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“GOLD CLAUSES” AND “SILVER CLAUSES” IN FINANCIAL TRANSACTIONS

A Practical Study Concerning Their Origin and Use

Last Updated on August 20, 2021 by Constitutional Militia

“Gold Clauses” and “Silver Clauses” in Financial Transactions: A Practical Study Concerning Their Origin and Use is designed to provide information, analysis, and opinion in regard to the subject matter it covers. It is published and distributed with the understanding that the author and other persons involved in such publication and distribution are not thereby engaged in rendering legal, accounting, tax-consulting, or any other professional services, counseling, or advice of any sort whatsoever. If any reader of this study requires such assistance, he should retain a competent professional in one or more of those areas of expertise. Because of the rapidly changing nature of statute law and judicial opinions relevant to the subject matter of this study, information contained herein may become outdated; and therefore anyone using the material compiled in this study must research original sources in order to update authorities and to ensure their continued applicability and materiality. Moreover, although the author has expended every reasonable effort to make this study a useful reference and resource, neither has it been his purpose, nor would it have been possible, to include all the information that might be available on the subject. In addition, although the author has expended every reasonable effort to make this study accurate, it nonetheless may contain inadvertent errors or oversights in content or analysis. Therefore, it should be used only as a general reference. Neither the author nor any person involved in the publication or distribution of this study assumes or shall have any liability or responsibility to or for any individual, person, or entity with respect to any loss, damage, or other claim of any sort allegedly caused directly, indirectly, or consequentially, or in any other way supposedly arising out of or related to, any such individual’s, person’s, or entity’s use of or other reliance upon any information, analysis, or opinion set out in this study.

Copyright 2009
by EDWIN VIEIRA, JR.
All Rights Reserved

As America’s monetary and banking systems slip into ever-more-serious crises, common Americans are asking themselves if any practical way exists through which they, by their own efforts, can begin to extricate themselves from the worsening situation. The answer is “yes”: Whenever and wherever possible, Americans should consider using “gold clauses” in their private business and other financial transactions.

1. WHAT IS A “GOLD CLAUSE”? WHO MAY EMPLOY SUCH A CLAUSE IN HIS BUSINESS AND OTHER FINANCIAL TRANSACTIONS? AND WHY SHOULD ANYONE WANT TO DO SO?

     a. WHAT IS A “GOLD CLAUSE”? In its strictest definition, a “gold clause” is a provision in, or which governs the execution of, a contract, obligation, instrument of debt, security, or other like agreement, and which requires one of the parties to pay the other party either: (i) a specified amount or quantity of gold, of a particular gold coin, or of some paper currency or other security redeemable or payable in a fixed amount or quantity of gold or of a particular gold coin; or (ii) some other currency in an amount determined by reference to a specified amount or quantity of gold or of a particular gold coin.

     In common parlance, however, the term “gold clause” has come to stand for any contractual or similar provision that requires payment in, or is tied in some way to, gold or silver. So, it is possible to write a “gold clause” that mandates payment only in gold (a pure “gold clause”), only in silver (a pure “silver clause”), or in both gold and silver (a mixed “gold and silver clause”).

Most practical for common Americans today are “gold clauses”, “silver clauses”, and “gold and silver clauses” that employ United States legal-tender gold or silver coins, or both, as their exclusive media of payment. Therefore, this study will rely on the general legal definition of a “gold clause” set out in the present version of Title 31 of the United States Code:

§ 5118. Gold clauses and consent to sue
     a) In this section—
         (1) “gold clause” means a provision in or related to an obligation alleging to give the obligee a right to require payment in—
               (A) gold;
               (B) a particular United States coin or currency; or
               (C) United States money measured in gold or a particular United States coin or currency.

In particular, this study will focus on solely the portion of the latter statute which defines a “gold clause” as “a provision in or related to an obligation alleging to give the obligee a right to require payment in * * * a particular United States coin”. Because it can include any “particular United States coin”, a “gold clause” of this type can be a pure “gold clause”, a pure “silver clause”, or a mixed “gold and silver clause”—various “models” for all of which will be presented hereinafter.[1]

     To be sure, a “gold clause” can employ gold itself, in other than the form of United States coin—that is, as bullion—for the statute so recites in its sub-section (A). (Silver in the form of bullion can also be the subject of a “gold clause”, albeit not under color of this particular statute.) But, in contrast to United States gold and silver coins, neither gold nor silver bullion is readily available to most Americans in conveniently-sized, governmentally-certified units that are suitable for employment in common day-to-day transactions as media of exchange. This renders the use of bullion impractical or at least cumbersome in most instances for most people.

b. WHO MAY EMPLOY A “GOLD CLAUSE” IN HIS BUSINESS AND FINANCIAL TRANSACTIONS?    

Perhaps amazingly, every common American and every State—but not the General Government of the United States—may employ “gold clauses” today.

     (1) A brief legal history of “gold clauses” in America. In contrast to the present situation, prior to 1933 the obligations of the General Government—issued under the power of Congress “[t]o borrow Money on the credit of the United States”[2]—always stood on an at least implicit “gold-clause” basis.

      For example, every issue of Treasury Notes from the late 1700s until 1862 implicitly promised to pay this country’s creditors in silver or gold coin, because the principal and interest of those notes were always denominated in “dollars”, which the coinage acts of that era defined either as silver coins (based on the constitutional silver “dollar” of 371.25 troy grains of fine metal[3]), or as gold coins “Value[d]” in silver, pursuant to Congress’s power “[t]o coin Money, [and] regulate the Value thereof”.[4]

     Even the theretofore unprecedented legal-tender United States Treasury Notes of the Civil War first emitted in 1862 (the so-called “Lincoln Greenbacks”), that actually functioned as paper currency, promised to pay in gold or silver—either explicitly and immediately, as to the interest derived from United States bonds for which the Greenbacks could be exchanged;[5] or implicitly and eventually, when the United States resumed gold and silver payments.[6] Indeed, the presumably inevitable redemption of the Greenbacks in coin of the fixed statutory standard was the decisive characteristic upon which the majority of Justices in the Supreme Court, in The Legal Tender Cases, fastened in order to hold the notes constitutional.[7]

     Moreover, besides actually paying or eventually redeeming all of its notes, bonds, and even legal-tender Treasury currency with silver or gold coin throughout the late 1700s and 1800s, from 1900 until 1933 Congress issued every United States bond with an explicit promise of payment in gold coin “of the present standard of value”[8]—which at that time was the statutory “gold dollar” of 1900, along with the constitutional silver “dollar” which Congress had ordered the Secretary of the Treasury to “maintain[ ] at a parity of value with th[e statutory gold] standard”.[9]

This pattern was followed even in the statute establishing the Federal Reserve System in 1913, which incorporated three “gold-clause” standards: First, a “gold clause” with respect to the Federal Reserve Notes the statute licensed the Board of Governors of the Federal Reserve System to emit:

     Federal reserve notes, to be issued at the discretion of the Federal Reserve Board for the purpose of making advances to Federal reserve banks * * * and for no other purpose, are hereby authorized. The said notes shall be obligations of the United States * * * . They shall be redeemed in gold on demand at the Treasury Department of the United States, in the city of Washington, District of Columbia, or in gold or lawful money at any Federal reserve bank.[10]

Second, further “gold clauses” with respect to the Treasury notes and bonds the statute authorized—to wit, “one-year gold notes of the United States”, “Treasury notes to be payable * * * in gold coin of the present standard value”, and “United States gold bonds”.[11] And third, gold reserves the banks were required to maintain against their deposits and notes:

Every Federal reserve banks shall maintain reserves in gold or lawful money of not less than thirty-five per centum against its deposits and reserves in gold of not less than forty per centum against its Federal reserve notes in actual circulation, and not offset by gold or lawful money deposited with the Federal reserve agent.[12]

Thus, from the late 1700s until 1933, “the credit of the United States” (and even of its creature, the Federal Reserve System) was always tied directly to a monetary system which ultimately rested upon silver and gold coinage.

     With the advent of the legal-tender “Greenback” paper currency in 1862, however, explicit “gold clauses” in private contracts became very popular among knowledgeable Americans who feared losses of their real wealth because of the new currency’s temporary irredeemability in gold or silver, coupled with its rapid depreciation in purchasing power as against gold in the free market. And not without reason: For at the end of 1862, 1863, and 1864, $100 face value in gold coin exchanged in the free market for $128, $148, and $225 face value in Greenbacks, respectively—the lowest point coming in July of 1864, when $100 in gold exchanged for $285 in paper currency.[13]

Very soon, the question of the legality of these “gold clauses” in relationship to the legal-tender law found its way to the Supreme Court. At issue in Bronson v. Rodes[14] was whether a contractual provision calling for “dollars payable in gold and silver coin, lawful money of the United States” could be satisfied with legal-tender Greenbacks. To determine “the precise import in law” of the contractual phrase, the Court turned to the Mint Act of 1792.[15] The Court noted that the act “established the [silver] dollar as the money unit”, and that “[p]rovision was also made for a gold coinage * * * of eagles, * * * being of the value * * * [of so many] dollars”.[16] Then, after reviewing the coinage acts enacted from 1792 onwards, the Court observed that “[t]he design of all this minuteness and strictness in the regulation of coinage * * * recognizes the fact, accepted by men throughout the world, that value is inherent in the precious metals; that gold and silver are in themselves values, and being such * * * are the only proper measure of value; [and] that these values are determined by weight and purity”.[17] Moreover, “[e]very * * * dollar is a piece of gold or silver, certified to be of a certain weight and purity, by the form and impress given to it at the mint * * * and therefore declared to be a legal tender in payments”.[18] From all this, the Court concluded that

[a] contract to pay a certain number of dollars in gold or silver coins is, therefore, in legal import, nothing else than an agreement to deliver a certain weight of standard gold, to be ascertained by a count of coins, each of which is certified to contain a definite proportion of that weight. It is not distinguishable * * * , in principle, from a contract to deliver an equal weight of bullion of equal fineness. It is distinguishable, in circumstance, only by the fact that the sufficiency of the amount to be tendered in payment must be ascertained, in the case of bullion, by assay and the scales, while in the case of coins it may be ascertained by count.[19]

The Court then denied that “a contract to pay coined money may be satisfied by a tender of United States notes”.[20] “[L]aws for the coinage of gold and silver”, the Court explained,

have never been repealed * * * .They remain on the statute-book in full force. And the emission of gold and silver coins from the mint continues. * * *

     Nor have those provisions of law which make these coins a legal tender in all payments been repealed or modified.
     It follows that there were two descriptions of money in use at the time the tender under consideration [in the case] was made, both authorized by law, and both made legal tender in payments. The statute denomination of both descriptions was dollars; but they were essentially unlike in nature. The coined dollar was * * * a piece of gold and silver of a prescribed degree of purity, weighing a prescribed number of grains. The note dollar was a promise to pay a coined dollar; but it was not a promise to pay on demand nor at any fixed time, nor was it, in fact, convertible into a coined dollar. It was impossible, in the nature of things, that these two dollars should be the actual equivalents of each other, nor was there anything in the currency acts purporting to make them such * * * .
     If then, no express provision to the contrary be found in the acts of Congress, it is a just and necessary inference, from the fact that both descriptions of money were issued by the same government, that contracts to pay in either were equally sanctioned by law. It is, indeed, difficult to see how any question can be made on this point. Doubt concerning it can only spring from that confusion of ideas which always attends the introduction of varying and uncertain measures of value into circulation of money.
* * * What reason can be assigned now for saying that a contract to pay coined dollars must be satisfied by the tender of an equal number of note dollars, which will not be equally valid then, for saying that a contract to pay note dollars must be satisfied by a tender of an equal number of coined dollars?[21]

     Finally, the Court held that “express contracts to pay coined dollars can only be satisfied by the payment of coined dollars. They are not ‘debts’ which may be satisfied by the tender of United States notes”.[22]

     Butler v. Horowitz[23] elaborated on Bronson. The Butler Court reaffirmed that “[a] contract to pay a certain sum in gold and silver coin is, in substance and legal effect, a contract to deliver a certain weight of gold and silver of a certain fineness, to be ascertained by count”; and that “two descriptions of lawful money [are] in use under acts of Congress”—adding that “the obvious intent, in contracts for payment or delivery of coin or bullion, to provide against fluctuations in the medium of payment, warrants the inference that it was the understanding of the parties that such contracts should be satisfied, whether before or after judgment, only by tender of coin”.[24] The Court further noted that “the acts making United States notes a legal tender * * * not only do not prohibit, but, by strong implications, sanction contracts made since their passage for payment of coin; and consequently, taken in connection with the provision of the act of 1792, concerning money of account, require that damages upon such contracts be assessed in coin, and judgment rendered accordingly”.[25] This faithfully followed the Mint Act of 1792, which had provided that “the money of account of the United States shall be expressed in dollars”[26]—just as the United States Code continues to do, somewhat more elaborately but in substantively the same language, today.[27] So, concluded the Court, judges are required “to give full effect to the intention of parties [to the contract] as to the medium of payment”.[28]

Such was the basic law of “gold clauses” prior to 1933. At the height of the banking crisis and depression in that year, however, Congress enacted House Joint Resolution No. 192, which outlawed most “gold clauses”, by decreeing that

every provision contained in or made with respect to any obligation which purports to give the obligee a right to require payment in gold or a particular kind of coin or currency, or in an amount in money of the United States measured thereby, is declared to be against public policy; and no such provision shall be contained in or made with respect to any obligation hereafter incurred. Every obligation, heretofore or hereafter incurred, whether or not any such provision is contained therein or made with respect thereto, shall be discharged upon payment, dollar for dollar, in any coin or currency which at the time of payment is legal tender for public and private debts.[29]

     In 1977, however, Congress mandated that the Joint Resolution “shall not apply to obligations issued on or after [28 October 1977]”,[30] thus reinstating the right of every American to make “gold clauses”.

The entirety of the section of Title 31 of the United States Code applicable to “gold clauses” now provides as follows:

§ 5118. Gold clauses and consent to sue
     (a) In this section—
          (1) “gold clause” means a provision in or related to
     an obligation alleging to give the obligee a right to require
     payment in—
            (A) gold;
            (B) a particular United States coin or currency; or
            (C) United States money measured in gold or a particular United States coin or currency.
     (2) “public debt obligation” means a domestic obligation issued or guaranteed by the    United States Government to repay money or interest.
     (b) The United States Government may not pay out any gold coin. A person lawfully holding United States coins and currency may present the coins and currency to the Secretary of the Treasury for exchange (dollar for dollar) for other United States coins and currency (other than gold and silver coins) that may be lawfully held. The Secretary shall make the exchange under regulations prescribed by the Secretary.
(c) (1) The Government withdraws its consent given to anyone to assert against the Government, its agencies, or its officers, employees, or agents, a claim—
            (A) on a gold clause public debt  obligation or interest on the obligation;
            (B) for United States coins or currency; or
            (C) arising out of the surrender, requisition, seizure, or acquisition of United States coins or currency, gold, or silver involving the effect or validity of a change in the metallic content of the dollar or in a regulation about the value of money.
         (2) Paragraph (1) of this subsection does not apply to a proceeding in which no claim is made for payment or credit in an amount greater than the face or nominal value in dollars of public debt obligations or United States coins or currency involved in the proceeding.
         (3) Except when consent is not withdrawn under this subsection, an amount appropriated for payment on public debt obligations and for United States coins and currency may be expended only dollar for dollar.
     (d) (1) In this subsection, “obligation” means any obligation (except United States currency) payable in United States money.
        (2) An obligation issued containing a gold clause or governed by a gold clause is discharged on payment (dollar for dollar) in United States coin or currency that is legal tender at the time of payment. This paragraph does not apply to an obligation issued after October 27, 1977.[31]

     So, today, in terms of the applicable law, monetary conditions are essentially the same as they were in the immediate post-Civil War era, as is evident from describing the present situation in the language the Supreme Court once used in Bronson v. Rodes (quoted above):[32]

• “[L]aws for the coinage of gold and silver * * * have never been repealed * * * . They remain on the statute-book in full force. And the emission of gold and silver coins from the mint continues.”
     This is true for gold coins, in the form of United States “American Eagles” in “fifty dollar” (one ounce), “twenty-five dollar” (one-half ounce), “ten dollar” (one-fourth ounce), and “five dollar” (one-tenth ounce) coins.[33] It is also true for silver coins, in the form of United States “Liberty” (one ounce) “One Dollar” coins.[34]

• “Nor have those provisions of law which make these coins a legal tender in all payments been repealed or modified.” 
     This is true for both gold United States “American Eagle” and silver United States “Liberty” coins, which are “legal tender” equally with all other forms of United States coins and currency (including Federal Reserve Notes).[35]

• “[T]here [are] two descriptions of money in use at the [present] time * * * , both authorized by law, and both made legal tender in payments.”
     Contemporary official United States media of exchange take two primary forms: The first is actual “Money”,[36] consisting of “American Eagle” gold coins—variously denominated (in relationship to weight of gold) as “fifty dollar[s]”, “twenty five dollar[s]”, “ten dollar[s]”, and “five dollar[s]”—and “Liberty” silver coins, each denominated as “One Dollar”. The other is a paper currency, consisting of Federal Reserve Notes, variously denominated in “dollars” (although they are not actually “dollars”, but instead “notes”, “securities”, or evidences of debt merely redeemable in “dollars”).
     As the statute authorizing their emission states, Federal Reserve Notes “shall be obligations of the United States” and “shall be redeemed in lawful money on demand at the Treasury Department of the United States * * * or at any Federal Reserve bank”.[37] Therefore, Federal Reserve Notes are not themselves “lawful money” of any kind. Federal Reserve Notes are analogous to the United States Notes involved in Thompson v. Butler. Prior to Thompson, the question of the character of United States Notes arose in New York ex rel. Bank of New York v. Board of Supervisors.[38] At issue was whether the notes were liable to State taxation, or immune under a statutory exemption for “securities of the United States”. In favor of the tax, “it was insisted that [the notes] were issued as money; their controlling quality was that of money, and that therefore they were subject to taxation in the same manner, and to the same extent, as coin”.[39] This was a substantial argument, inasmuch as Congress had declared that United States Notes “shall * * * be lawful money”.[40] The Court, however, held that “these notes are obligations of the United States. Their name imports obligation. * * * They bind the national faith. They are, therefore, strictly securities.”[41] Obviously, if United States Notes—which Congress declared to “be lawful money”—are merely “securities” that lack the monetary status of actual coin, then Federal Reserve Notes—which Congress requires to “be redeemed in lawful money”—can be no more than such “securities”, too.

