February 8, 2013
Yesterday I noted that Republican state legislators in Indiana are pushing a restriction on voting rights that is almost surely unconstitutional. Apparently Republican state legislators in Virginia are similarly shaky in their grasp of constitutional law. But for the Virginians, the issue isn’t voting—it’s currency.
Virginia Republicans have passed a bill to “study the feasibility of a metallic-based monetary unit”— meaning Virginia wants to consider creating its own currency based on a gold standard, because its lawmakers are fed up with the Fed and its “fiat” money.
Just one problem. Article I, Section 10 of the U.S. Constitution states explicitly that “No state shall … coin money; emit bills of credit; [or] make anything but gold and silver coin a tender in payment of debts.” A “bill of credit” is generally understood to refer to paper issued and intended to circulate for ordinary use as redeemable money. In other words, if Virginia wants to use gold or silver strictly for paying its own debts, that’s fine. But it seems pretty clear that the state cannot produce its own coins or paper money for general circulation without violating the plain text of the Constitution.