Acts of the 73rd United States Congress by United States
Congress Session 1, Chapter 48: Pub. Res., No. 10
To assure uniform value to the coins and currencies of the United States Chapter 49: Public, No. 30→ 48 Stat. 112, H.J.Res. 192, enacted June 5, 1933. (Also frequently cited as the Gold Repeal Joint Resolution)
73RD UNITED STATES CONGRESS 1ST SESSION Joint Resolution To assure uniform value to the coins and currencies of the United States.
Whereas the holding of or dealing in gold affect the public interest, and are therefore subject to proper regulation and restriction; and
Whereas the existing emergency has disclosed that provisions of obligations which purport to give the obligee a right to require payment in gold or a particular kind of coin or currency of the United States, or in an amount of money of the United States measured thereby, obstruct the power of congress to regulate the value of the money of the United States, and are inconsistent with the declared policy of the Congress to maintain at all times the equal power of every dollar, coined or issued by the y the United States, in the markets and in the payment of debts. (Emphasis added)
What happened to cause the ‘existing emergency’? The monetary collapse that had caused the Great Depression disclosed that Congress was obstructed in its power to regulate the value of money.
Further, that obstruction, in the estimation of Congress, was inconsistent with its declared policy of maintaining the equal power (of money) in the payment of debts. This is a not so subtle admission that Congress could no longer pay its debts with gold.
Now therefore be it Resolved by the Senate and House of Representatives of the United States of America in Congress assembled,
That (a) every provision contained in or made with respect to any obligation which purports to give the obligee a right to require payment in gold or a particular kind of coin or currency, or in an amount in money of the United States measured thereby, is declared to be against public policy; and no such provision shall be contained in or made with respect to any obligation hereafter incurred.
Did you catch that? Repaying debt with gold was declared against public policy. It was made illegal to repay debt with gold coin or gold backed currency.
Every obligation, heretofore or hereafter incurred, whether or not any such provision is contained therein or made with respect thereto shall be discharged upon payment, dollar for dollar, in any coin or currency which at the time of payment is legal tender for public and private debts.
Here, obligations (debt) are to be discharged (not paid) with legal tender, not gold coin.
Any such provision contained in any law authorizing obligations to be issued by or under authority of the United States, is hereby repealed, but the repeal of any such provision shall not invalidate any other provision or authority contained in such law.
All other provisions in law, authorizing obligations to be repaid in gold, are repealed, but still retains the obligatiion that debts (obligations) must be satisfied. But now, obligations are discharged, not paid.
(b) As used in this resolution, the term ‘‘obligation’’ means an obligation (including every obligation of and to the United States, excepting currency) payable in money of the United States; and the term ‘‘coin or currency’’ means coin or currency of the United States, including Federal Reserve notes and circulating notes of Federal Reserve banks and national banking associations.
Here, Congress defines what they mean by obligation; that it’s payable in money, and that “coin or currency” also includes Federal Reserve Notes.
EC. Here it was amended.
2. The last sentence of paragraph (1) of subsection (b) of section 43 of the Act entitled ‘‘An Act to relieve the existing national economic emergency by increasing agricultural purchasing to raise revenue for extraordinary expenses incurred by reason of such emergency, to provide emergency relief with respect to agricultural indebtedness, to provide for the orderly joint-stock land banks, and for other purposes’’, approved May 12, 1933, is amended follows: “All coins and currencies of the United States (including Federal Reserve notes a notes of Federal Reserve banks and national banking associations) heretofore or hereafter coined or issued, shall be legal tender for all debts, public and private, public char duties, and dues, except that gold coins, when below the standard weight and limit provided by law for the single piece, shall be legal tender only at valuation in proper actual weight.´´ Approved June 5, 1933, 4:40 PM.
Here, the Wiki source appears to have made some typographical ommissions. At any rate, this law is promulgating that Federal Reserve Notes shall be legal tender, except that gold coins shall be legal tender when they are below the standard weight and limit as provided by law…
This is a stunning admission of their intention to revalue gold coin at a different value than by their weight would indicate. This means their purpose was to disavow their obligation to provide an honest weight and measure for gold coin!
