Re: Not. [Was Re: Federal Reserve Bank is ILLEGAL?]

["Michael Froomkin - U.Miami School of Law" <froomkin@law.miami.edu>]

On Tue, 12 Nov 1996, Doug Renner wrote:

> article nearly head-on.  However is it true that what you are saying is 
> that two fundamental premises in the article you refer to as "rabid" are 
> incorrect?  Namely:
> 
> "ARTICLE 1, SECTION 8 OF THE CONSTITUTION STATES THAT CONGRESS SHALL HAVE
> THE POWER TO COIN (CREATE) MONEY AND REGULATE THE VALUE THEREOF.

The above is a true statement.  Note however that "congress" cannot
operate the mint.  It must -- **MUST** -- delegate this duty to the
executive branch (or someone outside the legislative branch, cf. Chadha
v. U.S.) if it wants it done. Congress is free to select the type
of agent it wants to do this.  Indeed, if Congress chose to license
private mints, that would, IMHO be legal.  The point here is that the
states don't have the power to coin money.

> 
> "IN 1935 THE SUPREME COURT RULED THAT CONGRESS CANNOT CONSTITUTIONALLY
> DELEGATE ITS POWER TO ANOTHER GROUP. (Reference 22, P. 168)
> 

The above is so oversimplified as to be meaningless; anyway it's almost
certainly (mostly) wrong. It refers to a case that has never been followed
since.  There are many cases since that supply the necessary context.  I
discuss some of them in my article.  I discuss others in my student note
and in other articles availble from my homepage.

> Are these not correct?  Anyway, there were issues other than mere legality 
> discussed, including history & practicality.  Specifically, the quotes from 
> Benjamin Franklin, Thomas Jefferson, Rothschild, references to 
> Congressional Record, etc. were what had impressed me in the link 
> below.

Bah. "Mere legallity" indeed. 

> Is it an accurate statement that we are effectively paying the Fed 
> interest on the currency we carry?

No.  Unless by "effectively" you mean "during periods of inflation".  But
the currency can deflate too... e.g. in a depression. 

> Or am I just making that common but incorrect assumption that 
> unconstitutionality entails illegality?

No, I'm afraid you are making the common but incorrect assumption that
reading some part of one court case from the dustbin of history out of
context makes you a constitutional expert. 
> 
> Thanks for responding to this thread, Michael.  Your input is very much 
> valued.

You may feel differently as I get grumpier...

A. Michael Froomkin        | +1 (305) 284-4285; +1 (305) 284-6506 (fax)
Associate Professor of Law |
U. Miami School of Law     | froomkin@law.miami.edu
P.O. Box 248087            | http://www.law.miami.edu/~froomkin
Coral Gables, FL 33124 USA | Great weather here.