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The Congress shall have power to coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures;
http://www.fame.org/HTM/Vieira_Edwin...ney_EV-006.HTM
"To Regulate The Value Of Money"
An Analysis Of The Power Of Government To Create And Set A Value On Money
By
Edwin Vieira, Jr.
http://www.fame.org/HTM/Vieira_Edwin...ney_EV-006.HTM
"To Regulate The Value Of Money"
An Analysis Of The Power Of Government To Create And Set A Value On Money
By
Edwin Vieira, Jr.
What, then, does the power "To coin Money, regulate the Value thereof, and of foreign Coin" actually mean? First, it is important to pay attention to what the Constitution says in haec verba. The verb "regulate" refers explicitly to two things, and two things only: (i) the "Money" Congress "coin[s]" and (ii) "foreign Coin.” Thus, on its face, Article 1, Section 8, Clause 5 grants Congress a power that that body can constitutionally exercise on coinage, and on coinage only. Second, it is also important to pay attention to what the Constitution does not say. Nowhere in the Constitution does any power exist to "regulate the Value" of "currency,” "securities,” "bills,” "notes,” or anything other than coin.71 Thus, on its face, the entire Constitution makes clear that the power "To * * * regulate the Value" does not include some general, undefined power to declare what shall have "Value" as "Money,” or shall be "Money.”
In the late 1700s, "regulate" meant (as it does today) "[t]o adjust by rule or method" or "[t]o adjust, in respect of some standard.”72 "The word ordinarily implies not so much the creating or establishment of a new thing, as the arranging in proper order and controlling that which already exists."73 For the most important example, in his Commentaries Blackstone outlined the English common law concerning "[t]he denomination, or the value for which the coin is to pass current":
Interestingly, Blackstone equated "the value for which the coin is to pass current" (i.e., at its full lawful face value) simply with its "denomination,” or mere name—thereby indicating that the process of "fix[ing] the value" of both domestic and foreign coins under English common law was a mechanical and objective comparison of the weight and fineness of precious metal in a particular "denomination" to the "the true standard" of that metal, rather than an attempt to give the coins some arbitrary value, or to manipulate the coins' purchasing-powers according to some arbitrary policy.
Blackstone wrote of "fix[ing] the value" of coins; but he could just as easily have written "regulat[ing] the Value thereof,” the verbs "fix" and "regulate" being reasonably synonymous in this context.75 An early example of such usage appears in Queen Anne's Proclamation of 1704, and the Parliamentary Act of 1707, wherein the Queen referred to "a Table of the Value of the several foreign Coins which usually pass in Payments in our said Plantations, according to their Weights, and the Assays made of them in our Mint, thereby showing the just Proportion which each Coin ought to bear to the other,” and then commanded that various foreign coins "stand regulated, according to their Weight and Fineness, according and in Proportion to the Rate before limited and set.”76
About seventy years later, the Continental Congress proceeded in the same manner. As noted above, the Articles of Confederation, under which the Continental Congress operated, contained a power similar to that in Article 1, Section 8, Clause 5 of the Constitution.77 In 1776, a committee of the Continental Congress "appointed to * * * ascertain the value of the several species of gold and silver coins current in these colonies, and the proportions they ought respectively to bear to Spanish milled dollars,” prepared a table of "rates,” showing the name and weight of the various coins, and their "Value in Dollars.”78 The similarity of this procedure to that in the English act of 1707—even to the use of the nouns "proportion,” "rate,” and "value,” and of the verb "ascertain"—is both striking and hardly accidental.
