August 06, 2003
FIAT CURRENCY....I was killing time this afternoon and surfed
over to the Volokh Conspiracy, where I found that Eugene, who apparently
also has time on his hands, has answered a question from someone who
wants to know if it's legal for a business to refuse to accept bills larger than $20. After all, his questioner says: "....legally,
Starbucks has to accept a $50 for "all debts public and private". There
is also the issue of keeping confidence in a fiat currency, which is in
the best interest of the U.S. government.
Personally,
I would refuse to be baited by the kind of person who refers to paper
notes as "fiat currency," but hey — it's Eugene's blog and he can do
what he likes.
In any case, Eugene's answer is that if you buy something first and then pay
for it (as in a "pump then pay" gas station) they have to accept your
$50 bill. However, if you have to pay up front, they can simply refuse
to do business with you.
That's clever, but I'd like to suggest two other answers that are completely unrelated to any knowledge of the law:
Stores have been doing this for a long time, and it's a
dead certainty that some loon somewhere has litigated this. So, since
many stores continue to have this policy, apparently that person lost.
Perhaps the gas station has to accept your $50
bill, but they don't have to give you change. It's up to you if you
want to do business with a merchant who has this policy.
Any other ideas?
UPDATE: In comments, Anuraq provides a link to the definitive answer to this question direct from the U.S. Treasury: The
pertinent portion of law that applies to your question is the Coinage
Act of 1965, specifically Section 102. This is now found in section 392
of Title 31 of the United States Code.
....This statute means that all United States money as identified
above are a valid and legal offer of payment for debts when tendered to a
creditor. There is, however, no Federal statute mandating that a
private business, a person or an organization must accept currency or
coins as for payment for goods and/or services. Private businesses are
free to develop their own policies on whether or not to accept cash
unless there is a State law which says otherwise. For example, a bus
line may prohibit payment of fares in pennies or dollar bills. In
addition, movie theaters, convenience stores and gas stations may refuse
to accept large denomination currency (usually notes above $20) as a
matter of policy.
Thanks!
Posted by Kevin Drum at August 6, 2003 05:05 PM
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I believe that they can accept or refuse any currency that they want.
Wasn't this issue settled a few years ago when that college student
tried to pay his entire tuition in pennies?
Your hypothetical loon litigation could have been dismissed on grounds of mootness ("you've already paid, so case dismissed").
Here's a link on this at Lawzilla:
http://www.lawzilla.com/ca-bus-001.shtml
There is no federal statute mandating that one must accept currency or coins for payment.
OK, so you don't believe Lawzilla -- what do they know. Here's the link from US Treasury
http://www.ustreas.gov/education/faq/currency/legal-tender.html
There seem to be two ways out of this situation. One is to stress
safety. To discourage robbery, there is never more than change for a
twenty in the till. Then it is a matter out of the hands of the
management: police, insurance, safety consultants recommended it. I
have seen a lot of places where they do take 50's and 100's between 7am
and 7pm but not at other times.
The second way is to never have the change on hand. You can't take bills when you don't have the change on hand.
Anuraq, those are great links. I never thought someone would actually find an answer to this question. Thanks!
I love Option B.
Nice thread.
Oops, somebody beat me to it.
I'm always amused when some wacko brings up the issue of "fiat currency."
I suppose that they should try to barter. I wonder how many 'coon pelts it would take to get a gallon of gasoline.
I can't link, but I admit I was confused when I tried to look up the
section of the U.S. Code that the Treasury Dept. referenced, since it no
longer exists. It is now classified as Title 31, Section 5103, which
merely states (in its entirety):
"United States coins and currency (including Federal reserve notes
and circulating notes of Federal reserve banks and national banks) are
legal tender for all debts, public charges, taxes, and dues. Foreign
gold or silver coins are not legal tender for debts."
Oddly, the public and private language was changed to the current language in 1982.
Even more oddly, I could not find a lawsuit about the no bill larger
than $20 issue, but I did find two others that were interesting and
somewhat related.
In Nemser v New York City Transit Authority, a New York state court
held that a vending machine which only accepted coins did not violate
the legal tender provision of federal law because it did not accept any
bills at all (this was 1988, presumably somewhat before bill-acceptance
technology was mainstream).
