Are Goldbacks Constitutional Currency?

Are Goldbacks Constitutional Currency?

What is constitutional currency?

Constitutional currency is money that is specifically authorized by a country's constitution. In the United States, for example, the Constitution gives Congress the power "To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures" (Article I, Section 8). This has historically been understood as giving the federal government the power to issue money and set its value.

Goldbacks, on the other hand, are a form of voluntary, non-governmental currency that is made from a very thin layer of gold. They are designed to be used as a medium of exchange for goods and services, and they represent an innovative way of holding and using gold in small, practical denominations. Nevertheless, they are not issued by the federal government, and they are not legal tender in the way that dollars are. Instead, they are an attempt by private parties to create a form of currency that is backed by physical gold. Whether goldbacks or similar forms of currency are "constitutional" is a matter of interpretation.

The U.S. Constitution does not explicitly say that only gold and silver may be created as money, but it does say that "[n]o State shall ... make any thing but gold and silver coin a tender in payment of debts" (Article I, Section 10), and some argue that this implies that gold or silver-backed currency would be consistent with the original Constitution.

In practice, of course, the US has long since stopped using the gold standard, and presently issues fiat money that is not linked to any physical commodity. Goldbacks, therefore, are consistent with various originalist readings of the Constitution, but they are not official constitutional currency. Goldbacks are an alternative form of currency that attempts to modernize the historical preference for precious metals as media of exchange.


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