|Image of the Signing of the Constitution courtesy of Wikipedia.org
It is crystal clear that the Framers, having seen the carnage that nonconvertible paper money wreaks on society, especially the most vulnerable in society, wished to constitutionally constrain the new federal government from having recourse to paper. This was accomplished by stripping out the operative words "to emit bills" from the draft constitution. Since the delegates believed that the federal government would have only those powers specifically enumerated, that was their way of removing this power - and it worked … with interruptions … for almost 200 years.
There is much better evidence of the "intent of the Framers" than most nonspecialists know. James Madison, widely considered the chief architect of the Constitution, took shorthand notes of the debates of the Constitutional Convention 1787. He retired to his room and transcribed these notes each night. They amount of almost a quarter million words of secret, and candid, debates by some of the most brilliant and respected political minds that ever lived, collectively known as the Framers of the U.S. Constitution.
Madison kept these notes and transcriptions safe, and private, until he died. Then the Library of Congress purchased them for a sum just barely sufficient to keep Madison's widow, Dolly, in modest comfort for the remainder of her life. It is from Madison's notes often that one can best discern the true intent of the Framers.
The discussions show that by stripping the power "to emit bills" from the Constitution the framers considered that they had eliminated the power to issue paper money. "Bills," short for "bills of credit," were paper money not legally convertible into a fixed weight of precious metal. It is clear from their discussions that there were several reasons not to include an explicit prohibition against federal issue of paper money. In part there was a sense that it would be redundant. In part there was a fear that by prohibiting actions for which no power had been granted it would raise an inference of a more plenary grant of power to the federal government than was intended.
But there was also a sense to provide a bit of wiggle room for the government in the event of extreme circumstances - such as war. George Mason, for example, "observed that the late war could not have been carried on, had such a prohibition existed." It arguably was due to Mason's foresight, at least in part, that President Lincoln was able, constitutionally, to have recourse to "greenbacks," permitting the salvation of the Union. So while the Framers shut, they did not quite bar, the door to paper money. This stance served America well so long as later officials respected the wisdom of the Framers.
Let's go to the record.
On August 16, 1787, Madison records, the delegates to the Constitutional Convention gathered and discussed the powers to be included in what became Article I section 8 clause 2 of the Constitution of the United States.
The delegates squarely addressed the issue of whether to give the federal government the power to issue inconvertible paper money. The power was debated and went down to defeat by the resounding margin of nine states opposed to paper money, only two in support. In their own words (and retaining Mr. Madison's original spelling), this is what some of the wisest statesmen in history had to say, before stripping it out, about the power to issue inconvertible paper money:
Mr. Govr. MORRIS moved to strike out "and emit bills on the credit of the U. States" -If the United States had credit such bills would be unnecessary: if they had not, unjust & useless.
Mr. BUTLER, 2ds. the motion.
Mr. MADISON, will it not be sufficient to prohibit the making them a tender? This will remove the temptation to emit them with unjust views. And promissory notes in that shape may in some emergencies be best.
Mr. Govr. MORRIS. striking out the words will leave room still for notes of a responsible minister which will do all the good without the mischief. The Monied interest will oppose the plan of Government, if paper emissions be not prohibited.
Mr. GHORUM was for striking out, without inserting any prohibition. if the words stand they may suggest and lead to the measure.
Col. MASON had doubts on the subject. Congs. he thought would not have the power unless it were expressed. Though he had a mortal hatred to paper money, yet as he could not foresee all emergences, he was unwilling to tie the hands of the Legislature. He observed that the late war could not have been carried on, had such a prohibition existed.
Mr. GHORUM. The power as far as it will be necessary or safe, is involved in that of borrowing.
Mr. MERCER was a friend to paper money, though in the present state & temper of America, he should neither propose nor approve of such a measure. He was consequently opposed to a prohibition of it altogether. It will stamp suspicion on the Government to deny it a discretion on this point. It was impolitic also to excite the opposition of all those who were friends to paper money. The people of property would be sure to be on the side of the plan, and it was impolitic to purchase their further attachment with the loss of the opposite class of Citizens.
Mr. ELSEWORTH thought this a favorable moment to shut and bar the door against paper money. The mischiefs of the various experiments which had been made, were now fresh in the public mind and had excited the disgust of all the respectable part of America. By witholding the power from the new Governt. more friends of influence would be gained to it than by almost any thing else. Paper money can in no case be necessary. Give the Government credit, and other resources will offer. The power may do harm, never good.
Mr. RANDOLPH, notwithstanding his antipathy to paper money, could not agree to strike out the words, as he could not foresee all the occasions which might arise.
Mr. WILSON. It will have a most salutary influence on the credit of the U. States to remove the possibility of paper money. This expedient can never succeed whilst its mischiefs are remembered, and as long as it can be resorted to, it will be a bar to other resources.
Mr. BUTLER. remarked that paper was a legal tender in no Country in Europe. He was urgent for disarming the Government of such a power.
Mr. MASON was still averse to tying the hands of the Legislature altogether. If there was no example in Europe as just remarked, it might be observed on the other side, that there was none in which the Government was restrained on this head.
Mr. READ, thought the words, if not struck out, would be as alarming as the mark of the Beast in Revelations.
Mr. LANGDON had rather reject the whole plan than retain the three words "(and emit bills")
On the motion for striking out
N. H. ay. Mas. ay. Ct ay. N. J. no. Pa. ay. Del. ay. Md. no. Va. ay. N. C. ay. S. C. ay. Geo. ay.
The clause for borrowing money, agreed to nem. con.
The Founders of the United States had experienced the terrible consequences of paper money, the Continental. Their own paper money rapidly had depreciated from scrip to scrap … as paper money will. When the time came, they shut the door against paper money. The door to inconvertible paper money stayed shut, with emergency interruptions, for almost 200 years.
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