The Founders wrote sound money into the Constitution. We have spent fifty years unwinding it.

DENVER — The national debt stood at $39.31 trillion as of late June, on track to cross $40 trillion, and to the historian Lawrence W. Reed that number is a moral verdict more than a fiscal one. “I think someday there will be a generation of Americans who will look back on us and say, how could you run up a national debt of $40 trillion, print lots of money, cause all kinds of havoc in the economy and prices to soar, and then send us the bill for it all?” Reed said.

Reed is President Emeritus of the Foundation for Economic Education, and he has just published a book on the ideas that shaped the American founding. He appeared on The Kim Monson Show during a pre-recorded Independence Week broadcast, and the conversation arrived at the question that runs underneath the debt totals: what is a dollar supposed to be? In Reed’s telling, the Founders already answered it. They lived through a currency collapse, learned the lesson the hard way, and wrote the remedy into the Constitution. The country has since walked away from that answer, and Reed argues the bill for walking away is the one now being handed to the young.

A dollar that was a receipt for the real thing

Sound money is currency anchored to something real. For most of the country’s history that anchor was gold and silver, so a dollar amounted to a claim on a fixed weight of metal rather than a promise the government could redefine at will. Reed puts the principle in plain terms. “Paper money is fine if it’s a receipt for the real thing,” he said. The trouble starts, he explained, “when governments are in charge of it and they break any connection between it and a precious metal, which gives them the power to print for whatever reason.” That, he said, is “an enormous power to entrust to anybody.”

The Founders shared the worry, and they constrained it in writing. The Constitution grants Congress the power “To coin Money, regulate the Value thereof,” and in the same article it forbids the states from making “any Thing but gold and silver Coin a Tender in Payment of Debts” or emitting “Bills of Credit.” The word coin is doing deliberate work there. The men who drafted those clauses had just watched paper money detached from metal destroy itself, and they meant the dollar to be measured in something real.

Not worth a continental

The lesson came from the Revolution’s own treasury. “Congress experimented with unbacked paper money early in the war,” Reed said. “They put Ben Franklin in charge of the printing press, and they said, now, don’t print too much. But the pressure to print was so immense that they printed the continental dollar until it became nearly worthless.” Congress issued roughly $200 million in Continental currency; by 1780 the bills traded at about one-fortieth of their face value, and by May 1781 they had stopped circulating as money at all. The collapse gave the language its proverb for worthlessness, “not worth a continental.”

What turned the war, in Reed’s account, was a return to honest money. “We started winning more battles when we got honest with our money and paid in gold and silver,” he said. He points to Yorktown in September 1781, where Washington’s troops, long unpaid, were close to walking away rather than laying siege. What held them in the field was hard coin. The French admiral de Grasse, Reed recounted, “did a door-to-door contribution campaign in Havana, Cuba, no less, at raising gold and silver from private citizens who supported the American cause,” delivering it “just in time for Washington to pay the troops in gold and silver.” The men had demanded a month’s pay in coin rather than worthless Continentals, and the specie raised in Havana helped bankroll the victory that ended the war.

That experience drove the gold-and-silver clause into the Constitution, and the principle was made statutory soon after. Robert Morris, the Revolution’s financier and the man Congress put in sole charge of funding the army in 1781, called for a national mint and a uniform currency. The Coinage Act of 1792 answered the call. It created the United States dollar as the standard unit of money, established the United States Mint, and defined the dollar precisely in grains of silver and gold. It also set a death penalty for anyone who debased the coinage, a measure of how seriously the founding generation took the integrity of the money.

The bill sent to the next generation

The dollar no longer carries that definition. The last formal link between the dollar and metal was severed on August 15, 1971, when President Nixon ended the dollar’s convertibility to gold, closing the gold window and bringing down the Bretton Woods system. Since then the dollar has been backed by government decree alone, and the constraint the Founders built has been gone for more than half a century.

This is where Reed’s argument turns from monetary mechanics to moral accounting. “The last people you want to be in charge of an unbacked paper currency are spend-happy politicians who love to buy your vote with money they can print and send the bills to the next generation,” he said. Kim Monson named the stakes directly. “There’s something immoral about that,” Kim said. Reed did not hedge: “Yeah, absolutely.”

The complaint is generational by design. A specie-backed dollar forces a government to pay for what it buys in real value at the time it buys it. An unbacked dollar lets a government defer the cost, printing now and presenting the invoice to people who cannot yet vote. The debt that stood at $39.31 trillion in late June is, in Reed’s framing, that deferral made concrete.

A principle worth recovering

Reed is not fatalistic about it. When Monson asked whether the country can turn the trend around, he called himself “an eternal optimist.” The same force that led the country astray, he argues, is the one that can right it. “We are creatures of ideas, and we go in wrong directions when we are influenced by bad ideas,” he said. “But if we wake ourselves up, educate ourselves, understand what good ideas are of things like sound money and moral character, we can change the course of history.” Monson framed the 250th anniversary as “the third founding of our country,” a moment to recover principles the first Founders fought to establish.

Sound money is one of those principles, and Reed makes the case that it was a deliberate choice of the founding, paid for in gold and silver at Yorktown and written into the nation’s first law on the dollar. His new book, Born of Ideas: How Principles, Faith, and Courage Forged America, traces that founding from the Mayflower Compact forward, with chapters on how Washington won the war and on the money that funded it. The argument for the 250th is that the principle is still there to be reclaimed, if the country decides the next generation is owed its return.