In Martin v Rhode Island Co., a passenger who attempted to pay his
five-cent fare with five one-cent coins was unsuccessful in his lawsuit
against the railway company. The railway company had an automated
fare-registering device that would not accept one-cent coins and this
also did not violate the legal tender clause. The interesting part of
this case was that it took place in 1911.
And in case you were wondering, you can't pay your federal taxes by
giving them your car either, see Calafut v Commissioner of the Revenue.
That one's from 1967.
Guess what! Mahdi Obeidi says Saddam had no $50 bills! I guess,
according to your people's logic, that means $50 bills do not exist!
How can $50 bills be legal tender if they do not exist! Hey, look, I
opened my wallet and there were no $50 bills! More proof of the
non-existence of $50 bills!
You people are pathetic.
"You people are pathetic"
Pot, meet kettle.
That, uh, probably ain't Glenn.
Kind of a pity, come to think of it.
No, it wasn't - too many exclamation marks. The intellectual honesty level was flat on, though.
raj,
Barter is not completely unheard of these days. I live in an area
where there are lots of farms and know a man who recently (2-3 yrs ago)
bought a new car entirely with soybeans.
Go figure.
What is this "loon" nonsence about fiat money?
Money not backed by gold is by economic definition fiat currency. There isn't anything loony about that, as far as I can tell.
Summer fun - go to a gas station and try buying a single gallon of gas.
That will be $1.59 and 9/10, please.
"Money not backed by gold is by economic definition fiat currency"
Well, I don't know that "fiat currency" really is a term recognized
by economists. But of course, paper money backed by gold, or gold coins
themselves, would be "fiat currency" too, as much as anything else.
Money is a medium of exchange, silly--it's a method of calculating, say
hypothetically, how many groceries are the equivalent of 8 hours of
factory work.
Instead of passing a law saying one dollar equals X amount of
gold, why not pass a law saying one dollar equals one dollar? This is
"fiat money" (from the Latin for being forced to drive a cheap,
unreliable car), and it's almost the only kind of national currency left
in the world.
-- P.J. O'Rourke, Eat the Rich
"Money not backed by gold is by economic definition fiat currency"
This is dumb. Any medium of exchange--yup, even gold coinage--whose denomination is set by government, is fiat currency.
What is so special about gold?
Personally, I would refuse to be baited by the kind of person who
refers to paper notes as "fiat currency," but hey — it's Eugene's blog
and he can do what he likes.
Why? It is the very definition of fiat currency.
What is so special about gold?
You get one experience point for each gold piece you bring back from the dungeon.
--Kynn
To take this slightly off topic, as I understand it, shops that
accept credit cards are contractually obligated to take them regardless
of the total sale. In other words, they can't set a minimum sale price.
Good information for the next time you try to charge that pack of gum.
How come fast food open late at night can say you must drive a car to
get served? If you don't own a car, why can they refuse to sell to
you?
I guess no one here took economics?
> refuse to be baited by the kind of person who
> refers to paper notes as "fiat currency," but
> hey
I am the original poster of the question to Eugene, and I used "fiat"
not for some underlying political philosophy, but if you ever take Econ
101, 102, 201, 202, 501, 502 - that's what it is referred to. So for
those of you who were too supid/poor/hung over/not interested in Econ
101, here is an out take from the second day of class:
We have a "fiat" currency since there is no underlying value to the
currency - it's paper worth about 1/10 of a cent. The government says
that the paper that has a "50" on it is worth 50 times the one with the
"1" on it and half of the one with a "100" on it. In fact, the paper in
itself all has the same underlying value.
Because the government sets these rules, and we all follow them, we
are agreeing to its value by fiat. This system has proven to be the
most successful of other systems we will study in this course - namely
bartering, coinage, and currency backed by assets (gold).
So go back to class and learn something before making snyde comments about the use of "fiat".
Umm... you sound a little angry. Do you think that kind of response will convince anyone that you AREN'T a loon?
could you please send me more info on what programmes you offer on
you tv station and if you coould give me ur address and telephone no. i
would realy appreciate that
Can anyone help me locate a book/author? I believe his name is Gil
Schiff (or Schiffman) and in about 1970 he wrote a book about his
argument with the IRS over the issue of fiat currency. Can't seem to
locate it.
Thanks, RR
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