EndingtheFederalReserveFromtheBottomUp: ReintroducingCompetitiveCurrencybyStateAdherenceto ArticleI,Section10

WilliamGreene,Ph.D. VerityInstitute/MiamiChristianUniversity PresentedattheAustrianScholarsConference MisesInstitute,AuburnAL March13,2010

Electronic copy available at: http://ssrn.com/abstract=1570108

Sinceitsinception,theU.S.FederalReservesmonetarypolicieshaveledtoa declineofover95%inthepurchasingpoweroftheU.S.dollar.1Asaresult,there havebeenseveralattemptstocurtailoreliminatetheFederalReservespowers (e.g.,theeffortsofRep.LouisT.McFaddeninthe1930s;2theeffortsofRep.Wright Patmaninthe1970s;3theeffortsofRep.HenryGonzalezinthe1990s;4andthe effortsofRep.RonPaulsincethe1990s5).However,nonehaveprovensuccessfulto date,duemainlytotheconstraintsofstrongpoliticaloppositionatthenational level.Incontrasttothesetopdownattemptsatthenationallevel,thispaper proposesanalternativeapproachtoendingtheFederalReservesmonopolyon money:theConstitutionalTenderAct,abilltemplatethatcanbeintroducedin everystatelegislatureinthenation,returningeachofthemtoadherencetotheU.S. Constitution'slegaltenderprovisionsofArticleI,Section10.6 1Calculatedatusinflationcalculator.comonMarch1,2010,basedontheConsumer PriceIndexprovidedbytheU.S.BureauofLaborStatistics.CPIdatawaslast updatedbyBLSonFebruary19,2010,andcoversuptoJanuary2010. 2McFaddenintroducedamotionforimpeachmentoftheFederalReservesBoardof GovernorsonMay23,1933(HouseResolutionNo.158). 3PatmanintroducedseveralbillscallingforaGeneralAccountingOfficeauditofthe FederalReserveBoard,theFederalAdvisoryCouncil,theFederalOpenMarket CommitteeandFederalReservebanksandtheirbranchesinthe1970s,including HR7590(1975),whichgarnered21additionalcosponsors.However,the companionbillintheSenate(S.2509),introducedbySen.WilliamProxmireof Wisconsin,hadnocosponsorsatall. 4InJuly1991,GonzalezaskedtheFederalReserveBoardtosubmittoa congressionalauditofitsdiscountwindowlendingoperations,butwasrefused;in 1993,heagainvoicedhissupportforlegislationthatwouldaudittheFederal ReserveSystem(aswellasmakeitsmeetingstelevisedandopentothepublic,as wellasrequiringthePresidenttoappointitstwelvemembers). 5Forexample,hislatestbills,H.R.833(toendtheFederalReserve)andH.R.1207 (toaudittheFederalReserve). 6TherearevariousversionsofConstitutionalTenderActsbeingintroducedinthe severalStates.ThispaperfocusesonHB430inGeorgia.See http://www.ConstitutionalTender.com/. 1
Electronic copy available at: http://ssrn.com/abstract=1570108

Thisapproachwouldhaveagreaterlikelihoodofsuccessforanumberof reasons.First,itisdecentralized:ratherthanfacingconcertedpoliticalopposition atasingleFederallevel,itattackstheissueattheStatelevel,wherestrategiesand tacticscanbeadaptedtothetypesandamountofpoliticaloppositionthey encounter.Second,itisdiffused:itcanbeattemptedinanynumberofStates,which cancausetheoppositiontospreaditsresourcesmuchmorethinlythanwouldbe necessaryattheFederallevel.Finally,itislegallysound:itreliesontheU.S. ConstitutionsnegativemandateinArticleI,Section10,thatNoStateshall...make anyThingbutgoldandsilverCoinaTenderinPaymentofDebts.7Therefore,in contrasttotopdownattemptstoendtheFed,abottomupapproachusing constitutionaltenderlawswillfindgreatersuccess. Overthecourseoftime,whenevertherehavebeenattemptstoend,oreven tomaintaingreateroversight,oftheFederalReserve,thoseeffortshavebeen stronglyrebuffed.OnJune10,1932,forexample,theformerChairmanoftheU.S. HouseCommitteeonBankingandCurrency,Rep.LouisT.McFaddenof Pennsylvania,gaveanextendedspeechontheFederalReserveSystem,callingit oneofthemostcorruptinstitutionstheworldhaseverknown,thathas impoverishedandruinedthepeopleoftheUnitedStates;hasbankrupteditself,and haspracticallybankruptedourGovernment.8Hecalledagainforanauditofthe FederalReserveBoardandtheFederalreservebanks,9butwasridiculedand 8CongressionalRecord,June10,1932,pp.12595 9Ibid.,p.12602.ThepreviousDecember,McFaddenhadintroducedaresolution askingforanexaminationandanauditoftheFederalReserveBoardandallthe Federalreservebanksandallrelatedmatters.ThefollowingMay,McFadden 2