What does all this mean for us today? First, it explains why the US no longer pays debts. Now it discharges liabilities. In fact, it is illegal to pay debt with anything other than legal tender, ie Federal Reserve Notes.
According to Black’s Law Dictionary, ‘tender’ means:
Definition of TENDER -An offer of money; the act by which one produces and offers to a person holding a claim or demand against him the amount of money which he considers and admits to be due, in satisfaction of such claim or demand, without any stipulation or condition.
Tender is an offer of money.
Definition of LEGAL -1. Conforming to the law; according to law; required or permitted by law; not forbidden or discountenanced by law; good and effectual in law. 2. Proper or sufficient to be recognized by the law ; cognizable in the courts; competent or adequate to fulfill the requirements of the law. 3. Cognizable in courts of law, as distinguished from courts of equity; construed or governed by the rules and principles of law, in contradistinction to rules of equity. 4. Posited by the courts as the inference or imputation of the law, as a matter of construction, rather than established by actual proof; e. g., legal malice.
LEGAL TENDER is an offer of money made legal by operation of law. It is not money; it is legal tender. Remember, paying debt with money is now illegal, but discharging liabilities is made legal by Congress Session 1, Chapter 48: Pub. Res., No. 10, et seq.
Why is this important? Because LEGAL TENDER is debt! It’s not money, but it is an offer to pay money. Simply put, we trade in debt.
Now the way debt is created, which is ‘money’ being created, a promise to pay is made, and it is entered onto a ledger as a credit. When someone borrows money in a Federal Reserve Bank, the bank extends credit based on a borrower executing a promisssory note.
That credit is entered into the bank’s ledger, and monetized in the form of a check or deposit slip, ie receipt. The bank doesn’t have a vault with money in it. It simply creates credit in a ledger, based on the borrower’s signed note promissing to pay. The bank puts no money into the transaction. It merely provides the vehicle for a borrower to create ‘money’.
The same process holds true when government borrows ‘money’. Congress simply writes a Bill, signed by the President, and the funds are created in the Federal Reserve’s ledger. The government can then write checks to draw down the account, until such time it needs more funds.
There is an unanswered question: How can the debt obligations ever be satisfied, if LEGAL TENDER offered in payment is only an offer of money? No money is actually ever tendered!
Look for the answer is Part 2.
(The following is by Michael Linten and reprinted via his open license. Keith Sharp)
The LETSystem Design Manual
1.1 Money and Community “Give someone a fish and they’ll eat for a day, teach them how to fish and they’ll eat forever.” The problem with money Many of us are active in creating and maintaining a sense of community amongst our friends and neighbours. But more and more our hands seem to be tied: the world is in serious trouble, both ecologically and economically.
Few people would argue with this, but how many would recognise a major cause of our problems? We assert that a major problem, perhaps the major problem, lies in conventional money and the form that it takes.
Every modern community depends on the flow of national currency through its internal economy. The money swirls in and it rushes out again. Money flows into the community from exports, visitors and government spending. It flows out on imports, travel and taxes.
When local industry loses an export market, when fewer visitors arrive or when governments cut spending, the money that leaves is not replaced. As the amount of money circulating in the community falls, so does the level of trading.
Business declines and people lose jobs, not because they have nothing to offer, but because there is not enough money to go around. In the contest for a share of this limited supply, people work in ways that damage their own health, the environment and the well-being of the community.
People are prepared to do almost anything for money because they need it to take part in the game. This is the source of the problem, since money, by virtue of its very structure, is scarce and hard to come by.
There are three reasons for this: there is only so much in circulation; it can go virtually anywhere, and so it does; you can’t issue it yourself. All over the world communities suffer from a shortage of money, simply because there is only so much of it, it’s gone elsewhere and they can’t print their own.
