PHOENIX (AP) — The Republican-led Arizona Legislature has passed legislation making gold and silver legal tender, no different under state law than the U.S. dollar printed by the federal Treasury Department.
But under the bill the House passed Monday, the state Department of Revenue wouldn’t have to accept gold as legal payment.
State officials want no part in the bill because they are wary of how it would work in practice, said Republican Rep. David Livingston, who ushered the legislation through the House and crafted the amendment exempting the state Department of Revenue from the proposed law at its request. But Livingston said the state’s reluctance to participate in the measure is not indicative of larger problems with the bill.
“They wanted to make sure they wouldn’t be required to take gold and silver,” Livingston said in a telephone interview before the vote. “They just didn’t want to have to deal with it right now.”
The measure reflects a growing distrust of government-backed money amid the declining value of the dollar. Many investors have invested their money in precious metals in recent years, and the value of gold and silver is on the rise.
But allowing gold to be used as legal payment is still considered extreme by most governments. If the Arizona measure were to become law, it would become only the second state in the nation to recognize gold and silver as legal tender. Utah became the first in 2011. Lawmakers in Minnesota, North Carolina, Idaho, South Carolina, Colorado and other states have debated similar laws in recent years.
The Arizona House passed the bill 36-22 along party lines Monday. The Senate gave the bill its blessing in February in a 17-11 partisan vote. The House’s amendment exempting the Department of Revenue means the bill has to go back to the Senate for approval.
Senate Bill 1439 would let people use the precious metals as money as long as businesses agree to take them. If made law, it would take effect in 2014.
Livingston, a financial adviser, predicted businesses embracing gold as legal tender would use it as a sales pitch to beat competitors who don’t accept gold.
“My clients have been buying gold and silver like crazy,” he said.
Democrats oppose the measure. They say it would be a bureaucratic nightmare because businesses don’t have the equipment to determine the value of gold and silver.
“This should be addressed by the Federal Reserve and not by the state,” Democratic Rep. Rosanna Gabaldon said during a recent committee meeting on the bill.
Gold-backed money fell out of favor during World War I because the U.S. and many other countries needed to print more cash to pay for the war. President Richard Nixon formally abandoned the gold standard in 1971.
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