Malcolm Rivera
The US Constitution gives Congress the power to coin money, regulate the value of US and foreign currencies, and fix the standard of weights and measures. This power is outlined in Article I, Section 8, Clause 5, also known as the Coinage Clause, and has been interpreted by the Supreme Court to authorize Congress to regulate every aspect of US currency. Congress can also charter banks and give them the right to issue circulating notes, and it may restrain the circulation of notes not issued under its authority. The Constitution also gives Congress the power to punish counterfeiting of US currency and securities.
| Characteristics | Values |
|---|---|
| Power to coin money | Congress |
| Regulate the value of money | Congress |
| Regulate the value of foreign coin | Congress |
| Fix the standard of weights and measures | Congress |
| Provide punishment for counterfeiting the securities and current coin of the United States | Congress |
| Charter banks | Congress |
| Endow banks with the right to issue circulating notes | Congress |
| Restrain the circulation of notes not issued under its authority | Congress |
| Levy taxes on banknotes issued by state banks | Congress |
| Prohibit the use of counterfeit money in financial transactions | Congress |
| Authorize the expenditure of all federal funds | Congress |
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What You'll Learn
Congress's power to regulate currency
The U.S. Constitution grants Congress the authority to regulate currency. This power is derived from Article I, Section 8, Clause 5, also known as the coinage clause, which states that Congress has the power " [to] coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures".
The Supreme Court has interpreted this clause as giving Congress the exclusive power to regulate every aspect of United States currency, including the power to charter banks and endow them with the right to issue circulating notes such as coins, banknotes, and government notes. Congress can also regulate the value of currency and has the authority to restrain the circulation of notes not issued under its authority. This includes imposing taxes on the circulation of notes from state banks or municipal corporations.
In addition to its power over coinage, Congress also has the authority to regulate and punish counterfeiting. The counterfeiting clause, Article I, Section 8, Clause 6, allows Congress to prohibit the creation and use of counterfeit coins or money. This includes the power to pass federal laws that punish the importation and use of counterfeit currency.
The power to coin money also includes the authority to maintain such coinage as a medium of exchange and to protect and preserve the purity of the constitutional currency for the benefit of the nation. This includes the power to require the surrender of gold coins and certificates in exchange for other currency and to abrogate clauses in private contracts calling for payment in gold coins.
Furthermore, Congress has the power to borrow money on credit for the United States and regulate commerce with foreign nations and between the states.
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The prevention and punishment of counterfeiting
The U.S. Constitution grants Congress the exclusive power to coin money and regulate its value, as stated in Article I, Section 8, Clause 5, also known as the Coinage Clause. This clause also empowers Congress to regulate foreign coins and set standards for weights and measures.
The federal government has the power to penalize the importation, circulation, and possession of counterfeit coins, as well as the possession of equipment used to make them. This is based on the understanding that the power to coin money includes the responsibility to protect and preserve the purity of the nation's currency.
In addition to addressing the act of counterfeiting, Congress has used its authority to restrict the use of photographic depictions of currency. However, in the case of Regan v. Time, Inc. in 1984, the Supreme Court found that certain aspects of these laws were unconstitutional on First Amendment grounds.
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The power to charter banks
The ability to charter banks allows the federal government to carry out its express constitutional duties and is supported by the Supremacy Clause of the Constitution, which places federal authority above conflicting state laws. This forbids states from taxing federal entities like the national bank. The power to charter banks is an implied power, allowing Congress to exercise not just its explicitly enumerated powers but also implied powers necessary for executing its functions.
A bank's charter outlines its operational guidelines and how it will comply with relevant regulations, such as maintaining a minimum capital requirement. In the United States, a bank can be chartered by either a state or the federal government. The Office of the Comptroller of the Currency (OCC), an independent bureau within the U.S. Department of the Treasury, is responsible for approving or denying applications for new charters for national banks and federal savings associations. The OCC conducts on-site reviews to ensure safe and sound operations.
