Bank of Canada notes do not claim to be dollars. They instead just have
the word “DOLLARS” written on them without claiming to be dollars.
RCM coins do not claim to be cents. They instead just have the word
“CENTS” written on them without claiming to be cents.
Bank of Canada notes and RCM coins are claimed to be legal tender.
Legal tender is not the same as dollars and cents. Financial
transactions, that do not involve any legal tender, such as credit card
and debit card transactions, are claimed to be
conducted in dollars and cents.
Bank of Canada notes used to be promissory notes. Before 1969, they
contained the phrase “WILL PAY TO THE BEARER ON DEMAND” and then some
number (“ONE”, “TWO”, “FIVE”, “TEN”, “TWENTY”, “FIFTY”, or “ONE
HUNDRED”) and then the word “DOLLAR” or “DOLLARS”. The dollar always
referred to something real. For example, the dollar in North America
used to refer to the Spanish dollar, a coin made mainly of silver. In
1969, the phrase “WILL PAY TO THE BEARER ON DEMAND” was simply omitted
from new Bank of Canada notes but the word “DOLLAR”, or “DOLLARS”, was
conveniently left on. Merely removing the phrase “WILL PAY TO THE
BEARER ON DEMAND” from Bank of Canada notes did not change them into
According to the Bank of Canada publication A
History of the Canadian
Dollar by James Powell, in the section titled The
Canadian Dollar under
the Gold Standard (1854-1914) (pdf document) : “From 1 August 1854
the Currency Act was proclaimed, until the outbreak of World War I in
1914, the Province of Canada, and subsequently the Dominion of Canada,
was continuously on a gold standard. Under this standard, the value of
the Canadian dollar was fixed in terms of gold and was convertible upon
demand. It was also valued at par with the U.S. dollar, ...”; and,
“Deflation after the Civil War enabled the United States to return to
the gold standard on 1 January 1879, with the greenback convertible
into gold at the old pre-war rate of 23.22 grains of gold (Yeager
1976). Once again, the Canadian dollar traded at par with its U.S.
counterpart. This exchange rate held until the outbreak of World War I.”
One troy ounce of gold equals 480 grains of gold. 23.22 grains of gold
equals 0.048375 troy ounces of gold.
So, on January 22, 1901, the day that Victoria of the United Kingdom
died, the Canadian dollar was fixed and valued at par with 0.048375
troy ounces of gold.
A “Federal” Reserve Note is not a U.S.A. dollar. “Most people associate
the noun ‘dollar’ with the Federal Reserve Note (‘FRN’) ‘dollar bill’,
engraved with the portrait of President George Washington. This
association is mistaken. No statute defines - or ever has defined - the
‘one dollar’ FRN as the ‘dollar’, or even as a species of ‘dollar’”,
wrote Edwin Vieira, Jr. in What
Is A “Dollar”?.
The Coinage Act of 1792 defined the U.S.A. dollar as containing 371.25
grains (24.06 grams) of pure silver. After 1792, U.S.A. laws, that
redefined the U.S.A. dollar as no longer consisting of fixed mass of
silver but rather consisting of a fixed mass of gold, include the Gold
Standard Act in 1900. In the past, Congress has considered defining and
redefining the U.S.A. dollar to be “Acts and Things which Independent
States may of right do”.
I am unaware of any U.S.A. law, since 1900, redefining the U.S.A.
dollar as no longer having the value of a fixed mass of gold. The last
time, that I know of, that the official U.S.A. price for gold was fixed
was in 1973 at 42.2222 dollars per ounce. Public Law 93-110 defined the
U.S.A. dollar as having the value of 1/42.2222 fine troy ounces of gold.
The U.S.A. Department of the
Treasury values gold at 42.2222 U.S.A. dollars per fine troy ounce. The “statutory
rates of $42.2222 per fine troy ounce (FTO) for gold and $1.2929292 per
silver are used to value the entire custodial reserves, which are in
custody of the U.S. Mint and the Federal Reserve Bank of New York”, as stated in the Department of the
Financial Report (pdf document).
The action, of no longer redeeming “Federal” Reserve Notes for gold for
various people, is not the same thing as the action of defining or
redefining what the U.S.A. dollar actually is.
In any financial
transaction, there is an offer and an acceptance of
the offer. In each and every financial transaction, an offeror makes
something an offer to an offeree. In financial transactions, states in
the U.S.A. have been making so-called “legal tender”, that is neither
gold nor silver coin, an offer in payment of debts. In financial
transactions, states in the U.S.A. have been making so-called “legal
tender”, that is neither gold nor silver coin, a tender in payment of
States in the U.S.A. have
been making cheques a “means of payment” in
payment of debts. States in the U.S.A. have been making cheques a
“formal offer” in payment of debts. States in the U.S.A. have been
making cheques a tender
in payment of debts. “No State shall ... make any Thing but gold and
silver Coin a Tender in Payment of Debts; ...”, according to Article I,
Section 10, Clause 1 of the U.S.A. Constitution.
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© 2009-2017 David P. Wozney
“No State shall ... make any Thing but gold and silver Coin a Tender in
Payment of Debts; ...”, according to Article I, Section 10, Clause 1 of
the U.S.A. Constitution. The noun “tender” is defined differently than
the term “legal tender”. Wiktionary's
first definition for the noun “tender” states “A means of payment such
as a check or cheque, cash or credit card” and the second definition
states “(law) A formal offer to buy or sell something”.