* Constitutional Money: A Review of the Supreme Court's Monetary Decisions
By Richard H. Timberlake
New York: Cambridge University Press, 2013.
Pp. xiv, 247. $95 hardcover.
The recent financial crisis has led macroeconomists and monetary economists to reconsider their first principles. One tradition of monetary research receiving more attention, arguably tracing its intellectual heritage back to Henry Simons ("Rules versus Authorities in Monetary Policy," Journal of Political Economy 44 [Winter 1936]: 1-30), looks for economic stability by bringing monetary policy under the rule of law. This tradition is concerned with the "constitutionalization" of money--creating binding rules for the monetary authority that the monetary authority itself cannot change, as in James Buchanan's recent formulation ("The Constitutionalization of Money," Cato Journal 30 [Spring-Summer 2010]: 251-58]). Much of this work is institutional-theoretical analysis, as in Alexander Salter's approach ("Is There a Self-Enforcing Monetary Constitution?" Constitutional Political Economy 25 [Fall 2014]: 280-300): it uses comparative institutional analysis to predict how particular monetary institutions will affect economic stability. Less has been done in recent years in the empirical-historical line of research: exploring how actual monetary constitutions, formal or informal, have performed. Richard Timberlake's new book Constitutional Money is a valuable contribution to this latter line of research, both in itself and as a complement to the work in the institutional-theoretical line.
The book is structured as an alternating presentation of the U.S. Supreme Court's decisions in cases relating to the constitutionality of money and Timberlake's commentary on these decisions. Timberlake is explicit in the normative premise behind his presentation. To him, Article 1, section 8, of the U.S. Constitution clearly limits the federal government to coining commodity money, and section 10 clearly prevents the several states from utilizing any monetary powers, which includes legal-tender laws (p. 1). As such, he sees current monetary arrangements in the United States--fiat money backed by legal tender laws--as blatantly unconstitutional. In contrast, Timberlake praises the early U.S. bimetallic system, where both gold and silver (or claims to gold and silver) were legal tender. He is well aware of the difficulties of defining the medium of exchange in terms of two commodities as...