Montana Denies Legislator’s Request to be Paid in Precious Metals

Jerry O’Neil is a Republican representative from a northern district of Montana. He wrote a letter to his state legislature asking them to pay his $7,000 salary in gold. He said that he was prompted to make such a request because he doesn’t have faith in the US dollar anymore. Also, his constituents have been holding him to his oath to the Constitution which he says requires that states issue payments in gold or silver.

Predictably, state officials scoffed at him and denied his request. Jaret Coles, a legislative staff attorney stated:

 “The United States Constitution does not require states to pay debts in gold and silver. Additionally, there is no specific authority in the Montana Code Annotated for an agency to pay debts using gold or silver for services.”

 So what does the document that politicians are sworn to uphold say about gold and silver? Here’s Article I, Section 8, Clause 5:

 “The Congress shall have Power … To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures.”

 Here’s Article I, Section 10, Clause 1:

 “No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.”

 It appears that Mr. O’Neil is correct in his assertion that he should be paid only in gold and silver. While Congress has the power to coin money, states are prohibited from doing so and are required to use only gold and silver. So competing currencies (including foreign coins) are fine as long as they are gold or silver. The Constitution effectively prohibits states from using Federal Reserve Notes in their payment of debts, because a Federal Reserve Note is a “bill of credit”; a promissory note; a “promise to pay”; an IOU. It’s not backed by anything except debt.

What is this attorney doing saying that Mr. O’Neil’s request is unconstitutional? If he were more honest, he might say something like this:  “While we are required by the Constitution to pay debts in only gold or silver, we believe that that part of the Constitution is outdated and not suitable for a modern economy. If we actually followed that part of the law, there wouldn’t be enough money for all the government departments and programs that our citizens have grown to expect from us. The government would be smaller, and people would actually have tangible wealth. That’s the complete opposite of what it should be during this economic downturn.”

Of course it’s Constitutional. States wouldn’t dare start paying in gold and silver, because that would require new policies of real fiscal restraint. What will they do if the dollar does collapse, Weimar Republic style? If that happens, gold and silver will still have its value.