dismissedbyRep.JamesG.StrongofKansas,whostatedthatMcFaddenmusthave someviolentformofabellyache.10 In1975,Rep.WrightPatmanofTexasintroducedabilltohavetheGeneral AccountingOfficeaudittheFederalReserve(HR7590).Whilethebillhad22co sponsorsandwasreportedouttotheHousefromtheCommitteeonBanking, CurrencyandHousing,itwasthenstuckintheRulesCommittee,whichwouldnot allowthebilltocometothefloorforafullvote.Patman,whowasconvincedthat thebilldidnotreceiveafairandimpartialhearingbeforetheRulesCommittee,11 filedadischargepetition(H.Res.746)tobringittothefloor;however,his resolutionreceivednocosponsors,andthebilldiedincommittee. InJuly1991,Rep.HenryGonzalezofTexas,theChairmanoftheHouse BankingCommittee,askedtheFederalReserveBoardtosubmittoacongressional auditofitsdiscountwindowlendingoperations,butwasrefused;12in1993,he againvoicedhissupportforlegislationthatwouldaudittheFederalReserveSystem (aswellasmakeitsOpenMarketCommitteemeetingstelevisedandopentothe public,aswellasrequiringthePresidenttoappointitstwelvebankgovernors insteadofthebankersthemselves).Thistime,notonlydidFederalReserve ChairmanAlanGreenspanresisthim,butPresidentBillClinton,whoclaimedthat suchamovewouldruntheriskofunderminingmarketconfidenceintheFed,also introducedhismotionforimpeachmentoftheFederalReservesBoardof Governors. 10Ibid.,p.12603. 11ThePanolaWatchman,Carthage,TX,October23,1975,p.A6. 12DebraCope,GonzalezasksforGAOauditofFedloans.AmericanBanker,July30, 1991. 3

rebuffedhim.Thereisageneralfeeling,Clintoninsisted,thatthesystemis functioningwellanddoesnotneedanoverhauljustnow.13 ThelatestCongressmantochallengetheauthorityandlegalityoftheFederal ReserveisRep.RonPaulofTexas,therankingminoritypartymemberoftheHouse MonetaryPolicySubcommittee.Rep.PaulhasintroducedH.R.833,toabolishthe BoardofGovernorsoftheFederalReserveSystemandtheFederalreservebanks, [and]torepealtheFederalReserveAct;however,therehavebeennocosponsors asofMarch2010.Ontheotherhand,Rep.PaulalsointroducedH.R.1207,the FederalReserveTransparencyAct,whichwouldgivegreaterauditingcapabilities oftheFederalReservetotheComptrollerGeneral;thisbillnowhas318co sponsors,or73%oftheMembersoftheHouse(itscompanionbillintheSenate,S. 604,has33totalcosponsors1/3ofthatbodysMembers).Sowithnearlythree fourthsoftheU.S.Housesupportingabill,undernormalcircumstancesthebill wouldbebroughttothefloorforastandalonevotebythefullHouse;however,the Democraticleadershiphaskeptthebillfrombeingvotedon,althoughtheywere unabletokeepitssupportersfromattachingitasanamendmenttoalarger financialreformpackage(H.R.4173)whichpassedinDecember2009.14Evenwith thatsuccess,thereisastrongpushtoamendthebillbystrippingouttheauditthe FedlanguageandinsteadexpandingtheFederalReservespoweroverbanks, lendingandmoney.15 13RobertM.Garsson,ClintonrefusestobackoverhauloftheFed.American Banker,Sept.27,1993. 14RonaldOrol,PanelvotestoaudittheFed;capitsspendingat$4trillion.Market Watch,November19,2009. 15SillaBrush,BankgroupscallforstrongerFedReserve.TheHill,March2,2010. 4

