“Bills of Credit”
A term of art for “paper money” in the pre-constitutional period

“In the the Federal Convention of 1787 , the initial draft of the Constitution reported by the Committee of Detail copied the relevant language of the Articles [of Confederation] almost word for word: “To borrow money and emit bills on the credit of the United States”. (footnote 1) But, by a vote of nine States to two, the Convention deleted the phrase “and emit bills”. (footnote 2) 

Pieces of Eight: The Monetary Powers and Disabilities of the United States Constitution, (Chicago, Illinois R R Donnelly & Sons ., Inc., GoldMoney Foundation Special Edition [2011] of the Second Revised Edition, 2002) by Dr. Edwin Vieira, Jr., Volume I, page 142.

Also see  Civil War and “Bills of Credit”  What is a “Dollar”? •  Mint Act of 1792 (Free Coinage Act) • Federal Reserve System: Cartel Structure • Silver and Gold as “Money” Implemented by the States • “Right of Redemption” of Paper Money: The Monetary Conjurer’s Trick


“Bills of Credit”: A Term of Art for Paper Money in the Pre-Constitutional Period

America’s Founding Fathers, realists all, denominated redeemable paper currency as “bills of credit”. They knew that such bills’ values in gold or silver are always contingent upon the issuers’ credit—that is, ultimately, the issuers’ honesty and ability to manage their financial affairs. The unavoidable trouble with “bills of credit”, though, is that they can (and usually do) turn out to be “bills of discredit”, when the holders discover that the money-managers are dishonest and incompetent—or worse, as is the situation today, highly competent at dishonesty. Then the holders of the paper currency (if they are sufficiently astute) realize how unwise it is to allow the gold to remain in the custody of the very institutions and individuals with the greatest incentives, and the uniquely favorable positions and opportunities, to steal it. (footnote 3)

In the the Federal Convention of 1787 , the initial draft of the Constitution reported by the Committee of Detail copied the relevant language of the Articles [of Confederation] almost word for word: “To borrow money and emit bills on the credit of the United States”. (footnote 4) But, by a vote of Nine States to two, the the Convention deleted the phrase “and emit bills”. (footnote 5) Subsequently the Constitution was and remains as a declaration of constitutional law, “No State shall…; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts….” (footnote 6) States are disabled from “emit[ting] bills of credit” whether redeemable in some other commodity or not. Concurrently States are required to transact in silver and gold only, based on the constitutional standard, the “dollar”, as used in the Constitution, (footnote 7) a coin containing precisely 371 1/4 grains of fine silver. Turning our attention to Congress, we need to recall that Congress only has the powers that are granted to it. We do not look in the Constitution for prohibitions on Congress’s authority and assume that it can do everything that is not prohibited. You look for delegations of authority, and anything that has not been delegated is prohibited. Inclusio unius exclusio alterius. (footnote 8)

Because uncertainty, confusion, and downright error in terms of definitions can all too easily insinuate themselves into shoddy constitutional analysis we must conduct any examination of the Constitution’s terms circumspectly. For example, in one of the Supreme Court’s most important cases on the subject of unconstitutional paper currency, one Justice pointed out that,

“[t]he terms, “bills of credit,” are in themselves vague and general, and, at the present day, almost dismissed from our language. It is, then, only by resorting to the nomenclature of the day of the Constitution, that we can hope to get at the idea which the framers * * * attached to it.” (footnote 9)

Amazingly, this observation was offered a scant forty-two years after ratification of the Constitution, when men who had been young adults in 1788 were still alive and capable of remembering not only “the nomenclature of th[at] day” but also the actual “bills of credit”—such as the Continental Currency—which had then circulated throughout America. And, these possible witnesses aside, the pre-constitutional historical record more than adequately addressed the issue. (footnote 10)

  • From the very first, Federal Reserve Notes, which are ‘Bills of Credit’, were denominated ‘advances’ and ‘obligations’—that is, instruments and evidence of debt.

    From the very first, Federal Reserve Notes were denominated “advances” and “obligations”—that is, instruments and evidence of debt. Revealingly, Section 16 of the original Federal Reserve Act provided that

    Federal reserve notes, to be issued at the discretion of the Federal Reserve Board for the purpose of making advances to Federal reserve banks * * * are hereby authorized. The said notes shall be obligations of the United States, and shall be receivable by all national and member banks and Federal reserve banks and for all taxes, customs, and other public dues. They shall be redeemed in gold on demand at the Treasury Department of the United States, * * * or in gold or lawful money at any Federal reserve bank. (footnote 1)

    Footnotes:

    1.) ¶ 1, 38 Stat. at 265.