When you think about it, this situation is nonsensical. Money is merely a means of exchange, a set of tickets, a number in your bank account. It has no value in itself – you can’t eat it, wear it or build anything with it. It is a measure of value, like an inch measures length or a ton measures weight .
There need never be a shortage of the measure. Imagine a carpenter not working because he has run out of inches! Yet we are often idle when all we lack is the means of exchange. There may be plenty of materials, equipment, skills, time, goods and needs to be met, but we cannot work or trade with each other because there are no tickets around, no scores on the sheet, no means of measuring relative value.
The problem suggests the solution. We can get around this problem by creating local money to finance local needs, to generate wealth and protect us from poverty. A local currency can’t leave the community it serves, so it ensures connections between people exchanging skills, goods and services. With a local currency, the community is less affected by fluctuations in the external money supply.
Local currencies have been common throughout history, emerging whenever a community needs to protect its internal economy from outside disturbances such as war, or depression. The Social Credit movement was one example, and more successful systems were used in Austria before the second world war.
Not surprisingly, the current economic climate has spawned several systems ranging from small, informal self help networks to the hundreds of commercial “barter” networks now operating throughout the US, and increasingly elsewhere.
The growth of these commercial networks is extraordinary. In 1991 they reported $5.9 billion trading among 240,000 clients, in 450 systems. Two years later estimated trading had almost doubled to $10 billion, at a time when the US economy as a whole was standing still. This growth has occurred despite the high costs of taking part.
At present the LETSystem -Local Exchange Trading System -is the most advanced form of local currency in circulation. The first LETSystem was developed in Canada’s Comox Valley, in 1983, where some people adapted the “barter” network model and turned it into a full scale community system with greater advantages, yet operating at a fraction of the cost.
This prototype was very successful, despite considerable antipathy and even active resistance from key elements in the local community, and about 20 similar systems sprang up across North America. By 1988 a combination of factors, principally research and development costs and fragile user confidence, caused trading in the Comox Valley system to decline virtually to a standstill.
While this created a general loss of confidence in N. America, LETSystems began to grow worldwide. Since 1987 some 70 LETSystems have been established in New Zealand and almost 200 in Australia. In Britain the number has rocketed from 7 systems in early 1991 to 150 by the end of 1993. All these systems are based on the original prototype in Comox Valley whichs recently resumed trading with improved computer software, administration and more ways of introducing and educating people about LETSystems.
For a local currency to work people need to be able to use it alongside conventional money, and its design should resolve around the three fundamental problems of that money. A local currency should ideally stay within the community it serves, be issued by the people who use it, and exist in sufficient supply to meet the needs of that community.
The LETSystem meets these criteria. It is also friendly, convenient, cost effective, simple and secure. It works much like a bank or a building society. Everyone has an account, but instead of money transferring from one bank to another, all exchanges are within a single system.
Personal Money – Each new account starts at zero and thereafter may hold a positive or a negative balance. Those with negative balances have, quite simply, created the money which is in the positive accounts. So this local money is essentially a promise by some members of the community to give service to others.
Money like this, which you issue yourself, is personal money. Conventional money, while easy to spend, is hard to earn. As a result it is coercive by nature – people with money exercise power over people without it. Who pays the piper calls the tune.
In a personal network , however, money is easy to earn. Everyone has money to spend. By the same token, nobody needs it, so things only happen when people want them to. People serve willingly, or not at all. Nobody can tell anyone else what to do. We are acknowledged for what we give to others. Acknowledgement in the local money has value because that money is actually the commitment of people in the community, to the community.
(Landsman Community Services Ltd Paper No. 1.1 Version No
17 August 94 Written by Michael Linton of Landsman Community Services Ltd. and Angus Soutar of Robert Soutar Ltd.Compiled 10-01-95 by Andy Blunt and Adrian Steele of LETSgo Manchester
“Pervading nationalism imposes its dominion on man today in many different forms, with an aggressiveness that spares no one. The challenge that is already with us, is the temptation to accept as true freedom, what in reality is only a new form of slavery.” – Pope John Paul II
True freedom. What is it? How can it be distinguished from what Pope John Paul characterized as, “a new form of slavery”? Fortunately, in another place, he pithily described authentic freedom:
“Freedom consists not in doing what we want, but in having the right to do what we ought.”
