Precisely the point I made about how the former forms of private bank notes as currency were taxed out of existence (and still are).

Much as I deplore the effects of “Fiat” currencies (which are just about all there are), I think the legal precedent in the Constitution “To borrow Money on the credit of the United States,” authorizes the issuances of silver certificates, gold certificates (which are not coinage), treasury notes of any duration – with or without specifiction as to mode of repayment.

The exclusive power to regulate the “Value” of Money creates inter alia the force of nationwide Legal Tender laws, in addition to any rules of Tender under State laws.

Of course, the actual “currencies” afloat in daily transactions have largely been forms of private credits, such as “checks” on demand accounts, now widely replaced by credit cards, electronic balance transfers, in which the formal “Legal Tender” is simply the unit of account.

So, daily trade does use a large amount of “private currency” in the form of “private credits.”

Given your background, none of this is news to you; just an explication of my previous expression.

More like the Spanish Empire than the British.

A vast web of detailed controls on every aspect of life, and so on.

Actually for a brief period the British Empire was getting like that – “new thinking” (not that new – the Spanish and Romans had done it, and Dalhousie had gone too far down the “development” road in India in the early 19th century, well intentioned but without understanding) came in the 1930′s (at least in the colonies that did not have elected assemblies) with “marketing boards” and so on

After World War II (with Atlee) it became much worse – with people like Andrew Cohen setting themsleves up like Plato Guardians, in places like Uganda.

They meant well (they really though that all this statism would be good for the locals – it was not an exploitation effort, and lands that got independence, such as India, followed the same policies of folly, only more so), but the whole thing was crackbrained.

However, some colonies (noteably) Hong Kong managed to dodge the bullet of “reform”.

As for the E.U. – the whole thing is demented, a Tower of Babal.

The international elite (as can be seen from the academics and the estabishment media – such as the Economist magazine and the Financial Times) love it – not because they have a deep love of European culture (actually they place little value on “Europe” – people like Timothy Garton Ash would sell the whole place out to the forces of Islam in a heatbeat) but because they see it as a stepping stone to the “world community” they crave.

This world community would be sort of like Francis Bacon “New Atlantis” accept on a globel scale – a regime ruled by an “educated” elite (with neither indiviudal freedom, at least not in anything the elite cared about, or any real, as opposed to formal, “democracy”), all aspects of life controlled by the elite (the wise – the guardians) for the benefit of the people. Not via public excutions and so on – but via regulations and propaganda.

Rather like Cas Susteen’s view of government (“Nudge” – required reading for high officials and ministers in both the American and British, Mr Cameron loves the vile work, governments not just in the E.U.).

“But this is insane Paul” – errr yes it is, but it is also the truth.

In the face of all this such things as German (and other bankers) trying to cover their backsides by getting an Irish baillout looks rather innocent in comparison.

As Ian B. is fond of pointing out – the British and American political class is just as sick as any in Europe. The European political classes are committed to demented notions such as the European Union – but so is the British (and the American) one.

Some people carried on this type of thinking – such as Edward Gibbon Wakefield (his plans for New Zealand).

However, the influence over government policy was very limited in the 19th and 20th centuries.

The idea that people in overseas colonies should be forced to buy British goods was not followed – nor was the idea that they should be forbidden to manufacture various things, or that their exports should be taxed (all this is generally Spanish policy – rather than British).

Indeed trade restrictions tended to go the other way – for example as early as the 1850′s colonies in Australia were putting taxes on British imports (as did Canada). Possibly this was an over reaction to the experience with the American colonies – they had been subjected to controls on their imports and taxes, so with the Australian and Canadian colonies policy went to the other extreme their assemblies (a typical British thing – setting up elected assemblies ….) were allowed to put taxes on British goods.

Both extremes of policy were destructive of the idea of a long term empire – but then, even in Africa, many British Empire buildings (such as Lugard) thought of Empire as temporary – much longer term than it proved to be, but still temporary.

It could be that the dream of Empire free trade never really had a chance after the colonies in Australia and Canada were allowed to put taxes on British imports – although people like Joe Chamberlain kept trying to breath life into it.

As late as 1931 there was an effort at “Imperial Preference” but it did not really catch on (perhaps had the war not come…..).

Many British people remained basically committed to world free trade (although the overvaluation of the Pound in 1925 made free trade a very difficult position) – although they retaliated to the American (and other) trade tax increases of 1931 with their own trade taxes in 1932.

Perhaps the real problem was the lack of any Imperial Parliament – even for defence.

A political rather than economic problem.

The idea of American representatives in the House of Commons was rejected in the 1770′s (although the debate was a lot closer than a lot of people think) and that led to the break with the American colonies.

And the idea of an Imperial Parliament (Joe Chamberlian again) was rejected in the 19th and 20th centuries – thus making the British Empire politically (as well as economically) rather an illusion (a lot of pink on the map – rather than a real enity, at least to some extent). Although, of course, the two World Wars really did the damage – they made what might have been a long term dissolution into a dissolution that took only a few decades.

Perhaps you were thinking of Article I, Section 8, Clause 5, which gives Congress the power “To coin Money, regulate the Value thereof, and of foreign Coin . . . .” However, nothing in this suggests that the federal government has any legal authority to issue fiat currency. Jessica’s statement at 04:26 PM is correct.

Single currency in the U.S.

First Paragraph Sec.10 Art I Constitution.

Through taxation at 100% of face, private Bank Notes were put out of existence, the last being permitted to the National Bank of Waco, Texas (because of territorial spread of use). Thus Fed notes are now all there is. Treasury issues of Silver Certificates were withdrawn long ago; and we all know what FDR did with his promise about gold.

Thanks, Brian, this is excellent news!!

In exchanges with Martin Wolf quite sometime back, I pointed out that what “stood behind” or ultimately supported the U.S. currency was the productivity of the U.S. “economy.”
Wolf disagreed with me and took the position that the controlling factor is its Legal Tender status.

My point has been (but is now being diminished by actions of the Fed in expanding its “balance sheet” [forms of assets held]) that the $$ was backed by holdings of obligations of U.S. business operations (discount window) and obligations of the U.S. Gov’t.; both of which depend upon producing revenues from business activities for repayments, either directly or as taxes on the revenues.

But what has been “behind” the Euro? Anything other than the obligations of the several governments; dependent on taxation of internal revenues?

I think we now have some indication that the legal tender status of the Euro, while a factor, is not sufficient to support what is labeled Value.

There is a fragmentation of, and serious differentiation in the capacity for, taxation to support the Euro, whose issuer does not have the same “private” role as the FED in the U.S.

So, there is a difference in the kinds of issuers; and, in what is “behind” the currencies.

How come this “well regulated central bank” didn’t mitigate the many booms and busts since its creation, including the uber boom and bust of 1920-1930?

Between Jackson and Wilson there was never any boom or bust like the ones we have had since Wilson.

> Meanwhile, there was considerable political strife over how to regulate the value of the currency, a power the Constitution reserves to Congress.

No it doesn’t, the constitution grants congress the power to coin money. This has been grossly extrapolated to mean the power to delegate to an unaccountable body the power to print unbacked monopoly money. Which is hardly the same thing.

But but…it was agreeeeeeed, wasn’t it? Sovereignty ends at midnight, haven’t you been told?