What we are going to show by this work is the history of money in the United States, as well as its origin and purpose.
We assert that the dollar cannot exist without a measure of value, no more than the "foot" could exist without the measure of 12 inches.
The paper currency has never for any recognizable period in our history been maintained at parity with the Value Standard; and, the paper issued by the Federal Reserve, if that paper could be held to represent the dollar at all, must represent that dollar at a given ratio in excess of 400 to 1.
It is our contention, that Federal Reserve Notes are not "Dollars," but dishonored promises to pay dollars.
This work and the citations therein mentioned establish the validity of our position.
There are no existing references that may be cited which show opposing authority.
An appropriate beginning is June 10, 1932; in the midst of the great depression, when the Honorable Louis T. McFadden (R. Pa.) who was at that time Chairman of the Committee on Banking and Currency, stated as he addressed the House of Representatives:
Cong. Record, June 10, 1932
Thirty nine years and eleven months later, the Honorable John B. Rarick of Louisiana addressed the House of Representatives thus:
Cong. Record, Thursday, May 11, 1972
Blackstone on the National Debt 1 Blackstone, Sec. 451
1 Blackstone, Sec. 451
And further, says Blackstone:
1 Blackstone, Sec. 452
And further, continues Mr. Rarick:
Cong. Record, May 11, 1972
Congress has the power to borrow money on the credit of the United States, Art. I, Sec. 8, Cl. 2, but Congress must provide a made in the keeping of the letter and spirit of the Constitution; the deliberate placing of its citizens in bondage to a private banking corporation does not follow the mode of establishing justice as the preamble declares. Other modes are within the spirit of the Constitution, and have been accepted by the people, without bondage (United States Notes).
Questions have been raised as to who owns the Federal Reserve Banks.
Cong. Record, June 10, 1932, p. 12595
Cong. Record, Jan. 24, 1934, p. 1293
Lewis v. United States, 680 F.2d. 1239 (1982)
"Money & Banking" (1956) at p. 374 & 375 Rinehart & Co., Inc., N.Y.
"The Economics of Money & Banking" Harper & Bros., 1948
The preamble to the Constitution says it all:
Where is the justice, when Congress borrows we the people into debt to a private banking corporation? Ultimately it is our money Congress is borrowing. By borrowing it through the banks, Congress is laying a heavy tax upon us to repay that debt and the interest thereon; yet, if Congress borrowed the money directly from us as Congress has done in the past (1862), there would be no interest due to banks and no need for any heavy income tax ...
How could it be that a people so dedicated to establish justice would allow such an act of plunder to be within the authority of Congress? ...
It is admitted that no government could survive without revenue, but how does a government obtain the funds necessary to meet its expenses and pay its debts? The only manner is through taxation. Our Constitution authorizes Congress to borrow money on the credit of the United States. The credit of the United States is its ability to tax ...
The "Federal Reserve Act" of 1913 established or attempted to establish a new source of money supply. To date Congress has borrowed from these banks 465 Billions of Dollars, in Federal Reserve credit. ...
One can only ponder where the Federal Reserve Banks can obtain such vast sums of "money" to loan. ... The answer is not readily obtainable. However, in the Federal Reserve's own library is a copy of a 1939 edition of THE FEDERAL RESERVE SYSTEM, ITS PURPOSES AND FUNCTIONS, on page 83 Et. Seq.:
In other words, the Federal Reserve Banks merely create whatever funds it wishes to loan, without restraint. ...
The Federal Reserve did not have the 465 Billion to loan Congress, so it merely created it upon the credit of the United States, giving nothing of value to Congress, but demanding in return value from the people in the form of interest and, when possible principal payments.
The interest that the people pay upon the national public debt (creation and use of Federal Reserve Notes) amounts to a taking of private property without just compensation, in contravention to the 5th Amendment.
What have the Federal Reserve Banks done for Congress that Congress could not do for itself?
There would be no objection to Congress borrowing something of value from the banks, such as lawful money, gold and silver dollars or bullion, but when the banks create the money, the United States guarantee the redemption of the paper. The people pay an interest to the banks, and the banks end up owning all the property because of their unrestricted inflation of the Currency; the sanity of this entire process is above our comprehension.
The taking of the wealth of the people to pay an interest tribute to these private banks for a contract containing no lawful consideration again makes one wonder what has happened to sanity and justice for which our forefathers spilled their blood.
During the June 6, 1960, second session of the 86th Congress, at the hearings before the Subcommittee #3 on H.R. 8516 and H.R. 8627, the Committee on Banking and Currency, lead by the Honorable Wright Patman, posed several questions to Mr. Allen, the President of the Federal Reserve Bank of Chicago; at page 41 we find:
Subcommittee Hearings, June 6, 1960 @ pgs. 39 and 43
What value are we repaying? There wasn't any money in the banks, and none was actually loaned to the government, yet the income tax is laid to return, if possible, the principal borrowed or at least the interest thereon.
The Income Tax as a tax that must be imposed solely to pay the interest and, if possible, the principle borrowed from the banks. ...
The Income Tax is the ability by which the banks tax out of circulation the
credit they have
The Income Tax is only necessary because of our debt-money system; when the money is borrowed into circulation, there must be a mode of repayment, that mode is the Income Tax. ...
If the money were paid into circulation as was intended by the issue of every coin and currency created by our government. ... There would be no need of the Income Tax. ...