See how nationalism can interfere with true freedom? People are often asked to sacrifice part of their freedom for the ‘general welfare’ or the ‘greater good’. And nowhere in our society is this felt more than in commerce. Pope John Paul…
“The historical experience of socialist countries has sadly demonstrated that collectivism does not do away with alienation, but rather increases it, adding to it a lack of basic necessities and economic inefficiency.”
Now, many people will agree with the idea that America has adopted many socialist attributes. But most would disagree that, it is through our money that society exhibits its socialism most profoundly. Capitalism, they say, is the ruling paradigm.
But think about it. Money is our medium of exchange. It is the blood that flows in commerce, linking together without force (ideally) people and communities. It transports vital nutrients – wealth and commodities – throughout society, uniting communities with the common purpose of pursuing happiness.
In perhaps the cruelest irony of our time, in the Land of the Free, the world’s premier bastion of capitalism has unwittingly unleashed freedom on society in a most destructive capacity.
“When freedom does not have purpose, when it does not wish to know anything about the rule of law engraved in the hearts of men and women, when it does not listen to the voice of conscience, it turns against humanity and society.” – Pope John Paull II
Money and capitalism turn freedom on its head, when through these organs of commerce the State imposes collectivism on a free people.
How can this be? Very simply, it is through our money – our social blood – that the State operates and enforces its will in society. Fines, fees, and taxes of every sort pervade our lives, enforcing multitudes of statutes and regulations, all ostensibly for the good of society. Indeed, one is very hard pressed to find even a single activity in life, that is not regulated and enforced in some way through government and its revenue generating schemes.
What caused this? What mechanism in society transformed the Great Experiment (for so it was once called) into this kind of velveteen slavery, so antithetical to our roots? I say – and surely this will be stunning to some – it is usury that brought about this weird, twisted reality that is America.
Lending money at interest is the first order of the day in capitalism. Raising capital for industry and production puts labor to work. It is the wealth creation machine in the social body. It finances innovation, and raises standards of living all across the land. This all is made possible through our central banking system, the Federal Reserve.
But lending money at interest is akin to a dairyman watering down his milk for the market. Without going into much detail, the obvious consequence of watering down our money is, we get more volume – more money circulating in commerce – but its vital nutrient, wealth, is diluted. More wealth is not really created. Only the illusion of more wealth is created.
The second most notable order in capitalism is, the debt must be serviced. Making the interest payments on borrowed capital becomes ‘item 1’ in any responsible budget. People pledge property as collateral as security for their loans, and servicing the debt outweighs all other considerations, or one might suffer the loss of his collateral.
This natural consequence of debt, that of servicing it, necessarily brings about an unnatural and immoral course of action. People need things that aren’t easily quantified with money. Picking up a friend at the airport, or sharing vegetables from the garden with friends, things like this are lost in day to day commerce, because of the ever pressing need of servicing debt pervades society at every level.
Indeed, the social classes are formed by usury. It is by design that, when large sums of money are created by debt, a certain percentage of debt will never be repaid. People lose jobs and their homes are repossessed as a consequence of debt. Some people become extremely wealthy, while others become destitute and poor.
“Social justice cannot be created by violence. Violence kills what it intends to create.” – Pope John Paul II
Practically all of our law is designed to enforce contracts. For without the force of law, the blood (money) would not flow. All law is force. In our society, government has a monopoly on the use of force. And, in yet another cruel irony, it is charged with enforcing the peace through violence, which is focused almost exclusively on enforcing contracts.
Our homes, cars, jobs, education, health care, and practically everything else are held hostage to servicing debt. This has caused much evil in society, not the least of which the fracturing of families and communities.
