What Power Does Congress Have Over Money?

The Constitution gives Congress the power over the currency of the United States including the power to coin money and regulate its value. Congress also has the power to charter banks to circulate money. The converse power of the creation of currency is to regulate any and all counterfeit currency.

Coining Currency

Article I, Section 8, Clause 5:

United States Library of Congress, The Constitution of the United States of America: Analysis and Interpretation

[The Congress shall have Power . . . ] To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures; . . .

The power "to coin money" and "regulate the value thereof" has been broadly construed to authorize regulation of every phase of the subject of currency. Congress may charter banks and endow them with the right to issue circulating notes,¹ and it may restrain the circulation of notes not issued under its own authority.² To this end it may impose a prohibitive tax upon the circulation of the notes of state banks³ or of municipal corporations.⁴ It may require the surrender of gold coin and of gold certificates in exchange for other currency not redeemable in gold. A plaintiff who sought payment for the gold coin and certificates thus surrendered in an amount measured by the higher market value of gold was denied recovery on the ground that he had not proved that he would suffer any actual loss by being compelled to accept an equivalent amount of other currency.⁵ Inasmuch as "every contract for the payment of money, simply, is necessarily subject to the constitutional power of the government over the currency, whatever that power may be, and the obligation of the parties is, therefore, assumed with reference to that power,"⁶ the Supreme Court sustained the power of Congress to make Treasury notes legal tender in satisfaction of antecedent debts,⁷ and, many years later, to abrogate the clauses in private contracts calling for payment in gold coin, even though such contracts were executed before the legislation was passed.⁸ The power to coin money also imports authority to maintain such coinage as a medium of exchange at home, and to forbid its diversion to other uses by defacement, melting or exportation.⁹

Counterfeiting Power

Article I, 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; . . .

In its affirmative aspect, this clause has been given a narrow interpretation; it has been held not to cover the circulation of counterfeit coin or the possession of equipment susceptible of use for making counterfeit coin.¹⁰ At the same time, the Supreme Court has rebuffed attempts to read into this provision a limitation upon either the power of the States or upon the powers of Congress under the preceding clause. It has ruled that a state may punish the issuance of forged coins.¹¹ On the ground that the power of Congress to coin money imports "the correspondent and necessary power and obligation to protect and to preserve in its purity this constitutional currency for the benefit of the nation,"¹² it has sustained federal statutes penalizing the importation or circulation of counterfeit coin,¹³ or the willing and conscious possession of dies in the likeness of those used for making coins of the United States.¹⁴ In short, the above clause is entirely superfluous. Congress would have had the power it purports to confer under the Necessary and Proper Clause; and the same is the case with the other enumerated crimes it is authorized to punish. The enumeration was unnecessary and is not exclusive.¹⁵

Footnotes:

1. McCulloch v. Maryland, 17 U.S. (4 Wheat.) 316 (1819).
2. Veazie Bank v. Fenno, 75 U.S. (8 Wall.) 533 (1869).
3. 75 U.S. at 548.
4. National Bank v. United States, 101 U.S. 1 (1880).
5. Nortz v. United States, 249 U.S. 317 (1935).
6. Legal Tender Cases (Knox v. Lee), 79 U.S. (12 Wall.) 457, 549 (1871); Juilliard v. Greenman, 110 U.S. 421, 449 (1884).
7. Legal Tender Cases (Knox v. Lee), 79 U.S. (12 Wall.) 457 (1871).
8. Norman v. Baltimore & Ohio R.R., 294 U.S. 240 (1935).
9. Ling Su Fan v. United States, 218 U.S. 302 (1910).
10. United States v. Marigold, 50 U.S. (9 How.) 560, 568 (1850).
11. Fox v. Ohio, 46 U.S. (5 How.) 410 (1847).
12. United States v. Marigold, 50 U.S. (9 How.) 560, 568 (1850).
13. Id.
14. Baender v. Barnett, 255 U.S. 224 (1921).
15. Legal Tender Cases (Knox v. Lee), 79 U.S. (12 Wall.) 457, 536 (1871).