Does any intelligent being, believe for one honest moment that the national
debt could ever be
As long as there is an interest charge against the Federal Reserve Notes that debt could never be paid. ... One might pay back to the bank all the money borrowed, but, if all the money borrowed, is all the money that exists (as in the case of Federal Reserve Notes), where would we then have anything to pay interest?
In 1972, the Federal Government borrowed from the Banks 465 Billion Dollars in Bank Credit at interest amounting to 22 Billion Dollars. In 1973, congress will pay this debt to the Banks; 487 Billion Dollars to the Banks Credit will be due.
Congress must, to pay this debt, tax every Federal Reserve Note out of circulation. ... at that point Congress would only be short 22 Billion Dollars. ...
This simple rule of logic is: You cannot give more than you have, or, more than exists.
What must necessarily happen: Congress must renew the debt either by re-borrowing 467 Billion Dollars (which of course the bank would not permit) or pay the interest and re-borrow the principle. The new debt for the next fiscal year is 465 Billion Dollars, however, now only 443 Billion Dollars actually exists, the balances of the money, i.e. interest, is now the property of the bank. ...
Progressing through stages, the second year Congress again goes to the bank to extend the loan, Congress again owes 487 Billion Dollars, but it now only has 443 Billion Dollars with which to repay that loan, now Congress is 44 Billion Dollars with which to repay that loan, now Congress is 44 Billion Dollars short. ... ultimately the banks have all the Federal Reserve Notes back as its property and the United States is still owing the original 465 Billion Dollars with no way to pay that debt.
The banks have all the money, own all the property, and the citizens must ultimately borrow from the banks to pay their taxes just to maintain the interest payment. ...
Even if Congress should attempt to repay the debt in small increments without borrowing additional funds, the recession that must follow as the money is taken from circulation would totally destroy our economy and drastically reduce our ability to pay any further taxes until that money was borrowed back into circulation.
We sometimes wonder why our elected officials in Washington desire to spend so much money. They spend more each year than they receive in taxes; yet, the year Congress balances its budget and has no need for deficit spending, that will be the year of total economic collapse of our country will commence; for, it is these deficits that allow us to maintain a circulating principal by which we may pay some interest without borrowing from the banks ourselves.
The following excerpts are from the 1957 Senate Finance Investigation Committee in which Senator Malone posed several questions to William McChesney Martin the now former Chairman of the Federal Reserve Board.
Now, only is there no authority on the part of Congress to delegate its responsibility under Art. I, Sec. 8, par. 5 of the Constitution, but the Supreme Court, in the case of Ling Su Fan v. US, held, their power to be non-delegatable. See Ling Su Fan v. U.S., 218 US 302, 54 L.Ed. 1049
Thomas Jefferson once said: "If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered."
I must assert here, that, the power over money rests entirely with Congress, it is an act of sovereignty, and one strictly legislative in nature:
Article I, Section 1, U.S. Constitution
We the people have to Congress the power to borrow money on the credit of the United States, and to coin the money and regulate its value: Article I, Section 8, Clauses 2 & 5 respectively.
Since Congress derives its power from "We the People" and "We the People" have never amended the Constitution to enable Congress to delegate strictly legislative power, it must be asked, where does such authority exist?
The answer is that no such authority does exist; Congress has side stepped its responsibility; this responsibility pertains to what must perhaps be the most important function of Congress, creation and management of the nation's money.
We the people want to know why Congress has forced us to borrow our own money into circulation at interest with United States bonded indebtedness? We believe as did President Lincoln, that if a nation can issue a $5 bond, it can issue a $5 bill.
We the people gave no authority to the Federal Reserve Bank to coin or create the nations money. We delegated that power to Congress.
Even if Congress should feel incompetent to manage the nation's money, it has no power to delegate nor to relinquish that authority.
The Supreme Court has held some of the powers of Congress to be delegatable, but no power strictly legislative in nature Panama Ref. Co. v. Ryan, 293 US 388, 79 L.Ed. 446. Even where the power was held to be delegatable, Congress was required to lay a policy and to set up a standard. Avent v. U.S., 266 US 127; Central Securities Corp. v. U.S., 287 US 12; U.S. v. Chemical Foundations Inc., 271 US 1.
In the statute creating the Federal Reserve System, and in its subsequent amendments, there appears no stated limitation on the powers and authority of this corporation.
To constitute a proper delegation of legislative power, Congress must prescribe:
A definite standard for administrative action to carry out that policy, and
An administrative procedure and action which complies with due process of law.
Field v. Clark, 143 US 640;
Hampton & Co. v. U.S., 276 US 394;
Buttfield v. Stranahan, 192 US 470;
Union Bridge Co. v. U.S., 204 US 364;
U.S. v. Shreveport Grain & Elevator Co., 287 US 77;
U.S. v. Grimaud, 220 US 506.
The "Federal Reserve Act" does not place limitations on the reserve authority, or upon the Federal Reserve banks.
"Authority of the Federal Government in general may not be delegated, without restrictions and safeguards, even when power is delegatable, control must, at all times, remain in the Congress ..."
Panama Refining Co. v. Ryan,
293 US 386, 79 L.Ed. 446.
The "Federal Reserve Act" is without authority; Congress has made an unlawful delegation of power strictly legislative ...