Later in 1776 (as noted above), another committee of the Continental Congress submitted a more detailed report on the same subject. The committee defined its task as, first, "declaring the precise weight and fineness of the * * * Spanish milled dollar * * * now becoming the Money-Unit or common measure of other coins in these states;” and, second, "explaining the principles and establishing the rules by which * * * the said common measure shall be applied to other coins * * * in order to estimate their comparative value.”79
Having stated the weight of the Spanish milled dollar, "as it comes from the mint, new and unworn" (that is, "current"), the committee then set out the rules for regulating the value of silver and gold coins: (i) "[A]ll * * * silver coins * * * ought to be estimated * * * according to the quantity of fine silver they contain." And (ii) "all gold coins * * * ought to be estimated according to the quantity of fine gold they contain and the proportion * * * which the value of fine gold bears to that of fine silver in those foreign markets at which these states will probably carry on commerce,” "the several proportions at the said markets * * * [being] averaged.”
Although it found this average to be "nearly as one to fourteen and * * * one half,” the committee nevertheless recognized that, "as in long tracts of time the proportional values of gold and silver at market are liable to vary, whenever such variation shall have become sensible, this house [i.e., the Continental Congress] ought to make a corresponding change in the rates at their treasury.” It then presented a table of "values,” showing the various silver and gold coins, their "Proportion of fine metal,” "Weight,” amount of "Fine metal,” and "Value in Dollars" (to six decimal places!).80
The Continental Congress' conception of "fix[ing]" or "regulat[ing]" the value of coinage was widely understood among the public as well. For instance, Adam Smith noted how,
In sum, the power "To * * * regulate the Value [of United States coin], and of foreign Coin" consists solely of a power of comparison and declaration: (i) comparing the amount of fine silver in particular silver coins to that contained in the "Money-Unit or common measure of other coins in these states" (the "dollar"), and declaring this proportion in "dollar"-values; or (ii) ascertaining the amount of fine gold in particular gold coins, calculating the market-equivalent of fine silver, comparing the latter amount to the "Money-Unit,” and declaring this proportion in "dollar"-values.
Thus, under the power "To coin Money,” Congress has discretion to set the weight, purity, form, and impression of all silver, gold, and copper coins it mints (excepting, of course, the intrinsic value of the "dollar" itself). Whereas, under the power "To * * * regulate the Value,” it has a duty accurately to determine the proportions of market value between the fixed "Money-Unit" and the coinage it, and foreign nations, mint.
Insofar as the proportions of market value between various gold coins and the (silver) "dollar" are concerned, it may have been reasonable in the late 1700s and immediately thereafter to declare by statute the exchange-ratio customarily prevailing in the market between gold and silver—the transmission of financial information throughout the country, let alone the world, being both slow and uncertain. Even so, the Continental Congress recognized that, because "the proportional values of gold and silver at market are liable to vary,” the government had a duty "whenever such variation shall have become sensible, * * * to make a corresponding change in the rates.”82
Today, with almost instantaneous transmission of sound market-data available, any rigid statutorily declared ratio of value between gold and silver is unreasonable, and therefore unconstitutional.83 Rather, in exercising the power "To * * * regulate * * * Value" under contemporary economic circumstances, the government should simply permit the value of domestic and foreign gold coinage to "float,” as against the silver "Money-Unit" (the dollar), from one market level to another, as changing exchange-rates become "sensible" in commerce.
The Framers' consistent association of the power "To * regulate Value" with the power "To * * * fix the Standard of Weights and Measures,” then, was no mere caprice.84 Although the purchasing-power of money varies with economic conditions, and ultimately is beyond the government's power to control,85 at any particular point in time the relationship of money to economic values parallels that of weights and measures to physical quantities. Just as the Constitution gave Congress the power "To * * * fix the Standard of Weights and Measures" in order to establish uniformity therein throughout the country,86 so, too, did it confer the power "To * * * regulate Value" in order (as much as possible in economic life) "to produce uniformity of value throughout the Union, and thus to preclude us from the embarrassments of a perpetually fluctuating and variable currency.”87 "[F]luctuating and variable,” that is, in terms of political phenomena impinging on the market.
