Tag Archive for Banknotes

Harriet Tubman, Andrew Jackson, or Something Else?

$1 Educational Series Silver Certificate. Image: National Numismatic Collection at the Smithsonian Institution

$1 Educational Series Silver Certificate. Image: National Numismatic Collection at the Smithsonian Institution

The responses to the Treasury Department’s recent announcement that Andrew Jackson would be replaced by Harriet Tubman on the front of the $20 bill have been many and varied. Progressives have lauded the inclusion of a black female abolitionist on US currency. Many Republicans have lauded Tubman’s selection as she was an evangelical Christian, gun-toting Republican. Others, such as Donald Trump, decried Tubman’s selection as a typical example of political correctness run amok. Is it really something to get worked up about, or is there maybe a better solution?

A Brief Monetary History Of The United States: Part IV

Today we bring you Part IV of “A Brief Monetary History of the United States” from the Ron Paul Monetary Policy Anthology. The full series can be found at the following links:

  • Part I – Colonial Money and the Coinage Act of 1792
  • Part II – The Banks of the United States, McCulloch v. Maryland, and Private Coinage
  • Part III – Government Begins to Monopolize Currency
  • Part IV – The Legal Tender Cases and the “Crime of ’73”
  • Part V – The Rise of the Fed
  • Part VI – The Great Depression, Gold Confiscation, and the Gold Exchange Standard
  • Part VII – The Dollar Reigns Supreme: From Bretton Woods to Stagflation
  • Part VIII – The 1980s to the Great Recession and on to the Future
  • Legal Tender Cases

    Supreme Court Justice William Strong, author of the majority opinion in Knox v. Lee.

    Supreme Court Justice William Strong, author of the majority opinion in Knox v. Lee.

    The government understood the need to return to specie redemption, but was loath to let go of its issue of greenbacks. After all, greenbacks were an interest-free form of debt that circulated as money and could be used to pay off creditors, thus saving the government from having to use its valuable gold and silver. However, from the very inception of the Legal Tender Act, the constitutionality of legal tender paper currency had been called into question. That question was finally resolved after the decisions handed down in a series of Supreme Court cases known as the Legal Tender Cases.

    A Brief Monetary History Of The United States: Part III

    Today we bring you Part III of “A Brief Monetary History of the United States” from the Ron Paul Monetary Policy Anthology. The full series can be found at the following links:

  • Part I – Colonial Money and the Coinage Act of 1792
  • Part II – The Banks of the United States, McCulloch v. Maryland, and Private Coinage
  • Part III – Government Begins to Monopolize Currency
  • Part IV – The Legal Tender Cases and the “Crime of ’73”
  • Part V – The Rise of the Fed
  • Part VI – The Great Depression, Gold Confiscation, and the Gold Exchange Standard
  • Part VII – The Dollar Reigns Supreme: From Bretton Woods to Stagflation
  • Part VIII – The 1980s to the Great Recession and on to the Future
  • III. GOVERNMENT BEGINS TO MONOPOLIZE CURRENCY

    Coinage Act of 1857

    As the 19th century progressed, the federal government sought to enhance its control over the banking industry and the monetary system. In 1857, Congress passed a coinage act which removed the legal tender status that circulating foreign coinage had until then enjoyed. All circulating foreign coins received by the Treasury were to be melted down and recoined. By driving foreign coinage out of circulation, Congress sought to ensure that only U.S. coins circulated, a step towards federal government dominance of the money supply. This was ostensibly to provide a uniform national currency, a stated goal of the federal government since the country’s founding. By “uniform national currency” the federal government did not mean adherence to a dollar defined as a specific weight of metal with coinage circulating by weight and valued in relation to that dollar. Instead, the federal government sought to ensure that only the United States Mint’s coins would circulate in commerce, regardless of what type of coins the market desired.

    A further strike against market choice in currency came in 1864, when Congress passed legislation to prohibit private production of coins. The minting of any coins intended for use as current money was made illegal, even if the coins were of completely original design. This prohibition remains in force today, and was most famously used in recent years to prosecute the creators of the Liberty Dollar.

    On the Ignorance of Central Bankers

    Bank of Canada Note
    Central bankers are experts in using monotone intonation and innocuous phrasing to advance controversial positions. But every so often something a central banker says is so egregious that it just jumps out and smacks you in the face. Those types of statements merit a response. Consider a speech delivered last month by Carolyn Wilkins, Senior Deputy Governor of the Bank of Canada. Barely a quarter of the way through her speech, she states that:

    The form of money we know best is bank notes. They were issued primarily by commercial banks in Canada and the United States before those countries created central banks in the early 20th century. These privately-issued bank notes ultimately failed to provide what the economy needed and so central banks were given this responsibility.

    Now, I realize that this wasn’t an academic address, and the audience probably wasn’t terribly knowledgeable about monetary history, but to gloss over the development of the monetary system in such a manner just blows my mind. The clear implication in Mrs. Wilkin’s speech is that privately-issued banknotes were tried and failed. Not addressing the fact that private note issuance faced insurmountable hurdles placed in their way by government displays either willing disingenuity, or ignorance of economic history.