Panama Ref. Co., supra. at 388; Union Bridge Co. v. U.S., supra.; Wayman v. Southland, 10 Wheat. (U.S.) 1, 6 L.Ed. 253; Schechter Poultry Corp. v. U.S., 295 US 495, 79 L.Ed. 1570; Knickerbocker Inc. Co. v. Stewart, 253 US 149, 64 L.Ed. 834
It must be understood that the "Federal Reserve Note" is not United States money, as defined by our Constitution, although it might be implied by the legal tender at 31 USC 392:
(NOTE: all U.S. Code citations cited herein are those of 1973.)
Our Constitution has declared that gold and silver shall be the money of the United States. Congress being fully aware of the will of the people passed Section 311 of Title 31:
31 USC 311
The United States can declare Federal Reserve Notes to be a legal tender in payment of money debts, but the United States cannot change the standard of value nor make anything lawful money, but the value of gold and silver.
In the United States, the dollar has been declared to be the standard unit of money - and -
The dollar of gold 9/10 fine consisting of the weight determined under the provisions of Section 821, of this Title shall be the standard unit of value, and all forms of money issued or coined by the United States shall be maintained at a parity of value with this standard ... (31 USC 314)
Gold has been declared to be the standard of value for the dollar, just as the inch is declared to be standard of value for the foot and the ounce for the pound.
In the first "United States Coinage Act" of April 2, 1792; it was declared in Section 11, that the relative value of the two dollars, silver to gold, was to be 15 parts silver to 1 part gold. ... Here we see that Congress had established a standard that being the gold dollar containing at that time 24.75 grains fine, and to maintain the silver at a parity of value with that standard as 371.25 grains fine silver.
Then of course Congress declared the silver coins of the United States to be a dollar (31 USC 316).
Congress had never, and could never, declare Federal Reserve Notes to be a "Dollar." What then are these Federal Reserve Notes? They are not a measure of value within themselves, but only exist as the representative of value. Our money must have a measure of value with the gold dollar. Congress declared that:
31 USC 314 and record of the 42nd Congress, Feb. 12, 1873
31 USC 457 and record of the 42nd Congress, Feb. 12, 1873
The "Dollar" is the unit of money in the United States, just as the "pound" is the unit of weight, and the "foot" is the unit of distance.
What are these terms in themselves without any measure of value? Could the "foot" exist without 12 inches or could the "pound" exist without 16 ounces?
If there were never more than 11 inches to measure, nor more than 15 ounces to weigh, would the foot or the pound exist? but the foot and the pound would exist, but in name only; they would never be represented by any measure of value.
We know that there must be a measure of value; in order for the units to be maintained, we know that 12 inches are 12 inches; and also, that 12 inches represent a foot and that a foot is for all purposes that which is the measure of its value ...
We might say that a foot is 12 inches, but we must say that 12 inches represent a foot ...
Could a piece of paper then represent a foot? This is a relatively simple question; of course a piece of paper could represent a foot by being 12 inches long. ... The same holds true with all units of measure; the pound is merely represented by 16 ounces, but 16 ounces merely represent that pound just as a piece of paper might represent a pound by weighing 16 ounces ...
What is a "Dollar?" A dollar, like the foot and pound, backs a "standard of value." Congress has said that the standard unit of value for the dollar is to be gold, 15 5/21 grains 9/10 fine by weight, and that this gold at this weight is to represent the dollar, and further that the dollar of gold, shall be the standard unit of value by which all coins and currencies are to be maintained (31 USC 314).
As early as the second Congress, it was established that the proportional value of silver to the gold dollar of 15 5/21 grains of gold 9/10 fine.
We know that the "Federal Reserve Note" does not represent either gold or silver. There were 67 billion of dollars in bills as of June 1973 circulating in the form of these "Notes" and at that time there was only 10 billion Dollars in gold within the continental United States.
The "Federal Reserve Note" represents no standard of value and is incapable of representing the dollar. This lack of value is fatal to its character and the intention of Congress.
What then are "Federal Reserve Notes", if they are not "Dollars?"
Was the purpose and effect of the "Federal Reserve Act" to authorize a new kind of money?
Did the government and the Federal Reserve bank really and in fact contract by these "Notes" to pay the bearer on demand, or at any time?
Are these "Notes" really promises to make other promises?
"Federal Reserve Notes" are in many respects similar to the "United States Notes"; they are both paper; they are both "Notes", and they both circulate on the credit of the United States. ...
Bank of New York v. N.Y. County, 7 Wall. (U.S.) 26
Bank of New York, supra., at 30
The Supreme court held that the issue of "United States Notes," was not an attempt by Congress to make dollars, but an attempt to borrow dollars and to repay that debt.
From the beginning it was intended that "Federal Reserve Notes" would represent the dollar at a ratio of $1 in "Federal Reserve Notes" to be equal to $1 in value ... but by 1935; the ratio of gold to "Federal Reserve Notes" had slipped to 40% and at that time it was enacted:
12 USC 413
as enacted on August 23, 1935
Now the ratio was established at $2.50 in "Federal Reserve Notes" to be equal to $1 in value; however, this, too, did not last for long; in less than 10 years, the ratio had changed once more, and out of necessity the reserve requirements were reduced to 25% (see the "Act" of June 12, 1945, 59 Stat. 237).
The "Act" of June 12, 1945, established a new ratio for the value; at that time $4 in "Federal Reserve Notes" circulating that the banks and the government were beginning to become nervous; they then enacted legislation to attempt to curb the redemption of "Federal Reserve Notes" by restricting the Federal Reserve banks from paying out "Notes" of another Federal Reserve bank (See "Act" of July 19, 1954, 68 Stat. 495).