Now, a "Standard of Weigh[t]" must itself be a weight and a "Standard of * * * Measur[e]" a measure. So, too to regulate * * * Value" implies the existence of a unit of "Value.” Here, the two phrases "fix the Standard" and regulate * * * Value" subtly diverge in shades of meaning, if not in ultimate intent: The phrase "fix the Standard" empowers Congress to define the basic units of weights and Measures;” whereas, the phrase "regulate the Value" empowers Congress only to apply the basic unit of "Value,” which the Constitution elsewhere explicitly identifies as the "dollar,” a known, historically fixed weight of silver.88
Moreover, whereas the verb "fix" as applied to "Weights and Measures" implies "stability and confirmation,”89 the verb "regulate" as applied to coinage implies adjustment. Here, then, is another striking example of the Framers' linguistic precision, in one phrase selecting the verb that connotes the establishment of permanent "Standard[s],” without which a system of "Weights and Measures" could not serve its purpose; and, in the other, choosing the synonym that connotes a process of inter-comparisons among changing forms of coinage, according to a set "Money-Unit,” without which a monetary system involving both gold and silver could not achieve its end.
In short, the Framers interpreted the constitutional "Value" of "Money" as something not subject to the vagaries of governmental edict—but rather, as Blackstone taught, as something identical with "the weight and standard (wherein consists the intrinsic value).”90
C. The disability to debase "Money" below the constitutional standard
The power to "regulate the Value [of Money]" is distinct from the power to debase its value. For example, to "regulate the Value" of a silver coin means to compare the weight of pure silver it contains to the weight of pure silver in the monetary standard (the "dollar"), and to declare the coin's value in terms of that standard. Thus, if a silver coin contains 185.625 grains of fine silver, and the standard "dollar" contains 371.25 grains of silver, then the "Value" of the former coin, properly "regulate[d],” is one half of a "dollar.” Conversely, to debase a silver coin means to declare its value without proper reference to the standard, or to lower the silver-content of the standard. Thus, as possible instances of this practice, the hypothetical silver coin in the previous example would be debased if minted of only 150 grains of silver, yet still declared to be one half of a "dollar;” if minted of 185.625 grains of silver, yet declared to be one "dollar;” or if minted of 185.625 grains of silver, and declared to be one "dollar,” based upon a phony "dollar" decreased from 371.25 to 185.625 grains of silver.91
From time to time, the Kings of England did engage in the practice of debasing coinage.92 Whether they rightfully enjoyed the power to do so under the unwritten English constitution, however, is highly questionable (as discussed below). In any event, even if the Kings actually had this authority under English law, the people of the United States clearly denied it to Congress under the Constitution. The Framers of the Constitution explicitly enumerated the coinage-power in Article 1, Section 8, Clause 5 because: (i) under common law, that power had been executive in nature (i.e., the power of the King); and, therefore, (ii) without enumeration among the legislative powers of Congress in Article 1, it might have passed to the Executive by implication among the general powers in Article 11.93 And this result, of course, the Framers sought to forfend.
The Framers, after all, were conversant with the dolorous history of excesses various English monarchs had perpetrated, and were aware how "in former ages" the crown had "greatly abused" its prerogative of coinage: "for base coin was often coined and circulated by its authority, at a value far above its intrinsic worth, and thus taxes of a burdensome nature were laid indirectly on the people.”95 Therefore, the Framers made clear by the placement of the coinage-power that Congress, not the Executive, was to exercise it. And they made equally clear by the language of that power that it included no authority to debase "Money,” but only to "regulate [its] Value" according to a fixed standard. Indeed, the sole power concerning the "Value" of Money is the power in Article 1, Section 8, Clause 5 to "regulate"—which (as described above) at common law meant only the process of properly comparing the coin needing regulation to the monetary standard, not falsifying that comparison or changing the standard.
And the monetary standard itself the Constitution fixes in historically unmistakable terms as the "dollar.” Thus, even if the English Kings had taken advantage of Parliamentary pusillanimity and successfully debased the coinage by falsely certifying its intrinsic value, or permuting the monetary standard, contrary to common-law tradition, the Constitution denied any such license to Congress, by permitting it only to "regulate the Value [of Money],” according to a legislatively unchangeable standard.
cont.