     • [T]he statute denomination of both descriptions [of these media of exchange is] dollars; but they [are] essentially unlike in nature. The coined dollar[s are] * * * piece[s] of gold and silver of a prescribed degree of purity, weighing a prescribed number of grains. The [Federal Reserve N]ote dollar * * * [is] not * * * convertible into a coined dollar [of either gold or silver]. It [is] impossible, in the nature of things, that these two dollars should be the actual equivalents of each other, nor [is] there anything in the currency acts purporting to make them such[.]”
     United States “American Eagle” gold coins and “Liberty” silver coins do not exchange in the free market at their face (or nominal) values for equivalent face (or nominal) values of Federal Reserve Notes—for example, a “$50” (one ounce) “American Eagle” coin for a “$50” note; or a “$1” “Liberty” coin for a “$1” note. (Such equivalences in value between the coins and the notes are not impossible in principle, because, although they are not being enforced, the present monetary laws of the United States do require that the coins and the notes should exchange at equivalent face values.[42])

• “If then, no express provision to the contrary be found in the acts of Congress, it is a just and necessary inference, from the fact that both descriptions of money were issued by the same government, that contracts to pay in either [are] equally sanctioned by law. It is, indeed, difficult to see how any question can be made on this point. Doubt concerning it can only spring from that confusion of ideas which always attends the introduction of varying and uncertain measures of value into circulation of money.”
     Which explains perfectly the difficulty most Americans have today in understanding this situation.

(2) The self-imposed disability of the General Government to employ “gold clauses”.

As pointed out above, prior to 1933 (and even under color of the original Federal Reserve Act of 1913) the General Government regularly issued notes and bonds containing “gold clauses”. Today, however, it is statutorily impossible for the Treasury Department to issue a credible “gold-clause” bond or other debt obligation or security of that kind, because:

(i) if such a “gold clause” existed, it could not be executed, inasmuch as “the United States Government may not pay out any gold coin”;[43] moreover,

(ii) even if the Treasury could pay out gold or silver coin in satisfaction of such a “gold clause” as a matter of statute, but nonetheless refused to do so as a matter of fact, an aggrieved creditor could not enforce the obligation in court, because “[t]he Government withdraws its consent given to anyone to assert, against the Government, its agencies, or its officers, employees, or agents, a claim * * * on a gold clause public debt obligation or interest on the obligation”;[44] and therefore,

(iii) the most that any creditor could receive in purported satisfaction of the “gold-clause” debt would be “the face or nominal value in dollars of public debt obligations * * * involved in the proceeding”,[45] that “nominal value” to be paid in legal-tender Federal Reserve Notes,[46] or in the base-metallic (“clad”) United States coins in which Federal Reserve Notes can be redeemed;[47] which means that

(iv) no rational creditors would ever purchase any “gold-clause” “public debt obligations” from the Treasury—and insofar as the purchasing power of Federal Reserve Notes (or “clad” coinage) in comparison to gold and silver continues to depreciate at an accelerating rate, at some point in the not-so-distant future very few rational creditors will purchase any new “public debt obligations” from the Treasury.

So, without major monetary and banking reform emanating from Congress—including a return to silver and gold as the only official moneys of the United States, and the gradual phasing-out of Federal Reserve Notes as legal tender and official units of United States currency—the General Government will likely soon be confronted with a crisis in comparison to which the financial collapse of the 1930s will appear trivial.

(3) The absolute constitutional right of the States to employ “gold clauses”.

In contradistinction to the General Government, the States are not precluded from employing “gold clauses” in their financial transactions. To the contrary, the Constitution itself declares that “[n]o State shall * * * make any Thing but gold and silver Coin a Tender in Payment of Debts”,[48] which plainly indicates that the specific power and even duty to “make * * * gold and silver Coin a Tender in Payment of Debts”, including the State’s own “Debts”, is reserved to the States.[49]

     In addition to this, the States enjoy an absolute right to employ whatever currency they deem necessary and proper for the performance of their governmental functions—with the exceptions of “Money” that they themselves “coin” and “Bills of Credit” (paper currency) that they themselves “emit”.[50] In Lane County v. Oregon, the State courts had ruled that, as a matter of State law, certain county and State taxes “were required to be collected in [silver and gold] coin”.[51] At issue in the Supreme Court was whether, notwithstanding State law, the taxes could be paid in legal-tender United States Notes, pursuant to the Congressional mandate that those notes

shall be receivable in payment of all taxes, internal duties, excises, debts and demands due to the United States, except duties on imports * * * ; and shall also be lawful money and legal tender in payment of all debts, public and private, within the United States * * * .[52]

     The Supreme Court held that the taxes could not be paid in Greenbacks. “The people of the United States”, the Court explained,

constitute one nation, under one government, and this government, within the scope of the powers with which it is invested, is supreme. On the other hand, the people of each State compose a State, having its own government, and endowed with all the functions essential to separate and independent existence. The States disunited might continue to exist. Without the States in union there could be no political body as the United States.
      Both the States and the United States existed before the Constitution. The people, through that instrument, established a more perfect union by substituting a national government, acting, with ample power, directly upon the citizens, instead of the Confederate government, which acted with powers, greatly restricted, only upon the States. But in many articles of the Constitution the necessary existence of the States, and, within their proper spheres, the independent authority of the States, is distinctly recognized. * * * [T]o them and to the people all powers not expressly delegated to the national government are reserved. * * *
     Now, to the existence of the States, themselves necessary to the existence of the United States, the power of taxation is indispensable. It is an essential function of government. It was exercised by the Colonies; and when the Colonies became States, both before and after the formation of the Confederation, it was exercised by the new governments. * * * The Constitution, it is true, greatly changed this condition of things. It gave the power to tax, both directly and indirectly, to the national government, and, subject to the one prohibition of any tax upon exports and to the conditions of uniformity in respect to indirect and of proportion in respect to direct taxes, the power was given without any express reservation. On the other hand, no power to tax exports, or imports except for a single purpose and to an insignificant extent, or to lay any duty on tonnage, was permitted to the States. In respect, however, to property, business, and persons, within their respective limits, their power of taxation remained and remains entire. It is indeed a concurrent power, and in the case of a tax on the same subject by both governments, the claim of the United States, as the supreme authority, must be preferred; but with this qualification it is absolute. The extent to which it shall be exercised, the subjects upon which it shall be exercised, and the mode in which it shall be exercised, are all equally within the discretion of the legislatures to which the States commit the exercise of the power. * * * There is nothing in the Constitution which contemplates or authorizes any direct abridgment of this power by national legislation. * * * If, therefore, the condition of any State, in the judgment of its legislature, requires the collection of taxes in kind, that is to say, by the delivery to the proper officers of a certain proportion of products, or in gold and silver bullion, or in gold and silver coin, it is not easy to see upon what principle the national government can interfere with the exercise, to that end, of this power, original in the States, and never as yet surrendered.[53]

     Lane County was followed in Union Pacific Railroad Company v. Peniston on the general proposition “[t]hat the taxing power of a State is one of its attributes of sovereignty”,[54] and in Hagar v. Reclamation District No. 108 on the specific proposition that “[t]he acts of Congress making the notes of the United States a legal tender do not apply to involuntary contributions exacted by a State”.[55]

     These decisions laid down a wide avenue for the States’ self-emancipation from Congressional media of exchange other than silver and gold coin. For, although Lane County, Peniston, and Hagar all involved State taxes, their reasoning rested on a principle that sweeps in every monetary transaction arising from a State’s exercise of any of its attributes of sovereignty. After all, taxing is no more “indispensable” to or “an essential function of government” (Lane County), or an “attribute[ ] of sovereignty” (Peniston), than spending public moneys on public functions, borrowing on the public credit, paying just compensation to persons expropriated under the power of eminent domain, or awarding damages or collecting fines in judicial proceedings. All are quintessentially “sovereign” activities—

     • taxation, which Lane County, Peniston, and Hagar so held;

     • public spending, as to which Taub v. Kentucky noted that “state sovereignty extends to the total conduct of a state’s fiscal affairs”;[56]

     • public borrowing evidenced in and enforceable through “binding obligations”, which Perry v. United States held to be “a competence
attaching to sovereignty”;[57]

     • the power of eminent domain, which Boom Company v. Patterson  described as “an attribute of sovereignty”;[58] and

     • the jurisdiction of the courts, which The Schooner Exchange v.  McFaddon treated as “a branch” of “independent sovereign power”.[59]

Nowhere does the Constitution authorize the General Government to abridge any of these powers so fundamental to the existence and operations of the States qua States.

     Unfortunately, the average American may have to wait for a considerable length of time before his own State government asserts its authority in this field, and adopts United States gold and silver coin (or other forms of gold and silver) as its media of exchange in preference to Federal Reserve Notes.[60]

(4) The right of common Americans to employ “gold clauses”.

The average American, however, does not have to stand idly by and leave himself entirely unprotected from ever-worsening monetary and banking crises until either his State or the General Government acts—because all private citizens can, with perfect legality, structure their own business and other financial affairs on the basis of “gold clauses”, “silver clauses”, or “gold and silver clauses”, under the aegis of Title 31, United States Code, Section 5118(d)(2), if they simply follow the proper procedure.

c. WHAT ARE THE ADVANTAGES OF EMPLOYING “GOLD CLAUSES”?

“Gold clauses” enable every American to designate with exactitude what will be the only legal tender for his business and other financial transactions—either gold, or silver, or gold and silver. Federal Reserve Notes and United States base-metallic (“clad”) coins can be absolutely excluded as permissible media of payment—that is, with respect to Americans’ business and other financial transactions subject to “gold clauses”, Federal Reserve Notes and United States base-metallic coins can be effectively demonetized. Individuals using “gold clauses” can, to the extent of those clauses, separate their finances from the Federal Reserve System entirely. Thus, “gold clauses” can put the parties’ contracts on an economically sound and fully constitutional monetary basis—in particular, protecting creditors against the inherent instability of the Federal Reserve System’s paper currency and fractional-reserve central banking Ponzi scheme, as well as the potential hyperinflationary effects that could arise out of the mammoth governmental “bail outs” of banks, financial institutions, and major industries now taking place.

     In addition, to the extent that ever-increasing numbers of individuals and businesses adopt “gold clauses”, an alternative monetary system will develop that can protect a Locality’s or even a whole State’s economy against the increasingly severe economic shocks that will accompany the approaching collapse of the Federal Reserve System.

2. A POSSIBLE COMPLICATION: HOW ARE RECEIPTS UNDER A “GOLD CLAUSE” TO BE VALUED?

     A practical problem in the use of “gold clauses” is how to value such clauses in “dollars”, when both United States gold and silver coins, on the one hand, and Federal Reserve Notes, on the other hand, are equally legal tender but have widely disparate economic purchasing powers in the marketplace. For example, assume that a “gold clause” required the payment of ten United States “American Eagle” one-ounce gold coins, each with a face (or nominal) value of $50 as specified by Congress,[61] for an aggregate face (or nominal) value of $500. Further assume that, on the day the “gold clause” is paid, ten “American Eagle” one-ounce gold coins would hypothetically exchange in the free market for an aggregate face (or nominal) value of $10,000 in Federal Reserve Notes (i.e., $1,000 in notes for each coin). Is the monetary value of the “gold clause” to be assessed at $500 or $10,000? Unfortunately, as a practical matter no definitive answer can be given to this question at the present time.

     a. THE SUPREME COURT ’S DECISION IN THOMPSON v. BUTLER. In principle, this issue was settled by the Supreme Court in its landmark decision in Thompson v. Butler.[62] Unfortunately, Thompson is only little known today.[63] Nonetheless, it is significant for America’s contemporary monetary system, in which the General Government both emits gold and silver coinage (“American Eagle” and “Liberty” coins) in addition to paper currency (Federal Reserve Notes) and base-metallic coins,[64] and equates all of these coins and currencies as legal tender.[65]

The issue in Thompson was whether the amount in controversy in that case met the then-applicable requirement for the Supreme Court’s jurisdiction: namely, that it exceed $5,000. At trial, Butler had won a judgment on a “gold-clause” contract for $5,066.17 payable “in gold”. He then remitted $66.17, accepting a judgment for $5,000 “in coin”. Thompson appealed. Butler moved to dismiss the appeal, on the ground that the value of the matter in dispute did not exceed $5,000—which, of course, had been his ulterior motive for accepting the reduction in his judgment.[66]

     Thompson defended the Court’s jurisdiction on the ground that, because at the time the case was decided in the trial court legal-tender United States Treasury Notes were depreciated in purchasing power as against gold coin even though both were denominated in “dollars”, a judgment for $5,000 in gold coin was in economic fact the equivalent of a judgment for some $5,487 in notes, which was more than enough for the Supreme Court to take jurisdiction of the appeal.[67] “[I]nasmuch as the law recognizes two descriptions of dollars, which differ in actual value,” Thompson argued, the jurisdictional statute “must be held to refer to one or other of these ‘dollars’ as a uniform standard of value”. “There cannot be two jurisdictional standards of value”, he contended. For Thompson, the standard of value was

the legal dollar of least value, i.e., the treasury-note dollar; for where a contract or judgment calls for the payment of “dollars” generally, it means the legal dollars of least value, because the debtor has the legal option to pay in such dollars of least value; and when the statute speaks of “dollars,” it, of course, refers to the description of “dollars” contemplated by contracts or judgments payable generally in “dollars;” that is to say, to the treasury note or paper dollars.[68]

     How Thompson expected this argument to help him is unclear, given that the judgment handed down against him was not one “payable generally in ‘dollars’”, but one specifically payable in gold, as to which “the debtor ha[d no] legal option to pay in * * * dollars of least value”. In any event, Thompson asserted that

     [a] judgment for the payment of a certain sum in gold coin * * * is not distinguishable from a judgment for the recovery of an equal weight of gold bullion of equal fineness.

*     *     *     *     *

     This, then, in legal effect, is a judgment for the recovery * * * of a certain weight of standard gold of a certain purity, which had a definite and ascertainable “value” in the market of the country; and that judgment the court has jurisdiction to review if the market “value” exceeded $5,000 in legal tender notes, precisely as in the case of a judgment for an equal weight of bullion of equal fineness.[69]

In essence, Thompson asserted that the law conferring legal-tender status on United States Notes, coupled with the depreciation of the purchasing power of those notes in the marketplace, had effectively demonetized United States gold coin (reducing it to a mere commodity, gold bullion), with the result that United States Treasury Notes became the exclusive monetary standard of value, even where a judgment explicitly mandated payment in gold coin.

