The nation's first coinage Act

1 The Coinage Act of April 2, 1792 specified that nickels and pennies, our subsidiary or minor coins, were to contain no precious metals.

2 Because they contained no precious metals it would be an injustice to compel anyone to accept them in payment of large debts.

3 The Act therefore specified that pennies and nickels could be used in tenders of up to but not exceeding 25 cents.

4 This meant that if someone owed you $150, and if they tendered 15,000 pennies to you, you could refuse 14,975 of them without waiving your claim to payment, at law.

5 This special treatment given to subsidiary coinage by the courts gave rise to an informal but misleading use of the phrase "legal tender".

6 People began to say, “Pennies are legal-tender up to 25 cents; nickels are legal tender up to 25 cents.”

7 These sentences were easier to say and understand than saying, “The courts will compel acceptance of pennies in tenders of amounts up to but not exceeding 25 cents,” etc.

8 Although technically incorrect, this informal use of the two-word phrase legal tender became deeply rooted in the national consciousness.

9 This usage became the false premise upon which another technically incorrect colloquial use of the phrase legal tender would be based.

10 PAYMENT OF DEBTS

11 If, in 1800, a New York farmer sold to a neighbor a cow on credit, and if the amount owed was agree to be “ten-dollars”, the courts might have told the farmer that if he refused to accept a tender of ten officially-minted silver-dollar coins, instead of gold coins, the courts would hold that he thereby waived his claim for payment against the neighbor.

12 Perhaps the farmer had preferred to receive gold coins, but the courts determined that because the agreement did not expressly state that the debt was to be paid in gold coins, it would be an injustice to the neighbor to compel him to go to the trouble of meeting this special demand or preference of the farmer, the seller and creditor.

13 This kind of decision led to the public to say, “gold coins and silver coins are legal tender for any amount.”

14 Also, in the early 1800s, the courts had to contend with disputes about personal IOUs, Colony- or foreign-issued credit Notes, and foreign coin being used by debtors, to discharge obligations to creditors.

15 Routinely, the courts would hold that a tender of foreign coin would not be a legal tender for the payment of a debt incurred in the United States.

16 So the public began to say that foreign coins were not legal-tender.

17 The courts would sometimes be asked to determine the worth of a Note, to determine if an obligation had or had not been completely discharged, and thereby make sure that both parties received justice.

18 If a Massachusetts Colony Note, for example, had been used in a tender, and if the courts had determined that the creditor must accept this Note or waive his claim to payment, the public would colloquially describe Massachusetts Colony Notes as legal tender or legal tender Notes.

19 As court decisions were made about various media used in payments of debts or discharges of obligations, the public began to call each of those debts legal tender debts.

20 The courts, of course, would normally use more formal and more precise language, but in time, as colloquial uses of the phrase legal tender became widespread, even legal professionals began to use them.

21 But while legal professionals generally knew what the colloquialism actually meant in the precise language of the courts, the public began to develop a harmfully different understanding of the colloquialisms.

22 Another legitimate phrase," money of account", took on a colloquial form which, although acceptable for informal conversation, was even more harmfully inaccurate.

23 MONEY OF ACCOUNT

24 At the beginning of this nation’s history as the United States of America, the phrase money of account was used to define what the word dollar meant for accounting purposes.

25 In precise construction it was proper to say, “The unit of the money of account of the United States is the dollar.”

26 This phrase meant that the accounts kept by the United States government and by the governments of the several states would be denominated and organized in dollar units of weight of money.

27 The public and many professional people, however, began to say, “The dollar is the money of account of the United States.”

28 Again, while this colloquial usage was imprecise, even harmfully so, little harm seemed to be caused by its use in day-to-day conversations.

29 But as we’ve already seen, the colloquial expression, harmfully flawed as it was, became formalized and supposedly “the law” — in the public mind — through repetition.

30 By the 1900s, the public began to describe dollar-bills as dollars, and paper currency as paper money, or paper dollars.

31 Indeed, as proof of how inaccurate one can become in the use of colloquial expressions, even well-educated people began to use the word dollar as a synonym for money.

32 A dollar is NOT money.

33 In school, a student might hear a business-law professor correctly say, “The word dollar is the unit of weight of the money of account of the United States.

34 Several years later, a new professor might tell his students, “The dollar is the money of account of the United States.”

35 Today we might hear a professor tell his students, “Dollars are what money is in the United States.”

36 It’s no wonder that lay persons now say, “Dollars are money”, whern dollars are NOT money, dollars are a unite of weight.

37 This is in effect saying that units of weight are coins of precious metal, and that tons are sand — quarts are oil — and miles are railroad tracks.

38 As the next several decades passed, we the People began to lose sight of the correct concept behind the colloquial phrase legal-tender.

39 Through repetition from generation to generation, the original concept was forgotten and a new, incorrect concept was ascribed to it.

40 This false concept (embraced even by legal professionals) was deeply ingrained in the public mind by the time of the Civil War when President Abraham Lincoln issued paper currency to help pay for the War.

41 With public emotion riding high on war-issue news, dissent against the proposed paper emissions was smothered.

42 The nation got paper currency, colloquial expressions became “the law”, and our new “Ship of State” was launched.

43 May the grace of our Lord Jesus Christ be with you all. Amen.