Money and Law

B17　—　Cross-cutting theme

What can law do to money, and what can it not?

Supervised by: Mitsuru Hayama　／　Reading time (main text): course text ~8 min + textbook ~56 min = ~64 min　／　Beyond the text: 10 exercises · 6 coins · 11 readings · 1 references

What this course teaches you to do

• You can distinguish what law can do to money from what it cannot.
• From the weight of the penalty you can read what that society feared.
• You can explain what the term "legal tender" actually compels.
• You can read a law together with the failure of the decade just before it.
• Can explain the monetary clauses of the U.S. Constitution (clauses that grant power, clauses that prohibit, and its silences).
• Can explain the paradox of how the prohibition of interest gave rise to financial techniques, and the points of contention in the Gold Clause Cases.

TEXTBOOK

Lessons (8)

1. What law can do, and what it cannotLaw can define, monopolise and punish, but it cannot make people believe. Being legal tender guarantees no value.
2. The weight of the penalty is the size of the fearThe weight of the penalty is the size of the fear. When reading a law, look at the ten years before it.
3. "Thou shalt not use it" rarely worksA ban repeated is proof it failed. Law can order acceptance; it cannot order value.
4. Which edition is thickest in lawSome countries are thick in law, others in custom. The bulk of the statutes does not show the strength of the system.
5. Money in the Constitution — Clauses and SilenceClauses that grant, clauses that prohibit, and silence. A single unwritten line became a century-long controversy.
6. Law Follows Reality — Seventy Years of the Spanish DollarEven after having its own dollar, a foreign silver coin remained legal tender. Law walks behind the market.
7. Do Not Steal What Is God's — The Technology Born from the Prohibition of InterestTime belongs to God; interest is theft. This prohibition became the midwife of the financial technology known as the bill of exchange.
8. The Gold Clause Cases — A Confrontation Between Contract and SovereigntyThe law severed the golden lifeline within contracts. The culmination of the courtroom clash between monetary sovereignty and freedom of contract.

Case studies — applied in the materials (11)

• Money inside the constitution　United States　1787　Philadelphia, the Constitutional Convention
  §2. The scene where the memory of the Continental notes hangs over the chamber.
• The Gold Standard Act of 1900　United States　1900　Washington, the federal Congress
  What it means for law to define by number: the clause of one dollar = 25.8 grains of gold.
• The age of picking coin　Japan　1485–1500　The Ouchi castle town and Kyoto
  §3. Note that the Ouchi and the shogunate handled it in opposite ways.
• Louis XVI and the reformers　France　1774–1776　The office of the Controller-General
  Three noes: no bankruptcy, no new taxes, no borrowing. Not a law but an oath, yet the same structure.
• Money inside the constitution　United States　from 1787　In the silence of the text
  Section 5. The weight of an unwritten line. Silence is the battlefield's reserved ground.
• The country of the Spanish dollar　United States　from the founding of the country to 1857　A street corner in the United States
  Section 6. Seventy years with "foreign silver coins". The law follows the market.
• Gods and money　Overview: 2,700 years of the world　the Middle Ages　The Ban on Usury and Persecution
  Section 7. Time belongs to God—the theology of the prohibition of interest.
• The spring they let go of gold　United States　1933–1935　The Supreme Court
  Section 8. The confrontation of contract and sovereignty. Including the fact of the narrow margin.
• Coin famine　China　the 8th–10th centuries　A city gate with an edict posted
  Do not make bronze wares, do not take coins out of the country, do not hoard them—prohibitions were repeatedly issued throughout the ninth century. Please read about what happens to the law itself when the number of prohibitions issued equals the number of times they were ineffective.
• The Prohibition of Holding Gold　India　1962–1990　August 24, 1968
  The Gold Control Act of August 24, 1968, prohibited the very act of owning gold in the form of bullion and coin, and required people to have their gold coins and bars converted into jewelry and declare them. Please observe who paid the cost of this conversion when the law reached into people's homes.
• A Single Issuer　Mexico　1925–1932　The Market
  The merchants in the market quietly rejected the banknotes of the newly established central bank. This is a scene where a central bank can be established by decree, but its credit cannot.

Assessment

10 exercises in this course (7 check, 0 compare, 3 written). Progress is recorded by self-assessment.

References

• What is legal tender? — Bank of England　The central bank itself states that "legal tender" does not mean a shop is obliged to accept it. Bank of England notes are not legal tender in Scotland. Last updated 2025-02-26.

Only works and primary sources whose existence has been verified are listed.