The Court, however, ruled squarely against Thompson, holding that

[o]ne owing a debt may pay it in gold coin or legal-tender notes of the United States, as he chooses, unless there is something to the contrary in the obligation out of which the debt arises. A coin dollar is worth no more for the purposes of tender in payment of an ordinary debt than a note dollar. The law has not made the note a standard of value any more than coin. It is true that in the market, as an article of merchandise, one is of greater value than the other; but as money, that is to say, as a medium of exchange, the law knows no difference between them.[70]

     Thus, Thompson v. Butler put paid to the argument that, simply because Congress has seen fit to emit a legal-tender paper currency which thereafter depreciates in purchasing power, therefore such a currency purportedly supersedes United States legal- tender silver and gold coinage as the one and only standard of value. This means that, under Thompson, the monetary value of a “gold-clause”, or a “silver-clause”, or a “gold- and-silver-clause” contract, payable in United States legal-tender coins, is always the aggregate face (or nominal) values in “dollars” stamped on the coins that are delivered pursuant to the contract, and never the total value for which those coins might hypothetically be exchanged for the government’s or some bank’s depreciated paper currency in the free market. So, for example, a “gold-clause” contract payable in ten United States “American Eagle” one-ounce gold coins—each with a face (or nominal) value of $50, and therefore with an aggregate face (or nominal) value of $500—should have a value of $500, even though those coins could be exchanged in the free market for a face (or nominal) value of (say) $10,000 in Federal Reserve Notes. This, because (to quote Thompson again) “[a] coin dollar is worth no more for the purposes of tender in payment of an ordinary debt than a note dollar. The law has not made the note a standard of value any more than coin.” Of course, the opposite is also true. A contract explicitly payable in $10,000 aggregate face (or nominal) value in Federal Reserve Notes cannot be “revalued” to be worth only $500 simply because, hypothetically, the $10,000 in Federal Reserve Notes could be exchanged in the free market for ten “American Eagle” one-ounce gold coins each with a face (or nominal) value of $50.

     The problem today is not with the meaning or applicability of Thompson v. Butler. It is, of course, true that Thompson dealt with legal-tender United States Treasury Notes, whereas today the general circulating paper currency in America consists of legal-tender Federal Reserve Notes. This, however, is a distinction without a difference, because both Treasury Notes and Federal Reserve Notes were and are obligations of the United States.[71] Rather, the problem is that various tax authorities and courts inferior to the Supreme Court of the United States simply disregard Thompson altogether, and take the contrary position that the monetary value of a contract with a “gold clause” must be determined, not according to the aggregate face (or nominal) value of the actual United States legal- tender gold or silver coins that are in fact paid in satisfaction of that contract, but instead according to the utterly hypothetical aggregate face (or nominal) value of the Federal Reserve Notes for which those coins might be exchanged in the free market, even though no such exchange has taken or might ever take place. Obviously, though, any court inferior to the Supreme Court, any executive department, or any administrative agency—of either the General Government or the States—that in rendering some ruling on this matter of monetary valuation simply pays no attention to Thompson v. Butler at all to that extent forfeits its own legal authority in the premises. Because, of course, no such court, department, or agency has any power whatsoever to disregard or treat as irrelevant, let alone to “overrule”, Thompson.

To be sure, under color of its power “[t]o coin Money, regulate the Value thereof, and of foreign Coin”,[72] Congress could arguably render Thompson immaterial by enacting a statute specifying that the monetary value of a “gold-clause” contract must now be measured according to the hypothetical aggregate face (or nominal) value of the Federal Reserve Notes for which the United States gold or silver coins payable under such clause might be exchanged in the free market (even though no such exchange had taken or might ever take place). Indeed, at one time Congress did so recognize and act on the economic difference between United States legal-tender gold and silver coins, on the one hand, and legal-tender United States Treasury Notes, on the other: For a few years until its repeal, the Civil-War income tax imposed a duty on “all persons required to make returns or lists of income * * * to declare in such returns or lists whether the * * * amounts therein contained are stated according to their values in legal tender currency or * * * coined money”, and required assessors “to reduce such * * * amounts [stated in coined money] to their equivalent in legal tender currency, according to the value of such coined money in said currency”.[73] But, as of this writing, the author of this study has been apprised of no such modern Congressional statute. Neither has the author been apprised of any Congressional statute that purports generally to designate Federal Reserve Notes as the standard for determining the monetary value in “dollars” of United States legal-tender gold and silver coins to the exclusion of those coins’ face (or nominal) values. Furthermore, no State legislature has any power to coin money or to emit paper currency (“Bills of Credit”)[74]—and therefore every State legislature is powerless to enact any statute purporting to designate the State’s own arbitrary standard of value for either coins or currency of the United States.[75] And no mere executive department or administrative agency engaged in the assessment and collection of taxes for either the General Government or any of the States enjoys any such authority, either.

     Rather than selecting any one form of United States legal tender (such as Federal Reserve Notes) as the sole standard of value for all other forms of United States legal tender (such as “American Eagle” gold and “Liberty” silver coins), Congress has declared that all “United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues”, without any differentiation whatsoever among them.[76] Certainly, if Congress desired to discriminate among various forms of United States coinage and currency, it has the power and the knowledge to do so—because in the very same statute it was able to declare that “[f]oreign gold or silver coins are not legal tender for debts”.

So, the rule of valuation should be that the monetary value of a “gold-clause” contract in “dollars” is the aggregate face (or nominal) value in “dollars” that Congress has assigned by statute to the United States legal-tender gold, silver, or gold and silver coins specifically payable under the contract.

b. CONGRESS’S OWN RULE FOR VALUING TRANSACTIONS INVOLVING UNITED STATES GOLD AND SILVER COINAGE AND “PUBLIC DEBT OBLIGATIONS”.

If the decision in Thompson v. Butler were not enough, the contrary position should be foreclosed simply as a matter of simple equity and fair dealing by the manner in which Congress itself requires United States coinage and “public debt obligations of the United States” to be valued in transactions involving the General Government. Once again, the relevant statute provides as follows:

§ 5118. Gold clauses and consent to sue
          (a) In this section—
               (1) “gold clause” means a provision in or related to an obligation alleging to give the obligee a right to require payment in—
                            (A) gold;
                            (B) a particular United States coin or currency; or
                         (C) United States money measured in gold or a particular United States coin or currency. 
               (2) “public debt obligation” means a domestic obligation issued or guaranteed by the    United States Government to repay money or interest.
               (b) The United States Government may not pay out any gold coin.
A person lawfully holding United States coins and currency may present the coins and currency to the Secretary of the Treasury for exchange (dollar for dollar) for other United States coins and currency (other than gold and silver coins) that may be lawfully held. The Secretary shall make the exchange under regulations prescribed by the Secretary.
               (c) (1) The Government withdraws its consent given to anyone to assert against the Government, its agencies, or its officers, employees, or agents, a claim—
                            (A) on a gold clause public debt obligation or interest on the obligation;
                            (B) for United States coins or currency; or
                      (C) arising out of the surrender, requisition, seizure, or acquisition of United States coins or currency, gold, or silver involving the effect or validity of a change in the metallic content of the dollar or in a regulation about the value of money.
               (2) Paragraph (1) of this subsection does not apply to a proceeding in which no claim is made for payment or credit in an amount greater than the face or nominal value in dollars of the public debt obligations or the United States coins or currency involved in the proceeding.
               (3) Except when consent is not withdrawn under this subsection, an amount appropriated for payment on public debt obligations and for United States coins and currency may be expended only dollar for dollar.
(d) (1) In this subsection, “obligation” means any obligation (except United States currency) payable in United States money.
               (2) An obligation issued containing a gold clause or governed by a gold clause is discharged on payment (dollar for dollar) in United States coin or currency that is legal tender at the time of payment. This paragraph does not apply to an obligation issued after October 27, 1977.

This statute makes unmistakably clear that:

    (i) The Treasury will exchange United States legal-tender gold and silver coins for other United States coins or currency only on a nominal “dollar-for-dollar” basis: “A person lawfully holding United States coins and currency may present the coins and currency to the Secretary of the Treasury for exchange (dollar for dollar) for other United States coins and currency (other than gold and silver coins) that may be lawfully held.” Thus, if a person presents a $50 (one-ounce) “American Eagle” gold coin, the Treasury will exchange it for no more than $50 in Federal Reserve Notes or base-metallic (“clad”) coinage, not the much greater value in Federal Reserve Notes or “clad” coins that the gold coin might have brought in the free market. And, in that situation, no one may sue the General Government for “an amount greater than the face or nominal value in dollars of * * * the United States coins * * * involved in the proceeding”.

     (ii) Anyone who sues the General Government because of a “surrender, requisition, seizure, or acquisition of United States coins” originally belonging to him, in a situation “involving the effect or validity of a change in the metallic content of the dollar or in a regulation about the value of money”, may assert “no claim * * * for payment or credit in an amount greater than the face or nominal value in dollars of * * * the United States coins * * * involved in the proceeding”.

Thus, if the government seizes a $50 (one-ounce) “American Eagle” gold coin, the victim can claim no more than $50 in Federal Reserve Notes or base-metallic (“clad”) coinage, not the much greater value in Federal Reserve Notes or “clad” coins that the gold coin might have brought in the free market. And,

     (iii) Anyone who holds a “public debt obligation” containing a “gold clause” may assert “no claim * * * for payment or credit in an amount greater than the face or nominal value in dollars of * * * the United States coins * * * involved in the proceeding”. Thus, even if the “public debt obligation” promises to pay a $50 (one-ounce) “American Eagle” gold coin, the creditor can claim no more than $50 in Federal Reserve Notes or base-metallic (“clad”) coinage, not the much greater value in Federal Reserve Notes or “clad” coins that the gold coin might have brought in the free market.

In each and every one of these instances, Congress—the only entity to which the Constitution delegates the authority “[t]o coin Money, regulate the Value thereof, and of foreign Coin”[77]—itself treats the monetary values of all forms of United States coins, currency, and “public debt obligations” denominated in “dollars” purely on a nominal “dollar-for-dollar” basis, such that a United States legal-tender gold or silver coin, or a United States “public debt obligation” explicitly payable in any such coin, is to be assigned a monetary value equal only to its face (or nominal) value, and to be exchanged for or paid with only the same face (or nominal) value of Federal Reserve Notes or “clad” coin. How, then, could any agency of the General Government or the States claim that the monetary value of a private “gold clause”—a private “debt obligation” in which particular gold or silver coins are specified as the sole acceptable media of payment—is other than the face (or nominal) value of those coins as expressed in the number of “dollars” stamped on them by order of Congress? That is, how could any such agency claim that the monetary value of that clause should not be stated simply “dollar for dollar”? Is there to be one rule of monetary valuation expressed by Congress in relation to certain transactions for the General Government, and a quite different rule—never expressed by Congress at all—for everyone else in relation to the very same kinds of transactions?

     Interestingly, too, Congress’s directive in this statute is aimed, first and foremost, at the United States Department of the Treasury. This focus, however, would not absolve other agencies, of either the General Government or the States, from having to comply with Congress’s monetary policy, because: (i) such agencies have no constitutional authority to “regulate the Value” of “Money” in any event; and (ii) even if they arguably had some such power, their possible exercise of it has been “preëmpted” by Congress’s adoption of the “dollar-for-dollar” policy.[78] But it certainly does preclude anyone within the United States Department of the Treasury from claiming any authority to apply a different rule of monetary valuation in the course of any of the Treasury’s dealings with the general public, without some clear contrary statutory permission from Congress.

c. THE SECRETARY OF THE TREASURY’S DUTY TO MAINTAIN THE EQUAL PURCHASING POWER OF EACH KIND OF UNITED STATES CURRENCY.

Congress’s policy that, in all dealings with the General Government, all forms of United States coins and currency should exchange on a “dollar-for-dollar” basis would be equitable only if all forms of United States coins and currency actually had the selfsame purchasing power, “dollar for dollar”. Then, if an individual exchanged at the Treasury a United States gold or silver coin for Federal Reserve Notes (or “clad” coins) of the same face (or nominal) value, or if he were paid Federal Reserve Notes (or “clad” coins) on a “dollar-for-dollar” basis for a “public debt obligation” that promised to pay in United States gold or silver coin, he and the General Government would neither lose nor gain anything in terms of economic worth. That condition, however, is not satisfied today. Therefore, under the peculiarities of present-day circumstances, a somewhat different rule for fixing the monetary value of “gold-clause” or “silver-clause” contracts might arguably be applicable.

(1) In the case of gold.

Consider a “gold-clause” contract that required payment in one United States “American Eagle” one-ounce gold coin, the face (or nominal) value of which Congress has specified by statute as “$50”.[79]

     The cited coinage statute is not the only place in the United States Code at which Congress has set a statutory value for an ounce of gold. Congress has also mandated that

the Secretary [of the Treasury] shall redeem gold certificates owned by the Federal reserve banks at times and in amounts the Secretary decides are necessary to maintain the equal purchasing power of each kind of United States currency. When redemption in gold is authorized, the redemption may be made only in gold bullion * * * in an amount equal at the time of redemption to the currency presented for redemption.[80]

In relation to this mandate, Congress has further empowered the Secretary of the Treasury to

issue gold certificates [to Federal Reserve banks] * * * . The amount of outstanding certificates may not be more than the value (for the purpose of issuing those certificates, of 42 and two-ninths dollars a fine troy ounce) of the gold held against gold certificates. The Secretary shall hold gold in the Treasury equal to the required dollar amount as security for gold certificates issued after January 29, 1934.[81]

     So, according to these statutes, if the Secretary of the Treasury were properly performing his duty, the “purchasing power of each kind of United States currency” should be “equal”—which would mean that the number of “dollars” that Congress specified by statute as the monetary value of an ounce of gold should be the very same number of “dollars” in Federal Reserve Notes for which an ounce of gold exchanges for such notes in the free market. Or, today, the free-market price of gold in Federal Reserve Notes should be $42-2/9 per ounce, rather than what it actually is.[82]

     Of course, the Secretary of the Treasury is not the only individual or institution who or which can (and should) affect the rate of exchange between gold and Federal Reserve Notes so as “to maintain the equal purchasing power of each kind of United States currency”. For

     [e]very Federal reserve bank shall have power:
    (a) To deal in gold coin and bullion at home or abroad, to make loans thereon, exchange Federal reserve notes for gold, gold coin, or gold certificates, and to contract for loans of gold coin or bullion, giving therefor, when necessary, acceptable security, including the hypothecation of United States bonds or other securities which Federal reserve banks are authorized to hold[.][83]

     Whoever is to blame for the present situation, the fact remains that the statutory rate of exchange between gold and Federal Reserve Notes set by Congress is not the rate at which gold happens to exchange against Federal Reserve Notes from day to day in the free market, but instead (under these statutes) $42-2/9 per ounce of gold bullion, no more and no less. Of great significance, this is close to the value of $50 per ounce for one-ounce (“fifty dollar”), one-half ounce (“twenty-five dollar”), and one-tenth ounce (“five dollar”) “American Eagle” gold coins fixed in the coinage statute;[84] and even closer to the value of $40 per ounce for a one-fourth ounce “American Eagle” (“ten dollar”) gold coin set in that same statute.[85]

     Of the two sets of valuations—$42-2/9 per ounce of gold bullion as against $50 per ounce for a one-ounce, a half-ounce, and a one-tenth ounce gold coin; and $42-2/9 per ounce of gold bullion as against $40 per ounce for a one-fourth ounce gold coin—$50 or $40 (depending on the coins) should control the valuation of a “gold-clause” contract specifying payment in such coins, because those figures Congress has specified for those gold coins as legal tender (that is, media of exchange), as opposed to the $42-2/9 that Congress has specified for gold bullion for the purpose of setting a value to gold certificates that never exchange in the free market but only between the Treasury and the Federal Reserve System.

     Moreover, inasmuch as the statute providing for coinage of United States “American Eagle”gold coins was enacted in 1985, after the last amendment to the valuation of gold in relation to gold certificates in 1973, the statutory face “dollar”- designation for the one-ounce, one-half, and one-tenth ounce coins, on the one hand, and the one-fourth ounce coins, on the other hand, must supersede the “dollar”-designation for one ounce of gold bullion in relation to gold certificates simply perforce of temporal sequence, as well as specificity to the purpose.

     In any event, whichever of these three statutory measures of value is used—either $50, or $40, or $42-2/9 for each ounce of gold—the value of a one-ounce “gold-clause” contract today is certainly not the aggregate face (or nominal) value in “dollars” of the Federal Reserve Notes for which one ounce of gold in the form of one or more “American Eagle” coins hypothetically could be exchanged in the marketplace.

(2) In the case of silver.

A similar analysis applies to silver. The statute requiring the Secretary of the Treasury “to maintain the equal purchasing power of each kind of United States currency” is phrased in the general term “currency”.[86] Self-evidently, though, in the statute’s intended operation and effect, that term includes both paper currency (such as Federal Reserve Notes) and United States gold coins, because the statute operates through the redemption of gold certificates in actual gold bullion, which necessarily will affect the “purchasing power” of gold coins.

