(Books in Focus, P. O. Box 3481, Grand Central Station, New York, N.Y. 10163) • 227 Pages • $19.95
Editor Holzer has assembled several of the most interesting articles, cases and statements to be found on law and money and woven them together in a new book that should be in any library which has an economics or constitutional history collection.
The book begins by including parts of a law journal article written by P.J. Eder on monetary debasements in early times starting with Solon’s devaluation of 594 B.C. Eder moves forward quickly to English-medieval law where he emphasizes that the sovereign’s prerogatives over money were limited to coinage, seigniorage (minting fee), and the fixing of denominations of English and foreign coin according to the value of the money metal contained in them. Eder emphasizes that no general power of debasement existed in the sovereign, although one case, the Case of Mixed Moneys, seems to have allowed the sovereign to devalue the currency. However, Eder points out that the forced use of base coins (mixed monies) referred to by this one case was a temporary war measure used against Ireland by Elizabeth.
Government’s Money Monopoly next turns to the thirteen colonies and provides a good introduction to commodity money, foreign (Spanish or Mexican) metallic coins, and paper money. Then another short but insightful chapter appears on the subject of the intention of the Constitutional Convention regarding the emission of bills of credit. The author concludes, from Madison’s notes, that while there was grave fear of a paper money issuance with a legal tender requirement, nevertheless there was also a reluctance to completely prohibit the federal government from issuing paper money. Later, this ambiguity plus a broad interpretation of the coinage powers, and an expansive view of what was “necessary and proper” allowed Congress to take and keep nearly plenary monetary powers.
It is to the matter of a central bank that editor Holzer now directs the reader. He properly includes both Jefferson’s opinion against the First Bank of the U.S. and Hamilton’s defense of it. Their views are well worth reading. Unfortunately, John Marshall and the Supreme Court later followed the reasoning of Hamilton in upholding the chartering of the Second Bank of the U.S. in McCulloch v. Maryland.
The important cases of the Civil War era, the Legal Tender Cases are included and discussed. By reproducing the text of these decisions, Holzer performs a valuable service. Most constitutional law students find that their law casebooks refer to these critical cases by a mere passing note. They are usually regarded as cases showing the laudable rush toward plenary governmental power over money. The first Legal Tender Case, Hepburn vs. Griswold, still contains some of the best constitutional analysis and common sense about sound money ever found in a Supreme Court opinion. Ironically, the opinion repudiating the legal tender notes was written by Salmon P. Chase the very man, who as Secretary of the Treasury, oversaw the issuance of the notes.
Other materials are included which will help the defender of sound money obtain a better understanding of the politics behind the gradual creation of fiat money issues by a central bank. Holzer’s collection and notes tell the story clearly.