By 1965, all was totally lost; the ratio of "Federal Reserve Notes" then circulation and Bank Credit to the value standard was approaching $400 to $1; that is to say, 400 "Federal Reserve Notes" to be equal to $1 in value. It was out of desperate necessity that Congress enacted legislation eliminating reserve requirements altogether (See "Act" of March 3, 1965, 79 Stat. 5).
By 1968, Congress finally admitted what was known for some 35 years, that the "Notes" were hopelessly depreciated and no possibility of redemption existed (See "Act" of March 18, 1968, 28 Stat. 50).
If history is at all accurate, we can soon expect Congress to issue a new Currency to be used to replace the present Currency at a discount of approximately 100 to 1 or 100 "Federal Reserve Notes" for 1 Note of the new Currency. If any less of a depreciation is maintained at that time, subsequent changes in Currency must prevail until that level is attained.
This was exemplified as recently as 1780, 193 years ago our Currency followed the same path and ultimately died in the hands of those who possessed it.
Congress itself did not declare these issues to be a legal tender, but called upon the States to do so. The Congress lacked authority under the "Articles of Confederation" to declare "legal tender".
The States acknowledged with appropriate legislation and enacted ...
When depreciation of the bills became so marked that wages and prices began rapid increases, the legislature was forced to pass wage and price controls; the first of these were passed in December of 1776, but, as the depreciation was inherent in the paper itself, all attempts to support the credit of the bills failed; depreciation was quickly accelerated.
Valuation of "Notes" as depreciated to money:
1779- January 14 .................. 8 to 1
February 3 ....................... 10 to 1
April 2 .......................... 17 to 1
May 5 ............................ 24 to 1
June 4 ........................... 20 to 1
September 17 ..................... 24 to 1
October 14 ....................... 30 to 1
November 17 .................... 38.5 to 1
1781- January ................... 100 to 1
In May 1781 the "Notes" ceased to pass as Currency. ...
Financial History of the United States by Dewey, 12th Ed. 1934, p. 36 et. seq.
3 Story 224
Someone once said, "It is for those who do not learn from history that history must repeat itself."
The history of the "Federal Reserve Notes" closely resembles that of the continental Currency ... except that the Currency today is the product of a private corporation, and that corporation, not the government, derived value from its issue and creation. The government receives the cost of printing only, which is less than one cent for each note, and the banks receive the full face value of the note as it loans that note into circulation.
The Federal Reserve banks have placed themselves in jeopardy of total collapse. Their "Note" is worthless abroad and rapidly declining at home. It is perhaps the only opportunity we shall have in the next sixty years to escape total enslavement by allowing the Currency to collapse. It will harm no one; the Federal government would be let out of a 465 billion dollar debt and the American consumers would be let out of a 3 trillion dollar debt all owed to these banks; but our government will not allow this to happen. The government will treat the bank paper ("Money") as their obligation and enslave its own citizens in a feeble attempt to maintain this insane system of finance. It is the government's own fault that its citizens are enslaved to the Federal Reserve banks.
As stated before in this summary, it is the obligation of Congress to pay the money into circulation so that it can be paid back to Congress in the form and name of taxes and subsequently reissued and paid into circulation by Congress each year; thus maintaining a stable economy inflation and depreciation free. But; when Congress must pay a portion of the taxes to a private bank as interest, that much less money may be paid into circulation and a depression must follow. To make up the difference; one of the two things must happen:
Either someone has to borrow money from the banks to maintain the economy and in so doing, the interest charges would necessarily force up the cost of the commodities and services or
The government must formulate a deficit budget at least equal to the
interest paid to the bank in order to maintain a stable economy. ...
But when both of these occur; as has been prevalent in the fractional reserve banking system from its inception, the government must maintain a deficit equal to the interest paid to the banks by itself and by all interest paid throughout the nation less normal bank overhead. Upon the failure of Congress to maintain such a budget, we can expect to see more unemployment and a total economic standstill.
This is perhaps the most ideal of times for us to walk out from under this heave burden that we have been forced to bear. ...
It really amounts to who is guilty of issuing unlawful paper "money." That party; and that party only, is responsible for its consequences.
There is no doubt that the "Notes" issued are "bills of credit" in a legal sense; however, the "Bank Notes" are "bills of debt" economically. The question is: Whose "bills of credit" are the "Federal Reserve Notes"?
Craig v. Missouri, 4 Pet. 431
It might be understood, and must so be implied that upon the open admission of the inability to redeem this paper, the character and the ability of these "Notes" to circulate as "Money" ceases to exist, and they are no more a "bill of credit" than they are gold or silver coin.
Craig v. Missouri, Supra. at 436
Who issues these "Notes"?
12 USC 411
The Federal Reserve Board issues the "Notes" at the request of the member banks, and the members of the board receive their salaries from those member banks. ..." (Craig v. Missouri, Supra. at 431)
The "Federal Reserve Notes" are no longer instruments by which any division, either the Federal Government or the private banking corporations, use in an attempt to engage in the future payment of their "Notes".
The Federal Government owes the money to the Federal Reserve bank, and the Federal Reserve bank owes the Money to the people; both are in default.
The "Notes" are issued by each of the 12 Federal Reserve
banks; each "Note" bears the seal of the bank or issue with the
letter of the bank if issue in its center.