In the late 1700s, "regulate" meant (as it does today) "[t]o adjust by rule or method" or "[t]o adjust, in respect of some standard.”72 "The word ordinarily implies not so much the creating or establishment of a new thing, as the arranging in proper order and controlling that which already exists."73 For the most important example, in his Commentaries Blackstone outlined the English common law concerning "[t]he denomination, or the value for which the coin is to pass current":
In order to fix the value, the weight and the fineness of the metal are to be taken into consideration together. When a given weight of gold or silver is of a given fineness, it is then of the true standard, and called sterling metal * * * . And of this sterling metal all of the coin of the kingdom must be made * * * . The king may also * * * legitimate foreign coin, and make it current here; declaring at what value it shall be taken in payments. But this * * * ought to be by comparison with the standard of our own coin * * * .74
Interestingly, Blackstone equated "the value for which the coin is to pass current" (i.e., at its full lawful face value) simply with its "denomination,” or mere name—thereby indicating that the process of "fix[ing] the value" of both domestic and foreign coins under English common law was a mechanical and objective comparison of the weight and fineness of precious metal in a particular "denomination" to the "the true standard" of that metal, rather than an attempt to give the coins some arbitrary value, or to manipulate the coins' purchasing-powers according to some arbitrary policy.
Blackstone wrote of "fix[ing] the value" of coins; but he could just as easily have written "regulat[ing] the Value thereof,” the verbs "fix" and "regulate" being reasonably synonymous in this context.75 An early example of such usage appears in Queen Anne's Proclamation of 1704, and the Parliamentary Act of 1707, wherein the Queen referred to "a Table of the Value of the several foreign Coins which usually pass in Payments in our said Plantations, according to their Weights, and the Assays made of them in our Mint, thereby showing the just Proportion which each Coin ought to bear to the other,” and then commanded that various foreign coins "stand regulated, according to their Weight and Fineness, according and in Proportion to the Rate before limited and set.”76
About seventy years later, the Continental Congress proceeded in the same manner. As noted above, the Articles of Confederation, under which the Continental Congress operated, contained a power similar to that in Article 1, Section 8, Clause 5 of the Constitution.77 In 1776, a committee of the Continental Congress "appointed to * * * ascertain the value of the several species of gold and silver coins current in these colonies, and the proportions they ought respectively to bear to Spanish milled dollars,” prepared a table of "rates,” showing the name and weight of the various coins, and their "Value in Dollars.”78 The similarity of this procedure to that in the English act of 1707—even to the use of the nouns "proportion,” "rate,” and "value,” and of the verb "ascertain"—is both striking and hardly accidental.
Later in 1776 (as noted above), another committee of the Continental Congress submitted a more detailed report on the same subject. The committee defined its task as, first, "declaring the precise weight and fineness of the * * * Spanish milled dollar * * * now becoming the Money-Unit or common measure of other coins in these states;” and, second, "explaining the principles and establishing the rules by which * * * the said common measure shall be applied to other coins * * * in order to estimate their comparative value.”79
Having stated the weight of the Spanish milled dollar, "as it comes from the mint, new and unworn" (that is, "current"), the committee then set out the rules for regulating the value of silver and gold coins: (i) "[A]ll * * * silver coins * * * ought to be estimated * * * according to the quantity of fine silver they contain." And (ii) "all gold coins * * * ought to be estimated according to the quantity of fine gold they contain and the proportion * * * which the value of fine gold bears to that of fine silver in those foreign markets at which these states will probably carry on commerce,” "the several proportions at the said markets * * * [being] averaged.”
