This is the third post in a four-part article exploring the constitutionality of state-level Bitcoin legal tender laws — and the philosophical arguments against such laws.
This post was originally published April 20, 2023.
- Part I: Introduction and Summary of the Argument
- Part II: The Originalist Case for State-Level Bitcoin Legal Tender
- Part III: The Textualist Counter-Argument
- Part IV: Bitcoin’s Faustian Bargain
The Textualist Counter-Argument and Originalist Rebuttal
Part II of this article established the original meaning of Article I, Section 10’s prohibition that the the states may not “emit Bills of Credit,” or “make any Thing but gold and silver Coin a Tender in Payment of Debts.” This clause barred emission of paper fiat tender, but allowed states to adopt as legal tender the hardest forms of commodity money then in existence, gold and silver. This original meaning can be applied to the modern technological innovation of synthetic commodity money, the hardest form of which is Bitcoin.
This original meaning was established through a historical examination of legal tender laws in the Colonies and early Republic, as well as the Founders’ own writings and debates on money. "In their full context, words mean what they conveyed to reasonable people at the time they were written—with the understanding that general terms may embrace later technological innovations."1
But, a strict textualist might say, Article I, Section 10 uses specific terms that are not open ended: "any Thing but gold and silver Coin.” These narrow terms do not permit application to modern monetary technology.
What follows is the textualist counter-argument to the originalist interpretation offered in Part II, as well as an originalist rebuttal.
The Textualist Interpretation: Gold Means Gold
“Textualism” is “[t]he doctrine that the words of a governing text are of paramount concern and that what they fairly convey in their context is what the text means.”2
Context, however, means the document being interpreted, not the history behind the text or document. "Textualism, in its purest form, begins and ends with what the text says and fairly implies."3
The text of Article I, Section 10 says nothing about "commodity money” or the relative scarcity or hardness of money. To be sure, it bars emission of “bills of credit,” which was generally understood at the Founding to mean paper money.4
But it also broadly bars the states from adopting as tender “any Thing,” except specific types of “Coin”: “gold and silver.”
The term “any Thing” in the prohibitory clause is about as broad as it gets. It encompasses the universe of then-existing items that could be used as money. And because “any Thing” is a general term, it can “embrace later technological innovations,” not yet in existence at the time of the Founding.5 As discussed in Part II of this article, other types of commodity money apart from gold and silver had long existed in the Americas. The Founders would have been aware of innovations such as the tobacco notes in Maryland and Virginia, which extended the commodity’s salability across both time and space. They surely understood that the free market would continue to innovate and create new monetary “Things.” But they closed the window to state adoption of commodity money innovations, like tobacco notes, by prohibiting any such “Things.”
As for the term “Coin”, in the eighteenth century, it was most commonly understood to mean metallic tokens.6 And “gold and silver” further modify “Coin,” narrowing the definition to the types of specie in circulation within the colonies and early Republic.
Additionally, Article I, Section 10’s use of the phrase “gold and silver” implicates two canons of construction. First, the negative implication canon (known in latin as expressio unius est exclusio alterius) holds that the “expression of one thing implies exclusion of others."7 By specifying the types of “Coin” that states may adopt as tender, Article I, Section 10 impliedly excludes all other types of coins: copper, paper, cloth, or any other metallic or non-metallic (analog or digital) tokens.
Second, the surplusage canon directs that all words in a text should be given effect and not ignored.8 If coins other than gold and silver could be adopted by the states, then “gold and silver” would be mere surplusage. Thus, even if Bitcoin is considered a digital “Coin” within the term’s original meaning, an interpretation of Article I, Section 10 that includes Bitcoin as constitutional state tender must be rejected to preserve the efficacy of the phrase “gold and silver.”
At bottom, the “words [of the Constitution] are to be taken in their natural and obvious sense, and not in a sense unreasonably restricted or enlarged."9 Reading the phrase “gold and silver Coin” to encompass digital token money like Bitcoin unreasonably enlarges it beyond its plain meaning, i.e., that states could only adopt metallic coins made from gold and silver (the common circulating specie).
While seductive in it's simplicity, the strict textualist counter-argument does not account for the historical flexibility of the terms “coin” and “gold.”
Even "[a]dhering to the fair meaning of the text (the textualist's touchstone) does not limit one to the hyperliteral meaning of each word in the text."10
At the Founding, “coin” possessed non-metallic meanings. The phrase “coin” would have been understood by the Founders to mean a general “token,” as well as a specific circular piece of metal. For example, colonial land-banks “turned illiquid real-estate assets into, as Benjamin Franklin wrote, ‘Coined Land.’”11 This is a very abstract sense that modern observers might equate with digital tokenization of assets on a blockchain.
Almost anything could be “coined.” Paper (much to the Founders’ chagrin), and even “pasteboard.”12
Other Founding-era definitions of “coin” included “Payment of any kind,” and “all Manner of the several Stamps and Species in any Nation.”13
Thus, restricting “coin” in Article I, Section 10 to its metallic definition is a hyperliteral or overly narrow interpretation that does not reflect its usage at the time of the Founding. It was, in fact, a broad term.