     Constitutionally, all United States legal-tender coins are undoubtedly “currency”. For the Constitution explicitly empowers Congress “[t]o provide for the Punishment of counterfeiting the Securities and current Coin of the United States”,[87] the only place in which the Constitution denominates any form of “Money” as “current”. “[C]urrent Coin”, then, is necessarily a form of “curren[cy]”, by constitutional definition. Moreover, in its most general legal sense, “currency” is defined as “coin and paper of the United States or of any country that is designated as legal tender”.[88] And the present statutory law declares that United States “American Eagle” gold coins and “Liberty” silver coins “shall be legal tender”.[89] So, legal-tender United States “Liberty” silver coins are “currency”, in both the statutory and the constitutional senses of that term.[90]

The statute requiring the Secretary of the Treasury to “maintain the equal purchasing power of each kind of United States currency” does not explicitly mention silver. But the Secretary can “maintain the equal purchasing power” of silver as against gold by buying silver with or selling silver for gold, or as against Federal Reserve Notes by buying silver with or selling silver for those notes:

§ 5116. Buying and selling gold and silver.
            (a)(1) With the approval of the President, the Secretary of the Treasury may—
               (A) buy and sell gold in the way, in amounts, at rates, and on conditions the Secretary considers most advantageous to the public interest; and
               (B) buy the gold with any direct obligations of the United States Government or United States coins and currency authorized by law, or with amounts in the Treasury not otherwise appropriated.
*     *     *     *     *
     (b)(1) The Secretary may buy mined silver from natural deposits in the United States, or in a territory or possession of the United States, that is brought to a United States mint or assay office within one year after the month in which the ore from which it is derived was mined. * * *
     (2) The Secretary may sell or use Government silver to mint coins * * * . The Secretary shall sell silver under conditions the Secretary considers appropriate for at least $1.292929292 a fine troy ounce.[91]

     Furthermore, nothing in the statute that requires the Secretary “to maintain the equal purchasing power of each kind of United States currency” precludes the Secretary, pursuant to “regulations the Secretary * * * prescribes with the approval of the President”, from “redeem[ing] gold certificates owned by the Federal reserve banks” only on the condition that those banks, as part of the same transaction, purchase specified amounts of silver with gold (or with Federal Reserve Notes), or sell specified amounts of silver for gold (or for Federal Reserve Notes).[92]

The constitutional standard for this process should be a face (or nominal) value of $1.292929 per ounce of coined silver.[93] As quoted above, the present statutory standard for the General Government’s sale of silver is the same.

     In any event, whichever measure of value is used—either the face (or nominal) value of “One Dollar” statutorily mandated for the United States “Liberty” silver coin,[94] or the constitutionally mandated value of $1.292929 per ounce of silver in each “Liberty” coin which the statutory standard for the Treasury’s sales of silver follows—the value of a one-ounce “silver-clause” contract today is surely not the aggregate face (or nominal) value in “dollars” of the Federal Reserve Notes for which the coin hypothetically could be exchanged in the marketplace.

d. THE UNSETTLED NATURE OF THE QUESTION.

Notwithstanding the foregoing, the question of how to value the payment provision in a “gold-clause” contract remains unsettled, because since Thompson v. Butler no decision of the Supreme Court of the United States has squarely addressed the issue—and, to the author of this study’s knowledge, no decision of any other court or administrative agency has ever claimed that, let alone explained precisely why, Thompson is not controlling on this issue. For that reason, this study takes no final position on this matter.

     Anyone for whom the “dollar” value of a “gold clause” has particular significance in relationship to the jurisdiction of the courts; to tax assessments or the payment of taxes or other public dues or charges; to a requirement that the monetary value of a contract, agreement, or other transaction be reported to a governmental agency; or to any other like matter or concern must consult a competent attorney, accountant, tax advisor, or other professional counsel, licensed to practice in and familiar with the laws of his State and of the United States, for an opinion as to what rule of valuation should be used under the specific facts and circumstances of his situation. To assist such counsel in his work, the individual employing a “gold clause” should always determine and record the hypothetical free-market value in Federal Reserve Notes of the gold or silver received upon execution of that clause.

     In any event, it should be kept in mind that the ultimate utility of a “gold clause” is not to be found in the particular “dollar” value that may be assigned to any such clause, but rather in the separation of the transaction from the Federal Reserve System’s régime of legal-tender paper currency irredeemable in silver or gold that every such clause brings about. As a result of the execution of every “gold clause”, the creditor actually receives gold, silver, or both, not Federal Reserve Notes or bank-credits solvable only in such notes.

3. THE NEED FOR EXERCISING PRUDENCE IN THE USE OF “GOLD CLAUSES”.

     Any and every American citizen is constitutionally and statutorily entitled both: (i) to use a “gold-clause”, “silver-clause”, or mixed “gold-and-silver-clause” contract in any of his otherwise legal private transactions; and (ii) to advocate the employment of such a contract to other individuals, and when so doing to apprise them of such resources as the “model” PAYMENT CLAUSES contained in this study. Nonetheless, whether “gold clauses” are suitable for any particular individual will depend upon his specific circumstances, in the evaluation of which prior and full consultation with a competent attorney, accountant, or other professional counsel is always advisable. Therefore,

     a. The recipient of this study should neither presume, nor represent to any other individual with whom he may deal or whom he may advise, that—

     (i) The “model” PAYMENT CLAUSES set out hereinafter are anything other than “suggestions”, “guides”, or “starting points”, which require independent review, and perhaps revision, by competent attorneys, accountants, tax advisors, and other professionals capable of offering counsel to the parties to any contract, agreement, or other transaction that will contain or depend upon any such clause. Neither these “model” PAYMENT CLAUSES, nor anything else contained in this study, is intended to, or should, be employed without such independent review by competent professionals.

     (ii) Any of these “model” PAYMENT CLAUSES will definitely have a particular legal effect. This is because each “model” clause has not been:

• prepared by a competent attorney licensed to practice in a particular State or Locality who has actually consulted with a specific client in relation to a specific transaction as to which a PAYMENT CLAUSE will be employed in such State or Locality, pursuant to the laws thereof;

• tested in any court or administrative agency, so as to establish how the PAYMENT CLAUSE might be interpreted or applied—in terms of the laws of the General Government, or of a particular State or Locality, that control contracts, property, taxation, and other relevant matters—with respect to specific parties in a specific context; or, in particular,

• tested in any judicial or administrative proceeding that involves any type of taxation or other requirement for reporting, assessment, or payment based on the supposed “dollar” value of the contract, agreement, or other transaction with respect to which such a PAYMENT CLAUSE is employed.

b. Before entering into a “gold-clause contract”, both parties:

     (i) should fully understand and be in agreement as to why both of them want to effect their transaction through a “gold-clause” contract;

     (ii) should be aware of any potentially adverse consequences flowing from the use of a “gold-clause” contract;

       (iii) should be willing and agree between themselves to assume whatever costs and other risks may be involved; and

     (iv) should consult their own attorneys, accountants, and other financial advisors, who should analyze the specific transaction being contemplated, their clients’ particular purposes and circumstances, the law of “gold-clause” contracts (as those advisors understand it), any other applicable laws or regulations of the General Government and of the State and Locality in which the “gold clause” contract is to be executed, whatever potentially adverse consequences of using a “gold-clause” contract and other prudential considerations the advisors consider relevant, and whether in the advisors’ independent professional opinions the use of a “gold-clause” contract by those parties in that transaction is appropriate.

     c. A written contract including the “gold-clause” provision in all its detail ought be prepared and executed by both parties, after both have actually availed themselves of the counsel of attorneys, accountants, and other advisors.

     d. Any individual or business entity who or which undertakes to sell the necessary gold or silver (or both) to the party to a proposed “gold-clause” contract who will be paying in gold or silver should:

     (i) neither offer to, nor in fact, represent himself or itself, or otherwise act, as the agent of either of the parties for any purpose related to either the “gold- clause” contract or the underlying transaction of which it is a part—so that his or its sole and exclusive participation is as the seller of the gold or silver to the purchaser thereof in a transaction separate from and independent of the transaction to which the “gold clause” pertains;

     (ii) be sure that all checks, money orders, wire transfers, or other instruments for purchase of the gold or silver by the party to the “gold-clause” contract who will be paying the other party in gold or silver pursuant to that clause are made payable to the individual or business entity supplying the gold or silver, not to the other party to the contract, and that if cash is the medium of payment the cash is delivered by the purchaser of the gold or silver directly to the individual or business entity supplying the gold or silver; and

     (iii) perfect the sale of the gold or silver by identifying with suitable documentation, and by physically delivering the actual coins to, the purchaser—so that no question can arise as to the purchaser’s ownership of the coins prior to the purchaser’s execution of the “gold-clause” contract.

4. SOME “MODEL” “GOLD CLAUSES”, “SILVER CLAUSES”, AND “GOLD AND SILVER CLAUSES”.

     The following “model” clauses are provided solely for the purpose of general information that may be helpful to individuals contemplating the use of “gold clauses”, and are to be taken as no more than starting-points for licensed attorneys, accountants, and other professional counsel and advisors who may be interested in drafting “gold-clause” contracts or other similar arrangements for their own clients. Inasmuch as in some final form these “model” clauses would be merely parts of contracts, agreements, or other arrangements dealing with transactions and other matters the substance of which cannot be anticipated in this study, they will need to be supplemented, revised, amended, or otherwise altered by competent draftsmen in order properly to fit the context of the transactions in which they may be employed.

MODEL PAYMENT CLAUSE NUMBER 1
[For payment in gold at the statutory rate of 0.020 ounce (troy) per “dollar”.]

     (a) AUTHORIZATION AND CONSTRUCTION. This PAYMENT CLAUSE is authorized by, relies upon, and must be construed and implemented solely according to:

     (i) Section 4(c) of the Act of 28 October 1977, Public Law 95-147, 91 Statutes at Large 1227, 1229, now codified in Title 31, United States Code, Section 5118(d)(2);

     (ii) Section 2(a)(7), (8), and (10) of the Act of 17 December 1985, Public Law 99-185, 99 Statutes at Large 1177, 1177, now codified in Title 31, United States Code, Section 5112(a)(7), (8), and (10);

     (iii) Title II, Section 202(h) of the Act of 9 July 1985, Public Law 99-61, 99 Statutes at Large 113, 116, now codified in Title 31, United States Code, Section 5112(h);

     (iv) Title 31, United States Code, Sections 5101, 5102, and 5103;

     (v) the decisions of the Supreme Court of the United States in New York ex rel. Bank of New York v. Board of Supervisors, 74 U.S. (7 Wallace) 26 (1869); Bronson v. Rodes, 74 U.S. (7 Wallace) 229 (1869); Butler v. Horowitz, 74 U.S. (7 Wallace) 258 (1869); and Thompson v. Butler, 95 U.S. 694 (1878); and

     (vi) such and all other authorities as the SELLER, the BUYER, or both may invoke in the event of any challenge by any third party and for any reason to the propriety, sufficiency, enforceability, construction, interpretation, or operative effect of this PAYMENT CLAUSE or any portion thereof.

     (b) DELIVERY AND SATISFACTION OF PAYMENT. Payment for {…here supply an appropriate reference to the contract, agreement, or other underlying transaction to which this PAYMENT CLAUSE applies…} shall consist only, and be executed exclusively through actual physical delivery by the BUYER (or his authorized agent) to the SELLER (or his authorized agent), of

     (i) {…here specify some number of…} United States “American Eagle” “fifty dollar gold coin[s]”—each of which “contains one troy ounce of fine gold”, pursuant to Section 2(a)(7) of the Act of 17 December 1985, Public Law 99-185, 99 Statutes at Large 1177, 1177, now codified in Title 31, United States Code, Section 5112(a)(7);

     (ii) {…here specify some number of…} United States “American Eagle” “twenty-five dollar gold coin[s]”—each of which “contains one-half troy ounce of fine gold”, pursuant to Section 2(a)(8) of the Act of 17 December 1985, Public Law 99-185, 99 Statutes at Large 1177, 1177, now codified in Title 31, United States Code, Section 5112(a)(8);

     (iii) {…here specify some number of…} United States “American Eagle” “five dollar gold coin[s]”—each of which “contains one-tenth troy ounce of fine gold”, pursuant to Section 2(a)(10) of the Act of 17 December 1985, Public Law 99-185, 99 Statutes at Large 1177, 1177, now codified in Title 31, United States Code, Section 5112(a)(10);[95]

     (iv) each of which United States “American Eagle” gold coins has been designated “United States money” by Congress, pursuant to Title 31, United States Code, Section 5101, by being given face (or nominal) values in “dollars” under Section 2(a)(7), (8), and (10) of the Act of 17 December 1985, Public Law 99-185, 99 Statutes at Large 1177, 1177, now codified in Title 31, United States Code, Section 5112(a)(7), (8), and (10);

      (v) each of which United States “American Eagle” gold coins has been designated “legal tender” by Congress under Title II, Section 202(h) of the Act of 9 July 1985, Public Law 99-61, 99 Statutes at Large 113, 116, now codified specifically in Title 31, United States Code, Section 5112(h), and generally under Title 31, United States Code, Section 5103; and

     (vi) which United States “American Eagle” gold coins, as specified heretofore, collectively shall constitute the sole and exclusive media of exchange, money, currency, and legal tender for all the purposes of this PAYMENT CLAUSE.

     (vii) Provided, however, that the contents by weight in fine gold specified for the United States legal-tender “American Eagle” gold coins described heretofore are taken to be the standard contents of such coins when originally minted; and the BUYER may tender in satisfaction of this PAYMENT CLAUSE any United States “American Eagle” gold coin of any denomination specified herein that will exchange or pass “by tale” in the recognized commercial markets for gold coins within the United States; and the SELLER may refuse a tender of any such coin that will not exchange or pass “by tale” in such markets.

     (c) VALUATION OF PAYMENT.[96] Payment for the {…here supply an appropriate reference to the contract, agreement, or other underlying transaction to which this PAYMENT CLAUSE applies…} shall be valued at the sum of {…here specify some stated number of…} “dollars” of United States coined gold, each such “dollar” to consist of two one-hundredths (0.020) of an ounce (troy) of fine gold in the form of the United States legal-tender gold coins commonly known as “American Eagle” coins, as specified in Section (b) of this PAYMENT CLAUSE, such valuation being authorized pursuant to:

     (i) the statutory and actual face (or nominal) value of “fifty dollar[s]” for an “American Eagle” gold coin “contain[ing] one troy ounce of fine gold”, established and implemented by the Congress of the United States in Section 2(a)(7) of the Act of 17 December 1985, Public Law 99-185, 99 Statutes at Large 1177, 1177, now codified in Title 31, United States Code, Section 5112(a)(7), enacted under Congress’s exclusive power “[t]o coin Money, [and] regulate the Value thereof” in Article I, Section 8, Clause 5 of the Constitution of the United States;

     (ii) the statutory and actual face (or nominal) value of “twenty-five dollar[s]” for an “American Eagle” gold coin “contain[ing] one-half troy ounce of fine gold”, established and implemented by the Congress of the United States in Section 2(a)(8) of the Act of 17 December 1985, Public Law 99-185, 99 Statutes at Large 1177, 1177, now codified in Title 31, United States Code, Section 5112(a)(8), enacted under Congress’s exclusive power “[t]o coin Money, [and] regulate the Value thereof” in Article I, Section 8, Clause 5 of the Constitution of the United States;

     (iii) the statutory and actual face (or nominal) value of “five dollar[s]” for an “American Eagle” gold coin “contain[ing] one-tenth troy ounce of fine gold”, established and implemented by the Congress of the United States in Section 2(a)(10) of the Act of 17 December 1985, Public Law 99-185, 99 Statutes at Large 1177, 1177, now codified in Title 31, United States Code, Section 5112(a)(10), enacted under Congress’s exclusive power “[t]o coin Money, [and] regulate the Value thereof” in Article I, Section 8, Clause 5 of the Constitution of the United States;[97] and

     (iv) the rule of valuation set down by the Supreme Court of the United States in Thompson v. Butler, 95 U.S. 694, 696 (1878), that:

[o]ne owing a debt may pay it in gold coin or legal-tender notes of the United States, as he chooses, unless there is something to the contrary in the obligation out of which the debt arises. A coin dollar is worth no more for the purposes of tender in payment of an ordinary debt than a note dollar. The law has not made the note a standard of value any more than coin. It is true that in the market, as an article of merchandise, one is of greater value than the other; but as money, that is to say, as a medium of exchange, the law knows no difference between them.

     (d) DISCLAIMER. This PAYMENT CLAUSE is not intended to be, to operate as, or to be construed in any manner as or for any purpose of an “abusive tax shelter” or other unlawful means or device to defeat, evade, or avoid (in whole or in part) any lawful tax or other public charge, due, or debt, any reporting-requirement, or any other duty or obligation imposed by law arising out of the contract, agreement, or other underlying transaction to which this PAYMENT CLAUSE pertains. In particular, this PAYMENT CLAUSE does not necessarily purport, in, of, or by itself alone, to establish that the aggregate face (or nominal) value of the United States legal-tender “American Eagle” gold coins specified for payment in this PAYMENT CLAUSE is or should be the monetary value to be used in the calculation of any tax or other public charge, due, or debt, or in relation to any reporting-requirement or other duty or obligation imposed by law that is, might be, or might become applicable to the contract, agreement, or other underlying transaction to which this PAYMENT CLAUSE relates. Rather, this PAYMENT CLAUSE presumes that the aggregate value to be assigned for any such purpose to the United States legal-tender “American Eagle” gold coins specified for payment in this PAYMENT CLAUSE will be determined pursuant to those provisions: (i) of the Constitution of the United States; (ii) of the constitution of the State the laws of which are applicable to the contract, agreement, or other underlying transaction to which this PAYMENT CLAUSE relates; and (iii) of all valid statutes, regulations, or other lawful enactments or requirements, as well as relevant and authoritative judicial and administrative decisions, that now do or may hereafter apply to any such valuation (including, but not necessarily limited to, the statutes and judicial decisions cited in this PAYMENT CLAUSE).