"A" ..... Federal Reserve Bank of Boston
"B" ..... Federal Reserve Bank of New York
"C" ..... Federal Reserve Bank of Philadelphia
"D" ..... Federal Reserve Bank of Cleveland
"E" ..... Federal Reserve Bank of Richmond
"F" ..... Federal Reserve Bank of Atlanta
"G" ..... Federal Reserve Bank of Chicago
"H" ..... Federal Reserve Bank of St. Louis
"I" ..... Federal Reserve Bank of Minneapolis
"J" ..... Federal Reserve Bank of Kansas City
"K" ..... Federal Reserve Bank of Dallas
"L" ..... Federal Reserve Bank of San Francisco
As for the redemption pledge of the "Notes":
12 USC 411
The faith of the United States was solemnly pledged to the payment in coin, or its equivalent, of all the obligations of the United States; such payment was intended to be made in lawful money, unless expressly provided that such payment could be made in Currency other than Gold and Silver (See 31 USC 731).
It is our contention that the United States has merely assumed the obligation for those "Notes" and that in the Constitution sense; those "Notes" are not "bills of credit" issued by a sovereign power.
Darrington v. Bank of Alabama, 13 how. 12; Briscoe v. Bank of Kentucky, 11 Pet. 257
More classical and applying cases could not be found than the Darrington and Briscoe cases above; comparing the "Notes" issued by those banks to the "Federal Reserve Notes", we find that in the Brisco case, the State was the sole owner of the bank and that the operation of the bank was for the profit of the State of Kentucky; and yet, the "Notes" were not issued by the State in the Constitutional sense. Could it be any more so with the "Federal Reserve Notes" when the United States owns no interest in the bank but pays interest to it?
We allege that "Federal Reserve Notes" are merely depreciated "Bank Notes"; and as such, they have no more value than the assumed value given them by the legal tender statute.
It is relatively simple to define a bank note; the term embraces: "the instruments issued by a bank for circulation"; they are technically and more accurately designated as "Bank Notes"; they are ordinarily so called in England. The name bank bill has, however, come to have a like significance, and in the United States, it is more frequently used in ordinary parlance; the terms bank note and bank bill are equivalent and interchangeable (Eastman v. Commonwealth, 4 Grey (Mass) 416; Banks and Banking, 5th Ed., Vol. II, Sec. 635; State v. Hays, 21 Ind. 176).
Banks and Banking, Supra., Sec. 635
From 1913 until 1934, the "Federal Reserve Note" have this inscription:
From 1934 to 1968, the "Federal Reserve Note" bore the inscription:
And from 1968, the "Federal Reserve Note" was to bear this inscription:
Until 1968, the "Note" was intended to be paid in Dollars.
Did something occur in 1968 to suddenly give this paper a value of its own? Did this paper suddenly become the measure of value equal to the inch that was relative to the foot? We think not, but in fact we believe that the "Federal Reserve Notes" were given up by Congress as they being depreciated beyond all possible hope of redemption. This is evident by the following Public Law:
Banks and Banking, Supra., Sec. 636; Fulton Bank v. Phoenix Bank, 1 Hall, (N.Y.) 577
Ward v. Smith, 7 Wall (US) 447, 19 L.Ed. 207
"Federal Reserve Notes" are not redeemable at the counter of the bank where they were issued, nor do they pass at the par value of Gold and Silver.
Ward v. Smith, Supra.; Ontario Bank v. Lightbody, 3 Wend. 101
Ontario Bank v. Lightbody, Supra., at 105
Johnson v. State, 167 Ala. 82
"Bank Notes" then, as all forms of paper Currency, merely represent the value standard, as before stated. "Federal Reserve Notes" no longer represent any value standard and consequently they can not represent the dollar.
Congress has established procedure upon which we may proceed against banks who fail to redeem their paper.
15 F.R. 4935, 64 Stat. 1280, 12 USC 131, as reorganized under plan #26, Sec. 1, eff. July 31, 1950
All National Banks are members of the Federal Reserve, and the "Federal Reserve Notes" replaced the "National Bank Notes" as a circulating bank medium (12 USC 282 et. seq.).
The laws relating to National Banks apply with equal force to Federal Reserve Banks (12 USC 341, para 8 et. seq.).
The purpose of the "National Bank Act" and the "Federal Reserve Act" was to provide a national Currency secured by a pledge of United States Bonds, and to provide for the circulation and redemption thereof (12 USC 38; 12 USC 411).
The Federal Reserve banks are in violation of the very "Act" that established their creation.
The "Act" of Congress (12 USC 411) binds the redemption of those "Notes", and no subsequent "Act" passed after the issue and acceptance of the contract and promise of the government to pay could invalidate or repudiate that pledge. ... If the government repudiates its promise, that "Act" is fatal to the character of the "Notes" to circulate as legal tender, or in fact to circulate at all. ...
There is no question as to the power of Congress to regulate the value of money, that is, to establish a monetary system and thus to determine the currency of the Country. The question is whether the Congress can use that power so as to invalidate the terms of the obligations which the government has therefore issued in the exercise of the power to borrow money on the credit of the United States. ...
This very question was before the Supreme Court as late as 1935 (See Perry v. U.S., 204 US 330, 79 L.Ed. 917). The position of Congress in that case was:
Perry v. U.S., Supra.
The Supreme Court held that Congress could not withdraw its terms of payment, and implied that the United States could not withdraw its credit once that credit had been pledged.
Sinking fund cases, 99 US 700, 25 L.Ed. 496
U.S. v. Bank of the Metropolis, 15 Pet. 377, 10 L.Ed. 774
3 Hamilton's Works 518
Once the faith of the United States was pledged to redeem and pay the obligations which bore the form of "Federal Reserve Notes" it was beyond the authority of Congress to pass legislation which would impair or repudiate that pledge.