Eachofthesedifferenteffortsoverthelast80yearswhetherbyMcFadden, Patman,Gonzalez,Paul,orothershavehadtwofeaturesincommon:theyhaveall beentopdownantiFedeffortsatthenationallevel,andtheyhaveallbeen thwartedbyconcertedpoliticaloppositionatthatlevel.Accordingly,anewtacticis needed,whichcouldachievethedesiredgoalofabolishingtheFederalReserve systembyattackingitfromthebottomuppullingtherugoutfromunderit,by workingtomakeitsfunctionsirrelevantattheStateandlocallevel.Thatnewtactic isthepassageoftheConstitutionalTenderActinindividualStatesacrossthe country. TheConstitutionalTenderActisaproposedStatelaw,firstintroducedin 2009asHB430intheGeorgiaHouseofRepresentatives,16whichreappliestheU.S. ConstitutionsnegativemandateinArticleI,Section10,thatNoStateshallmake anyThingbutgoldandsilverCoinaTenderinPaymentofDebts.UnderthisAct, theStatewouldberequiredtoonlyusegoldandsilvercoins(ortheirequivalents, suchaschecksorelectronictransfers)forpaymentsofanydebtowedbyortothe State(e.g.,taxes,fees,contractpayments,etc.).Allcontracts,taxbills,etc.wouldbe requiredtobedenominatedinlegaltendergoldandsilverU.S.coins,includingGold Eagles,SilverEagles,andpre196590%silvercoins.AllStatecharteredbanks,as wellasanyotherbankthatisadepositoryforStatefunds,wouldberequiredto offeraccountsdenominatedinthosetypesofgoldandsilvercoins,andtokeepsuch accountssegregatedfromothertypesofaccountssuchasFederalReserveNotes. 16JoeRauch,Georgianscouldpayfuturestatetaxesingold.AtlantaBusiness Chronicle,March6,2009. 5

Upongoingintoeffect,theConstitutionalTenderActwouldintroduce

currencycompetitionwithFederalReserveNotes,byoutlawingtheirusein transactionswiththeState.OrdinarycitizensoftheState,beingrequiredtopay theirStatetaxesingoldandsilvercoins,wouldfinditnecessarytoopenbank accountsinthosedenominations.BusinessesoperatingwithintheState,being requiredtopaytheirStatesalestaxesandlicensefeesingoldandsilvercoins, wouldneedtodothesame;andinordertoacquiresuchcoins,theywouldbeginto offertheirgoodsandservicesindualcurrencydenominations,wherecustomers couldchoosetopayinFederalReserveNotes(whichwouldstillbenecessarytopay Federalfeesandtaxes)orgoldandsilvercoins(includingchecksanddebitcards basedonbankaccountsdenominatedinsuchcoins).Customers,havingfoundthe needtoopensuchaccountsinordertodealwiththeState,wouldbeabletoengage incommerceusingthoseaccounts. Overtime,asresidentsoftheStateusebothFederalReserveNotesandsilver andgoldcoins,thefactthatthecoinsholdtheirvaluemorethanFederalReserve NotesdowillleadtoareverseGreshamsLaweffect,17wheregoodmoney(gold andsilvercoins)willdriveoutbadmoney(FederalReserveNotes).Asthis happens,acascadeofeventscanbegintooccur,includingtheflowofrealwealth towardtheStatestreasury,aninfluxofbankingbusinessfromoutsideoftheState (ascitizensresidinginotherStatescarryouttheirdesiretobankwithsound 17Greshamslawisstatedas,Wherelegaltenderlawsexist,badmoneydrivesout goodmoney.Areverseofthiswouldbe,Intheabsenceoflegaltenderlaws,when peoplearegiventhefreechoicebetweenacceptinggoodmoneyoracceptingbad money,badmoneybecomeslesspopularthangoodmoney,andisdrivenoutofthe marketplace. 6