     (e) SPECIFIC PERFORMANCE OF AND ARBITRATION REGARDING PAYMENT; IMPOSSIBILITY OF PERFORMANCE. The SELLER and BUYER mutually agree that:

     (i) no medium of payment, money, currency, or legal tender other than the stated numbers of legal-tender United States “American Eagle” gold coins heretofore specified in Section (b) of this PAYMENT CLAUSE may be tendered, accepted, or in any other way used for payment and satisfaction of this PAYMENT CLAUSE in whole or in any part;

     (ii) in the event of any breach of the contract, agreement, or other underlying transaction to which this PAYMENT CLAUSE relates, with respect to payment and satisfaction of this PAYMENT CLAUSE by the BUYER, the sole and exclusive remedy and relief which the SELLER shall seek, and to which the SELLER shall be entitled and the BUYER shall be liable, shall be specific performance of this PAYMENT CLAUSE by the BUYER, in whole or in such part as may prove necessary; and

     (iii) in the event of any alleged breach, disagreement as to performance, or other issue related to interpretation or implementation of this PAYMENT CLAUSE, the matter shall be subject to binding arbitration, pursuant to Section (f) of this PAYMENT CLAUSE, the arbitrator to be bound by and required to enforce the terms and conditions of this PAYMENT CLAUSE to the exclusion of any other damages, remedy, or relief, as specified in the said Section (f).

     (iv) Provided, however, that in the event performance and satisfaction of this PAYMENT CLAUSE as specified herein shall be rendered impossible, because the private ownership, possession, or use as a medium of exchange, or status as legal tender of any or all of the United States “American Eagle” gold coins specified in this PAYMENT CLAUSE has been declared illegal, otherwise prohibited, or regulated in some other manner inconsistent with the full performance and satisfaction of this PAYMENT CLAUSE, by competent governmental authority prior to such performance and satisfaction, the contract, agreement, or other underlying transaction to which this PAYMENT CLAUSE relates shall be deemed and treated as null and void in toto.

     (f) COMPULSORY AND BINDING ARBITRATION. The SELLER and BUYER mutually agree that:

     (i) In the event of any alleged breach, disagreement as to performance, or other issue related to interpretation or implementation of this PAYMENT CLAUSE, the matter shall be subject to such compulsory and binding arbitration as is or may be recognized under the laws applicable to the contract, agreement, or other underlying transaction to which this PAYMENT CLAUSE relates. And such compulsory and binding arbitration shall be the exclusive procedure for resolving any such issue.

     (ii) In any decision that enforces this PAYMENT CLAUSE, the arbitrator shall be strictly bound by and required to apply the terms and conditions of this PAYMENT CLAUSE, to the exclusion of any and all other damages, remedy, or relief.

     (iii) {…here supply the substance and procedure of an arbitration clause that satisfies the requirements of the State and Local laws applicable in the place in which the contract, agreement, or other underlying transaction to which this PAYMENT CLAUSE relates is to be executed…}.

MODEL PAYMENT CLAUSE NUMBER 2
[For payment in gold at the statutory rate of 0.025 ounce (troy) per “dollar”.]

     (a) AUTHORIZATION AND CONSTRUCTION. This PAYMENT CLAUSE is authorized by, relies upon, and must be construed and implemented solely according to:

     (i) Section 4(c) of the Act of 28 October 1977, Public Law 95-147, 91 Statutes at Large 1227, 1229, now codified in Title 31, United States Code, Section 5118(d)(2);

     (ii) Section 2(a)(9) of the Act of 17 December 1985, Public Law 99-185, 99 Statutes at Large 1177, 1177, now codified in Title 31, United States Code, Section 5112(a)(9);

     (iii) Title II, Section 202(h) of the Act of 9 July 1985, Public Law 99-61, 99 Statutes at Large 113, 116, now codified in Title 31, United States Code, Section 5112(h);

     (iv) Title 31, United States Code, Sections 5101, 5102, and 5103;

     (v) the decisions of the Supreme Court of the United States in New York ex rel. Bank of New York v. Board of Supervisors, 74 U.S. (7 Wallace) 26 (1869); Bronson v. Rodes, 74 U.S. (7 Wallace) 229 (1869); Butler v. Horowitz, 74 U.S. (7 Wallace) 258 (1869); and Thompson v. Butler, 95 U.S. 694 (1878); and

     (vi) such and all other authorities as the SELLER, the BUYER, or both may invoke in the event of any challenge by any third party and for any reason to the propriety, sufficiency, enforceability, construction, interpretation, or operative effect of this PAYMENT CLAUSE or any portion thereof.

     (b) DELIVERY AND SATISFACTION OF PAYMENT. Payment for {…here supply an appropriate reference to the contract, agreement, or other underlying transaction to which this PAYMENT CLAUSE applies…} shall consist only, and be executed exclusively through actual physical delivery by the BUYER (or his authorized agent) to the SELLER (or his authorized agent), of

     (i) {…here specify some number of…} United States “American Eagle” “ten dollar gold coin[s]”—each of which “contains one-fourth troy ounce of fine gold”, pursuant to Section 2(a)(9) of the Act of 17 December 1985, Public Law 99-185, 99 Statutes at Large 1177, 1177, now codified in Title 31, United States Code, Section 5112(a)(9);

     (ii) each of which United States “American Eagle” gold coins has been designated “United States money” by Congress, pursuant to Title 31, United States Code, Section 5101, by being given a face (or nominal) value in “dollars” under Section 2(a)(9) of the Act of 17 December 1985, Public Law 99-185, 99 Statutes at Large 1177, 1177, now codified in Title 31, United States Code, Section 5112(a)(9);

     (iii) each of which United States “American Eagle” gold coins has been designated “legal tender” by Congress under Title II, Section 202(h) of the Act of 9 July 1985, Public Law 99-61, 99 Statutes at Large 113, 116, now codified specifically in Title 31, United States Code, Section 5112(h), and generally under Title 31, United States Code, Section 5103; and

     (iv) which United States “American Eagle” gold coins, as specified heretofore, collectively shall constitute the sole and exclusive media of exchange, money, currency, and legal tender for all the purposes of this PAYMENT CLAUSE.

     (v) Provided, however, that the contents by weight in fine gold specified for the United States legal-tender “American Eagle” gold coins described heretofore are taken to be the standard contents of such coins when originally minted; and the BUYER may tender in satisfaction of this PAYMENT CLAUSE any United States “American Eagle” gold coin of the denomination specified herein that will exchange or pass “by tale” in the recognized commercial markets for gold coins within the United States; and the SELLER may refuse a tender of any such coin that will not exchange or pass “by tale” in such markets.

     (c) VALUATION OF PAYMENT.[98] Payment for the {…here supply an appropriate reference to the contract, agreement, or other underlying transaction to which this PAYMENT CLAUSE applies…} shall be valued at the sum of {…here specify some stated number of…} “dollars” of United States coined gold, each such “dollar” to consist of twenty-five one-thousandths (0.025) of an ounce (troy) of fine gold in the form of the United States legal-tender gold coins commonly known as “American Eagle” coins, as specified in Section (b) of this PAYMENT CLAUSE, such valuation being authorized pursuant to:

     (i) the statutory and actual face (or nominal) value of “ten dollar[s]” for an “American Eagle” gold coin “contain[ing] one-fourth ounce of fine gold”, established and implemented by the Congress of the United States in Section 2(a)(9) of the Act of 17 December 1985, Public Law 99-185, 99 Statutes at Large 1177, 1177, now codified in Title 31, United States Code, Section 5112(a)(9), enacted under Congress’s exclusive power “[t]o coin Money, [and] regulate the Value thereof” in Article I, Section 8, Clause 5 of the Constitution of the United States; and

     (ii) the rule of valuation set down by the Supreme Court of the United States in Thompson v. Butler, 95 U.S. 694, 696 (1878), that:

[o]ne owing a debt may pay it in gold coin or legal-tender notes of the United States, as he chooses, unless there is something to the contrary in the obligation out of which the debt arises. A coin dollar is worth no more for the purposes of tender in payment of an ordinary debt than a note dollar. The law has not made the note a standard of value any more than coin. It is true that in the market, as an article of merchandise, one is of greater value than the other; but as money, that is to say, as a medium of exchange, the law knows no difference between them.

     (d) DISCLAIMER. This PAYMENT CLAUSE is not intended to be, to operate as, or to be construed in any manner as or for any purpose of an “abusive tax shelter” or other unlawful means or device to defeat, evade, or avoid (in whole or in part) any lawful tax or other public charge, due, or debt, any reporting-requirement, or any other duty or obligation imposed by law arising out of the contract, agreement, or other underlying transaction to which this PAYMENT CLAUSE pertains. In particular, this PAYMENT CLAUSE does not necessarily purport, in, of, or by itself alone, to establish that the aggregate face (or nominal) value of the United States legal-tender “American Eagle” gold coins specified for payment in this PAYMENT CLAUSE is or should be the monetary value to be used in the calculation of any tax or other public charge, due, or debt, or in relation to any reporting-requirement or other duty or obligation imposed by law that is, might be, or might become applicable to the contract, agreement, or other underlying transaction to which this PAYMENT CLAUSE relates. Rather, this PAYMENT CLAUSE presumes that the aggregate value to be assigned for any such purpose to the United States legal-tender “American Eagle” gold coins specified for payment in this PAYMENT CLAUSE will be determined pursuant to those provisions: (i) of the Constitution of the United States; (ii) of the constitution of the State the laws of which are applicable to the contract, agreement, or other underlying transaction to which this PAYMENT CLAUSE relates; and (iii) of all valid statutes, regulations, or other lawful enactments or requirements, as well as relevant and authoritative judicial and administrative decisions, that now do or may hereafter apply to any such valuation (including, but not necessarily limited to, the statutes and judicial decisions cited in this PAYMENT CLAUSE).

     (e) SPECIFIC PERFORMANCE OF AND ARBITRATION REGARDING PAYMENT; IMPOSSIBILITY OF PERFORMANCE. The SELLER and BUYER mutually agree that:

     (i) no medium of payment, money, currency, or legal tender other than the stated numbers of legal-tender United States “American Eagle” gold coins heretofore specified in Section (b) of this PAYMENT CLAUSE may be tendered, accepted, or in any other way used for payment and satisfaction of this PAYMENT CLAUSE in whole or in any part;

     (ii) in the event of any breach of the contract, agreement, or other underlying transaction to which this PAYMENT CLAUSE relates, with respect to payment and satisfaction of this PAYMENT CLAUSE by the BUYER, the sole and exclusive remedy and relief which the SELLER shall seek, and to which the SELLER shall be entitled and the BUYER shall be liable, shall be specific performance of this PAYMENT CLAUSE by the BUYER, in whole or in such part as may prove necessary; and

     (iii) in the event of any alleged breach, disagreement as to performance, or other issue related to interpretation or implementation of this PAYMENT CLAUSE, the matter shall be subject to binding arbitration, pursuant to Section (f) of this PAYMENT CLAUSE, the arbitrator to be bound by and required to enforce the terms and conditions of this PAYMENT CLAUSE to the exclusion of any other damages, remedy, or relief, as specified in the said Section (f).

     (iv) Provided, however, that in the event performance and satisfaction of this PAYMENT CLAUSE as specified herein shall be rendered impossible, because the private ownership, possession, or use as a medium of exchange, or status as legal tender of any or all of the United States “American Eagle” gold coins specified in this PAYMENT CLAUSE has been declared illegal, otherwise prohibited, or regulated in some other manner inconsistent with the full performance and satisfaction of this PAYMENT CLAUSE, by competent governmental authority prior to such performance and satisfaction, the contract, agreement, or other underlying transaction to which this PAYMENT CLAUSE relates shall be deemed and treated as null and void in toto.

(f) COMPULSORY AND BINDING ARBITRATION. The SELLER and BUYER mutually agree that:

     (i) In the event of any alleged breach, disagreement as to performance, or other issue related to interpretation or implementation of this PAYMENT CLAUSE, the matter shall be subject to such compulsory and binding arbitration as is or may be recognized under the laws applicable to the contract, agreement, or other underlying transaction to which this PAYMENT CLAUSE relates. And such compulsory and binding arbitration shall be the exclusive procedure for resolving any such issue.

     (ii) In any decision that enforces this PAYMENT CLAUSE, the arbitrator shall be strictly bound by and required to apply the terms and conditions of this PAYMENT CLAUSE, to the exclusion of any and all other damages, remedy, or relief.

     (iii) {…here supply the substance and procedure of an arbitration clause that satisfies the requirements of the State and Local laws applicable in the place in which the contract, agreement, or other underlying transaction to which this PAYMENT CLAUSE relates is to be executed…}.

MODEL PAYMENT CLAUSE NUMBER 3
[For payment in silver at the statutory rate of 0.999 ounce (troy) per “dollar”.]

     (a) AUTHORIZATION AND CONSTRUCTION. This PAYMENT CLAUSE is authorized by, relies upon, and must be construed and implemented solely according to:

     (i) Section 4(c) of the Act of 28 October 1977, Public Law 95-147, 91 Statutes at Large 1227, 1229, now codified in Title 31, United States Code, Section 5118(d)(2);

     (ii) Title II, Section 202(e) of the Act of 9 July 1985, Public Law 99-61, 99 Statutes at Large 113, 115-116, now codified in Title 31, United States Code, Section 5112(e);

     (iii) Title II, Section 202(h) of the Act of 9 July 1985, Public Law 99-61, 99 Statutes at Large 113, 116, now codified in Title 31, United States Code, Section 5112(h);

     (iv) Title 31, United States Code, Sections 5101, 5102, and 5103;

     (v) the decisions of the Supreme Court of the United States in New York ex rel. Bank of New York v. Board of Supervisors, 74 U.S. (7 Wallace) 26 (1869); Bronson v. Rodes, 74 U.S. (7 Wallace) 229 (1869); Butler v. Horowitz, 74 U.S. (7 Wallace) 258 (1869); and Thompson v. Butler, 95 U.S. 694 (1878); and

     (vi) such and all other authorities as the SELLER, the BUYER, or both may invoke in the event of any challenge by any third party and for any reason to the propriety, sufficiency, enforceability, construction, interpretation, or operative effect of this PAYMENT CLAUSE or any portion thereof.

     (b) DELIVERY AND SATISFACTION OF PAYMENT. Payment for {…here supply an appropriate reference to the contract, agreement, or other underlying transaction to which this PAYMENT CLAUSE applies…} shall consist only, and be executed exclusively through actual physical delivery by the BUYER (or his authorized agent) to the SELLER (or his authorized agent), of

(i) {…here specify some number of…} United States “Liberty” “One Dollar” silver coins—each of which contains “1 Oz. Fine Silver” in a coin that “weigh[s] 31.103 grams” and “contain[s] .999 fine silver”, pursuant to Title II, Section 202(e) of the Act of 9 July 1985, Public Law 99-61, 99 Statutes at Large 113, 115-116, now codified in Title 31, United States Code, Section 5112(e);[99]

(ii) each of which United States “Liberty” silver coins has been designated “United States money” by Congress, pursuant to Title 31, United States Code, Section 5101, by being given a face (or nominal) value in “dollars” under Title II, Section 202(e) of the Act of 9 July 1985, Public Law 99-61, 99 Statutes at Large 113, 115-116, now codified in Title 31, United States Code, Section 5112(e);

(iii) each of which United States “Liberty” silver coins has been designated “legal tender” by Congress under Title II, Section 202(h) of the Act of 9 July 1985, Public Law 99-61, 99 Statutes at Large 113, 116, now codified specifically in Title 31, United States Code, Section 5112(h), and generally under Title 31, United States Code, Section 5103; and

     (iv) which legal-tender United States “Liberty” silver coins, as specified heretofore, collectively shall constitute the sole and exclusive media of exchange, money, currency, and legal tender for all the purposes of this PAYMENT CLAUSE.

     (v) Provided, however, that the contents by weight in fine silver specified for the United States legal-tender “Liberty” silver coins described heretofore are taken to be the standard contents of such coins when originally minted; and the BUYER may tender in satisfaction of this PAYMENT CLAUSE any United States “Liberty” silver coin of the denomination specified herein that will exchange or pass “by tale” in the recognized commercial markets for silver coins within the United States; and the SELLER may refuse a tender of any such coin that will not exchange or pass “by tale” in such markets.