The intent and "Act" of Congress, if allowed to stand, must invalidate the legal tender quality of those "Notes" and reduce them to mere depreciated evidences of worthless debts as would be known by any "Act" of repudiation. A check not honored by a bank would have no value and just as all contractual failures would render those contracts valueless so must the repudiation of redemption render these obligations of no value.
Perry v. U.S., Supra.
As Congress has repudiated its obligation, that "Act" necessarily leaves an important question unanswered ... are "Federal Reserve Notes" still qualified to remain a legal tender? We do not think that the "Legal Tender Acts" previously passed by Congress were meant to deprive the Citizens of their property without just compensation as is now intended.
The Supreme Court decisions have been witness to our contention and all they maintain that no attempt was made to coin dollars nor to make anything without value; money. What the Supreme Court did say was that the pledge of the United States to pay dollars was temporarily to be accepted as being as good as the money promised by it to be paid. ...
"Hepburn v. Griswald" was the first legal tender case to be decided by the Supreme Court. There Justice Miller (who along with Swayne and Davis JJ dissented from the majority opinion and who later in the case of "Knox v. Lee" [which over ruled the "Hepburn" case]) became part of the majority. He says:
Hepburn v. Griswald, 8 Wall 634
In "Knox v. Lee" the majority opinion was written by Justice Strong:
Knox v. Lee, 12 Wall 552, 553
In March 1968, the government repudiated its promise to pay money and according to what Justice Strong implied if there were no promise there could be no value, the value was derived from the promise of the government and nothing else...
Justice Bradley, who wrote a separate concurring opinion, felt that the "Legal Tender Act":
Knox v. Lee, Supra., at 560; Bank of New York v. New York County, Supra.
Knox v. Lee, Supra., at 561 and 562
That day has come; Congress has repudiated its solemn pledge; there can be no sustaining a value in the circulation of these "Federal Reserve Notes." All the opinions in the many important cases hold that the "Federal Reserve Notes" are not now a legal tender and are of no value; they can no more represent the dollar than they could be that dollar.
In the last of the important legal tender cases it was held that Congress, under its authority to borrow money on the credit of the United States, could make its obligations to pay money as good for payment of money debts as the money it owed (Julliard v. Greenman, 110 US 421).
What we are to understand from this eight Justice majority is that the promise of the government has a value; and so long as that promise is intact, so long as that pledge remains, the value may exist; but, once the pledge is withdrawn, once the government admits its promise cannot be kept, nothing can give value to those dishonored "Notes", and they must fall as any contract without consideration.
The legal tender question has raised many interesting points, one, itself being the validity of Supreme Court decisions.
It was intended by the separation of powers inherent in our Constitution that the judiciary should be independent and free from all encroachment by the other departments of government. Yet the Supreme Court was totally dominated by Congress and President Grant.
"This Honorable Court" by Leo Pfeffer, p. 182 et. seq.
The only real area of disagreement in the legal tender cases was: could Congress make its obligations a legal tender? No argument was presented to deny the fact that the paper "Notes" were obligations and no intent was conceived that the obligations would not be honored at a future day.
Chief Justice Chase said, in regard to the "United States Notes", that their value is:
Hepburn v. Griswald, 8 Wall 607
Hepburn v. Griswald, Supra., 608
There is ample precedent for the devaluation of currency made legal tender and although Congress had forbidden their depreciation in payment of money debts; they have said nothing regarding the receiving of the payment. Congress has enacted that all coins or currencies offered in payment shall, dollar for dollar in whatever form tendered, be accepted at its nominal value in discharge of that debt. This leaves to the receiving party the obligation of determining how much he has lost by the payment in different currencies, and their representative value in respect to the dollar (its value).
In the "Vaughan" and "Telegraph" cases of October 1864, the libellants were given a decree for the value in gold of the cargo lost and at the same time the court converted the decree into "Legal Tender Notes", $201.00 in gold. Affirmed by the Supreme Court - 1870 (Vaughan & telegraph, 14 Wall. 258).
Chief Justice Chase, dissenting to much of the court's opinion to grant the remedy based upon the variance of the value standard to the "United States Notes" at the height of their depreciation, said:
The Vaughan and Telegraph, Supra., 267 & 268.
The only money that may lawfully circulate within the United States is gold and silver coin; this is the only money Congress may legally issue and it is the only money to be honored by the courts. The legal tender "Notes" have been the representative of the values and have circulated by general consent as the equivalent to money; but not as money by any legal standard.
Money, says Sir William Blackstone, is:
Commentaries on the Laws of England, 1 Blackstone, Sec. 387
With regard to the materials, Sir Edward Coke lays it down:
1 Blackstone, Sec. 389
The legal tender quality of the copper (zinc) coin was restricted just as our nickel and copper coins are restricted to a tender of $5.00 or less.
When the silver coins of England were below the established standard of weight, they were made a legal tender in law for their value determined by that weight. It was enacted in 1774:
14 Geo. III c 42; 1 Blackstone, Sec. 389
1 Blackstone, Sec. 391
3 Story 16
3 Story 18
The intrinsic value of our coin today is so base that, due to inept leadership, we have a value standard whereby the nickel has an intrinsic worth of 2.5 times that of the dime and our paper medium, not representing any value at all, is in reality a complete and thorough tax. The paper medium, having no intrinsic value and being non redeemable, is merely taxing the citizens as much as that currency circulates.
