California’s unconstitutional IOUs
It's amazing that this has not gotten more media attention.
This is what the Constitution says:
No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.
Unconstitutional IOUs from California
So, the question is: what constitutes a “bill of credit?” Well, the United States Supreme Court has dealt with this issue, to define a bill of credit. The source of case law goes back to Craig v. Missouri (1830). In deciding for the majority, Chief Justice Marshall defined bills of credit in the Constitutional sense.
In its enlarged, and perhaps its literal sense, the term ‘bill of credit’ may comprehend any instrument by which a State engages to pay money at a future day; thus including a certificate given for money borrowed…To ‘emit bills of credit’ conveys to the mind the idea of issuing paper intended to circulate through the community for its ordinary purposes, as money, which paper is redeemable at a future day.
But it is contended, that though these certificates should be deemed bills of credit, according to the common acceptation of the term, they are not so in the sense of the constitution; because they are not made a legal tender. The constitution itself furnishes no countenance to this distinction. The prohibition is general. It extends to all bills of credit, not to bills of a particular description.
As far as my research can carry me, this is still considered to be the Constitutional “gold standard” upon which “bills of credit” are defined. It seems quite clear to me, that given Marshall’s definition, the California IOUs absolutely should be considered bills of credit and as such should be considered to violate Article I, Section 10 (as above). I am shocked and amazed that nobody has questioned this, yet.
It's also interesting that we (here in the USA), use the Federal Reserve Notes when this clause specifically states that only gold and silver may be used for legal tender.