     (c) VALUATION OF PAYMENT.[100] Payment for the {…here supply an appropriate reference to the contract, agreement, or other underlying transaction to which this PAYMENT CLAUSE applies…} shall be valued at the sum of {…here specify some stated number of…} “dollars” of United States coined silver, each such “dollar” to consist of nine hundred ninety-nine thousandths (0.999) of an ounce (troy) of fine silver in the form of the United States legal-tender silver coin commonly known as the “Liberty” “dollar”, as specified in Section (b) of this PAYMENT CLAUSE, such valuation being authorized pursuant to:

     (i) the statutory and actual face (or nominal) value of “1 Oz. Fine Silver” and “One Dollar” in a “Liberty” coin which “weigh[s] 31.103 grams” and “contain[s] .999 silver, established and implemented by the Congress of the United States in Title II, Section 202(e) of the Act of 9 July 1985, Public Law 99-61, 99 Statutes at Large 113, 115-116, now codified in Title 31, United States Code, Section 5112(e), enacted under Congress’s exclusive power “[t]o coin Money, [and] regulate the Value thereof” in Article I, Section 8, Clause 5 of the Constitution of the United States; and

(ii) the rule of valuation set down by the Supreme Court of the United States in Thompson v. Butler, 95 U.S. 694, 696 (1878), that:

[o]ne owing a debt may pay it in gold coin or legal-tender notes of the United States, as he chooses, unless there is something to the contrary in the obligation out of which the debt arises. A coin dollar is worth no more for the purposes of tender in payment of an ordinary debt than a note dollar. The law has not made the note a standard of value any more than coin. It is true that in the market, as an article of merchandise, one is of greater value than the other; but as money, that is to say, as a medium of exchange, the law knows no difference between them.

     (d) DISCLAIMER. This PAYMENT CLAUSE is not intended to be, to operate as, or to be construed in any manner as or for any purpose of an “abusive tax shelter” or other unlawful means, or device to defeat, evade, or avoid (in whole or in part) any lawful tax or other public charge, due, or debt, any reporting-requirement, or any other duty or obligation imposed by law arising out of the contract, agreement, or other underlying transaction to which this PAYMENT CLAUSE pertains. In particular, this PAYMENT CLAUSE does not necessarily purport, in, of, or by itself alone, to establish that the aggregate face (or nominal) value of the United States legal-tender “Liberty” silver coins specified for payment in this PAYMENT CLAUSE is or should be the monetary value to be used in the calculation of any tax or other public charge, due, or debt, or in relation to any reporting-requirement or other duty or obligation imposed by law that is, might be, or might become applicable to the contract, agreement, or other underlying transaction to which this PAYMENT CLAUSE relates. Rather, this PAYMENT CLAUSE presumes that the aggregate value to be assigned for any such purpose to the United States legal-tender “Liberty” silver coins specified for payment in this PAYMENT CLAUSE will be determined pursuant to those provisions: (i) of the Constitution of the United States; (ii) of the constitution of the State the laws of which are applicable to the contract, agreement, or other underlying transaction to which this PAYMENT CLAUSE relates; and (iii) of all valid statutes, regulations, or other lawful enactments or requirements, as well as relevant and authoritative judicial and administrative decisions, that now do or may hereafter apply to any such valuation (including, but not necessarily limited to, the statutes and judicial decisions cited in this PAYMENT CLAUSE).

     (e) SPECIFIC PERFORMANCE OF AND ARBITRATION REGARDING PAYMENT; IMPOSSIBILITY OF PERFORMANCE. The SELLER and BUYER mutually agree that:

     (i) no medium of payment, money, currency, or legal tender other than the stated numbers of legal-tender United States “Liberty” silver coins heretofore specified in Section (b) of this PAYMENT CLAUSE may be tendered, accepted, or in any other way used for payment and satisfaction of this PAYMENT CLAUSE in whole or in any part;

     (ii) in the event of any breach of the contract, agreement, or other underlying transaction to which this PAYMENT CLAUSE relates, with respect to payment and satisfaction of this PAYMENT CLAUSE by the BUYER, the sole and exclusive remedy and relief which the SELLER shall seek, and to which the SELLER shall be entitled and the BUYER shall be liable, shall be specific performance of this PAYMENT CLAUSE by the BUYER, in whole or in such part as may prove necessary; and

     (iii) in the event of any alleged breach, disagreement as to performance, or other issue related to interpretation or implementation of this PAYMENT CLAUSE, the matter shall be subject to binding arbitration, pursuant to Section (f) of this PAYMENT CLAUSE, the arbitrator to be bound by and required to enforce the terms and conditions of this PAYMENT CLAUSE, to the exclusion of any other damages, remedy, or relief, as specified in the said Section (f).

     (iv) Provided, however, that in the event performance and satisfaction of this PAYMENT CLAUSE as specified herein shall be rendered impossible, because the private ownership, possession, or use as a medium of exchange, or status as legal tender of the United States “Liberty” silver coins specified in this PAYMENT CLAUSE has been declared illegal, otherwise prohibited, or regulated in some other manner inconsistent with the full performance and satisfaction of this PAYMENT CLAUSE, by competent governmental authority prior to such performance and satisfaction, the contract, agreement, or other underlying transaction to which this PAYMENT CLAUSE relates shall be deemed and treated as null and void in toto.

     (f) COMPULSORY AND BINDING ARBITRATION. The SELLER and BUYER mutually agree that:

     (i) In the event of any alleged breach, disagreement as to performance, or other issue related to interpretation or implementation of this PAYMENT CLAUSE, the matter shall be subject to such compulsory and binding arbitration as is or may be recognized under the laws applicable to the contract, agreement, or other underlying transaction to which this PAYMENT CLAUSE relates. And such compulsory and binding arbitration shall be the exclusive procedure for resolving any such issue.

     (ii) In any decision that enforces this PAYMENT CLAUSE, the arbitrator shall be strictly bound by and required to apply the terms and conditions of this PAYMENT CLAUSE, to the exclusion of any and all other damages, remedy, or relief.

     (iii) {…here supply the substance and procedure of an arbitration clause that satisfies the requirements of the State and Local laws applicable in the place in which the contract, agreement, or other underlying transaction to which this PAYMENT CLAUSE relates is to be executed…}.

MODEL PAYMENT CLAUSE NUMBER 4
[For payment in gold at the statutory rate of 0.020 ounce (troy) per “dollar” and in silver at the statutory rate of 0.999 ounce (troy) per “dollar”.]

     (a) AUTHORIZATION AND CONSTRUCTION. This PAYMENT CLAUSE is authorized by, relies upon, and must be construed and implemented solely according to:

     (i) Section 4(c) of the Act of 28 October 1977, Public Law 95-147, 91 Statutes at Large 1227, 1229, now codified in Title 31, United States Code, Section 5118(d)(2);

     (ii) Section 2(a)(7), (8), and (10) of the Act of 17 December 1985, Public Law 99-185, 99 Statutes at Large 1177, 1177, now codified in Title 31, United States Code, Section 5112(a)(7), (8), and (10);

     (iii) Title II, Section 202(e) of the Act of 9 July 1985, Public Law 99-61, 99 Statutes at Large 113, 115-116, now codified in Title 31, United States Code, Section 5112(e);

     (iv) Title II, Section 202(h) of the Act of 9 July 1985, Public Law 99-61, 99 Statutes at Large 113, 116, now codified in Title 31, United States Code, Section 5112(h);

     (v) Title 31, United States Code, Sections 5101, 5102, and 5103;

     (vi) the decisions of the Supreme Court of the United States in New York ex rel. Bank of New York v. Board of Supervisors, 74 U.S. (7 Wallace) 26 (1869); Bronson v. Rodes, 74 U.S. (7 Wallace) 229 (1869); Butler v. Horowitz, 74 U.S. (7 Wallace) 258 (1869); and Thompson v. Butler, 95 U.S. 694 (1878); and

     (vii) such and all other authorities as the SELLER, the BUYER, or both may invoke in the event of any challenge by any third party and for any reason to the propriety, sufficiency, enforceability, construction, interpretation, or operative effect of this PAYMENT CLAUSE or any portion thereof.

     (b) DELIVERY AND SATISFACTION OF PAYMENT. Payment for {…here supply an appropriate reference to the transaction to which this PAYMENT CLAUSE applies…} shall consist only, and be executed exclusively through actual physical delivery by the BUYER (or his authorized agent) to the SELLER (or his authorized agent), of

     (i) {…here specify some number of…} United States “American Eagle” “fifty dollar gold coin[s]”—each of which “contains one troy ounce of fine gold”, pursuant to Section 2(a)(7) of the Act of 17 December 1985, Public Law 99-185, 99 Statutes at Large 1177, 1177, now codified in Title 31, United States Code, Section 5112(a)(7);

     (ii) {…here specify some number of…} United States “American Eagle” “twenty-five dollar gold coin[s]”—each of which “contains one-half troy ounce of fine gold”, pursuant to Section 2(a)(8) of the Act of 17 December 1985, Public Law 99-185, 99 Statutes at Large 1177, 1177, now codified in Title 31, United States Code, Section 5112(a)(8);

     (iii) {…here specify some number of…} United States “American Eagle” “five dollar gold coin[s]”—each of which “contains one-tenth troy ounce of fine gold”, pursuant to Section 2(a)(10) of the Act of 17 December 1985, Public Law 99-185, 99 Statutes at Large 1177, 1177, now codified in Title 31, United States Code, Section 5112(a)(10);[101]

     (iv) {…here specify some number of…} United States “Liberty” “One Dollar” silver coins—each of which consists of “1 Oz. Fine Silver” in a coin that “weigh[s] 31.103 grams” and “contain[s] .999 fine silver”, pursuant to Title II, Section 202(e) of the Act of 9 July 1985, Public Law 99-61, 99 Statutes at Large 113, 115-116, now codified in Title 31, United States Code, Section 5112(e);[102]

     (v) each of which United States “American Eagle” gold coins and “Liberty” silver coins has been designated “United States money” by Congress, pursuant to Title 31, United States Code, Section 5101, by being given face (or nominal) values in “dollars” under Section 2(a)(7), (8), and (10) of the Act of 17 December 1985, Public Law 99-185, 99 Statutes at Large 1177, 1177, now codified in Title 31, United States Code, Section 5112(a)(7), (8), and (10), and underTitle II, Section 202(e) of the Act of 9 July 1985, Public Law 99-61, 99 Statutes at Large 113, 115-116, now codified in Title 31, United States Code, Section 5112(e);

     (vi) each of which United States “American Eagle” gold coins and “Liberty” silver coins has been designated “legal tender” by Congress under Title II, Section 202(h) of the Act of 9 July 1985, Public Law 99-61, 99 Statutes at Large 113, 116, now codified specifically in Title 31, United States Code, Section 5112(h), and generally under Title 31, United States Code, Section 5103; and

     (vii) which United States “American Eagle” gold coins and “Liberty” silver coins, as specified heretofore, collectively shall constitute the sole and exclusive media of exchange, money, currency, and legal tender for all the purposes of this PAYMENT CLAUSE.

     (viii) Provided, however, that the contents by weight in fine gold specified for the United States legal-tender “American Eagle” gold coins, and the contents by weight in fine silver for the United States legal-tender “Liberty” silver coins, described heretofore, are taken to be the standard contents of such coins when originally minted; and the BUYER may tender in satisfaction of this PAYMENT CLAUSE any United States “American Eagle” gold coin of any denomination specified herein, and any United States “Liberty” silver coin, that will exchange or pass “by tale” in the recognized commercial markets for gold and silver coins within the United States; and the SELLER may refuse a tender of any such coin that will not exchange or pass “by tale” in such markets.

     (c) VALUATION OF PAYMENT.[103] Payment for the {…here supply an appropriate reference to the contract, agreement, or other underlying transaction to which this PAYMENT CLAUSE applies…} shall be valued at the sum of sub-paragraphs (1) and (2) hereof—

     (1) {…here specify some stated number of…} “dollars” of United States coined gold, each such “dollar” to consist of two one-hundredths (0.020) of a troy ounce of fine gold in the form of the United States legal-tender gold coins commonly known as “American Eagle” coins, as specified in Section (b) of this PAYMENT CLAUSE, such valuation being authorized pursuant to:

     (i) the statutory and actual face (or nominal) value of “fifty dollar[s]” for an “American Eagle” gold coin “contain[ing] one troy ounce of fine gold”, established and implemented by the Congress of the United States in Section 2(a)(7) of the Act of 17 December 1985, Public Law 99-185, 99 Statutes at Large 1177, 1177, now codified in Title 31, United States Code, Section 5112(a)(7), enacted under Congress’s exclusive power “[t]o coin Money, [and] regulate the Value thereof” in Article I, Section 8, Clause 5 of the Constitution of the United States;

     (ii) the statutory and actual face (or nominal) value of “twenty-five dollar[s]” for an “American Eagle” gold coin “contain[ing] one-half troy ounce of fine gold”, established and implemented by the Congress of the United States in Section 2(a)(8) of the Act of 17 December 1985, Public Law 99-185, 99 Statutes at Large 1177, 1177, now codified in Title 31, United States Code, Section 5112(a)(8), enacted under Congress’s exclusive power “[t]o coin Money, [and] regulate the Value thereof” in Article I, Section 8, Clause 5 of the Constitution of the United States;

     (iii) the statutory and actual face (or nominal) value of “five dollar[s]” for an “American Eagle” gold coin “contain[ing] one-tenth troy ounce of fine gold”, established and implemented by the Congress of the United States in Section 2(a)(10) of the Act of 17 December 1985, Public Law 99-185, 99 Statutes at Large 1177, 1177, now codified in Title 31, United States Code, Section 5112(a)(10), enacted under Congress’s exclusive power “[t]o coin Money, [and] regulate the Value thereof” in Article I, Section 8, Clause 5 of the Constitution of the United States;[104] and

     (iv) the rule of valuation set down by the Supreme Court of the United States in Thompson v. Butler, 95 U.S. 694, 696 (1878), that:

[o]ne owing a debt may pay it in gold coin or legal-tender notes of the United States, as he chooses, unless there is something to the contrary in the obligation out of which the debt arises. A coin dollar is worth no more for the purposes of tender in payment of an ordinary debt than a note dollar. The law has not made the note a standard of value any more than coin. It is true that in the market, as an article of merchandise, one is of greater value than the other; but as money, that is to say, as a medium of exchange, the law knows no difference between them.

     (2) {…here specify some stated number of…} “dollars” of United States coined silver, each such “dollar” to contain nine hundred ninety-nine thousandths (0.999) of an ounce (troy) of fine silver in the form of the United States legal-tender silver coin commonly known as the “Liberty” “dollar”, as specified in Section (b) of this PAYMENT CLAUSE, as authorized pursuant to:

     (i) the statutory and actual face (or nominal) value of “1 Oz. Fine Silver” and “One Dollar” in a “Liberty” coin which “weigh[s] 31.103 grams” and “contain[s] .999 fine silver”, established and implemented by the Congress of the United States in Title II, Section 202(e) of the Act of 9 July 1985, Public Law 99-61, 99 Statutes at Large 113, 115-116, now codified in Title 31, United States Code, Section 5112(e), enacted under Congress’s exclusive power “[t]o coin Money, [and] regulate the Value thereof” in Article I, Section 8, Clause 5 of the Constitution of the United States; and

     (ii) the rule set down by the Supreme Court of the United States in Thompson v. Butler, 95 U.S. 694, 696 (1878), that:

[o]ne owing a debt may pay it in gold coin or legal-tender notes of the United States, as he chooses, unless there is something to the contrary in the obligation out of which the debt arises. A coin dollar is worth no more for the purposes of tender in payment of an ordinary debt than a note dollar. The law has not made the note a standard of value any more than coin. It is true that in the market, as an article of merchandise, one is of greater value than the other; but as money, that is to say, as a medium of exchange, the law knows no difference between them.

     (d) DISCLAIMER. This PAYMENT CLAUSE is not intended to be, to operate as, or to be construed in any manner as or for any purpose of an “abusive tax shelter” or other unlawful means or device to defeat, evade, or avoid (in whole or in part) any lawful tax or other public charge, due, or debt, any reporting-requirement, or any other duty or obligation imposed by law arising out of the contract, agreement, or other underlying transaction to which this PAYMENT CLAUSE pertains. In particular, this PAYMENT CLAUSE does not necessarily purport, in, of, or by itself alone, to establish that the aggregate face (or nominal) value of the United States legal-tender “American Eagle” gold coins and United States legal-tender “Liberty” silver coins specified for payment in this PAYMENT CLAUSE is or should be the monetary value to be used in the calculation of any tax or other public charge, due, or debt, on in relation to any reporting-requirement or other duty or obligation imposed by law that is, might be, or might become applicable to the contract, agreement, or other underlying transaction to which this PAYMENT CLAUSE relates. Rather, this PAYMENT CLAUSE presumes that the aggregate value to be assigned for any such purpose to the United States legal-tender “American Eagle” gold coins and United States legal-tender “Liberty” silver coins specified for payment in this PAYMENT CLAUSE will be determined pursuant to those provisions: (i) of the Constitution of the United States; (ii) of the constitution of the State the laws of which are applicable to the contract, agreement, or other underlying transaction to which this PAYMENT CLAUSE relates; and (iii) of all valid statutes, regulations, or other lawful enactments or requirements, as well as relevant and authoritative judicial and administrative decisions, that now do or may hereafter apply to any such valuation (including, but not necessarily limited to, the statutes and judicial decisions cited in this PAYMENT CLAUSE).