Under the existing principle of double taxation; it is doubted if Congress can tax the "Federal Reserve Notes" in any manner. Since the issuance of such "Notes" constitutes a complete tax; the government would be precluded from any further taxation. It could merely print all the "Notes" it needed and issue them; taking the property from the Citizens and merely leaving them this "Note" as a receipt for the wealth they have given up ... a negotiable tax receipt.
In speaking of the views of the framers of the Constitution on the subject of money, it was said that:
Pol. Economy, p. 222; 2 Mill's Pol. Economy, p. 19; 18 Ind. 471
Gen. 23, 16.
1st of Kings, Chapter 10, Verses 14, 15, 29.
"The prophet Jeremiah, one of the "Greater Prophets" says, "and I bought the field of Hanamerl, my Uncle's son, that was in Anothoth, and I weighed him the money, even 17 sheckles of silver, and I subscribed the evidence and sealed it, and took witnesses, and weighed the money in the balances."
Jeremiah, Chapter 32, Verses 9, 10.
"The circulating medium of a commercial community," says Mr. Webster, "must be that which is also the circulating medium of other commercial communities, or must be capable of being converted into that medium without loss, it must also be able not only to pass in payments and receipts among individuals of the same society and nation, but to adjust and discharge the balance of exchanges between different nations, it must be something which has a value abroad as well as at home, by which foreign as well as domestic debts can be satisfied. The precious metals alone answer these purposes, they therefore alone, are money, and whatever else is to perform the functions of money must be their representative and capable of being turned into them at will as long as bank paper retains this quality it is a substitute for money, DIVESTED OF THIS NOTHING CAN GIVE IT THAT CHARACTER."
3 Webster's Works 41
Miller v. Race, 1 Burrow 452; United States Bank v. Bank of Georgia, 10 Wheat. 333
"Bank Notes" and all "Paper Notes" are treated as money only so long as they remain current at par and in lieu of coin; but no paper, in a strictly legal sense, could be money as money, strictly applied, is coined metal. There is a necessary distinction between paper being treated as money and paper actually being money. There is a possibility of the former but there is no possibility of the latter. "Bills of credit" and "negotiable tax receipts" were actually the forerunners of the legal tender "United States Notes," "Treasury Notes," and all other legal tender paper. The sole distinction is that "Bank Notes" are guaranteed by the bank of issue; whereas, the "Legal Tender Notes" are ultimately guaranteed by the government. The laws, necessarily relevant to "Bank Notes," must apply with like force to "Notes" guaranteed and ultimately pledged to be redeemed by the government.
Young v. Scott, 5 Ala. 475
Carlisle v. Davis, 7 Ala. 42
Flemming v. Nall, 1 Tex. 246; Pierson v. Wallace, 7 Ark. 282
There are numerous cases where a designation of the payment of such instruments in "Notes" of particular banks, associations or in paper not current as money; have been held to destroy their negotiability (Irvine v. Laury, 14 Pet. 295; Miller v. Austin, 13 How. 218, 228; Ontario Bank v. Lightbody, 3 Wend. 101).
"In the use of the term, currency, includes only such bank notes as are current, that is, bank notes which are issued for circulation by authority of law, and are in actual and general circulation at par with coin, as a substitute for coin, interchangeable with coin; bank notes which actually represent dollars and cents, and are paid and received for dollars and cents at their legal standard value, whatever is at a discount, that is whatever represents less than the standard value of coined dollars and cents, at par does not properly represent dollars and cents, and is not money."
Leeger v. Goodrich, 5 Cw. 187; Pierson v. Wallace, 7 Ark. 293; Ontario Bank v. Lightbody, Supra.; Klauber v. Biggerstaff, 47 Wis. 561
"Federal Reserve Notes" are so hopelessly depreciated that Congress has given up any attempt at redemption. Twice in fourteen months they have depreciated some 18% in the foreign markets and Congress, here at home, has offered standard silver dollars for sale at a ratio of $30 dollars in "Federal Reserve Notes" for $1 in standard lawful money (See General Service Administration, Form T-588-R [12-72] - and like offers over the years).
Thus Congress has established that there is a ratio of value somewhere exceeding 30 to 1. That "Act" necessarily raises another question; namely. if all coins and currencies, regardless of when coined or issued shall be a legal tender (31 USC 392); what is Congress doing when it sells one "legal tender" for thirty dollars ($30.00) in another "legal tender" ("Federal Reserve Notes")? Is it not depreciating the dollar "Federal Reserve Note" tender and declaring that there is a difference in the measure of value? Congress has declared that it cannot redeem its obligations, and yet they have offered to sell lawful legal tender silver dollars (at a premium) for its depreciated legal obligations called "Federal Reserve Notes." Does this "Act" make sense?
Leiber v. Goodrich, Supra.; Pierson v. Wallace, Supra.
Congress was actually purchasing Federal Reserve paper for "Lawful Money" and doing so at a discount of 3000% by the San Francisco Mint sale of lawful silver dollars.
5 Am. & Eng. Enc. of Law, 854
Cook v. State, 130 Ark. 95; 15 Am. & Eng. Enc. of Law, 701
103 US 792
The lawful money of the United States is gold and silver coin stamped by the sovereign power.
110 US 421; 25 Ark. 215; 83 Ala. 51; 23 Ind. 21; 35 Ill. 158; 8 Minn. 324; 27 Mich. 191
Bank of New York, Supra at 30
Bank of New york, Supra., 31
And Justice Stone, concurring in the majority opinion of "Perry v. United States", condemned the "Acts" of Congress that refused to honor their gold obligations.
