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Source link: http://archive.mises.org/13681/california-leads-nation-with-sound-money-%e2%80%94-in-1865/

California Leads Nation with Sound Money — in 1865

August 24, 2010 by

In 1865, California law allowed contracts to specify that payment be made in gold. But California’s treasury secretary admonished the citizens to be “cured of the mania for an exclusive metallic currency.” FULL ARTICLE by Brad Skiles

{ 13 comments }

james b. longacre August 24, 2010 at 3:05 pm

It wasn’t that California didn’t recognize greenbacks as money. The California law simply allowed a contract to name the form of money to be used.

could a contract be made in another state to have gold as payment??
if the gold part of the contract wasnt fulfulled in another state could greenbacks be required or accepted??? is that the only difference?

Jonathan Baltazar August 24, 2010 at 3:54 pm

It means that greenbacks could be substituted as payment in a contract requiring gold or silver in states other than California. California law required that the exact currency stated in the contract be used as payment.

J. Murray August 24, 2010 at 6:33 pm

Basically, legal tender laws say that if you are offered the greenback, rejection is effectively nullifying the debt. If the contract is specifically stated to be paid in gold in a legal tender environment, the debtor can pay the contract off in the legal tender in the fiat currency, thus being able to nullify the contract with government approval.

California effectively nullified the Federal legal tender law, which was why it was possible to refuse greenbacks without extinguishing the debt.

james b. longacre August 24, 2010 at 3:30 pm

is a better developed financial market one where the money is gold/silver/commodity where it can be traded instantly and at high volume as opposed the system that is in place now (so i have been told, that money/currency can be created instanly via banks), i dont know.

Richard Garner August 24, 2010 at 5:52 pm

Isn’t that a legal tender law? Are we supposed to endorse legal tender laws now?

james b. longacre August 26, 2010 at 2:14 am

i dont know if the constitution distinguishes between legal tender in general of legal tender in payment of debts. ihavent been able to find supportin info from the consitutional authors. though it probably exists.

from the constitution there were fees mentioned that were in dollars of that day. i assume a weight of silver and not an untrue note. now if no state could issue bills of credit i guess thaey could only get them from the federal govt. but i thought the federal govt could only have the power to coin coin money??? not emit bills per se??? and borrow money on credit…credit being uniformed people pointing guns at others.???

now if the constitution said that contracts could be made to pay in anything but if they were unfulfilled ( i guess a contract breach would be a debt??) and went to a govt court then they would be settled in gold and/or silver coin..but i am not sure. leaving money to arise from the market (existing coins, foreign coins, etc) except come tax time. i dont know exactly.

are you supposed endorse anything??

i have asked if a legal tender law with govt controlling all the legal tender or a legal tender law where if you wanted, you could spend time getting it out of the ground is better.
“making and earning” the money yourself, iow..but i never got any replies.

if you think the govt will take coon skins for tax payments and you can make all the paper notes , etc you want for trade then try it.

Ralph Fucetola JD August 24, 2010 at 6:23 pm

It seems to me that the California law was not a “legal tender law” but rather a law in support of contract. Of course, under the Constitution California did have authority to declare either gold or silver legal tender, while the Federal Government clearly not only did not have that authority, but the Constitutional Convention had actually removed that authority from the draft of Article I, Section 8. The Unionist imposition of legal tender was an extra-constitutional act during war. When the rump Congress packed the Supreme Court, which then conveniently reheard the Legal Tender Cases and discovered invisible words in the Constitution giving Congress the power to declare paper notes legal tender, that usurpation of the Constitution had then and has now no precedent authority. We need to return to the plain language of the Constitution, allowing each state to choose between gold and/or silver as legal tender. Better, simply do as California sought to do, enforce the contract between the parties when it specified tender. That would be the best market solution

james b. longacre August 28, 2010 at 5:31 am

make any Thing but gold and silver Coin

where is the plain language that says states choose gold or silver

J Cuttance August 24, 2010 at 7:54 pm

please clarify ‘a contract stating “$1000 in gold” required the delivery of gold.’

the delivery of a $1000 worth of gold at the time of payment?
or the weight of $1000 worth of gold at the time the contract was struck?

guard August 25, 2010 at 5:56 am

Yes, I’m a little confused about this myself. Why would gold have anything whatever to do with dollars or tender? What would it mean for example if one had a contract stating “$1000 in gravel” or firewood or anything else. Wouldn’t this simply be a contract trading for a certain weight of gold? And what would that have to do with legal tender? Or was the state of California trying to artificially fix the value of gold in some kind of fiat gold system?

james b. longacre August 26, 2010 at 2:50 am

what is sound money anyway?

james b. longacre August 28, 2010 at 5:32 am

if gold and silver were legal tender why does that title say that it was sound money??

Paul February 10, 2011 at 6:03 pm

I can’t believe people fall for this trick of accepting paper fiat currency. I think people are starting to see cracks in this paper game. I have been collection silver coins for years now. They have provided me a great return on my investment with what was little risk. People can trust the government money all they want but I will trust hard money.

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