Bill by Rep. Ron Paul seeks repeal of legal tender laws

Measure would also overturn some anti-counterfeiting statutes
Published : 03/25/11
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Rep. Ron Paul, R-Texas, has introduced a bill in the United States House of Representatives to repeal the legal tender laws, to prohibit taxation on certain coins and bullion and to repeal superfluous sections of the law related to coinage.

Rep. Paul is the chairman of the House Financial Services Subcommittee on Domestic Monetary Policy.

His bill, H.R. 1098, was introduced on March 15.

Rep. Paul describes himself on his Web site as a tireless advocate for “limited, constitutional government, low taxes, free markets, and a return to sound monetary policy.”

The short bill has four sections.

Section one defines the title as the “Free Competition in Currency Act of 2011.”

Section two would repeal Section 5103 of Title 31, United States Code, which addresses legal tender laws.

Section three would provide that no tax will be imposed with respect to the sale, exchange or other disposition of any coin, medal, token, or gold, silver, platinum, palladium or rhodium bullion, whether issued by a state, the United States, a foreign government, or any other person.

The third section would also order that no state may assess any tax or fee on any currency or monetary instrument used in interstate or international commerce that “is subject to the enjoyment of legal tender status under article I, section 10 of the United States Constitution.”

Section four would repeal “superfluous sections” of United States Code. Specifically, Title 18, Sec. 486 relating to uttering coins of gold, silver, or other metal, and Sec. 489, which addresses possessing likenesses of coins. These are currently treated as anti-counterfeiting statutes.

Section four of the legislation also states, “Any prosecution under the sections stricken by subsection (a) [the counterfeiting section] shall abate upon taking effect of this section. Any previous conviction under those sections shall be null and void.”

The bill currently has no co-sponsors. It has been referred to the House Committee on Financial Services, in addition to the Committee on Ways and Means and the Judiciary, for a period to be subsequently determined by the speaker of the House, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.

While the language of the bill is simple, the ideology behind it is more complex.

The bill in context

Rep. Paul’s bill is another piece of the growing movement advocating “Constitutional Tender.”

Utah’s Senate voted 21 to 4 on March 8 to give preliminary approval to a bill that would recognize gold and silver coins issued by the federal government as legal tender for both their face value and for their precious metal content.

Utah’s Senate voted 16 to 7 on March 10 to send the bill to Utah Gov. Gary Herbert for his signature to become law.

Utah’s bill would exempt the exchange of gold and silver coins from certain types of tax.

Several other states have proposed expanding the use of gold and silver as an alternate currency including New Hampshire, Georgia, South Carolina and Montana, among other states.

In his statement introducing the bill, Rep. Paul said that money allows civilization to flourish and that money should be durable, portable, recognizable and uniform. “It should be scarce, in the economic sense, so that the extant supply does not satisfy the wants of everyone demanding it; it should be stable, so that the value of its purchasing power does not fluctuate widely; and it should be reproducible, so that enough units of money can be created to satisfy the needs of exchange.”

Paul further noted that throughout human history, gold and silver have most often satisfied these conditions, adding that the metals are difficult to counterfeit and have the trust of billions of people.

Liberty Dollar connection

In framing his argument for eliminating legal tender laws, Rep. Paul again cited Article I, Section 10 of the U.S. Constitution, which forbids individual states from making anything but gold and silver a legal tender in payments of debts, adding, “Historically legal tender laws have been used by governments to force their citizens to accept debased and devalued currency.”

In his statement, Rep. Paul endorsed eliminating laws that prohibit the operation of private mints, referencing Liberty Services, the creators of the Liberty Dollar.

Also in his statement, Paul said:

“The sections of U.S. Code which Liberty Services is accused of violating are erroneously considered to be anti-counterfeiting statutes, when in fact their purpose was to shut down private mints that had been operating in California. California was awash in gold in the aftermath of the 1849 gold rush, yet had no U.S. Mint to mint coinage. There was not enough foreign coinage circulating in California either, so private mints stepped into the breech to provide their own coins. As was to become the case in other industries during the Progressive era, the private mints were eventually accused of circulating debased (substandard) coinage, and with the supposed aim of providing government-sanctioned regulation and a government guarantee of purity, the 1864 Coinage Act was passed, which banned private mints from producing their own coins for circulation as currency.”

Bernard von NotHaus — who developed and marketed the Liberty Dollar as a currency alternative — was convicted of counterfeiting and fraud March 18 in a federal counterfeiting trial in Statesville, N.C. He was accused of violating the sections of Title 18 cited by Rep. Paul. ■

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