Q154. "I think that the citizens of the United States are under the assumption that the Federal government actually prints money, which is actually not a right that the federal government has."
A. The ability of the government to print paper money is certainly not an enumerated right. Yet we all use U.S. dollar bills everyday. How is this possible?
An original draft of the Constitution expressly permitted the government not only to borrow money, as Article 1, Section 8, Clause 2 notes, but also to "emit bills." In Madison's Notes from August 16, 1787, the subject of paper money was debated at some length. Gouverneur Morris warned that if paper money was allowed, "The Monied interest will oppose the plan of Government." John Mercer thought it unwise to "deny [the Government] discretion on this point." But others thought paper money was a deal-killer. George Read likened the words, if included, to the "mark of the Beast," and John Langdon said he'd rather reject the entire plan than include the words. On a 9-2 vote, the words were struck. So how is it possible for us to pay for anything with paper money today? Shouldn't all currency be coins with inherent value, like silver and gold?
Gold and silver are not panaceas. Gold and silver coins have issues of their own, and the evils of paper money were outweighed by the evils of manipulation of purity and weights, not to mention convenience. By the Civil War, "greenbacks" were issued by the government and used in all manner of commerce. Not everyone liked this, and legal conflict ensued. The Supreme Court eventually had to rule on the question. In Knox v Lee, 79 U.S. 457 (1871), the Court ruled that paper money was not unconstitutional: "The Constitution nowhere declares that nothing shall be money unless made of metal." The Court argued that the Congress can manipulate the value of precious metals to the point where it can be rendered as inherently worthless as paper (the Congress could enact a law that says that 10-dollar silver coins weigh 400 grains in one year and 500 grains the next, effectively devaluing the silver). The Court even noted the arguments of the Framers against "emitting bills," but wrote that the Framers, one, could not anticipate all governmental needs, and, two, allowed the Congress to do what was necessary and proper to carry out its powers. In this case, that includes printing paper money.
So, said the Court, even though paper money is not expressly permitted by the Constitution, it is also not expressly forbidden, and in spite of the extra-constitutional opinions of some of the Framers, the ability to print paper money is a necessary and proper power of the federal government.