A proposed measure that would allow Texas to use precious metals in financial transactions cleared a major legislative hurdle, but with significant revisions.
House Bill 1056 by State Rep. Mark Dorazio (R–San Antonio) invokes a frequently overlooked provision in the U.S. Constitution to permit the state comptroller to authorize the use of gold and silver as currency.
Article 1, Section 10 of the U.S. Constitution states, “No state shall coin money, emit bills of credit, or make any thing but gold and silver coin a tender in payment of debts.”
HB 1056 was heard in the House State Affairs Committee in March. After languishing for close to a month, it was placed on the House Calendar on Thursday.
The bill survived a Democrat point of order during floor debate and appeared headed to passage when State Rep. Charlie Geren (R–Ft. Worth) amended the bill to make “implementation of a state gold currency contingent on a final order from a federal court.”
Geren’s amendment states, “Authority to implement this subchapter is contingent upon a ruling of a federal court of competent jurisdiction.” This likely means the U.S. Supreme Court.
The Independent Bankers Association of Texas has lobbied extensively against the bill.
Economist Kevin Freeman, an advocate for state-based gold currency, explained on social media that federal courts have already addressed the concerns behind Geren’s amendment.
In the 1868 case Lane County v. Oregon, SCOTUS ruled that states have the authority to use precious metals as currency for purposes of taxation.
Texas Republican voters overwhelmingly voted in favor of a ballot measure supporting this concept in the last primary cycle.
Ballot Proposition 7 stated: “The Texas Legislature should establish authority within the Texas State Comptroller’s office to administer access to gold and silver through the Texas Bullion Depository for use as legal tender.”
It passed with the support of 76 percent of primary voters.
After final passage on Friday in a vote of 89-45, HB 1056 heads to the Texas Senate.
The Senate can concur with the bill in its current form with the Geren amendment, or strip the amendment.
Freeman told Texas Scorecard, “We are counting on Senator Hughes to move this to the Governor for signature (hopefully without requiring pre-permission from federal courts).”
If the Senate removes the Geren amendment, the legislation will need to head to a conference committee, in which House and Senate lawmakers adopt a final version of the legislation. However, a conference committee is a time-consuming process as the legislative session moves into its final month.
The Texas Legislature adjourns sine die on June 2.