money),andaneventualoutcryagainsttheuseofFederalReserveNotesforany transactions.Atthatpoint,theFederalReservesystemwillhavebecomeunwanted andirrelevant,andcanbeeasilyabolishedbythepeopleselectedRepresentatives inWashington,D.C. BecausetheConstitutionalTenderActplanisdecentralizedintotheStates, ratherthanfocusedatthefederallevel,attemptsatconcertedpoliticalaction againsteverybillintroducedwillbemuchmoredifficulttoachieve.Sucha decentralizedapproachallowsstrategiesandtacticstobeadaptedtothetypesand amountofpoliticaloppositiontheyencounterineachState,givingamuchgreater chanceofsuccessagainstsuchopposition.Forexample,oneStatemayfacestrong oppositionfromaregionalFederalReservebank,whichitcanthenwardoffby focusingontheConstitutionalrequirementthattheStatenotuseaThinglike FederalReserveNotesasatenderinpaymentofdebtstoandbytheState.Another Statemaymeetoppositionfromthebankinglobbies,whichitcanneutralizeby highlightingthehighrateofbankfailures,andthebankingindustryssubsequent needfornewwaysofbringinginbusiness,customers,andmoney.18 InmuchthesamewaythattheConstitutionalTenderActplanisableto counterconcertedpoliticaloppositionfrommanyfactions,whichfederallevel 18Forexample,inGeorgia,morethanthreeoutoffivebankswereunprofitablein 2009,overtwicethenationalaverage.IfbanksinGeorgiaaredirectedtoallowtheir customerstoestablishgoldandsilveraccounts,therecouldbealargeinfluxof customersnotonlyfromacrossGeorgia,butfromacrossthenation;thiswouldbe theGeorgiabankingindustry'sbestopportunitytoattracttherecordbreakinglegal tendersilverandgoldcoinbusiness,nowatover30millionSilverEaglesandnearly 2millionGoldEaglesperyear.Thatwouldbeanincreasedreserveofover$2.2 billioninvalueinGeorgia'sbanks,aspresentlynootherstateisofferingthisservice initsbanks. 7

approachesarenotduetotheireasilytargetedcentrallocation,itisalsoableto counterconcentratedpoliticalopposition,asitforcestheoppositiontospreadits resourcesmuchmorethinly,becauseitisbeingattemptedinanynumberofStates. Aswehaveseenovernearlyacenturystime,supportersoftheFederalReserve systemareabletoconcentratealloftheirresourcesatanyonetimeagainstany challengetoitsexistenceandautonomy.ThelatestexampleofthisistheFederal Reserveshiringofaveteranlobbyist(formerEnronlobbyist,LindaRobertson)to counterskepticisminCongressaboutthecentralbanksgrowingpoweroverthe U.S.financialsystem.19Suchhighpoweredandcostlylobbyingresourcesare mucheasiertoapplyatasinglefederallevel;asagreaternumberofStates introducetheConstitutionalTenderAct,thoseresourceswouldbespreadthin,and theoppositionwouldbemorelikelytorelyonlocallobbyingassociationsand organizationsoverwhomtheyhavelesscontrol,andwithwhomtheyhaveless coordinationofefforts. Finally,besidesthevariouslegislativeattemptstoabolishtheFederal Reserve,oneofthemainargumentsmadeagainstitsexistenceisthequestionofits Constitutionalityspecifically,thelackofCongressionalauthoritytodelegateits enumeratedpowerinArticleI,Section8(TheCongressshallhavePowerTocoin Money,regulatetheValuethereof)toaprivatebankingcartelsuchastheFederal Reserve.20Unfortunately,moderncourtshaveconsistentlyruledinfavorofthe 19RobertSchmidt,FedIntendstoHireLobbyistinCampaigntoButtressItsImage. BloombergNews,June5,2009. 20See,forexample,MichaelS.Rozeff,TheFEDsUnsoundTheories(February8, 2009:LewRockwell.com):Itisnotwithintheenumeratedpowersofthe ConstitutiontoestablishacentralbankwiththeFEDspowers,noristheFED 8

Fedsconstitutionality,21restingontheprecedentofearlierdecisionssuchas McCullochv.Maryland,wheretheCourtruledthatCongresshadthepowerto establishanationalbankandissuepapermoney.22Sofar,therehasnotbeena successfulchallengetothesedecisions. TheConstitutionalTenderAct,ontheotherhand,doesntrelyonclaimsof unconstitutionalityoftheFederalReserve;infact,itavoidsthefederalquestion altogether.Instead,itreliesontheU.S.ConstitutionsnegativemandateinArticleI, Section10,forbiddinganyStatefromusing(makingatender)anythingbutgoldand silvercoinstopay,orreceivepaymentfor,anydebt(anyamountowedtoorbythe State).Thisisanapproachthathasneverbeenbroughttocourt,eventhoughthe languageoftheConstitutionisclearanddirect:NoStateshall.Infact,everyState doesusesomeotherThingthangoldandsilvercoinsastender:namely,Federal ReserveNotes,forwhichthereisnolongeranyclaimmadethattheycanevenbe redeemedingoldorsilver.23UnderthisAct,notonlywouldtheuseofFRNsbythe Statebemadeillegal;theuseoflegaltenderU.S.goldandsilvercoinswouldbe encouragedamongstthegeneralpopulationaswell,alongwithanyothercurrency thatpartiesmutuallyconsenttousing:
50373:Pre1965silvercoins,silvereagles,andgoldeaglesshallbetheexclusivemedium whichthestateshallusetomakeanypaymentswhatsoevertoanypersonorentity,whether

