The Currency Power: Exploring Constitutional Roots

The Constitution of the United States grants Congress the authority to regulate currency and mint money, as outlined in Article I, Section 8. This section also empowers Congress to punish those who produce counterfeit money and establish banks. The Supreme Court case McCulloch v. Maryland (1817) affirmed Congress's power to charter banks and issue circulating notes. The Necessary and Proper Clause, found in Article I, Section 8, Clause 18, further enables Congress to pass federal laws necessary for executing its powers, including the regulation of currency and punishment for counterfeiting. Article I, Section 10 prohibits states from issuing their own currency, reinforcing the federal government's exclusive control over the monetary system.

Explore related products

The Constitution of the United States of America: The Declaration of Independence, The Bill of Rights

$9.99 $9.99

End The Fed

$15.62 $19.99

Athenian Economy and Society: A Banking Perspective

$44.99 $63

All You Have to Do Is Ask: How to Master the Most Important Skill for Success

$10.83 $27

Monetary Authorities: Capitalism and Decolonization in the American Colonial Philippines

$55.94 $102.95

Monetary Policy, Inflation, and the Business Cycle: An Introduction to the New Keynesian Framework and Its Applications - Second Edition

$47.63 $90

Congress's powers to mint and regulate currency value

The US Constitution grants Congress the authority to mint and regulate the value of currency. This power is derived from Article I, Section 8, Clause 5 of the Constitution, also known as the Coinage Clause. The Coinage Clause gives Congress the exclusive 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 broadly, authorizing Congress to regulate every phase of the currency. This includes 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 restrain the circulation of notes not issued under its authority by imposing taxes on them.

In addition to regulating the supply and circulation of currency, Congress also has the power to punish the creation and use of counterfeit money. This authority is derived from Article I, Section 8, Clause 6, known as the Counterfeiting Clause. The Supreme Court has interpreted the Counterfeiting Clause as allowing Congress to prohibit the creation of counterfeit coins or money and to pass federal laws that penalize the use of counterfeit currency.

The power to coin money also includes the authority to maintain such coinage as a medium of exchange and to forbid its diversion to other uses, such as defacement, melting, or exportation. Congress may require holders of gold coin or gold certificates to surrender them in exchange for other currency not redeemable in gold.

Furthermore, Congress has the power to abrogate clauses in pre-existing private contracts calling for payment in gold coin or allowing 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 Constitution's denial of state currency control

The Constitution of the United States grants Congress explicit authority over the country's currency, including the ability to mint money and determine its value. This power is outlined in Article I, Section 8, which enumerates Congress's powers, including the ability to "coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures".

The Supreme Court has upheld this interpretation in several cases, including McCulloch v. Maryland (1817) and Houston v. Moore (1820). These rulings affirmed Congress's exclusive power to charter banks, issue circulating notes, and regulate the circulation of currency. Additionally, Congress can levy taxes on banknotes issued by state banks, further reinforcing its control over currency matters.

The Constitution also addresses counterfeit currency, empowering Congress to pass federal laws to punish the creation and use of counterfeit money. This includes the power to regulate and criminalize the importation, circulation, and use of counterfeit coins or banknotes. While states retain the authority to punish individuals or entities that use counterfeit money, the federal government's power to enact laws and enforce penalties related to counterfeiting supersedes state-level actions.

In summary, the Constitution of the United States explicitly denies states the authority to control currency by vesting this power solely in Congress. This includes the ability to mint coins, determine their value, regulate currency circulation, and address counterfeit money through federal legislation. The Supreme Court's interpretations and rulings have further solidified Congress's exclusive authority over the country's monetary system.

The Supreme Court's interpretation of counterfeiting

The Supreme Court has interpreted the counterfeiting clause as allowing Congress to punish the use of counterfeit money. This interpretation is based on the Necessary and Proper Clause, which authorises Congress to enact laws necessary for executing its powers. The Court has ruled that the counterfeiting clause does not limit the power of the states, meaning states can also punish the use of counterfeit money.

In Fox v. Ohio (1847), the Supreme Court held that the language of the counterfeiting clause covers only the creation of forged coins, not the separate offence of fraudulently using them in transactions. This case involved an indictment against Malinda Fox for "passing and uttering a certain piece of false, base, and counterfeit coin". Fox argued that jurisdiction over her offence belonged exclusively to the federal courts. However, the Court ruled that states could punish the use of forged coins, as this was an offence against the government.

In United States v. Marigold (1850), the Court affirmed that Congress had the power to protect and preserve the purity of its constitutional currency. It sustained federal statutes penalising the importation or circulation of counterfeit coins, as well as the possession of equipment used to make them.

In a 1984 case, Regan v. Time, Inc., the Supreme Court observed that Congress had relied on its counterfeiting authority to restrict the use of photographic depictions of currency. However, it did not directly consider the scope of the Counterfeiting Clause and held that aspects of the relevant laws were unconstitutional on First Amendment grounds.

Explore related products

A Monetary History of the United States, 1867-1960

$58.03 $75

The Believer's Authority

$8.56

The Theory of Monetary Institutions

$35.42 $80

The Almightier: How Money Became God, Greed Became Virtue, and Debt Became Sin

$26.04 $28

Cashless: China's Digital Currency Revolution

$5.99 $22.99

Twilight of Authority

$12

Congress's authority to charter banks

The Constitution grants Congress the authority to establish banks and manage the circulation of money. This power is derived from Article I, Section 8, which enumerates Congress's powers, including coining money and regulating currency.

The Supreme Court case McCulloch v. Maryland (1817) further solidified Congress's power to charter banks. In this case, the Supreme Court decided that the chartering of a bank was an implied power of the Constitution under the "elastic clause." The elastic clause grants Congress the authority to “make all laws which shall be necessary and proper for carrying into execution" the work of the Federal Government. This case also addressed the broader issue of the division of powers between state and the Federal Government, with the court deciding that the Federal Government had the right to set up a Federal bank, and that states did not have the power to tax the Federal Government.

Congress's power to charter banks includes the authority to grant banks the right to issue circulating notes, such as coins, banknotes, and government notes. Additionally, Congress may restrain the circulation of notes not issued under its own authority by imposing taxes on them. This allows Congress to control the amount of unregulated currency issued by state banks and prevent the use of counterfeit currency.

The necessary and proper clause, found in Article I, Section 8, Clause 18, further supports Congress's authority to charter banks. This clause allows Congress to pass federal laws necessary for carrying out its powers, including the power to charter banks and regulate currency.

In summary, Congress has the constitutional authority to charter banks and manage the circulation of money. This power has been interpreted by the Supreme Court and is derived from various clauses in Article I, Section 8 of the Constitution. Congress's ability to charter banks is an important aspect of its power to regulate currency and ensure the stability and integrity of the nation's financial system.

The Necessary and Proper Clause

Article I, Section 8, Clause 18 of the United States Constitution, also known as the Necessary and Proper Clause, grants Congress the power to:

> "...make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof."

This clause has been a source of controversy, with Anti-Federalists arguing that it grants the federal government unlimited power. Federalists, on the other hand, interpret it as permitting only the execution of powers granted by the Constitution. Alexander Hamilton, for instance, argued that the Necessary and Proper Clause applies to activities reasonably related to constitutional powers, not just those absolutely necessary for carrying out said powers.

Frequently asked questions