Thus, any limitation on “coin” stems from the presence of the modifier “gold and silver.” But a hyperliteral reading of “gold and silver” should also be rejected. “Gold and silver” are not just shiny pet rocks.
As discussed in Part II, gold’s status as the preeminent money of the eighteenth century was not due to the fact that it was a precious metal. Rather, its value derived from its scarcity, high cost of production, high stock to flow ratio, and difficulty to fake. Platinum is also a precious metal, possessing many of the same elemental attributes as gold, but it will never be a monetary good because its stock to flow ratio is vastly lower.14 “Hard money” refers to scarcity and inflation rate, not the Mohs scale.
A reading of “gold and silver,” therefore, that focuses on their superior monetary qualities, rather than their basic elemental characteristics, does not unreasonably enlarge the natural and obvious sense of those words, in the context of Article I, Section 10’s list of monetary restrictions on the states.
Where “one word may take multiple meanings,” determining the appropriate sense “depends on context.”16 The contextual canon of noscitur a sociis, or “it is known by its associates,”17 “dictates that words grouped in a list should be given related meaning."18 The prohibition that states shall not “make any Thing but gold and silver Coin a Tender” is listed amongst other monetary prohibitions, thereby implying the monetary sense of gold and silver. The metallic sense is a hyperliteral interpretation that ignores the reason gold was permissible state tender in the first place.
At bottom, a textualist interpretation of Article I, Section 10 further supports a broad interpretation of “gold and silver Coin” as hard commodity money. This interpretation, far from treating “gold and silver” as surplusage, gives those terms the meaning that is most relevant to their context. That meaning applies to new monetary developments — so long as those new technologies share the same fundamental attributes that made “gold” the most valuable money of the eighteenth century. Currently, only Bitcoin fits that bill.
This article has made the argument that the original meaning of “gold and silver Coin” in Article I, Section 10 meant the hardest commodity money then in existence. The history of money in the colonies and early-Republic was marked by costly experiments with paper fiat—a history with which the Founders were, of course, very familiar. As such, the words of Article I, Section 10 restrict states from adopting inflationary and abusive paper fiat tender laws, but allow adoption of gold, which was immune to government inflationary monetary policy. Gold further provided a universal medium of exchange that facilitated economic cohesion amongst the states and did not affect foreign relations.
Bitcoin is digital gold. It has an immutable monetary policy that is immune to government intervention. And, like gold, it’s also a universal medium of exchange. Thus, the original understanding of “gold” as used in Article I, Section 10 (the hardest commodity money) applies to the technological development of Bitcoin (the hardest synthetic commodity money).
The textualist counter-argument was more easily made. The clause “but gold and silver Coin” uses narrow and specific words (meaning metallic coins made from gold and silver) that do not permit application to new technological developments. Conversely, Article I, Section 10’s prohibition that states shall not “make any Thing” tender uses the broadest possible terms , encompassing any possible existing monies, as well as any new developments such as Bitcoin.
You, dear reader, must render your own judgment as to which argument is the more persuasive.
The aim thus far has been to provide both legal arguments for open criticism and discussion, to better inform the discourse on adoption of Bitcoin as state legal tender. The article will conclude next week with Part IV, and will transition from legal argumentation to a moral and philosophical argument against Bitcoin legal tender laws. Alternatives to tender laws, which may achieve similar aims (perhaps more effectively), will be proposed.
Until next week,
Antonin Scalia & Bryan A. Garner, Reading Law: The Interpretation of Legal Texts, 16 (2012).
TEXTUALISM, Black's Law Dictionary (11th ed. 2019)
Scalia & Garner at 16.
See Ali Kahn, The Evolution of Money: A Story of Constitutional Nullification, 67 U. Cin. L. Rev. 393, 398-99 & n.28 (1999).
Scalia & Garner at 16.
Robert Natelson, Paper Money and the Original Understanding of the Coinage Clause, 31 Harv. J.L. & Pub. Pol’y 1017, 1061 (2008).
Scalia & Garner at 107.
Scalia & Garner at 174.
Martin v. Hunter's Lesee, 14 us (1 wheat.) 304, 326 (1816) (Story, J.)
Scalia & Garner at 356.
Natelson at 1046.
Natelson at 1063-64.
Natelson at 1061.
This is because platinum was discovered so much later in human history than gold, and so its existing stockpile is multiples smaller than that of gold. New production of platinum overwhelms the small existing stockpile. For a concise treatment of Bitcoin’s stock to flow ratio relative to gold, see Lyn Alden’s “3 Reasons to Invest in Bitcoin.”
GOLD, John Ash, The New and Complete Dictionary of the English Language (1775), at https://www.google.com/books/edition/The_New_and_Complete_Dictionary_of_the_E/vyk_AQAAMAAJ?hl=en&gbpv=0.
Calderon v. Witvoet, 999 F.2d 1101, 1104 (7th Cir. 1993).
Scalia & Garner at 195.
Dole v. United Steelworkers of Am., 494 U.S. 26, 36, 110 S. Ct. 929, 935 (1990).