O'Neil's request for gold denied

Longtime Republican legislator Jerry O’Neil says he was mostly trying to make a point when he requested he be paid for his work in Helena in gold and silver coins, but the Montana Legislative Services Division had to respond to his request and come up with an answer.

On Nov. 12, after being re-elected for a second term in the House District 3 election, O’Neil wrote to Legislative Services asking that he be paid in gold and silver American Eagle coins at their current market prices, which were $1,801 and $35.28 at the time.

O’Neil cited Article 1 Section 10 of the U.S. Constitution that says “no state may make anything but gold and silver coin a tender in payment of debts.”

“Over the 10 years that I have previously served in the legislature, I have considered this a trivial matter,” he wrote. “Today I am looking at this issue in a new light.”

Citing the nation’s $16 trillion debt, O’Neil said he was concerned “the bottom will fall out from under the U.S. dollar” and the “Keynesian era of financing government with debt” appeared to be coming to a close.

“If and when that happens, how can we in the Montana Legislature protect our constituents?” he asked. “The only answer I can come up with is to honor my oath to the U.S. Constitution and request that your debt to me be paid in gold and silver coins that will still have value when the U.S. dollar is reduced to junk status.”

O’Neil said last week that legislators get about $85 a day while serving in Helena, which amounts to about $7,650 for 90 days service every two years. He also said he didn’t realistically expect to receive gold and silver coins from the state, but to show that he’s serious about the issue, he said he would try to put his legislative pay in an account backed by precious metals.

He also said he received a lot of phone calls and e-mails commenting on his request — about half positive and half negative.

“Some think I’m wonderful, and some think I’m not good enough to mop the floor with,” he said, providing one example.

“Thanks for your example,” Ryan Karren of Miles City e-mailed O’Neil. “I wish we had more leaders that understood things as you do.”

On Nov. 14, legislative staff attorney Jared Coles provided Legislative Services executive director Susan Fox with his analysis of O’Neil’s request. First, Coles noted, O’Neil only cited one of two sections in the U.S. Constitution that deals with how government regulates money.

Article 1 Section 8 says that “Congress shall have power ... to coin money, regulate the value thereof.” Coles also cited the U.S. Supreme Court’s interpretation of this section in Norman v. Baltimore & O.R. Co., which said “the Constitution ‘was designed to provide the same currency, having uniform legal value in all the States,’” and that “the States cannot declare what shall be money, or regulate its value.”

Coles concluded that the U.S. Constitution does not require state governments to pay their debts in gold or silver. Furthermore, he said, state law does not grant that authority to the State Treasurer. Legislative Services denied O’Neil’s request.

Returning the U.S. to a gold or silver-backed economy has long been a political issue. Republican Presidential candidate Ron Paul has told followers that “only gold and silver are legal tender.” Opponents to the idea note that there isn’t enough gold and silver in the world to efficiently run the global economy.

The history of “legal tender” in the U.S. is long and complicated. In addition to numerous court cases, coinage acts were passed in 1792, 1834, 1849, 1857, 1864, 1873 and 1965, mostly in response to wide swings in the availability and value of gold or silver, particularly during the Civil War when the first “greenbacks” were issued by the federal government to finance its armies. The 1965 act made all U.S. coins and currency and certain bank issues legal tender.