Some national banks have converted to state charters to gain benefits such as cost savings, higher revenues, improved access to local regulators, and reduced national bank powers. However, the conversion process incurs filing fees, legal costs, and rebranding expenses. With a state charter, banks are regulated by both the state and the Federal Deposit Insurance Corporation (FDIC), which provides federal deposit insurance. The FDIC was created in 1933 to maintain public confidence and mitigate bank failure by insuring deposits of up to $250,000 per member institution.
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The right to regulate the value of foreign and domestic coin
The US Constitution grants Congress the power to regulate the value of both foreign and domestic coin. This power is derived from Article I, Section 8, Clause 5 of the Constitution, also known as the Coinage Clause. The clause states that Congress has the power " [t]o coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures".
The purpose of granting this power to Congress is to ensure uniformity of value throughout the Union and to prevent the confusion and instability that could arise from a fluctuating and variable currency. Money serves as a universal medium or common standard by which the value of goods and services can be measured. By regulating the value of both domestic and foreign coin, Congress can maintain a stable and reliable medium of exchange within the country.
The Supreme Court has interpreted the Coinage Clause broadly, recognising Congress's exclusive power to regulate every aspect of US currency. This includes the power to charter banks and authorise them to issue circulating notes, as well as the power to restrain the circulation of notes not issued under its authority. Congress can also require the surrender of gold coins and certificates in exchange for other currency that is not redeemable in gold.
In addition, Congress has the authority to abrogate clauses in pre-existing private contracts that specify payment in gold coin or allow bondholders to elect to be paid in foreign currencies. However, the Supreme Court has held that such abrogation does not apply to obligations of the United States, as it would render those obligations illusory.
The power to regulate the value of foreign coin is particularly important to prevent fraud and instability that could arise from the free circulation of foreign coin without any control by the government. By regulating the value and use of foreign coins, Congress can protect the integrity of the US currency and maintain its purity for the benefit of the nation.
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The power to declare war and raise an army
Article I, Section 8 of the U.S. Constitution enumerates Congress's powers, which include the ability to declare war and raise armies. The Framers of the Constitution granted Congress these powers to ensure that the legislature had several checks on the president's ability to wage war as commander-in-chief of the military. The Framers were cautious of granting the president excessive control over the military, so they allocated several war powers to Congress. These powers include the power to declare war, raise armies, and fund armies, all of which act as checks and balances on the president's war powers.
Throughout history, there have been conflicts between the legislative and executive branches regarding the scope of their respective powers. Since the American Revolution, the United States has engaged in 108 military operations, but Congress has only issued 11 formal declarations of war, the last of which was in 1942. This discrepancy highlights the tension between a president's use of military force and Congress's war powers. In some cases, Congress authorized a president's military action after the fact or provided a different type of authorization that did not amount to a formal declaration of war but had a similar effect.
The Supreme Court has upheld Congress's power to raise and support armies and regulate the currency of the United States. This includes the power to charter banks, regulate commerce with foreign nations and between states, and borrow money on credit for the country. Additionally, Congress can require the surrender of gold coins and certificates in exchange for other currencies that are not redeemable in gold. The Court has also interpreted Congress's power to include the authority to regulate every phase of the subject of currency and to prohibit the creation of counterfeit coins or money.
Congress's power to raise armies differs from its ability to call on militias, and the Constitution does not limit Congress from raising armies as it sees fit. The Supreme Court has held that the powers of the states concerning militias are subordinate to the federal government's power to raise and maintain armies. The Court has also noted that conscription does not introduce a "novel doctrine" and does not prohibit states from enforcing civic duties like serving in a state militia.
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Frequently asked questions
Congress has the exclusive power to coin money and regulate the value of currency in the United States, as outlined in Article I, Section 8 of the Constitution.
The Coinage Clause, also known as Clause 5, gives Congress the authority to coin money and regulate all aspects of US currency. It is part of Article I, Section 8 of the Constitution.
The Counterfeiting Clause, or Clause 6, gives Congress the power to punish the counterfeiting of US coins and securities. It is also part of Article I, Section 8.
No, Article I, Section 10 of the Constitution prohibits states from coining money or printing their own currency.
