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Legal tender touchy topic

Steve Bieda, a Michigan hobbyist and  member of the state’s legislature wants to crack down on advertisements for questionable coins from questionable countries.

Many collectors would laud his attempt at consumer protection. They see red when coins from the Marshall Islands can’t be redeemed when taken to the Marshall Islands.

However writing law is a tricky thing. It has to apply equally to everybody and to every country. You might want to take aim at one, but you likely will hit unintended targets.

If the news story I read is accurate, the broad brush of the law would make it illegal to advertise that the European Union’s euro was legal tender in Michigan without a disclaimer that it “cannot be exchanged or redeemed at face value for U.S. currency in the United States.”

The five-euro note and the 50 euro cents coin I had left in my pocket when I came back from Berlin are not readily exchangeable for U.S. money for face value though they are legal tender all the same. I know. I spent way too many euros while I was in Germany. The question isn’t legal tender status, it is the cost of using the banking system to make foreign exchange transactions.

The new commemorative two-euro coin introduced by Germany is legal tender, but I wouldn’t want to attempt to exchange one for U.S. currency. That’s why some airports have donor boxes for good causes. It is well known that coins and small bills cannot be redeemed because the fees involved far exceed the face value. Tourists make the best of it and give to good causes as a result.

Some people can be misled by claims of legal tender. That’s not a point I would disagree with. It is sad to think that numismatics would now mark coin related items like we do stepladders.

Perhaps we should ask foreign countries for edge lettering on all of their coins saying, “This cannot be spent in the United States of America.”

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4 Responses to Legal tender touchy topic

  1. Scott Barman says:

    I read a similar article and like you, I was worried about the wording of such a bill. I believe Rep. Steve Bieda’s heart is in the right place even if the execution needs work. Bieda is going after those who advertise "legal tender coins" from the Commonwealth of the Northern Mariana Islands, Marshall Islands, or some native-American nation. Regardless of the political beliefs, these entities are protectorates of the United States and subject to US law. As such, "coins" made on behalf of these entities are not Legal Tender as defined by the US Constitution and Title 31, Section 5103 of the United States Code.

    But 31 U.S.C. Sect. 5103 also raises a question about your concerns with foreign coins. According to the law, "Foreign gold or silver coins are not legal tender for debts." This means that the 5 Euro note you brought back to the US is not legal tender in the US. So would this law be written in a way to "harm" the collection of foreign coins?

    So what happens to other non-circulating legal tender (NCLT) coins? For example, the 1 dollar guitar and motorcycle coins of Somalia are NCLT coins, but some has questioned the legality of those coins as the "dollar" is not Somalia’s unit of currency.

    What happens to legitimate medals from US-based private mints and foreign strikes?

    In other words, this bill has to be seriously debated before being introduced and passed. Otherwise, the unintentional consequences could be damaging.

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