by William Greene, Ph.D.
In early 2009, I was teaching a course on American Government at Gainesville State College here in Georgia. As I was going over with my students the powers prohibited of the States in Article I, Section 10 of the U.S. Constitution, we hit upon this one: “No State shall… make any Thing but gold and silver Coin a Tender in Payment of Debts”.
A student in the back of the room raised his hand, and asked, “What does Georgia use for paying its debts – money owed to the State, and by the State?”
“Federal Reserve Notes,” I replied.
“Not gold or silver coins?” he asked.
“No, not gold or silver coins. And no, Federal Reserve Notes are not backed by gold or silver coins, either.”
He raised his hand again. “Which States DO use gold and silver coins for paying State debts?”
“None of them,” I answered. “They all use Federal Reserve Notes, which were declared to be ‘legal tender’ by the U.S. Congress.”
“When did we pass a Constitutional Amendment to change this requirement in Article I, Section 10?” He had a puzzled look on his face.
My answer seemed to puzzle him even more. “We didn’t.”
It was quiet in the classroom at that point. I waited. I didn’t have to wait for long.
“How have the States gotten away with that?”
I didn’t have an answer to that question. And it bothered me...
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