Field accurately described the dangers to the 
constitutional republic posed by legal tender laws: ``The arguments in 
favor of the constitutionality of legal tender paper currency tend 
directly to break down the barriers which separate a government of 
limited powers from a government resting in the unrestrained will of 
Congress. Those limitations must be preserved, or our government will 
inevitably drift from the system established by our Fathers into a 
vast, centralized and consolidated government.''
  Considering the growth of government since the Supreme Court joined 
Congress in disregarding the constitutional barriers to legal tender 
laws, can anyone doubt the accuracy of Justice Field's words? Repeal of 
legal tender laws would restore constitutional government and protect 
the people's right to use a currency chosen by the market because it 
serves the needs of the people, instead of having to use a currency 
chosen by the State because it serves the needs of power hungry 
politicians and special interests. Therefore, I urge my colleges to 
cosponsor the Honest Money Act.

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