  • THE PEOPLE are not necessarily legally bound by every act that individuals who may happen to be Members of Congress may perpetrate, such as the Federal Reserve Act.

    THE PEOPLE are not necessarily legally bound by every act that individuals who may happen to be Members of Congress may perpetrate,  such as the Federal Reserve Act. Whether an action taken by such individuals is entitled to be denoted an action “of Congress” depends, not upon its mere occurrence in the Capitol, but upon its strict congruence with the Constitution, because “Congress” enjoys no authority—indeed, has no legal existence—outside of, let alone contrary to, the Constitution. So, that Members of Congress may have purported to enact some statute, although necessary for that statute’s bare existence, is not sufficient for its validity. “Illegality cannot attain legitimacy through practice.” (footnote 1) Moreover, if (as no one doubts) “a bold and daring usurpation might be resisted, after * * * [long and complete] acquiescence”(footnote 2) then surely a mindless “[g]eneral acquiescence cannot justify departure from the law”, (footnote 3) no matter how long it may have continued. “[N]either the antiquity of a practice nor * * * steadfast legislative and judicial adherence to it through the centuries insulates it from constitutional attack”. (footnote 4) “[N]o one acquires a vested or protected right in violation of the Constitution by long use, even when that span of time covers our entire national existence and indeed predates it.” (footnote 5) Rather, “when the meaning and scope of a constitutional provision are clear, it cannot be overthrown by legislative action, although several times repeated and never before challenged”. (footnote 6) Constitutional questions “must be resolved not by past uncertainties, assumptions or arguments, but by the application of the controlling principles of constitutional interpretation”. (footnote 7)

    Footnotes:

    1.) Inland Waterways Corporation v. Young, 309 U.S. 517, 524 (1940).

    2.) McCulloch v. Maryland, 17 U.S. (4 Wheaton) 316, 401 (1819).

    3.) Smiley v. Holm, 285 U.S. 355, 369 (1932).

    4.) Williams v. Illinois, 399 U.S. 235, 239 (1970), quoted in Pacific Mutual Life Insurance Company v. Haslip, 499 U.S. 1, 18 (1991).

    5.) Walz v. Tax Commission of the City of New York, 397 U.S. 664, 678 (1970).

    6.) Fairbank v. United States, 181 U.S. 283, 311 (1901).

    7.) Wright v. United States, 302 U.S. 583, 597-598 (1938).

  • Modern ‘money’ has become a means for the total confiscation of private property by the government.

    The present monetary provisions of the United States Code demonstrate that official Washington, D.C., has no conception of what a “dollar” really is. The reason for this self-imposed ignorance is obvious. By reducing the “dollar” to a political abstraction, the national government has empowered itself to engage in limitless debasement (depreciation in purchasing power) of the currency. A “dollar” that contains – and must perforce of the Constitution contain – 371.25 grains of fine silver cannot be reduced in value below the market exchange value of silver for other commodities. A pseudo-“dollar” that contains no fixed amount of any particular substance per “dollar” can be reduced in value infinitely. As debasement of currency amounts to a hidden tax, Congress’ silent refusal to recognize the constitutional “dollar” amounts to the usurpation of an unlimited power to tax through manipulation of the monetary system. Thus, modern “money” has become a means for the total confiscation of private property by the government. (footnote 1)

    More ominously, this scheme of surreptitious confiscation remains hidden from the vast majority of Americans, who seem blissfully unconcerned about the issue most important to the soundness of the country’s monetary system: namely, the character of the monetary unit. One need not be overly pessimistic to predict that misuse by politicians of the fictional, constantly depreciating pseudo-“dollar” to expropriate unsuspecting citizens will continue until an economic crisis finally shocks an increasingly impoverished American people out of its slumber, and forces the people to ask the simple question: “What is a ‘dollar’?” At that time, the answer will be no different from what it is today, and has been since 1704 – but the opportunity to use that knowledge to prevent a catastrophe may be long gone. (footnote 2)

    Footnotes:

    1.) What Is A “Dollar”? An Historical Analysis of the Fundamental QuestionIn Monetary Policy, Published by the National Alliance for Constitutional Money, Inc., by Dr. Edwin Vieira, Jr., Monograph No. 6, p.29.

