As states scramble to raise revenue to balance their budgets (which most have to do or violate their constitutions and laws) it’s not surprising that some are eyeing creating their own "money."
According to Virginia lawmakers, they are paving the way for the state to strike its own precious metals "commemorative coins" as a means of raising funds for the state.
In February the Virginia General Assembly (which holds its legislative debates and votes in a capitol building designed by Thomas Jefferson) passed legislation authorizing the Old Dominion’s governor to direct the state treasurer to mint "gold, platinum and silver coins for commemorative use that bear seals of the Commonwealth."
At press time Feb. 25 the measure awaited only Gov. Robert McDonnell’s signature to become law.
While several states — including California and South Dakota — have legally sanctioned state bullion pieces, none have come as close as Virginia to suggesting the underlying intent is to actually offer an alternative currency to legal tender coins and paper money produced by the U.S. Mint and the Bureau of Engraving and Printing that are sold to the Federal Reserve Banking system for use in commerce.
While alternative currency is not specifically mentioned in the bill, it was given prominence in the rhetoric as the legislation moved through the committee process.
There’s also the matter of deciding exactly what has been created.
Somehow the Virginians seem to believe as long as they call their state coins "commemoratives" they are on solid ground. Apparently they didn’t bother to read the U.S. Constitution, which grants only the U.S. Congress authority to issue legal tender coins in the United States (Article 1, Sec. 8).
We suspect federal officials will be watching this development carefully. States commissioning precious metals bullion rounds is quite different from a state setting up its own currency. Whether Virginia actually crosses the threshold will be determined by what is stated on the pieces and how they are marketed to the public.
Insofar as looking to the collector market as a means of producing a windfall for the state’s treasury, we have market history for guidance. While there are some collectors — especially in Virginia — who may be interested, state commemorative programs of this ilk have not proven to be popular or economically viable for extended durations. Today’s collectors and investors have many choices in the precious metals markets. And at today’s prices they tend to be discriminating as to where they spend their dollars.
The most valuable collectible from this exercise in "money making" may not be made of precious metals. Attendees at the Virginia Capitol Correspondents Association dinner Feb. 9 received wooden nickels that are called "Bob Bucks." One side features a portrait of Del. Robert G. Marshall, the state legislator who introduced the authorizing bill for the state’s precious metals "commemorative coins." The legend around his portrait reads in bob we trust. The reverse has a design similar to the Shield 5-cent coin with a 5 in the center surrounded by 13 stars and the legend commonwealth of virginia above the denomination ginnies. n