What is a Dollar?

According to a monograph written by Edwin Vieira, Jr., even those who purport to print our money don’t really know what a dollar is.

"No statute defines - or ever has defined - the "one dollar" Federal Reserve Note “FRN” as the "dollar,” or even as a species of "dollar.” Moreover, the United States Code provides that FRNs "shall be redeemed in lawful money on demand at the Treasury Department of the United States…or at any Federal Reserve bank.” Thus, FRNs are not themselves "lawful money" - otherwise, they would not be "redeemable in lawful money.” And if FRNs are not even "lawful money,” it is inconceivable that they are somehow "dollars,” the very units in which all "United States money is expressed.”

People are confused on this point because of the insidious manner in which FRNs "evolved" - actually, degenerated is a more appropriate verb - from the late 1920s until today. FRNs of Series 1928 through Series 1950E carried the obligation "The United States of America will pay to the bearer on demand [some number of] dollars.” Prior to 1934, the notes carried the inscription "Redeemable in gold on demand at the United States Treasury, or in gold or lawful money at any Federal Reserve Bank.” After 1934, the notes carried the inscription "this note…is redeemable in lawful money at the United States Treasury, or at any Federal Reserve Bank" (post-1934). Starting with Series 1963, the words "will pay to the bearer on demand" no longer appear; and each FRN simply states a particular denomination in "dollars”."

People have written to both their representatives and the Treasury Department asking for a definition of what a “dollar” is. The replies reveal just how confused this situation has become. Being a man who considers his word his bond, I would have to say that the FRN is and remains a contract; whether or not the government chooses to admit this…they printed the things. At the top of the contract they proudly proclaim it to be a Federal Reserve Note. At the bottom they declare the value, as in the dollar bill as One Dollar. The value of goods or services the note may purchase has changed, albeit not for the better. However, if you hold a 1900 $20 gold piece, you can still purchase what that coin could buy when it was minted. For example, back in 1920, a $20 gold coin would pay for a good suit. You can still do that today…if you have a $20 gold coin. A 1920 silver dime would pay for a decent breakfast…you can see my point.

The situation with coinage is more complex, but equally (if not more) confusing. The United States Code provides for three different types of coinage denominated in "dollars": namely, base- metallic coinage, gold coinage, and silver coinage.

The base-metallic coinage consists of "a dollar coin,” weighing "8.1 grams,” "a half dollar coin,” weighing "11.34 grams"; "a quarter coin,” weighing "5.67 grams": and "a dime coin,” weighing "2.268 grams.” All of these coins are composed of copper and nickel. The weights of the dime, the quarter, and the half dollar are in the correct arithmetical proportions, the one to each of the others. But the "dollar" is disproportionately light (or the other coins disproportionately heavy). In this series of base metallic coins, then, the questions naturally arise: Is the "dollar" a cupro-nickel coin weighing "8.1 grams"? Or is it two cupro- nickel coins (or four or ten coins) collectively weighing 22.68 grams? Or is it both? Or is it neither, but something else altogether, to which the weights of these coins are irrelevant?

In regards to the silver dollar...back when we actually minted silver coins for everyday use, the dollar coin weighed .999 troy ounces of silver. I would say that particular coin is the closest to anything as far as actually being a dollar. The value was there, the trust was there and the value of that coin has not varied through the years. If you currently have a silver dollar of nominal numismatic value (not one of the rarities) you can still purchase roughly the same value of goods or services you could back when the coin was minted, as stated in the examples above. Now we do still mint “Liberty Dollars”, but they are minted as collectibles more so than money.

Similarly, the gold coinage consists of "a fifty dollar gold coin" that "weighs 33.931 grams, and contains one troy ounce of fine gold"; "a twenty-five dollar gold coin" that "contains one-half ounce of fine gold"; "a ten dollar gold coin" that "contains one fourth ounce of fine gold"; and "a five dollar gold coin" that "contains one tenth ounce of fine gold.” The "fifty dollar,” "twenty-five dollar,” and "five dollar" coins are in the correct arithmetical proportions each to the others. But the "ten dollar" coin is not. Therefore, is a "dollar" one-fiftieth or one-fortieth of an ounce of gold? It appears to be undecided.

Right now businesses are advertising to convince an unsophisticated public to trade in their gold jewelry for banknotes. The price of both gold and silver is skyrocketing. If the policies of the Obama administration continue unabated you will see the value of notes plummet and the value of silver and gold climb even higher.

The US Government has not upheld its part on a contract begun back when it first began printing monetary notes. We still trade the notes for goods and services, but the trust is no longer there, in fact, based on the current crisis, the lack of trust is completely justified. If we had an administration with the courage to place the U.S. back onto the gold standard, we would see the value of the dollar skyrocket, whether or not enough gold exists to do so is beside the point. Experts disagree on both sides of that issue. What would be important would be the willingness to actually declare a foundation and to keep a promise...something our government hasn’t been willing to do for nearly three quarters of a century.

This brings me to a loosely connected point. Hollywood has expressed in film the idea that Uncle Sam trusts its citizenry about as much as they trust him. The background stories in the movies The Rock and Men in Black are an example. There is no love lost in either direction, but the greatest violator is the government. The current and ongoing mess was caused primarily by the government fouling up yet again…and apparently those in power are satisfied with the status quo. If you will think back to the last Presidential campaign, the reaction of the GOP leadership over the possibility of Sarah Palin being a heartbeat from the Presidency is a very telling bit of evidence. In that they resembled the Democrat leadership. The idea of having someone in power willing to tell the truth and act on it was horrifying to the entrenched bureaucracy. If we are to ever regain our prosperity with some stability we need to begin being an honest, ethical nation. Being honest in our money would be a good start.