I say, usury is an assault on society. We have allowed the unholy pursuit of profit at all cost to disrupt our lives, and transform the Land of the Free into the Land of the Debt Slave. But there is a better way, and it is within our power to make it happen.
I’ve been struggling to find an easy way of explaining LET systems, and I finally found it: YouTube
It’s about 8 minutes, and gives a great overview of a successful and thriving LET system in Asheville NC. Please tell me what you think.
People need to know this one, very important fact about the Federal Reserve: when Uncle Sam borrows from the Fed, it’s not like there’s a vault of money they go into, and cart out oodles and gobs of cash.
No, what happens is, an accounting entry is made, and upon the Fed’s issuing of the check, Presto! Debt is created.
Think about that for a moment. Many people realize this is how money enters the economy from the Fed. But most don’t realize one very important aspect: the Fed doesn’t risk anything. It has no skin in the game. And since it’s lending money that formerly did not exist, it is lending out a fiction!
If the Fed has no skin in the game – no assetts at risk – it is lending nothing. And if it’s lending nothing, that means the so-called debt is nothing. Further, if it’s a fictional debt, why the need to raise real taxes to repay it? In fact, what is the point of taxation at all?
Yesterday, I had a good conversation with an old friend, about getting a LET system started in the area. We discussed the vision, and broadly talked about what steps we’d need to take to get it off the ground.
I came away from our time feeling good, but daunted, as the concept solidified a bit in my mind. The project is enormous. Mentally, I set a goal of 1500 members, of which several hundred would be merchants. I realized though, our first contacts needed to be in accounting, law, and possibly banking.
We need to have a steering comittee capable of making good decisions on behalf of the community. Freedomworx is a community. Even as I write, this is dawning on me, right now.
I confess: while trying to put my vision together in words that others can understand, I’ve allowed two competing ideas in my mind to mix, but not blend. My vision – its end result – is clear in my mind, but the steps getting there are clouded. Like how government money and private money mix in an economy, but never blend, so have my ideas appeared in my vision.
Bitcoin and LETS are competing forms of money. After studying both currencies, and seeing the different advantages of both, I’ve been trying to merge the two into one workable system.
The temptation to edit and/or remove all mention of one or the other from this blog is great, if only to help eliminate the confusion about money and what I propose. But this blog is more about exploring how money is used in society, and how we can use it to improve people’s lives.
I realize that eliminating confusion is key to introducing any successful alternative currency to a community. People must thoroughly understand the system, whatever it is, before they embrace it and make it work. Therefore it’s imperitive to explore the nature of money.
In its basic state, money is nothing but information. It’s an idea; a concept shared among at least two people. It is not gold, or wheat, or anything tangible. Money is wealth that has been quantified; given a number. Money is the number – representing wealth – that is entered into an accounting ledger. But not all money entries in a ledger represent wealth.
People use different currencies in order to delineate the different kinds of money. Often, people think of currency as money. It is money, but it’s only one specie of money. For example, we use paper Dollars and digitized Dollars, but these are legal tender, a particular kind of money.
Money, capital, wealth – all these words have many different meanings, depending on the context where they are used. For the purpose of this discussion, money is capital is wealth. We create capital when we combine labor and property (which can be intangible, such as an invention) in production.
The imprtant thing to remember is, real capital is created by people. Without labor, there can be no capital. Real capital having real value is created by labor.
The United States has a central banking system called the Federal Reserve System. It issues Dollars. Dollars are the currency that allows accounting entries be made in order that business can commence. The Federal Reserve System does not create money, but merely nominates it in order that accounting entries can be made.
Dollars, Bitcoin, LETS – all are currencies representing capital. Yet each are fundamentally different from one another, because each rely on different modes of being created. Each occur in an economy under different sets of circumstances.
Bitcoin is a digital currency. It is distinguished from Dollars and LETS by its completely decentralized origin. It has value because people see its ability to store value. There is no centralized issuer.