     (e) SPECIFIC PERFORMANCE OF AND ARBITRATION REGARDING PAYMENT; IMPOSSIBILITY OF PERFORMANCE. The SELLER and BUYER mutually agree that:

     (i) no medium of payment, money, currency, or legal tender other than the stated numbers of the United States “American Eagle” gold coins and United States “Liberty” silver coins heretofore specified in Section (b) of this PAYMENT CLAUSE may be tendered, accepted, or in any other way used for payment and satisfaction of this PAYMENT CLAUSE in whole or in any part;

     (ii) in the event of any breach of the contract, agreement, or other underlying transaction to which this PAYMENT CLAUSE relates, with respect to payment and satisfaction of this PAYMENT CLAUSE by the BUYER, the sole and exclusive remedy and relief which the SELLER shall seek, and to which the SELLER shall be entitled and the BUYER shall be liable, shall be specific performance of this PAYMENT CLAUSE by the BUYER, in whole or in such part as may prove necessary; and

     (iii) in the event of any alleged breach, disagreement as to performance, or other issue related to interpretation or implementation of this PAYMENT CLAUSE, the matter shall be subject to binding arbitration, pursuant to Section (f) of this PAYMENT CLAUSE, the arbitrator to be bound by and required to enforce the terms and conditions of this PAYMENT CLAUSE, to the exclusion of any other damages, remedy, or relief, as specified in the said Section (f).

     (iv) Provided, however, that in the event performance and satisfaction of this PAYMENT CLAUSE as specified herein shall be rendered impossible, because the private ownership, possession, or use as a medium of exchange, or status as legal tender of any or all of the United States legal-tender “American Eagle” gold coins or United States legal-tender “Liberty” silver coins specified in this PAYMENT CLAUSE has been declared illegal, otherwise prohibited, or regulated in some other manner inconsistent with the full performance and satisfaction of this PAYMENT CLAUSE, by competent governmental authority prior to such performance and satisfaction, the contract, agreement, or other underlying transaction to which this PAYMENT CLAUSE relates shall be deemed and treated as null and void in toto.

(f) COMPULSORY AND BINDING ARBITRATION. The SELLER and BUYER mutually agree that:

     (i) In the event of any alleged breach, disagreement as to performance, or other issue related to interpretation or implementation of this PAYMENT CLAUSE, the matter shall be subject to such compulsory and binding arbitration as is or may be recognized under the laws applicable to the contract, agreement, or other underlying transaction to which this PAYMENT CLAUSE relates. And such compulsory and binding arbitration shall be the exclusive procedure for resolving any such issue.

     (ii) In any decision that enforces this PAYMENT CLAUSE, the arbitrator shall be strictly bound by and required to apply the terms and conditions of this PAYMENT CLAUSE, to the exclusion of any and all other damages, remedy, or relief.

     (iii) {…here supply the substance and procedure of an arbitration clause that satisfies the requirements of the State and Local laws applicable in the place in which the contract, agreement, or other underlying transaction to which this PAYMENT CLAUSE relates is to be executed…}

MODEL PAYMENT CLAUSE NUMBER 5
[For payment in gold at the statutory rate of 0.025 ounce (troy) per “dollar” and in silver at the statutory rate of 0.999 ounce (troy) per “dollar”.]

(a) AUTHORIZATION AND CONSTRUCTION. This PAYMENT CLAUSE is authorized by, relies upon, and must be construed and implemented solely according to:

     (i) Section 4(c) of the Act of 28 October 1977, Public Law 95-147, 91 Statutes at Large 1227, 1229, now codified in Title 31, United States Code, Section 5118(d)(2);

     (ii) Section 2(a)(9) of the Act of 17 December 1985, Public Law 99-185, 99 Statutes at Large 1177, 1177, now codified in Title 31, United States Code, Section 5112(a)(9);

     (iii) Title II, Section 202(e) of the Act of 9 July 1985, Public Law 99-61, 99 Statutes at Large 113, 115-116, now codified in Title 31, United States Code, Section 5112(e);

     (iv) Title II, Section 202(h) of the Act of 9 July 1985, Public Law 99-61, 99 Statutes at Large 113, 116, now codified in Title 31, United States Code, Section 5112(h);

     (v) Title 31, United States Code, Sections 5101, 5102, and 5103;

     (vi) the decisions of the Supreme Court of the United States in New York ex rel. Bank of New York v. Board of Supervisors, 74 U.S. (7 Wallace) 26 (1869); Bronson v. Rodes, 74 U.S. (7 Wallace) 229 (1869); Butler v. Horowitz, 74 U.S. (7 Wallace) 258 (1869); and Thompson v. Butler, 95 U.S. 694 (1878); and

      (vii) such and all other authorities as the SELLER, the BUYER, or both may invoke in the event of any challenge by any third party and for any reason to the propriety, sufficiency, enforceability, construction, interpretation, or operative effect of this PAYMENT CLAUSE or any portion thereof.

     (b) DELIVERY AND SATISFACTION OF PAYMENT. Payment for {…here supply an appropriate reference to the contract, agreement, or other underlying transaction to which this PAYMENT CLAUSE applies…} shall consist only, and be executed exclusively through actual physical delivery by the BUYER (or his authorized agent) to the SELLER (or his authorized agent), of

     (i) {…here specify some number of…} United States “American Eagle” “ten dollar gold coin[s]”—each of which “contains one-fourth troy ounce of fine gold”, pursuant to Section 2(a)(9) of the Act of 17 December 1985, Public Law 99-185, 99 Statutes at Large 1177, 1177, now codified in Title 31, United States Code, Section 5112(a)(7);

(ii) {…here specify some number of…} United States “Liberty” “One Dollar” silver coins—each of which consists of “1 Oz. Fine Silver” in a coin that “weigh[s] 31.103 grams” and “contain[s] .999 fine silver”, pursuant to Title II, Section 202(e) of the Act of 9 July 1985, Public Law 99-61, 99 Statutes at Large 113, 115-116, now codified in Title 31, United States Code, Section 5112(e);[105]

     (iii) each of which United States “American Eagle” gold coins and “Liberty” silver coins has been designated “United States money” by Congress, pursuant to Title 31, United States Code, Section 5101, by being given face (or nominal) values in “dollars” under Section 2(a)(9) of the Act of 17 December 1985, Public Law 99-185, 99 Statutes at Large 1177, 1177, now codified in Title 31, United States Code, Section 5112(a)(9), and under Title II, Section 202(e) of the Act of 9 July 1985, Public Law 99-61, 99 Statutes at Large 113, 115-116, now codified in Title 31, United States Code, Section 5112(e);

     (iv) each of which United States “American Eagle” gold coins and “Liberty” silver coins has been designated “legal tender” by Congress under Title II, Section 202(h) of the Act of 9 July 1985, Public Law 99-61, 99 Statutes at Large 113, 116, now codified specifically in Title 31, United States Code, Section 5112(h), and generally under Title 31, United States Code, Section 5103; and

     (v) which United States “American Eagle” gold coins and “Liberty” silver coins, as specified heretofore, collectively shall constitute the sole and exclusive media of exchange, money, currency, and legal tender for all the purposes of this PAYMENT CLAUSE.

     (vi) Provided, however, that the contents by weight in fine gold specified for the United States legal-tender “American Eagle” gold coins, and the contents by weight in fine silver for the United States legal-tender “Liberty” silver coins, described heretofore, are taken to be the standard contents of such coins when originally minted; and the BUYER may tender in satisfaction of this PAYMENT CLAUSE any United States “American Eagle” gold coin and any United States “Liberty” silver coin, specified herein, that will exchange or pass “by tale” in the recognized commercial markets for gold and silver coins within the United States; and the SELLER may refuse a tender of any such coin that will not exchange or pass “by tale” in such markets.

     (c) VALUATION OF PAYMENT.[106] Payment for the {…here supply an appropriate reference to the contract, agreement, or other underlying transaction to which this PAYMENT CLAUSE applies…} shall be valued at the sum of sub- paragraphs (1) and (2) hereof—

(1) {…here specify some stated number of…} “dollars” of United States coined gold, each such “dollar” to consist of twenty-five one-thousandths (0.025) of a troy ounce of fine gold in the form of the United States legal-tender gold coins commonly known as “American Eagle” gold coins, specified in Section (b) of this PAYMENT CLAUSE, such valuation being authorized pursuant to:

     (i) the statutory and actual face (or nominal) value of “ten dollar[s]” for an “American Eagle” gold coin “contain[ing] one-fourth ounce of fine gold”, established and implemented by the Congress of the United States in Section 2(a)(9) of the Act of 17 December 1985, Public Law 99-185, 99 Statutes at Large 1177, 1177, now codified in Title 31, United States Code, Section 5112(a)(9), enacted under Congress’s exclusive power “[t]o coin Money, [and] regulate the Value thereof” in Article I, Section 8, Clause 5 of the Constitution of the United States; and

     (ii) the rule of valuation set down by the Supreme Court of the United States in Thompson v. Butler, 95 U.S. 694, 696 (1878), that:

[o]ne owing a debt may pay it in gold coin or legal-tender notes of the United States, as he chooses, unless there is something to the contrary in the obligation out of which the debt arises. A coin dollar is worth no more for the purposes of tender in payment of an ordinary debt than a note dollar. The law has not made the note a standard of value any more than coin. It is true that in the market, as an article of merchandise, one is of greater value than the other; but as money, that is to say, as a medium of exchange, the law knows no difference between them.

     (2) {…here specify some stated number of…} “dollars” of United States coined silver, each such “dollar” to contain nine hundred ninety-nine thousandths (0.999) of an ounce (troy) of fine silver in the form of the United States legal-tender silver coin commonly known as the “Liberty” “dollar”, as specified in Section (b) of this PAYMENT CLAUSE, as authorized pursuant to:

     (i) the statutory and actual face (or nominal) value of “1 Oz. Fine Silver” and “One Dollar” in a “Liberty” coin which “weigh[s] 31.103 grams” and “contain[s] .999 fine silver”, established and implemented by the Congress of the United States in Title II, Section 202(e) of the Act of 9 July 1985, Public Law 99-61, 99 Statutes at Large 113, 115-116, now codified in Title 31, United States Code, Section 5112(e), enacted under Congress’s exclusive power “[t]o coin Money, [and] regulate the Value thereof” in Article I, Section 8, Clause 5 of the Constitution of the United States; and

     (ii) the rule set down by the Supreme Court of the United States in Thompson v. Butler, 95 U.S. 694, 696 (1878), that:

[o]ne owing a debt may pay it in gold coin or legal-tender notes of the United States, as he chooses, unless there is something to the contrary in the obligation out of which the debt arises. A coin dollar is worth no more for the purposes of tender in payment of an ordinary debt than a note dollar. The law has not made the note a standard of value any more than coin. It is true that in the market, as an article of merchandise, one is of greater value than the other; but as money, that is to say, as a medium of exchange, the law knows no difference between them.

     (d) DISCLAIMER. This PAYMENT CLAUSE is not intended to be, to operate as, or to be construed in any manner as or for any purpose of an “abusive tax shelter” or other unlawful means, or device to defeat, evade, or avoid (in whole or in part) any lawful tax or other public charge, due, or debt, any reporting-requirement, or any other duty or obligation arising out of the contract, agreement, or other underlying transaction to which this PAYMENT CLAUSE pertains. In particular, this PAYMENT CLAUSE does not necessarily purport, in, of, or by itself alone, to establish that the aggregate face (or nominal) value of the United States legal-tender “American Eagle” gold coins and United States legal-tender “Liberty” silver coins specified for payment in this PAYMENT CLAUSE is or should be the monetary value to be used in the calculation of any tax or other public charge, due, or debt, or in relation to any reporting-requirement or other duty or obligation imposed by law that is, might be, or might become applicable to the contract, agreement, or other underlying transaction to which this PAYMENT CLAUSE relates. Rather, this PAYMENT CLAUSE presumes that the aggregate value for any such purpose to be assigned to the United States legal-tender “American Eagle” gold coins and United States legal-tender “Liberty” silver coins specified for payment in this PAYMENT CLAUSE will be determined pursuant to those provisions: (i) of the Constitution of the United States; (ii) of the constitution of the State the laws of which are applicable to the contract, agreement, or other underlying transaction to which this PAYMENT CLAUSE relates; and (iii) of all valid statutes, regulations, or other lawful enactments or requirements, as well as relevant and authoritative judicial and administrative decisions, that now do or may hereafter apply to any such valuation (including, but not necessarily limited to, the statutes and judicial decisions cited in this PAYMENT CLAUSE).

     (e) SPECIFIC PERFORMANCE OF AND ARBITRATION REGARDING PAYMENT; IMPOSSIBILITY OF PERFORMANCE. The SELLER and BUYER mutually agree that:

     (i) no medium of payment, money, currency, or legal tender other than the stated numbers of the United States “American Eagle” gold coins and United States “Liberty” silver coins heretofore specified in Section (b) of this PAYMENT CLAUSE may be tendered, accepted, or in any other way used for payment and satisfaction of this PAYMENT CLAUSE in whole or in any part;

     (ii) in the event of any breach of the contract, agreement, or other underlying transaction to which this PAYMENT CLAUSE relates, with respect to payment and satisfaction of this PAYMENT CLAUSE by the BUYER, the sole and exclusive remedy and relief which the SELLER shall seek, and to which the SELLER shall be entitled and the BUYER shall be liable, shall be specific performance of this PAYMENT CLAUSE by the BUYER, in whole or in such part as may prove necessary; and

     (iii) in the event of any alleged breach, disagreement as to performance, or other issue related to interpretation or implementation of this PAYMENT CLAUSE, the matter shall be subject to binding arbitration, pursuant to Section (f) of this PAYMENT CLAUSE, the arbitrator to be bound by and required to enforce the terms and conditions of this PAYMENT CLAUSE, to the exclusion of any other damages, remedy, or relief, as specified in the said Section (f).

     (iv) Provided, however, that in the event performance and satisfaction of this PAYMENT CLAUSE as specified herein shall be rendered impossible, because the private ownership, possession, or use as a medium of exchange, or status as legal tender of any or all of the United States legal-tender “American Eagle” gold coins or United States legal-tender “Liberty” silver coins specified in this PAYMENT CLAUSE has been declared illegal, otherwise prohibited, or regulated in some other manner inconsistent with the full performance and satisfaction of this PAYMENT CLAUSE, by competent governmental authority prior to such performance and satisfaction, the contract, agreement, or other underlying transaction to which this PAYMENT CLAUSE relates shall be deemed and treated as null and void in toto.

     (f) COMPULSORY AND BINDING ARBITRATION. The SELLER and BUYER mutually agree that:

     (i) In the event of any alleged breach, disagreement as to performance, or other issue related to interpretation or implementation of this PAYMENT CLAUSE, the matter shall be subject to such compulsory and binding arbitration as is or may be recognized under the laws applicable to the contract, agreement, or other underlying transaction to which this PAYMENT CLAUSE relates. And such compulsory and binding arbitration shall be the exclusive procedure for resolving any such issue.

     (ii) In any decision that enforces this PAYMENT CLAUSE, the arbitrator shall be strictly bound by and required to apply the terms and conditions of this PAYMENT CLAUSE, to the exclusion of any and all other damages, remedy, or relief.

     (iii) {…here supply the substance and procedure of an arbitration clause that satisfies the requirements of the State and Local laws applicable in the place in which the contract, agreement, or other underlying transaction to which this PAYMENT CLAUSE relates is to be executed…}.

1.) See section, 4. SOME “MODEL” “GOLD CLAUSES”, “SILVER CLAUSES”, AND “GOLD AND SILVER CLAUSES”.

2.) U.S. Const. art. I, § 8, cl. 2.

3.) Compare U.S. Const. art. I, § 9, cl. 1 and amend. VII with Act of 2 April 1792, ch. 16, § 9, 1 Stat. 246, 248, and with United States v. Gardner, 35 U.S. (10 Peters) 618, 621 (1836). One ounce of silver contains 480 grains (troy). A constitutional “dollar”—which the Act of 1792 recognized as “of the value of a Spanish milled dollar as the same is now current”—contains 371.25 grains of silver. Therefore, one ounce of coined silver has a constitutional value of 480 divided by 371.25 equals 1.292929 “dollars”. The “troy” unit of measure for silver and gold remains the statutory standard today. 31 U.S.C. § 5102.