Although it found this average to be "nearly as one to fourteen and * * * one half,” the committee nevertheless recognized that, "as in long tracts of time the proportional values of gold and silver at market are liable to vary, whenever such variation shall have become sensible, this house [i.e., the Continental Congress] ought to make a corresponding change in the rates at their treasury.” It then presented a table of "values,” showing the various silver and gold coins, their "Proportion of fine metal,” "Weight,” amount of "Fine metal,” and "Value in Dollars" (to six decimal places!).80
The Continental Congress' conception of "fix[ing]" or "regulat[ing]" the value of coinage was widely understood among the public as well. For instance, Adam Smith noted how,
as people become gradually more familiar with the use of different metals in coin, and consequently better acquainted with the proportion between their respective values, it has in most countries * * * been found convenient to ascertain this proportion, and to declare by a public law, that a guinea (of gold), for example, of such a weight and fineness, should exchange for one and twenty shillings (of silver) or be a legal tender for a debt of that amount. In this state of things, and during the continuation of any one regulated proportion of this kind, the distinction between the metal which is the standard, and that which is not the standard, becomes little more than a nominal distinction.81
In sum, the power "To * * * regulate the Value [of United States coin], and of foreign Coin" consists solely of a power of comparison and declaration: (i) comparing the amount of fine silver in particular silver coins to that contained in the "Money-Unit or common measure of other coins in these states" (the "dollar"), and declaring this proportion in "dollar"-values; or (ii) ascertaining the amount of fine gold in particular gold coins, calculating the market-equivalent of fine silver, comparing the latter amount to the "Money-Unit,” and declaring this proportion in "dollar"-values.
Thus, under the power "To coin Money,” Congress has discretion to set the weight, purity, form, and impression of all silver, gold, and copper coins it mints (excepting, of course, the intrinsic value of the "dollar" itself). Whereas, under the power "To * * * regulate the Value,” it has a duty accurately to determine the proportions of market value between the fixed "Money-Unit" and the coinage it, and foreign nations, mint.
Insofar as the proportions of market value between various gold coins and the (silver) "dollar" are concerned, it may have been reasonable in the late 1700s and immediately thereafter to declare by statute the exchange-ratio customarily prevailing in the market between gold and silver—the transmission of financial information throughout the country, let alone the world, being both slow and uncertain. Even so, the Continental Congress recognized that, because "the proportional values of gold and silver at market are liable to vary,” the government had a duty "whenever such variation shall have become sensible, * * * to make a corresponding change in the rates.”82
Today, with almost instantaneous transmission of sound market-data available, any rigid statutorily declared ratio of value between gold and silver is unreasonable, and therefore unconstitutional.83 Rather, in exercising the power "To * * * regulate * * * Value" under contemporary economic circumstances, the government should simply permit the value of domestic and foreign gold coinage to "float,” as against the silver "Money-Unit" (the dollar), from one market level to another, as changing exchange-rates become "sensible" in commerce.
The Framers' consistent association of the power "To * regulate Value" with the power "To * * * fix the Standard of Weights and Measures,” then, was no mere caprice.84 Although the purchasing-power of money varies with economic conditions, and ultimately is beyond the government's power to control,85 at any particular point in time the relationship of money to economic values parallels that of weights and measures to physical quantities. Just as the Constitution gave Congress the power "To * * * fix the Standard of Weights and Measures" in order to establish uniformity therein throughout the country,86 so, too, did it confer the power "To * * * regulate Value" in order (as much as possible in economic life) "to produce uniformity of value throughout the Union, and thus to preclude us from the embarrassments of a perpetually fluctuating and variable currency.”87 "[F]luctuating and variable,” that is, in terms of political phenomena impinging on the market.
