In 1955 a hit song with the unlikely title “16 Tons” became the second largest selling record of all time, having sold about 20 million copies, according to Doris Day. There is hardly anyone born before 1945, many even after that, who doesn’t recall Tennessee Ernie Ford’s soulful rendition.
What was it about “16 Tons” that resonated so powerfully across every demographic? You could not dance to it. It was not as if a famous artist recorded it, e.g., Frank Sinatra or Bing Crosby. The melody was minimal.
The answer is that the lyrics reverberated with almost everyone, especially coal miners. Here is the refrain:
“You load sixteen tons, what do you get?
Another day older and deeper in debt
Saint Peter don’t you call me ’cause I can’t go
I owe my soul to the company store.”
Why would anyone sign up for a dirty, dangerous, unhealthy, and back-breaking job mining coal in those days with a pick and shovel and owe more money than when the day started? On the face of it, one would need to be a fool.
The answer is that coal mining wages appeared high. Before beginning work, workers did not understand that everything they bought would be from the “company store” at inflated prices.
Figure 1: A Company Store
It was common in coal mining locales, geographically distant from nearby towns, for mining companies to own the store that sold all employees’ everyday needs. Mining companies would selectively raise prices to keep miners working and coerce them to stay on so that the miners were in perpetual debt. “16 Tons” dramatized this injustice to music.
In addition, it was widespread practice for mining companies to employ armed guards to ensure that the miners did not run off without paying their debts. The miners were de facto “debt slaves.”
Significantly, there was another and much more insidious tactic that mining companies used to keep workers in debt bondage. Mining companies did not pay workers with real money. They paid them with company scrip redeemable only at the company store.
Here is an example of company scrip:
Figure 2: 50¢ scrip issued by The Canaan Coal Company. Notice the legend at the top: “This is not intended as a circulating medium.” The legend at the bottom: “in merchandise upon presentation at its store.”
Thus, a miner could not save up his wages and move, say, to Chicago. The company effectively trapped him.
Before I continue with the story, except for the issuing authority, what is the difference between company scrip and the legal tender irredeemable paper-ticket-electronic make-believe money that workers receive today?
Figure 3: 5¢ scrip issued by The Miners Trading Company
Figure 4: A $100 Federal Reserve Note
The answer is there is no difference. Both are just ink on paper. If a worker is not receiving real money, he is not getting paid. He is a de facto enslaved person.
People forget that the definition of slavery is having one’s work product stolen, usually under the color of law. It is a fundamental worker’s right to receive wages in real money. Indeed, it is a human right.
What remedy did coal miners have to escape debt bondage? They organized.
In 1890 they formed the United Mine Workers of America (the “UMW”). The founding UMW Constitution provided in the 2nd Item of the preamble the purpose of their collective action:
“To establish as speedily as possible, and forever, our right to receive pay, for labor performed, in lawful money and to rid ourselves of the iniquitous system of spending our money wherever our employers see fit to designate.” [Emphasis added.]
And the 9th Item:
“To secure, by legislation, weekly payments in lawful money.” 
The Federal Reserve Legislation, enacted at the end of 1913, expressly provided:
“They [Federal Reserve Notes (“FRNs”)] shall be redeemed in lawful money on demand at the Treasury Department of the United States, in the city of Washington, District of Columbia, or at any Federal Reserve bank.” [Emphasis added.]
Thus, FRNs could not have been lawful money. It was neither the intention of Congress nor would the public have accepted FRNs as lawful money.
In 1890 when the UMW was formed, lawful money was gold and silver coin. It was not until 1933 when a bank run revealed that banks had issued more loans denominated in FRNs entitling bearers to redeem in gold that could not be redeemed.
President Roosevelt did not explain that promises to redeem FRNs for gold and silver coin were dishonest. FRNs misrepresented the capability of being honored. Fraudulent promises of future payments in gold cheated savers, pensioners, annuitants, holders of United States Liberty Bonds, and others.
President Roosevelt, by Executive Order, confiscated publicly held monetary gold to disguise the fact that people had been defrauded and that the entire banking system was de facto bankrupt. Banks could not fulfill their obligations to FRN holders. President Roosevelt then made it a felony for Americans to own monetary gold worldwide. At the time, labor was on its knees and did not object.
While President Ford lifted the felony penalty for owning monetary gold at the end of 1974, all our money is still just ink on paper or electronic blips in a bank computer.
What is the relevance of this today? Why does it matter if workers receive legal tender irredeemable paper-ticket-electronic make-believe money or real money, i.e., gold and silver coin?
For day-to-day purchases, it makes no difference. One spends whatever medium one receives on goods and services at once, so why should it matter if it is not real money?
It does matter significantly for future payment, e.g., pensions. Today, there is no real money in workers’ pension plans. It is all just ink on paper or blips in a computer vulnerable to “monetary policy,” driven by the banking system, a cartel of private companies.
If workers want a secure retirement, they need to relearn the hard-won lesson from the UMW and insist that their pensions, annuities, savings, etc., be denominated in real money. Article I Section 10 of the United States Constitution implicitly requires our money to be gold and silver coins.
Larry Parks is the Executive Director of the Foundation for the Advancement of Monetary Education and the author of What Does Mr. Greenspan Really Think?
 John H.M. Laslett, Editor; The United Mine Workers: A Model of Industrial Solidarity; Pennsylvania State University Press, page 216.
 Constitution and Laws of the United Mine Workers; Established January 24th, 1890; Preamble
 Federal Reserve Act, Section 16. Note Issues: 1. Issuance of Federal Reserve notes; nature of obligation; where redeemable.
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