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02/03/2004: Arcanum Arcanum

NH Legislator Proposes Gold As Legal Tender
from Nashua Telegraph

Promoting the use of gold and silver by state government would trigger a flood of investment in New Hampshire, according to supporters who want a bill to proscribe their future uses.

Rep. Henry McElroy, R-Nashua, donned an Uncle Sam hat at a news conference Monday to urge lawmakers keep alive his bill that would make New Hampshire the first to endorse the use of gold and silver as legal tender for state government.

"This is nothing new to this country," he said. "It's what we were founded upon."

Dr. Edwin Vieira is a constitutional lawyer from Virginia who helped McElroy, Rep. David Buhlman, R-Hudson, and others prepare the bill.

"Paper currency in this country has lost its purchasing power since World War II. Precious metals have retained their purchasing power. This will stimulate investment in New Hampshire if you take this important first step," Vieira said.

But the House Commerce Committee found little support for the change due to the strain it would place on the state treasurer's office and the private banking system, said Rep. Leo Fraser, R-Pittsfield.

"The committee was having trouble believing that gold, which also may be devalued as a currency, would be of any benefit," Fraser said.


Bill urges use of gold, silver as legal tender


By KEVIN LANDRIGAN, Telegraph Staff
landrigank@telegraph-nh.com
Published: Tuesday, Feb. 3, 2004

CONCORD - Promoting the use of gold and silver by state government would trigger a flood of investment in New Hampshire, according to supporters who want a bill to proscribe their future uses.

Rep. Henry McElroy, R-Nashua, donned an Uncle Sam hat at a news conference Monday to urge lawmakers keep alive his bill that would make New Hampshire the first to endorse the use of gold and silver as legal tender for state government.

"This is nothing new to this country," he said. "It's what we were founded upon."

Dr. Edwin Vieira is a constitutional lawyer from Virginia who helped McElroy, Rep. David Buhlman, R-Hudson, and others prepare the bill.

"Paper currency in this country has lost its purchasing power since World War II. Precious metals have retained their purchasing power. This will stimulate investment in New Hampshire if you take this important first step," Vieira said.

But the House Commerce Committee found little support for the change due to the strain it would place on the state treasurer's office and the private banking system, said Rep. Leo Fraser, R-Pittsfield.

"The committee was having trouble believing that gold, which also may be devalued as a currency, would be of any benefit," Fraser said.

State Treasurer Michael Ablowich said as a courtesy he assisted lawmakers in trying to refine the bill (HB 1342), but he also saw many flaws in it.

"Like 90 percent of the Legislature, I'm fairly skeptical about how it might work," he said.

The federal government began getting off the gold standard in 1933 and in 1971 discontinued all purchase of gold or silver to back up Federal Reserve notes stored in the U.S. Mint.

Rep. Dan Itse, R-Fremont, said this has led to more inflation in the economy and a devaluing of the dollar here and abroad.

"Even today, we have low inflation now, but the common bank savings account interest rate is lower than the inflation rate. That is the definition of an unstable economy," Itse said.

Federal Reserve Chairman Alan Greenspan has praised the stability of the U.S. economy when gold backed its currency.

Any federal conversion would require the government to purchase huge stockpiles of the precious metal, Greenspan said.

If the government estimated the price of gold it was to buy as too low, Greenspan has warned taxes would have to be raised to keep government operating.

Edward Lee of Merrimack, who owns his own gold and silver depository, insists state government costs under this bill to allow gold and silver as an optional choice would not be significant.

To cover costs, Lee said the state could mark up the price and charge a handling fee for those who would want to be paid in gold or silver.

"There would be a small investment to get things going and the state could be profitable in a period of months," Lee said.