necessaryandpropertoachieveanyofitslistedpowersitdoesnotallow governmenttodoanythingotherthancoinmoney,whichtheFEDdoesnotdo. 21FirstNationalBankvFellows,244US416(1917). 22UpheldinOsbornv.BankoftheUnitedStates,22U.S.738(1824). 23Infact,thedirectissuanceofnotesforgoldwasprohibitedbytheFederalReserve Actasoriginallypassed;seeRayB.Westerfield,MethodsofRedemptionand Retirement.BankingPrinciplesandPractice(1921:RonaldPressCompany). 9

privateorgovernmental.Suchcoinsshallbetheexclusivemediumwhichthestateshall acceptfromanypersonorentityaspaymentofanyobligationtothestateincluding,without limitation,thepaymentoftaxes;provided,however,thatsuchcoinsandotherformsof currencymaybeusedinallothertransactionswithinthestateuponmutualconsentofthe partiesofanysuchtransaction.

Thishasthreeimmediateeffects:theeliminationofFederalReserveNotes fromStatetransactions;therequirementofindividualsandbusinessestocease usingFRNsintheirtransactionswiththeState;andtheintroductionofcompetition incurrenciesamongstthegeneralpopulation.Withallthreeeffectsworkingin tandem,theuseoflowvaluepiecesofpaperissuedbytheFederalReservewill becomeirrelevant,andanemaciatedFederalReservesystemcanbebroughttoa welcome,ifinglorious,end. Inconclusion,ashasbeendemonstratedhere,incontrasttotopdown attemptstoendtheFedwhichallowforconcertedandconcentratedpolitical oppositionatthenationallevel,abottomupapproachusingconstitutional tenderlawswillfindgreatersuccessduetoitsdecentralizednature,itsdiffusionto multipleStates,anditssoundlegalbasis.

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WORKSCITED CongressionalRecord,June10,1932,pp.12595 ThePanolaWatchman,Carthage,TX,October23,1975,p.A6. Brush,Silla,BankgroupscallforstrongerFedReserve.TheHill,March2,

2010.

Cope,Debra,GonzalezasksforGAOauditofFedloans.AmericanBanker, July30,1991. Garsson,RobertM.,ClintonrefusestobackoverhauloftheFed.American Banker,Sept.27,1993. Rauch,Joe,Georgianscouldpayfuturestatetaxesingold.AtlantaBusiness Chronicle,March6,2009. Rozeff,MichaelS.,TheFEDsUnsoundTheories(February8,2009: LewRockwell.com) Schmidt,Robert,FedIntendstoHireLobbyistinCampaigntoButtressIts Image.BloombergNews,June5,2009. Westerfield,RayB.,MethodsofRedemptionandRetirement.Banking PrinciplesandPractice(1921:RonaldPressCompany).

