ArtI.S8.C5.1 Coinage Power

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; . . .

Because Article I, Section 10, Clause 1 of the Constitution prohibits the States from coining money,1 the Supreme Court has recognized Congress’s coinage power to be exclusive.2 The Supreme Court has also construed Congress’s power “to coin money” and “regulate the value thereof” to authorize Congress to regulate every phase of currency. Congress may charter banks and endow them with the right to issue circulating notes,3 and it may restrain the circulation of notes not issued under its own authority.4 To this end it, may impose a prohibitive tax upon the circulation of notes of state banks5 or municipal corporations.6

Inasmuch as “every contract for the payment of money, simply, is necessarily subject to the constitutional power of the government over the currency, whatever that power may be, and the obligation of the parties is, therefore, assumed with reference to that power,” 7 the Supreme Court sustained the power of Congress to make Treasury notes legal tender in satisfaction of antecedent debts.8

The Supreme Court has also held that the power to coin money imports authority to maintain such coinage as a medium of exchange at home, and to forbid its diversion to other uses by defacement, melting, or exportation.9 Consistent with this power, Congress may require holders of gold coin or gold certificates to surrender them in exchange for other currency not redeemable in gold. The Supreme Court denied recovery to a plaintiff who sought payment for gold coin and certificates thus surrendered in an amount measured by the higher market value of gold on the ground that the plaintiff had not proved that he would suffer any actual loss by being compelled to accept an equivalent amount of other currency.10

The Supreme Court also upheld Congress’s authority to abrogate clauses in pre-existing private contracts calling for payment in gold coin.11 However, as to obligations of the United States (as opposed to those of private parties), the Supreme Court has held that such an abrogation was an unconstitutional use of the coinage power. The Court reasoned that such abrogation would render obligations of the United States, entered into by earlier Congresses pursuant to their authority to borrow money on the credit of the United States, mere illusory pledges.12

U.S. Const. art. I, § 10, cl. 1. back
Houston v. Moore, 18 U.S. 1, 49 (1820); Sturges v. Crowninshield, 17 U.S. 122, 125 (1819). back
McCulloch v. Maryland, 17 U.S. (4 Wheat.) 316 (1819). back
Veazie Bank v. Fenno, 75 U.S. (8 Wall.) 533 (1869). back
Id. at 548. back
National Bank v. United States, 101 U.S. 1 (1880). back
Legal Tender Cases (Knox v. Lee), 79 U.S. (12 Wall.) 457, 549 (1871); Juilliard v. Greenman, 110 U.S. 421, 449 (1884). back
Legal Tender Cases (Knox v. Lee), 79 U.S. (12 Wall.) 457 (1871). back
Ling Su Fan v. United States, 218 U.S. 302 (1910). back
Nortz v. United States, 249 U.S. 317 (1935). back
Norman v. Baltimore & Ohio R.R., 294 U.S. 240 (1935). Similarly, the Supreme Court also upheld Congress’s abrogation of clauses in pre-existing private contracts allowing bondholders to elect to be paid in foreign currencies. Guaranty Trust Co. of N.Y. v. Henwood, 307 U.S. 247 (1939). back
Perry v. United States, 294 U.S. 330 (1935). back