Perry v. U.S., Supra., at 358
In the "Serbian and Brazilian Bond Cases" it was declared:
Serbian & Brazilian Bond cases, P.C.I.J. series A, Nos. 20-21, pp 32-34, 109-119
In "Gregory v. Morris"; Chief Justice Waite said:
Gregory v. Morris, 96 U.S. 619, 24 L.Ed. 740
It is true to say that the gold clause frequently used prior to 1934 was intended to afford a definite standard or measure of value and this was to protect against a depreciation of the Currency and against the discharge of the obligation by payment of less than that prescribed.
Gold is still the standard unit and measure of value. Under authority of 31 USC 821; the President was given authority to depreciate the value and to declare a lesser unit for the dollar.
President Roosevelt re-established the new standard at 15 5/21 grains 9/10 fine. This is the standard today.
Congress has said all Coins and Currencies shall be a legal tender, and a tender in any Coins and Currencies shall, dollar for dollar at their nominal value, satisfy that debt (31 USC 462; 463).
But it must be questioned: does Congress have the ability and authority to declare the "Federal Reserve Notes" to be a legal tender?
The obligations under consideration in the legal tender cases Knox v. Lee, Hepburn v. Griswald, and Julliard v. Greenman, were promises to pay dollar. They were a pledge of the national credit and circulated with the intent of ultimate redemption. The value standard was not changed.
Now comes a new era. Congress has repudiated its pledge and the "Notes" circulate merely by a lack of understanding as to what is money and what may pass as money. The people are so bogged down with debt to the banks that they haven't the time to question that debt to see if, in fact, it is a lawful debt that they owe.
The opinion in "Knox v. Lee" was that "Legal Tender Acts" do not attempt to make paper a standard of value nor did the Court assert that Congress may make anything which has no value, money.
Where then does Congress have the authority to declare that these worthless "Notes" are to be equal to money?
The "Act" of Congress, in creating a worthless tender, does no less than take the property of the people and give it to the banks without giving any consideration in return.
The legal tender cases merely established precedent for the government to enact by legislation ("Legal Tender Acts") that its promises to pay money shall be, for the time being, equivalent in value to the representative of value determined by the "Coinage Acts."
There is no longer an attempt, pledge, or intention, by Congress, or any Federal Reserve Bank, to redeem these "Notes" and consequently; no authority precedent or ability of Congress exists to enact legislation that these "Notes" are to be a legal tender.
Fletcher v. Peck, 6 Cranch 87, 3 L.Ed. 162
Hepburn v. Griswald, Supra., 611
Thayer v. Hedges, 22 Ind. 296
Hepburn v. Griswald, Supra., 611
Hepburn v. Griswald, Supra., 613
McCullough v. Maryland, 4 Wheat. 421
Hepburn v. Griswald, Supra., 615 & 616
Thayer v. Hedges, Supra., 300; Hepburn v. Griswald, Supra., 616
Hepburn v. Griswald, Supra., 619
Hepburn v. Griswald, Supra., 621
Now witness this very "Act" with the "Federal Reserve Notes."
"If on the other hand, the quantity is only adequate to the demands of business, and confidence in early redemption is strong, the notes will circulate freely, whether made a legal tender or not."
Hepburn v. Griswald, Supra., 621
A $, according to Noah Webster's 20th Century Dictionary of the English Language at 43, is a symbol of dollar; a coin or piece of paper money of the value of one dollar.
We know that the paper itself has no value other than the value it achieves by the pledge of the United States to pay one dollar. Once that pledge is removed, the paper then no longer represents value; it is no longer representing the dollar. This "pledge" of redemption was officially removed on October 28, 1977 with Public Law 95-147 (91 Stat. 1229) at subsection (c):
Congress may have declared that the payment in Currency, dollar for dollar in any Currency, is legal tender payment for debts; but Congress has not, and in fact Congress could not, declare that receiving of payment in any Currency constitutes a payment for debts in dollars.
It can not be permitted that a government ordained to establish justice can continually repudiate its obligations.
When the government withdraws its pledge, it must necessarily exempt its obligations from all forms of taxation.
The "Federal Reserve Note," being at best the evidence of an imposed tax, is exempt from all further taxation.
That "Note" or "tax receipt" does not constitute "income" but actually constitutes the giving of goods and serves labor and commodities without compensation.
Justice Field, the lone dissenter in Julliard v. Greenman, had a tremendous insight and understanding for what was to come as stated in his eloquent opinion:
Dissenting opinion of Justice Field, Julliard v. Greenman, 110 US 421
The wise Justice foresaw what is happening today; let us expand upon his theory. If Congress, by the means of a printing press, can print all the money it needs for any imaginary scheme, and it has in fact evolved to a time in the history of the United States when it can make something of value out of nothing; then any political body, who uses this Colonial system of taxation, can no longer justify taxing its Citizens by means of the socialistic tax on bankers' paper. The mere printing of the paper with unlimited restraint would serve as a new form of tax. The continuation by Congress to tax its Citizens in any other manner, when it professes to have this ability, is nothing less than plunder in the form of unlawful confiscation of private property to unlawfully pay the unnecessary interest on an unnecessary government debt because of the purported delegation of creating demand deposit "money" to bankers under the fractional-reserve "National Bank Act" and the "Federal Reserve Act."