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What should have happened is the dollar should have retained value to match the metal content. This was the whole concept of “coining” money in the constitution.

“During the Revolutionary War two things almost led to the defeat of the struggle for American independence. One was the inadequate system of constitutional government and the other was unsound money.

Congress issued about $240 million in “Continentals” — referring to money of the Continental Congress. It was understood that this money would be redeemed in gold or silver by the states after the war.

The states thought this was a great way to manufacture money so they issued vast quantities of their own paper currency.

Even the enemy, the British, saw what was happening so they printed up bales of counterfeit “Continentals” and used them to buy supplies from Americans.

Before long confidence in the Continentals had sunk so low that by 1780 they were not even worth one cent. No further paper money was issued by the United States for over eighty years.

The American market had already accepted the Spanish dollar as its basic unit of value. It was minted in Mexico and called a “piece of eight,” or a peso. To make change, they would cut it into eight pieces or bits and small change began to be called two bits for a quarter, four bits for fifty cents, and six bits for seventy-five cents.

In 1785, two years before the Constitution was written, the Congress accepted the Spanish dollar as the official unit of value for the United States and determined that all foreign coin would be evaluated in terms of the Spanish dollar.

In 1786, the year before the Constitution was adopted, the Board of Treasury fixed the silver weight of the adopted dollar at 375 and 64/100s grains of fine silver. The value of gold coins or any other coins was to be calculated in terms of the silver dollar of this weight and fineness.

It will be noted that three things had been established before the Constitution was adopted:

That the official money of the United States would be precious metals-silver and gold.
That the basic unit of value would be called a “dollar” and consist of 375 and 64/100s grains of fine silver.
All other coins, both foreign and domestic, would be evaluated in terms of this official silver dollar.

All of this was already part of the law of the land when the Constitution was adopted. Therefore the Founders wrote the following provisions in the Constitution concerning money based on the above statutes which had previously been adopted as the official monetary system. They wrote:

“Congress shall have the power ‘to coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures.’” (Article I, section 8, clause 5.)”

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