4.) U.S. Const. art. I, § 8, cl. 5.

5.) Act of 25 February 1862, ch. 33, § 1, 12 Stat. 345, 345.

6.) During and in the aftermath of the Civil War, the Union government suspended payments on its notes in silver or gold. But it later pledged “to make provision at the earliest practicable period for the redemption of United States notes in coin”. Act of 18 March 1869, ch. 1, 16 Stat. 1, 1. And eventually it made good on this promise. Act of 14 January 1875, ch. 15, § 3, 18 Stat. 296, 296.

7.) 79 U.S. (12 Wallace), 457, 553 (opinion of Strong, J.), 560-562, 565 (Bradley, J, concurring) (1871).

8.) See, e.g., Act of 14 March 1900, ch, 41, § 2, 31 Stat. 45, 46 (United States bonds “to be payable, principal and interest, in gold coin of the present standard value”); Act of 4 February 1910, ch. 25, § 1, 36 Stat. 192, 192 (“bonds and certificates of indebtedness of the United States hereafter issued shall be payable, principal and interest, in United States gold coin of the present standard of value”); Act of 3 March 1917, ch. 159, Title IV, § 400, 39 Stat. 1000, 1003 (certain United States bonds “shall be payable, principal and interest, in United States gold coin of the present standard of value”); Act of 4 March 1917, ch. 191, 39 Stat. 1201, 1201 (as to certain bonds, “both principal and interest shall be payable in United States gold coin of the present standard of value”); Act of 24 April 1917, ch. 4, § 1, 40 Stat. 35, 35 (“[t]he principal and interest * * * shall be payable in United States gold coin of the present standard of value”); Act of 24 September 1917, ch. 56, § 1, 40 Stat. 288, 288 (“[t]he principal and interest * * * shall be payable in United States gold coin of the present standard of value”; Act of 4 April 1918, ch. 44, § 1, 40 Stat. 502, 503 (“[t]he principal and interest * * * shall be payable in United States gold coin of the present standard of value”).

9.) Act of 14 March 1900, ch. 41, § 1, 31 Stat. 45, 45. See also Act of 1 November 1893, ch. 8, 28 Stat. 4. The requirement for the Secretary of the Treasury to maintain “parity”—or “equal purchasing power”, in the contemporary statutory jargon—among various forms of United States currency remains even today. See 31 U.S.C. § 5119(a), discussed post, at 26-30.

10.) Act of 23 December 1913, ch. 6, § 16, 38 Stat. 251, 265, now codified (but with removal of an explicit redemption in gold) in 12 U.S.C. § 411. Under the original statute, Federal Reserve Banks could redeem Federal Reserve Notes “in gold or in lawful money”, which might be something other than gold; whereas the Treasury was required to redeem those notes exclusively “in gold”. Then the Treasury could collect from the banks on those notes it had redeemed, because “such Federal reserve notes * * * issued to any such [Federal Reserve] bank shall, upon delivery, * * * become a first and paramount lien on all the assets of such bank”. Act of 23 December 1913, ch. 6, § 16, 38 Stat. 251, 266-267, now codified in 12 U.S.C. § 414.

11.) Act of 23 December 1913, ch. 6, § 18, 38 Stat. 251, 269.

12.) Act of 23 December 1913, ch. 6, § 16, 38 Stat. 251, 266.

13.) See W. Mitchell, Gold, Prices & Wages Under the Greenback Standard (1908), at 288-301.

14.) 74 U.S. (7 Wallace) 229 (1869).

15.) Act of 2 April 1792, ch. 16, 1 Stat. 246.

16.) 74 U.S. (7 Wallace) at 247-248.

17.) Id. at 249.

18.) Id. at 250.

19.) Id.

20.) Id. at 251.

21.) Id. at 251-252.

22.) Id. at 254.

23.) 74 U.S. (7 Wallace) 258 (1869).

24.) Id. at 260-261.

25.) Id. at 261.

26.) Act of 2 April 1792, ch. 16, § 20, 1 Stat. 246, 250-251.

27.) 31 U.S.C. § 5101: “United States money is expressed in dollars, dimes or tenths, cents or hundredths, and mills or thousandths. A dime is a tenth of a dollar, a cent is a hundredth of a dollar, and a mill is a thousandth of a dollar.”

28.) 74 U.S. (7 Wallace) at 261.

29.) H.R.J. Res. No. 192, 5 June 1933, ch. 48, § 1(a), 48 Stat. 112, 113.

30.) Act of 28 October 1977, Pub. L. 94-147, § 4(c), 91 Stat. 1227, 1229, now codified in 31 U.S.C. § 5118(d)(2).

31.) Portions of this section derived from the Act of 30 January 1934, ch. 6, § 5, 48 Stat. 337, 340; the Act of 28 October 1977, Pub. L. 94-147, § 4(c), 91 Stat. 1227, 1229; the Act of 13 September 1982, Pub. L. 97-258, 96 Stat. 877, 985; and the Act of 17 December 1985, Pub. L. 99-185, § 2(d), 99 Stat. 1177, 1178.

32.) 74 U.S. (7 Wallace) 229, 251-252 (1869).

33.) Act of 17 December 1985, Pub. L. 99-185, § 2(a)(7, 8, 9, and 10), 99 Stat. 1177, 1177, now codified in 31 U.S.C. § 5112(a)(7, 8, 9, and 10).

34.) Act of 9 July 1985, Pub. L. 99-61, Title II, § 202(e), 99 Stat. 113, 115-116, now codified in 31 U.S.C. § 5112(e).

35.) Act of 9 July 1985, Pub. L. 99-61, Title II, § 202(h), 99 Stat. 113, 116, now codified in 31 U.S.C. § 5112(h), in addition to 31 U.S.C. § 5103.

36.) Constitutionally, the only official “Money” of the United States must consist of coin, because the Constitution empowers Congress only “[t]o coin Money, regulate the Value thereof, and of foreign Coin”. U.S. Const. art. I, § 8, cl. 5 (emphasis supplied).

37.) 12 U.S.C. § 411.

38.) 74 U.S. (7 Wallace) 26 (1869).

39.) Id. at 29-30.

40.) Act of 25 February 1862, ch. 33, § 1, 12 Stat. 345, 345.

41.) 74 U.S. (7 Wallace) at 30-31.

42.) See section c. THE SECRETARY OF THE TREASURY’S DUTY TO MAINTAIN THE EQUAL PURCHASING POWER OF EACH KIND OF UNITED STATES CURRENCY.

43.) 31 U.S.C. § 5118(b).

44.) 31 U.S.C. § 5118(c)(1)(A).

45.) 31 U.S.C. § 5118(c)(2).

46.) 31 U.S.C. § 5103.

47.) Compare 12 U.S.C. § 411 (Federal Reserve Notes “shall be redeemed in lawful money on demand at the Treasury Department of the United States, in the City of Washington, District of Columbia, or at any Federal Reserve bank”) with 31 U.S.C. § 5112(a)(1 through 6), (b), (c), and (d).

48.) U.S. Const. art. I, § 10, cl. 1 (emphasis supplied).

49.) See U.S. Const. amend. X.

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

51.) 74 U.S. (7 Wallace) 71, 74 (1869).

52.) Id. at 75, quoting Act of 25 February 1862, ch. 33, § 1, 12 Stat. 345, 345.

53.) 74 U.S. (7 Wallace) at 76-78 (emphasis supplied).

54.) 85 U.S. (18 Wallace) 5, 29 (1873).

55.) 111 U.S. 701, 706 (1884).

56.) 842 F.2d 912, 919 (6th Cir. 1988) (“[a] sovereign must have the authority to determine how tax revenues are to be spent, or the power to tax is illusory”). Accord, e.g., State ex rel. Walton v. Parsons, 58 Idaho 787, 792, 80 P.2d 20, 22 (1938) (“the power to levy and collect taxes and the power to appropriate public funds are coexistent and rest upon the same principle”); Mills v. Stewart, 76 Mont. 429, 438, 247 Pac. 332, 334 (1926) (same); Agricultural & Mechanical College v. Hagar, 121 Ky. 1, 14, 87 S.W. 1125, 1129 (1905) (same).

57.) 294 U.S. 330, 353 (1935) (footnote omitted).

58.) 98 U.S. 403, 406 (1879). Accord, Georgia v. City of Chattanooga, 264 U.S. 472, 480 (1924); Albert Hanson Lumber Co. v. United States, 261 U.S. 581, 587 (1923); Adirondack Railway Co. v. New York, 176 U.S. 335, 346-347 (1900).

59.) 11 U.S. (7 Cranch) 116, 136 (1812).

60.) One model statute for this purpose, drafted for the State of New Hampshire but applicable to other States with only minor modifications, appears here. The difficulty does not inhere in drafting such suitable legislation, but in moving it through the legislative process.

61.) Act of 17 December 1985, Pub. L. 99-185, § 2(a)(7), 99 Stat. 1177, 1177, now codified in 31 U.S.C. § 5112(a)(7).

62.) 95 U.S. 694 (1878).

63.) Recently, however, it was relied on in Crummey v. Klein Independent School District, No. 08-20133 (U.S. Ct. App. for the 5th Cir., 2 October 2008) (unpublished opinion). The text of the slip opinion in Crummey appears in the APPENDIX to this study. As to citation of this case, see Federal Rule of Appellate Procedure 32.1.

64.) See 12 U.S.C. § 411 and 31 U.S.C. § 5112.

65.) See 31 U.S.C. §§ 5103, 5112(h).

66.) 95 U.S. at 695.

67.) Brief of Plaintiff in Error, in Opposition to Motion to Dismiss Writ of Error, Thompson v. Butler, No. 633 (filed 10 December 1877), at 3-4 & n*. This document is to be found in Volume 9 of the Supreme Court’s File Copies of Briefs, 1877, in the Library of the Supreme Court of the United States.

68.) Brief of Plaintiff in Error, ante note 67, at 5, 6 (emphasis in the original).

69.) Id. at 7-8 (emphasis in the original).

70.) 95 U.S. at 696 (emphasis supplied).

71.) Compare New York ex rel. Bank of New York v. Board of Supervisors, 74 U.S. (7 Wallace) 26, 30-31 (1869), with 12 U.S.C. § 411. See ante, at 10-11.

72.) U.S. Const. art. I, § 8, cl. 5.

73.) Act of 13 July 1866, ch. 184, § 9, 14 Stat. 98, 147, amending Act of 10 March 1866, ch. 15, §§ 3 through 5, 14 Stat. 4, 5, repealed by Act of 14 July 1870, ch. 255, § 1, 16 Stat. 256, 256. See Pacific Insurance Co. v. Soule, 74 U.S. (7 Wallace) 433, 440-443 (1869).

74.) Compare U.S. Const. art. I, § 10, cl. 1 with art. I, § 8, cl. 5; art. VI, cl. 2; and amend. X.

75.) Presumably, however, a State could adopt the constitutional standard of 371.25 grains (troy) of fine silver per “dollar” as her standard of monetary value. Compare U.S. Const. art. I, § 10, cl. 1 with the authorities cited ante, note 3.

76.) 31 U.S.C. § 5103.

77.) U.S. Const. art. I, § 8, cl. 5.

78.) See U.S. Const. art. VI, cl. 2. Insofar as Congressional policy relating to “regulat[ing] the Value” of “Money” amounts in many cases to “regulat[ing] Commerce”, preëmption would also apply under Article I, Section 8, Clause 3.

79.) Act of 17 December 1985, Pub. L. 99-185, § 2(a)(7), 99 Stat. 1177, 1177, now codified in 31 U.S.C. § 5112(a)(7).

80.) 31 U.S.C. § 5119(a), derived from Act of 30 January 1934, ch. 6, § 6, 48 Stat. 337, 340.

81.) 31 U.S.C. § 5117(b), derived from Act of 30 January 1934, ch. 6, § 14(c), 48 Stat. 337, 344. The particular figure of $42-2/9 comes from the Act of 31 March 1972, Pub. L. 92-268, § 2, 86 Stat. 116, 116-117, as amended by the Act of 21 September 1973, Pub. L. 93-110, § 1, 87 Stat. 352, 352. This standard became permanent in the Act of 19 October 1976, Pub. L. 94-564, §§ 6 and 8, 90 Stat. 2660, 2661.

82.) For free-market prices of gold and silver, see, e.g., <www.kitco.com>.

83.) Act of 23 December 1913, ch. 6, § 14, 38 Stat. 251, 264-265, now codified in 12 U.S.C. § 354.

84.) 31 U.S.C. § 5112(a)(7), (8), and (10).

85.) 31 U.S.C. § 5112(a)(9).

86.) 31 U.S.C. § 5119(a).

87.) U.S. Const. art. I, § 8, cl. 6 (emphasis supplied).

88.) 31 C.F.R. § 103.11(h).

89.) Specifically, 31 U.S.C. § 5112(h), and generally, 31 U.S.C. § 5103.

90.) The general legal-tender statute declares that “United States coins and currencies (including Federal reserve notes * * * ) are legal tender for all debts, public charges, taxes, and dues”. 31 U.S.C. § 5103. In light of the Constitution’s recognition that “Coin” can be “current”, and therefore “curren[cy]”, this statutory language must be interpreted to mean: “United States coins and [other] currencies”, rather than imputing some difference between the two forms of “curren[cy]” other than that one happens to consist of metals, the other of paper.

91.) 31 U.S.C. § 5116.

92.) See 31 U.S.C. § 5119(a). See also 31 U.S.C. § 5117(c).

93.) See Act of 2 April 1792, ch. 16, § 9, 1 Stat. 246, 248. One ounce of fine silver contains 480 grains (troy). A constitutional “dollar”—“of the value of a Spanish milled dollar as the same [was] current” at the time the Constitution was ratified—contains 371.25 grains of silver. Therefore, one ounce of coined silver has a constitutional value of 480 divided by 371.25 equals 1.292929 “dollars”.

94.) Act of 9 July 1985, Pub. L. 99-61, Title II, § 202(e)(4), 99 Stat. 113, 116, now codified in 31 U.S.C. § 5112(e)(4).

95.) Which of sub-paragraphs (i), (ii), and (iii) will need to be used in any particular case will depend upon the aggregate value of the PAYMENT CLAUSE.

96.) This section should be used only if it is determined that the rule of valuation upheld in Thompson v. Butler applies to the contract, agreement, or other underlying transaction to which this PAYMENT CLAUSE pertains.

97.) Which of sub-paragraphs (i), (ii), and (iii) will need to be used in any particular case will depend upon the aggregate value of the PAYMENT CLAUSE.

98.) This section should be used only if it is determined that the rule of valuation upheld in Thompson v. Butler applies to the contract, agreement, or other underlying transaction to which this PAYMENT CLAUSE pertains.

99.) The statute specifies a coin weighing “31.103 grams” that “contain[s] .999 fine silver”. As each grain (troy) contains 0.0648 grams, 31.103 grams equals 479.98 grains. As there are 480.00 grains in an ounce (troy), each coin will actually contain 479.98 divided by 480.00 times 0.999 equals 0.9989, or 0.999 ounce of fine silver, as the statute stipulates.

100.) This section should be used only if it is determined that the rule of valuation upheld in Thompson v. Butler applies to the contract, agreement, or other underlying transaction to which this PAYMENT CLAUSE pertains.

101.) Which of sub-paragraphs (i), (ii), and (iii) will need to be used in any particular case will depend upon the aggregate value of the PAYMENT CLAUSE.

102.) The statute specifies a coin weighing “31.103 grams” that “contain[s] .999 fine silver”. As each grain (troy) contains 0.0648 grams, 31.103 grams equals 479.98 grains. As there are 480.00 grains in an ounce (troy), each coin will actually contain 479.98 divided by 480.00 times 0.999 equals 0.9989, or 0.999 ounce of fine silver, as the statute stipulates.

103.) This section should be used only if it is determined that the rule of valuation upheld in Thompson v. Butler applies to the contract, agreement, or other underlying transaction to which this PAYMENT CLAUSE pertains.

104.) Which of sub-paragraphs (i), (ii), and (iii) will need to be used in any particular case will depend upon the aggregate value of the PAYMENT CLAUSE.

105.) The statute specifies a coin weighing “31.103 grams” that “contain[s] .999 fine silver”. As each grain (troy) contains 0.0648 grams, 31.103 grams equals 479.98 grains. As there are 480.00 grains in an ounce (troy), each coin will actually contain 479.98 divided by 480.00 times 0.999 equals 0.9989, or 0.999 ounce of fine silver, as the statute stipulates.

106.) This section should be used only if it is determined that the rule of valuation upheld in Thompson v. Butler applies to the contract, agreement, or other underlying transaction to which this PAYMENT CLAUSE pertains.

The slip opinion in Crummey v. Klein Independent School District can be found here.

Dr. Edwin Vieira, Jr.
Dr. Vieira's biography can be found here.
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