[REDCLOUD]

One of the primary causes of the American Revolution were disagreements over taxation and money, more specifically, what constitutes money and what is the government's role in the creation and regulation of money. These issues were well addressed in the pre-revolutionary common-law, the Articles of Confederation, and the Constitution. This era is when the distinction between public debts and private debts was developed, the government's right to tax its citizens was set, and what constituted "Money." The Constitution contains seven major provisions dealing with the referring to money:

Article 1, Section 8, Clause 2. "The Congress shall have power to borrow money on the credit of the United States”;

Article 1, Section 8 , Clause 5. "The Congress shall have power to coin money, regulate the value thereof, and a foreign coin, and fix the standard of weights and measures”;

Article 1, Section 8, Clause 6. "The Congress shall have power to provide for the punishment of counterfeiting the securities and current coin of the United States”;

Article 1, Section 9, Clause 1. "The migration or importation of such persons as any of the states now existing shall think proper to admit, shall not be prohibited by the Congress prior to the year 1808, but a tax or duty may be imposed on such importation, not exceeding $10 for each person”;

Article 1, Section 9, Clause Seven. "No money shall be drawn from the treasury, but in consequence of appropriations made by law”;

Article 1, Section 10, Clause 1. "No State shall coin money; emit bills of credit; make anything but gold and silver coin a tender in payment of debts;

Amendment 7. In suits at common law, or the value in controversy shall exceed $20, the right of trial by jury shall be preserved.

In order to understand why these provisions are in the Constitution you need to relate back to Blackstone's commentaries which was the standard legal treaties among Americans. Blackstone elaborated five monetary principles of the common-law:

“First, the precious metals are most proper for money, the universal medium, or common standard. Second, the coin of the kingdom must consist of gold or silver of the true standard, in terms of weights and finance. (Or, under English common law prayer to 1776, the only true money was in the-based gold and silver coin) third, the common-law power to coin money by impression or stamping, and to fix the value or denomination thereof, was an executive or crown, not a parliamentary power. Fourth, to fix the value of domestic or foreign money meant to establish its intrinsic value by comparing the weight and the fineness of the precious metal and according with the true standard, which was known as Sterling metal. (Thus the origination of Pounds Sterling). This procedure precluded debasing or inhancing the value of the coin below or above the sterling value. (Specifically, from 1603 through 1816, England followed a bimetallic monetary policy, or by the law made no change in the silver coinage, but alter the weight and denomination the goal to secure concurrent circulation.) Fifth, common-law denied the executive any power to levy compulsive loans extorted without a real and voluntary consent by the people.

Although Blackstone did not discuss "bills of credit" as part of the money of England, in its continuing oversight of the American colonies Parliament dealt with the subject on several occasions from an early date, do a scarcity of coin in the colonies each colony claimed authority to declare as commodities of exchange such items as want them, corn, the Lutz, tobacco, pitch and tar, livestock, and country produce. He served as simple substitutes for money that the colonies and private creditors accepted at their market value in real money, as an accommodation to debtor strapped for gold and silver coins, sometimes, these commodity standings for silver and gold coin circulate in the form of warehouse receipts and exchanged title to varying amounts of the underlying goods, especially tobacco. During the 1700s, the colonies medium of exchange consisted of coins, crude commodity money substitutes such as tobacco, "book credit", and various types of paper currency. The unit of account for colonial money was the British pound although in 1766 Marilyn became the first call it issued currency denominated in Spanish silver dollars. But credit was credit merchants extended to other merchants, artisans, and farmers. In some areas, but credit may inform the largest part of the practical medium of exchange. The most commonly traded gold and silver coins came from Spanish and Portuguese colonies that were referred to as "dollars" or "pieces of eight". Those there was a mixed system of paper currency, commodity trading, and gold and silver coins. Gold and silver coins were referred to as money or "real money". Part and parcel to all of this was the inherent understanding of the Crown's ability to tax which was also considered a fundamental purpose of each colonial government, that is the right to tax. Colonial paper was generally known as "bills of credit", as distinguished from "money" proper, because the paper was only an instrument of debt ("credit") which promised to pay, or to be redeemed in, gold and silver coin (the real money). On December 10, 1690, Massachusetts admitted $7000 pounds and "indented (meaning official order)" bills of credit and "value equal to money" and "accordingly to be excepted in all public payments, but without a general legal tender character".

Apparently, this is the origin of paper money in the colonies and the general British Empire. (See . E. Channing, History of United States, 1908, page 500). Various following statutes empowered the Treasurer to apply such bills to pay for wages, grants, stipends, counties and premiums, and all other matters and things which the Legislature have or shall either by law orders provide for the payment of the public treasury. This is the root of the distinction between public debts and private debts.
The colonies developed two basic methods for omission of these bills. One was a governmental loan office or land Bank, which issued paper currency loans secured by mortgages on people's land. The land banks usually set interest on or loans below the free market rate. The other technique for generating bills of credit was to pay the bills into circulation for ongoing government or expenses not meant by current taxes, pledging future taxes to redeem the money, in effect monetizing expected public receipts. The currency might or might not be legal tender for private debts, was generally authorizes a medium for the payment of taxes, fees and other dues to the government. Because the currency could be used to pay taxes, the system could largely dispense with gold and silver coins as a medium of exchange between the colonial governments and their citizens. Corneal currency always constituted true bills of credit, rather than Fiat money, because the paper was back either by mortgages or by anticipated tax receipts. These taxes were of various kinds and specifically included what would today be considered income taxes derived from the buying and selling of goods. This principle of taxation was carried over into the Constitution as follows:
Article 1 Section 8 Says ,
“The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States”; In addition “ No Capitation, or other direct, Tax shall be laid, unless in proportion to the Census or Enumeration herein before directed to be taken’.

Article 1 Section 2 says, “Representatives and direct Taxes shall be apportioned among the several States which may be included within this Union, according to their respective Numbers, which shall be determined by adding to the whole Number of free Persons, including those bound to Service for a Term of Years, and excluding Indians not taxed, three fifths of all other Persons”.

Parliament did not like the practice of issuing bills of credit and beginning in 1720, colonial governors were instructed not to allow passage of laws authorizing omission of such bills of credit unless the statutes contained a suspending clause enabling the home government to nullify them. In 1741 Parliament issued another statute that said in part "all and every person in persons whatsoever, who shall be possessed of entitled to any promised note or notes, Bill or bills which shall have been issued in America, shall and are hereby empowered to commence an action or suit against any one or more of the persons who have been engaged in an inning such unlawful undertakings or who shall have signed such note or notes, bill or bills, in order to recover present payment in lawful money of the whole sum mentioned or expressed in such note or bill, to which payment every such person is hereby declared to be personally liable; and in such actions are suits, the plaintiff shall recover and have judgment for immediate payment by the defendant in lawful money, of the full sum mentioned in such note or bill".