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HB430: ABILLTOBEENTITLED ANACT 1ToamendTitle7oftheOfficialCodeofGeorgiaAnnotated,relatingtobankingandfinance, 2soasprovideashorttitle;toprovidelegislativefindings;todefinecertainterms;torequire 3anybankorlendinginstitutionservingasadepositoryforthestateoranydepartmentor 4agencyofthestatetoofferandtoacceptgoldandsilvercoinfordeposit;toamendTitle50 5oftheOfficialCodeofGeorgiaAnnotated,relatingtostategovernment,soastoprovide 6legislativefindings;todefinecertainterms;torequiretheexclusiveuseofgoldandsilver 7coinastenderinpaymentofdebtsbyortothestate;toprovideforrelatedmatters;toprovide 8aneffectivedate;torepealconflictinglaws;andforotherpurposes. 9BEITENACTEDBYTHEGENERALASSEMBLYOFGEORGIA: 10SECTION1. 11ThisActshallbeknownandmaybecitedasthe"ConstitutionalTenderAct." 12SECTION2. 13Title7oftheOfficialCodeofGeorgiaAnnotated,relatingtobankingandfinance,is 14amendedbyaddinganewchaptertoreadasfollows: 15"CHAPTER9 16791. 17TheGeneralAssemblyfindsanddeclaresthatsound,constitutionallybasedmoneyis 18essentialtothelivelihoodofthepeopleofthisstate,tothestabilityandgrowthofthe 19economyofthisstateandregion,andvitallyaffectsthepublicinterest.TheGeneral 20AssemblyfurtherfindsthatArticleI,Section10oftheUnitedStatesConstitutionprovides 21thatnostateshallmakeanythingbutgoldandsilvercoinatenderinpaymentofdebts. 22792. 23Asusedinthischapter,theterm: 24(1)'FederalReserveAccountingUnitDollaraccounts'meansaccountsbasedonlegal 25tenderfederalreservenotescreatedby12U.S.C.Section3,SubchapterXII.

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26(2)'Goldeagleaccounts'meansaccountsbasedonlegaltenderoneounce,onehalf 27ounce,andonetenthouncegoldcoinsmintedbytheUnitedStatesMintsince1986 28pursuantto31U.S.C.Section5112(a)(7)through(a)(10)and31U.S.C.Section5112(h). 29(3)'Pre1965silveraccounts'meansaccountsbasedonlegaltendersilvercoinsminted 30bytheUnitedStatesMintpriortotheCoinageActof1965(Pub.L.89,81,79Stat.254), 31havinga90percentsilvercompositionandcontainingwhenmintedapproximately 320.7234troyouncesofsilverperdollaroffacevalue. 33(4)'Silvereagleaccounts'meansaccountsbasedonlegaltenderoneouncesilvercoins 34mintedbytheUnitedStatesMintsince1986pursuantto31U.S.C.Section5112(e)and 3531U.S.C.Section5112(h). 36793. 37Banksandlendinginstitutionscharteredbythestatepursuanttothistitle,andanybankor 38lendinginstitutionservingasadepositoryforthestateoranydepartmentoragencyofthe 39state,shalloffergoldandsilvercoinsmintedbytheUnitedStatesto,andshallacceptthem 40fordepositfrom,thestateandothercustomers. 41794. 42(a)BanksandlendinginstitutionsdesignatedinCodeSection793shallofferaccounts 43denominatedin: 44(1)FederalReserveAccountingUnitDollaraccounts; 45(2)Pre1965silveraccounts; 46(3)Silvereagleaccounts;and 47(4)Goldeagleaccounts. 48(b)Accountsestablishedasprovidedinsubsection(a)ofthisCodesectionshallbe 49segregatedfromallothertypesofcurrency.Withdrawalsshallbemadeinthesame 50currencyasdeposits;provided,however,thatnothinginthisCodesectionshallpreventthe 51conversionfromoneformofcurrencytoanotherformofcurrency." 52SECTION3. 53Title50oftheOfficialCodeofGeorgiaAnnotated,relatingtostategovernment,isamended

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54byaddinganewchaptertoreadasfollows: 3 55"CHAPTER37 5650371. 57TheGeneralAssemblyfindsthat,asmandatedbyArticleI,Section10oftheUnitedStates 58Constitution,thestateshallnotmakeanythingbutgoldandsilvercoinsastenderin 59paymentofdebts.FederalReserveAccountingUnitDollars,havingnoredeemingvalue 60ingoldorsilvercoin,shallnotbemadeatenderinpaymentofdebtsbythestate. 6150372. 62Asusedinthischapter,theterm: 63(1)'FederalReserveAccountingUnitDollaraccounts'meansaccountsbasedonlegal 64tenderfederalreservenotescreatedby12U.S.C.Section3,SubchapterXII. 65(2)'Goldeagleaccounts'meansaccountsbasedonlegaltenderoneounce,onehalf 66ounce,andonetenthouncegoldcoinsmintedbytheUnitedStatesMintsince1986 67pursuantto31U.S.C.Section5112(a)(7)through(a)(10)and31U.S.C.Section5112(h). 68(3)'Pre1965silveraccounts'meansaccountsbasedonlegaltendersilvercoinsminted 69bytheUnitedStatesMintpriortotheCoinageActof1965(Pub.L.89,81,79Stat.254), 70havinga90percentsilvercompositionandcontainingwhenmintedapproximately 710.7234troyouncesofsilverperdollaroffacevalue. 72(4)'Silvereagleaccounts'meansaccountsbasedonlegaltenderoneouncesilvercoins 73mintedbytheUnitedStatesMintsince1986pursuantto31U.S.C.Section5112(e)and 7431U.S.C.Section5112(h). 7550373. 76Pre1965silvercoins,silvereagles,andgoldeaglesshallbetheexclusivemediumwhich 77thestateshallusetomakeanypaymentswhatsoevertoanypersonorentity,whether 78privateorgovernmental.Suchcoinsshallbetheexclusivemediumwhichthestateshall 79acceptfromanypersonorentityaspaymentofanyobligationtothestateincluding, 80withoutlimitation,thepaymentoftaxes;provided,however,thatsuchcoinsandother