Now, a "Standard of Weigh[t]" must itself be a weight and a "Standard of * * * Measur[e]" a measure. So, too to regulate * * * Value" implies the existence of a unit of "Value.” Here, the two phrases "fix the Standard" and regulate * * * Value" subtly diverge in shades of meaning, if not in ultimate intent: The phrase "fix the Standard" empowers Congress to define the basic units of weights and Measures;” whereas, the phrase "regulate the Value" empowers Congress only to apply the basic unit of "Value,” which the Constitution elsewhere explicitly identifies as the "dollar,” a known, historically fixed weight of silver.88
Moreover, whereas the verb "fix" as applied to "Weights and Measures" implies "stability and confirmation,”89 the verb "regulate" as applied to coinage implies adjustment. Here, then, is another striking example of the Framers' linguistic precision, in one phrase selecting the verb that connotes the establishment of permanent "Standard[s],” without which a system of "Weights and Measures" could not serve its purpose; and, in the other, choosing the synonym that connotes a process of inter-comparisons among changing forms of coinage, according to a set "Money-Unit,” without which a monetary system involving both gold and silver could not achieve its end.
In short, the Framers interpreted the constitutional "Value" of "Money" as something not subject to the vagaries of governmental edict—but rather, as Blackstone taught, as something identical with "the weight and standard (wherein consists the intrinsic value).”90
C. The disability to debase "Money" below the constitutional standard
The power to "regulate the Value [of Money]" is distinct from the power to debase its value. For example, to "regulate the Value" of a silver coin means to compare the weight of pure silver it contains to the weight of pure silver in the monetary standard (the "dollar"), and to declare the coin's value in terms of that standard. Thus, if a silver coin contains 185.625 grains of fine silver, and the standard "dollar" contains 371.25 grains of silver, then the "Value" of the former coin, properly "regulate[d],” is one half of a "dollar.” Conversely, to debase a silver coin means to declare its value without proper reference to the standard, or to lower the silver-content of the standard. Thus, as possible instances of this practice, the hypothetical silver coin in the previous example would be debased if minted of only 150 grains of silver, yet still declared to be one half of a "dollar;” if minted of 185.625 grains of silver, yet declared to be one "dollar;” or if minted of 185.625 grains of silver, and declared to be one "dollar,” based upon a phony "dollar" decreased from 371.25 to 185.625 grains of silver.91
From time to time, the Kings of England did engage in the practice of debasing coinage.92 Whether they rightfully enjoyed the power to do so under the unwritten English constitution, however, is highly questionable (as discussed below). In any event, even if the Kings actually had this authority under English law, the people of the United States clearly denied it to Congress under the Constitution. The Framers of the Constitution explicitly enumerated the coinage-power in Article 1, Section 8, Clause 5 because: (i) under common law, that power had been executive in nature (i.e., the power of the King); and, therefore, (ii) without enumeration among the legislative powers of Congress in Article 1, it might have passed to the Executive by implication among the general powers in Article 11.93 And this result, of course, the Framers sought to forfend.
The Framers, after all, were conversant with the dolorous history of excesses various English monarchs had perpetrated, and were aware how "in former ages" the crown had "greatly abused" its prerogative of coinage: "for base coin was often coined and circulated by its authority, at a value far above its intrinsic worth, and thus taxes of a burdensome nature were laid indirectly on the people.”95 Therefore, the Framers made clear by the placement of the coinage-power that Congress, not the Executive, was to exercise it. And they made equally clear by the language of that power that it included no authority to debase "Money,” but only to "regulate [its] Value" according to a fixed standard. Indeed, the sole power concerning the "Value" of Money is the power in Article 1, Section 8, Clause 5 to "regulate"—which (as described above) at common law meant only the process of properly comparing the coin needing regulation to the monetary standard, not falsifying that comparison or changing the standard.
And the monetary standard itself the Constitution fixes in historically unmistakable terms as the "dollar.” Thus, even if the English Kings had taken advantage of Parliamentary pusillanimity and successfully debased the coinage by falsely certifying its intrinsic value, or permuting the monetary standard, contrary to common-law tradition, the Constitution denied any such license to Congress, by permitting it only to "regulate the Value [of Money],” according to a legislatively unchangeable standard.
cont.