State considers return to gold, silver dollars

March 16, 2009

By Drew Zahn

A bill being considered in the Montana Legislature blasts the Federal Reserve's role in America's money policy and permits the state to conduct business in gold and silver instead of the Fed's legal tender notes.

Montana H.B. 639, sponsored by State Rep. Bob Wagner, R-Harrison, doesn't require the state or citizens to conduct business in gold or silver, but it does require the state to calculate certain transactions in both the current legal tender system and in an electronic gold currency. It further mandates that the state must accept payments in gold or silver for various fees and purchases.

While Wagner was unavailable for comment, the bill's language clearly alleges the nation's current financial system, with its reliance on the private Federal Reserve system for money supply, is a danger to American freedom.

"The absence of gold and silver coin, whether in that form or in the form of an electronic gold currency, as media of exchange," the bill states, "abridges, infringes on and interferes with the sovereignty and independence of this state … and exposes this state and Montana citizens, inhabitants and businesses to chronic problems and potentially serious crises that may arise from the economic and political instability of the present domestic and international systems of coinage, currency, banking and credit."

Further, the bill states, relying only on the depreciating legal tender issued by the Fed subjects citizens to "losses in purchasing power" inflicted by the government, a dilemma the bill says amounts to the "incremental confiscation" of property by government in violation of the U.S. Constitution's protections for just compensation and due process.

The Fifth Amendment states, "No person shall be … deprived of life, liberty or property, without due process of law; nor shall private property be taken for public use, without just compensation."

Critics of the current financial system argue that using Federal Reserve notes as legal tender, rather than gold- or silver-backed currency, means the value of Americans' money – and thus their "property" – is siphoned away by inflation, a process perpetuated by the government's reliance on legal tender. Gold and silver, critics say, don't lose their value on the whims of the Federal Reserve.

U.S. Rep. Ron Paul, R-Texas, even favors abolishing the Fed's system of fiat currency to return to dollars backed by gold.

"Throughout its nearly 100-year history, the Federal Reserve has presided over the near-complete destruction of the United States dollar," the Texas Republican said. "Since 1913 the dollar has lost over 95 percent of its purchasing power, aided and abetted by the Federal Reserve's loose monetary policy.

"How long will we as a Congress stand idly by while hard-working Americans see their savings eaten away by inflation? Only big-spending politicians and politically favored bankers benefit from inflation," he said.

Wagner joins legislators in several other states encouraging their respective governments to reconsider accepting gold as a form of payment. Indiana's S.B. 453, Colorado's H.B. 09-1206, Missouri's H.B. 0561, Georgia's H.B. 430 and Maryland's H.J.R. 5 are among the gold currency bills introduced just this year in various legislatures.

Montana's H.B. 639 has been referred to the Legislature's State Administration Committee.