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81formsofcurrencymaybeusedinallothertransactionswithinthestateuponmutual 82consentofthepartiesofanysuchtransaction. 8350374. 84UponthedateofeffectivenessofthisAct,allobligationsownedbyandtothestateshall 85beconvertedfromdenominationinFederalReserveAccountingUnitDollarsto 86denominationingoldandsilvercoinspursuanttoSection50373.Onthedateof 87conversionfromtheusebythestateofFederalReserveAccountingUnitDollarstoitsuse 88ofgoldandsilvercoins,theconversionvalueofeachcoinusedaspaymentofobligations 89byandtothestateshallnotbedeterminedbythenominalfacevalueofeachcoinitself,but 90shallbedeterminedasfollows: 91(1)Thecurrentmarketvalueofthesilverorgoldcontentofeachcoinatthattimeof 92conversionshallbeequaltothemostrecentconversionvaluetotheUnitedStatesdollar 93setonthatcurrentbusinessdaybytheLondonSilverFixingPriceandtheLondonGold 94FixingPriceasof1030GreenwichMeanTimeor1500GreenwichMeanTime, 95whicheverismostrecent; 96(2)Theconversionvalueofgoldeaglesshallbeequaltothecurrentmarketvaluein 97FederalReserveAccountingUnitDollarsofthegoldcontentofeachcoinplusthe 98standardUnitedStatesMintAuthorizedPurchaserspremiumforgoldeaglebullioncoins 99asfollows: 100(A)Threepercentpremiumforoneouncecoins; 101(B)Fivepercentpremiumforonehalfouncecoins; 102(C)Sevenpercentpremiumforonequarterouncecoins;and 103(D)Ninepercentpremiumforonetenthouncecoins; 104(3)Theconversionvalueofpre1965silvercoinsshallbeequaltothecurrentmarket 105valueinFederalReserveAccountingUnitDollarsofonetroyounceofsilver,multiplied 106times0.715ofthefacevalueofeachcoin;and 107(4)Theconversionvalueofsilvereaglesshallbeequaltothecurrentmarketvaluein 108FederalReserveAccountingUnitDollarsofthesilvercontentofeachcoinplusthe

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109standardUnitedStatesMintAuthorizedPurchaserspremiumforsilvereaglebullion 110coinsof$1.50percoin. 11150375. 112ThecoinsusedpursuanttoCodeSection50373shallbeacceptedfordepositbybanks 113andlendinginstitutionscharteredbythestateunderTitle7andbyanybankorlending 114institutionservingasadepositoryforthestateoranydepartmentoragencyofthestate. 115Anysuchbankorlendinginstitutionmayoffersuchcoinsto,andacceptthemfordeposit 116from,othercustomers.NothinginGeorgialawshallprohibitbanksandlending 117institutionsfromofferingaccountsasdescribedinCodeSection794priortotheeffective 118dateofthischapter. 11950376. 120Checksorelectronictransfersorpaymentsdrawnonpre1965silveraccounts,silvereagle 121accounts,andgoldeagleaccountsassuchaccountsaredefinedinCodeSection792and 122inaccordancewithCodeSection794shallbedeemedtosatisfytheUnitedStates 123Constitution'srequirementthatpaymentofobligationsbythestatebemadeonlyingold 124orsilvercoinandshallbedeemedtosatisfytherequirementofCodeSection50373for 125paymentofobligationsowedtothestate." 126SECTION4. 127ThisActshallbecomeeffectiveonJuly1,2011. 128SECTION5. 129AlllawsandpartsoflawsinconflictwiththisActarerepealed.

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