    2.) Id.

The declaration—”No State shall…emit Bills of Credit”— Article I, Section 10, Clause 1—whether redeemable in some other commodity or not— excludes all pretension that paper money is constitutional.

 The “bill of credit” (i.e., paper money) mechanism is one that is infinitely expandable. In the “old days” it was restricted by how much paper you had to print the bills and how fast someone could sign them. Today, the process is electronic and not bound by paper limitations. It’s all electrons, so counterfeiters can generate as much “money” as they want. This is an open invitation to counterfeiting, fraud, redistribution of wealth, and looting.

As Justice Stephen Field warned his fellow justices and countrymen in 1782 “[T]he arguments in favor of the constitutionality of legal tender paper currency] tend directly to break down the barriers which separate 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 government”. (footnote 11)

  • Footnotes

    1.) Documents Illustrative of the Formation of the Union of the American States, H.R. Doc. No. 398, 69th Cong., 1st Sess. (1927), at 475. See Debates on the Adoption of the Federal Constitution in the Convention Held at Philadelphia in 1787; with a diary of the Debates of the Congress of the Confederation; as Reported by James Madison, a Member, and Deputy from Virginia (J. Elliot ed.), in 5 J. Elliott, The Debates on the several Conventions on the Adoption of the Federal Constitution as recommended by the General Convention at Philadelphia in 1787 (2d ed. 1836), at 378; 2 The Records of the Federal Convention, at 182. These editions of Madison’s notes offer in minor ways (primarily as to punctuation and capitalization), but without any substantive discrepancies. Also see Pieces of Eight: The Monetary Powers and Disabilities of the United States Constitution, (Chicago, Illinois R R Donnelly & Sons ., Inc., GoldMoney Foundation Special Edition [2011] of the Second Revised Edition, 2002) by Dr. Edwin Vieira, Jr., Volume I, page 142.

    2.) Documents Illustrative of the Formation of the Union of the American States, H.R. Doc. No. 398, 69th Cong., 1st Sess. (1927), at 556-57. See Debates on the Adoption of the Federal Constitution in the Convention Held at Philadelphia in 1787; with a diary of the Debates of the Congress of the Confederation; as Reported by James Madison, a Member, and Deputy from Virginia (J. Elliot ed.), in 5 J. Elliott, The Debates on the several Conventions on the Adoption of the Federal Constitution as recommended by the General Convention at Philadelphia in 1787 (2d ed. 1836), at 434-35; 2 The Records of the Federal Convention, at 308-310. These editions of Madison’s notes offer in minor ways (primarily as to punctuation and capitalization), but without any substantive discrepancies. For Analysis on the debate over this deletion see Pieces of Eight: The Monetary Powers and Disabilities of the United States Constitution, (Chicago, Illinois R R Donnelly & Sons ., Inc., GoldMoney Foundation Special Edition [2011] of the Second Revised Edition, 2002) by Dr. Edwin Vieira, Jr., Volume I, page 144-153.

    3.) The Sword and Sovereignty: The Constitutional Principles of “the Militia of the several States”, Front Royal, Virginia CD ROM Edition 2012, by Dr. Edwin Vieira, Jr., page 1912.

    4.) Id. at 1.

    5.) Id. at 2.

    6.) U.S. Const., art I, § 10, cl.1.

    7.) U.S. Const. art. I § 9, cl. 1 and amend. VII.

    8.) “Inclusion of the one is exclusion of the other.”

    9.) Craig v. Missouri, 29 U.S. (4Peters) 410, 442 (1830) (Johnson, J., dissenting), referring to U.S. Const. art. I, § 10, cl. 1.

    10.) See, e.g., E. Vieira, Jr., Pieces of Eight: The Monetary Powers and Disabilities of the United States Constitution (Chicago, Illinois: R R Donnelley & Sons, Inc., GoldMoney Foundation Special Edition [2011] of the Second Revised Edition of 2002), Volume 1, at 67-79, 94-96, 141-155, 391-454.

    11.) Dooley v. Smith, 80 U.S. (13 Wall.) at 607-08 (1872) (Stephen J. Field, J., dissenting).