Von NotHaus’ Question: Does the government have the power to outlaw private coinage of money?

From the New York Sun.


Of all the constitutional questions working their way up through the federal courts — and there are some big ones — the case that has our attention at the moment is the motion by Bernard Von NotHaus to have set aside his conviction of counterfeiting coins. It is true that the Obamacare lawsuits are raising a profound question, whether the government has the power to punish an American for not engaging in commerce by failing to purchase health insurance. It is true that the litigation over Arizona’s immigration law tests whether states can deal directly with illegal immigration. But it is hard to think of a more basic question than that being raised by Von NotHaus in respect of whether the government has the power to outlaw private coinage of money.

The issue was raised by Von NotHaus’ conviction in March of two counts related to his issuing of silver medallions called Liberty Dollars. There were no complaints from the persons who bought Liberty Dollars or took them in exchange for goods. The fact is that Liberty Dollars have held their value even while the value of the fiat dollars issued by the Federal Reserve has plunged, to barely a fifth the value of what they were worth at the start of, say, the Bush administration. This is not lost on anyone looking at the case. One can imagine that this humiliation was keenly felt by the federal government that brought charges against Von NotHaus. It’s hard to see why else the government would have brought charges.

Von NotHaus was tried in criminal court at North Carolina. Just before the case went to the jury, there occurred what the editor of the Sun, writing in the Wall Street Journal, called “a curious thing.” The judge struck from the indictment the 33rd paragraph, which said that the power to coin money and regulate the value thereof — which the Constitution delegates to the Congress in Article 1, Section 8 — gave the government “the concurrent power to restrain the circulation of money not issued under its own authority, in order to protect and preserve the constitutional currency for the benefit of the nation.” Also struck was the indictment’s sentence that said “it is a violation of law for private coin systems to compete with the official coinage of the United States.”

The judge, in an exchange with the prosecutor just before the case went to the jury, stated that the paragraph did not “appear to the court to be a factual predicate that is supported by the evidence in the case.” So the copy of the indictment that went to the jury contained white space where paragraph 33 once was. Yet after von NotHaus was convicted, the government rushed out a press release repeating the part of the original indictment that the judge had struck out. The release, the Journal noted, also went further, asserting that Congress’s constitutional power to coin money was also meant to “insure a singular monetary system for all purchases and debts in the United States, public and private.”

This is the issue now at the center of the Von NotHaus legal maneuvering. It is raised pointedly in an amicus brief just submitted by a public educational charity called the Gold Anti-Trust Action Committee. GATA was established in 1999 to oppose what it has called “illegal collusion to control the price and supply of gold and related financial securities.” As the value of the dollar has collapsed, GATA’s work has begun to illuminate the one of the central questions of our time, namely whether the kind of fiat currency with which the government has been funding its own expansion is itself a constitutional form of money.

The question it is raising in the Von NotHaus case is directly related — whether the grant of power to the Congress to coin money and regulate the value thereof is exclusive. That is, does the grant to Congress of the power to coin money mean that no one else may coin money. The states are prohibited from coining money. But there is no express prohibition on private parties from coining money or using money that has been coined by foreign governments or private parties overseas. So where does Congress find the power to prohibit private coinage? GATA’s brief argues that the right is protected by the 10th amendment, which reserves to the to the people rights not delegated to the government by the Constitution or prohibited by it to the States.

Private mints operated in America long after ratification of the Constitution, and private coinage, in the view of the lawyer for the Gold Anti-Trust Action Committee, William Olson, is “one of the great ways we restrain tyranny.” The Justice Department objected to the idea of GATA being permitted to file an amicus brief in the Von NotHaus case. The judge, Richard Voorhees, brushed aside the federal objection, and so the constitutional question that Von NotHaus has brought before the court stands a better chance of being considered. We will see who has more closely hewed to the vision of America’s founders — a government that is issuing fiat money whose value has been collapsing or a private individual who issued private money that has held its value throughout the crisis.

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