AMERICA AWAITS GOLD CLAUSE RULING

Dominion, Volume 28, Issue 111, 4 February 1935, Page 9

AMERICA AWAITS GOLD CLAUSE RULING

Influence on Markets GOVERNMENT PREPARED FOR ADVERSE DECISION By Telegraph.—Press Assn.—Copyright. (Received February 3, 6.40 p.m.) Washington, February 2. After the markets had closed to-day the Chief Justice, Mr. Hughes, announced that the Supreme Court would not issue the golo clause ruling on Monday, as expected. He explained that the matter was under consideration, but nine judges were not yet ready to render their opinion.

During the past fortnight market movements have been largely influenced by speculation on what the decision might be. Fear that it might be adverse—that is that the Administration inflationary gold policy would become illegal—caused much apprehension and inertia ruled in the securities exchange, whereas the continued industrial improvements would normally send prices sharply forward. Commodity markets in general are similarly affected. ' It is understood that the Administration is confident of a favourable ruling but is prepared for an adverse one, and is reported to have measures drafted that would he rushed through Congress to counteract the immediation deflation effect that such a ruling would have. The nature of these Bills is not known. It is further reported that in the event of an adverse ruling the Government is prepared "to close security exchanges to prevent immediate fluctuations in prices. The postponement of the decision is viewed as a little alarming in some Administration quarters as it seemingly indicates that the Court is finding difficulty in weighing the legal issues involved against the Government’s contention that its step was imperative to the national welfare.

A test suit involves the holder of a single bond of the Baltimore-Ohio Railroad, who contends .that a 22-dollar interest payment should have been equivalent to the old gold value or about 40 per cent, more, and that, in effect, complainant has been deprived of property without due process of law. It is estimated that about 100 billion dollars’ worth of securities are involved in the issue, as well as the entire basis of President Roosevelt’s monetary policy. For that reason the Attorney-General, Mr. H. S. Cummings, took the almost unprecedented action of personally defending the suit against the Government before the Supreme Court. He argued that the crisis of 1933 was so serious that summary action was necessary “to keep the people from slipping to a lower level of civilisation.”