It is comparable to gold, since it is based on a natural resource: mathematical algorithms that must be solved in order for a Bitcoin to be created. In fact, this process is called mining. People use computers to solve the algorithms, in much the same way that people mine the earth for gold.
Since creating Bitcoin takes real labor to produce, it is capital. And since people see its ability to store value, it has utility. Realizing this, people buy and sell Bitcoin as a commodity. Therefore it becomes subject to the law of supply and demand. Its value goes up and down, depending on how much is available, and how much people want it.
LETS – from Local Exchange Trading Systems – are units of value in a defined economy. LETS are issued by individuals. They exist in mutual credit associations. It is important to understand that LETS exist only within a defined group of people, and by agreement. LETS cannot be be used outside of the group that uses them.
In their most basic form, LETS are nothing more than accounting entries. It is possible to create a physical form of LETS, such as coins, paper, or digitized accounting entries, and use them in exactly the same way Dollars are used. The value they hold is decided among the members as the members transact business. They are “backed” by the community’s faith in the issuer – the individual.
There are many working examples of LETS at large in the world today. Here is one working in the US, with apparent success: http://www.ashevillelets.org/
A LETS requires a central exchange, similar to a bank. It provides the service of recording transactions as they are made among the members, keeping track of debits and credits as a neutral observer.
There is no ability to lend at interest, since its purpose is not for profit. Costs associated with performing its function can be captured in the form of fees or dues paid by members. It is nothing more than a central clearinghouse, where people can find information as to the number of debits and credits that are accruing or reducing.
This is the magic of LETS: Where economies are experiencing a lack of capital coming into a community, capital can be created by people who agree to transact business among themselves. This effectively erects a fence of sorts, that unleashes and keeps capital in the community, yet still allows new capital to enter from outside the community.
Globally, most national and local economies are experiencing a strong credit capital contraction, resulting in what has come to be known as The Great Recession. While the causes for this remain open for debate, the fact is there has been a shortage of capital coming into many communities, which in turn has depressed local economic activity across America.
Unemployment remains unacceptably high, and many people experience great difficulty in selling their houses. These facts are widely accepted. A fresh infusion of capital is needed to remedy this situation, and get the economic engine running again.
Now, capital (wealth) creation is a greatly misunderstood subject in our society. Many people don’t realize that wealth is actually created when people do business together. Or, they don’t recognize the mechanism whereby wealth is created: the profit motive.
When two people barter, a trade is made where both parties experience gain, or profit. Otherwise the trade wouldn’t occur.This is multiplied billions of times per day, everyday, across America, with every transaction that is made. This is wealth being created.
Since the vast majority of trades use Dollars, people generally don’t realize that they are in fact trading with one another. They are using Dollars as a medium of exchange to facilitate their trades.
As already mentioned, America is experiencing a capital shortage, caused by a number of factors. The federal government is attempting to alleviate this problem by borrowing and spending more money in the economy, but with limited success.
Federal borrowing and spending programs are causing Dollars to become devalued, which is causing food and energy prices to rise, resulting in what most people call inflation. This is putting consumers in what appears to be an unsolvable dilemma: the shortage of capital in their communities is depressing economic activity, while prices for food and energy continue to rise.
What is the solution? Capital infusion! Not printed currency backed by nothing, but real money. Money that people value because real work goes into creating it. Safe money, backed by real value, and not subject to inflation.
This is why an alternative currency must be introduced – to unlock the capital in every community that is otherwise unreachable, and turn it loose so people can increase their economic activity. Therefore, we arrive at the solution of Freedomworx, and offer the following:
Our mission is to strengthen communities through promoting charitable works, building solidarity among the members through free enterprise; and to improve the national and local economies by intelligent application of known wealth creating principles.”
By introducing an alternative currency we can accomplish these aims. Bitcoin runs alongside of, and is complimentary to Dollars. Using charitable works as an entry into the economy, and tapping into the natural good will that people have for others in their communities, Freedomworx will begin have positive impact on the economy.