Utah has now made official the use of gold and silver coins as legal tender.
This marks the first time since 1971 that any government entity in the United States has legalized the use of gold and silver as currency.
The law, signed by Governor Gary Herbert, does not require citizens to pay or accept payment in gold or silver, but rather offers an alternative to the fiat-based Federal Reserve note.
The Utah law will also exempt the sale of gold and silver coins from state capital gains taxes, according to the Associated Press.
The idea was developed by Republican state Representative Brad Galvez, who sponsored the bill primarily as a protest against the reckless monetary policies of the Federal Reserve. Rep. Galvez stated that the American people are losing faith in the dollar and a sound monetary alternative is necessary.
“We’re too far down the road to go back to the gold standard,” Galvez contended. “This will move us toward an alternative currency.”
Larry Hilton, a Utah attorney who assisted in the drafting of Utah’s law, asserted that “We view this as a dollar-friendly measure. It will strengthen the dollar by refocusing policy matters in Washington on what led to the phrase, ‘the dollar is as good as gold.’”
Ralph Danker, project director for economics at American Principles in Action in Washington, D.C., which also helped draft Utah’s legislation, stated that ”Making gold and silver coins legal tender sends a strong signal to Congress and the Federal Reserve that their monetary policy is failing. The dollar should be backed by gold and silver, so we have hard money.”
The AP also noted that “Earlier this month, Minnesota took a step closer to joining Utah in making gold and silver legal tender. A Republican lawmaker there introduced a bill that sets up a special committee to explore the option. North Carolina, Idaho and at least nine other states also have similar bills drafted.”
Gold, silver coins to be legal currency in Utah
Utah legislators want to see the dollar regain its former glory, back to the days when one could literally bank on it being “as good as gold.”
To make that point, they have turned it around, and made gold as good as cash. Utah became the first state in the country this month to legalize gold and silver coins as currency. The law also will exempt the sale of the coins from state capital gains taxes.
Craig Franco hopes to cash in on it with his Utah Gold and Silver Depository, and he thinks others will soon follow.
The idea is simple: Store your gold and silver coins in a vault, and Franco issues a debit-like card to make purchases backed by your holdings.
He plans to open for business June 1, likely the first of its kind in the country.
“Because we’re dealing with something so forward-thinking, I expect a wait-and-see attitude,” Franco said. “Once the depository is executed and transactions can occur, then I think people will move into the marketplace.”
The idea was spawned by Republican state Rep. Brad Galvez, who sponsored the bill largely to serve as a protest against Federal Reserve monetary policy. Galvez says Americans are losing faith in the dollar. If you’re mad about government debt, ditch the cash — spend your gold and silver, he says.
His idea isn’t to return to the gold standard, when the dollar was backed by gold instead of government good will. Instead, he just wanted to create options for consumers.
If you live in Utah, you can now pay your local bills or taxes with gold or silver coins, thanks to a law passed by the state legislature this year.
In 1873, the United States "demonetized" silver, although the metal was used in coins until 1964. As part of the New Deal, the federal government took gold out of circulation in 1934, and in 1971, the gold backing of the U.S. dollar was removed. The price of gold was no longer fixed at $35 an ounce, and in 1975 Americans were again permitted to buy, sell and own gold.
The new Utah law directs the state treasurer to set the exchange rate (so many dollars for a given weight of gold or silver) and establishes guarded depositories for the metals.
Some accounts say Utah is the first state to do this; others say Colorado has had a similar statute in effect for years. As a 60-year Colorado resident, I haven't heard of it, and I'll point out that no one has offered to pay me in gold or silver since I baby-sat for my three-year-old cousin in the summer of 1963 and got paid with 10 silver dollars every week (if only I had kept them -- those old Morgans are now worth upwards of $50 apiece).
Is Utah's law constitutional? One provision of the federal constitution says "No State shall ... make any Thing but gold and silver Coin a Tender in Payment of Debts," which certainly implies that a state can makegold and silver coins a legal tender.
But the federal constitution is also clear about who does the coining. "No state shall ... coin Money" and Congress has the exclusive power "to coin Money" and "regulate the value thereof."
Reaction seems to be positive from some conservative organs.
Essays in the Range blog are not written by High Country News. The authors are solely responsible for the content.
Ed Quillen is a freelance writer in Salida, Colo.
Image courtesy Flickr user Temari09