THE GOLD CLAUSE

Evening Post, Issue 29, 4 February 1935, Page 9

THE GOLD CLAUSE

AMERICAN BOND ISSUE

COURT'S RULING DELAYED

INFLUENCE ON MARKET

United Press Association—By Electric l'elograph—Copyright. WASHINGTON, February 2 After the markets had closed today the Chief Justice, Mr. Hughes, announced that the Supreme Court would riot issue the gold 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 infiu-' enced by speculation on what the decision might be. Fear that it might | be adverse—that is, that the Adminis-1 tration 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 arc 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 be rushed through Congress to counteract the immediate deflation effect that such a ruling Avould 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 thedecision 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 pent, 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-Gen-eral, 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." . ,