GOLD CLAUSE BONDS
SUPREME COURT RULING Government’s Partial Win NEED NOT PRY IN GOLD <By Telegraph—Prose Assn.—Copyright.) (Received 19, 10-5 a.m.) WASHINGTON, Feb. 18. The United States Supreme Court upheld the Government’s right to cancel the gold clauses in private bonds, but ruled that Government gold obligations cannot be paid of on a dollar-for-dol-lar basis. The administration decided that legislation is not called for. Trading stopped in the wheat market at Chicago with the announcement of tho decision. In New York the securities markets surged upwards upon the news of the abrogation of the gold clause in private obligations. Chief Justice Hughes’ summarisation of tho decisions disclosed the Court's ruling thut Government “gold clause” bonds must be paid off in gold or an equivalent amount in devalued currency, meaning that for every thousand-dollar gold bond the Government must pay 1690 dollars. The attitude of the administration has not been announced. A later interpretation showed that while the Court held to be invalid the resolution of Congress saying that Government obligations need not be paid in gold, the decision also apparently has closed tho door to the recovery of damages by saying that bond-holders could not sue for redress. The Court completely sustained the Government with respect to private bonds by saying that they need not be paid in gold. It also ruled that holders of gold certificates did not have a legal cause for complaint, since the Devalution Act merely carried out the power of Congress to regulate currency.
The Supreme Court at Washington recently heard the argument of the Attorney-General in four cases before it affecting the abrogation by the United States Government of the "gold clause” in public and private bonds. Two of these cases were brought by the owners of railroad bonds containing a gold clause, one by the holder of a Fourth Lib erty Loan bond called for rm demption by the Treasury, and one by the holder of gold certificates surrendered to the Treasury under protest. All demanded gold or the equivalent in present currency of the amount of gold specified in their contracts.
The cases cover, as the AttorneyGeneral, Mr. Homer Cummings, said, "every essential aspect of the gold legislation,” and the magnitude of the issues involved appears in an estimate that as least 100,000,009,000 dollars (about £20,000,000,000) of gold clause securities arc outstanding. Payment in the paper equivalent of the new value of gold, said Mr. Cummings, would increase public and private debts by 09,000,000,000 dollars (about £1.3,800,000,000); it would create a special class outside the general financial structure of those holding gold bonds; and it would reduce the Treasury balance by 2,500,000,000 dollars (£500,000,000). Mr. Cummings argued that the President and Congress in the abrogation clause "acted reasonably,” and that their decision was not the "product of caprice.” •‘NEW DEAL” UPHELD Right to Abrogate Clause (Received 19, 1.5 p.m.) WASHINGTON, Feb. 18. By five votes to four the Supreme Court to-day upheld tho monetary features of Mr. Roosevelt’s “New Deal” which it had been considering for over a month. A majority opinion reftd by Chief Justice Hughes declared that the Government had the right to abrogate, tho so-called “gold clause 1 ’ in private and State and municipal bonds, also that the calling in of all gold and gold certificates by Congress was perfectly legal under the constitutional right of Congress to coin money and fix the value of it.
Ou the important issue of invalidating the “gold clause” in Government bonds the Court held that Congress had no right to invalidate this “contract,” but denied the right of holders of them to sue the Government through the so-called Court of Claims. In effect, therefore, the Government was under no jnandate to pay Government bond-holders the premium unless Congress passes Specific legislation allowing them to sue iu the ordinary courts, which the present Congress nt least will certainly not do. SATISFACTION IN LONDON ißritish Official Wireless.) (Received 19, 12.30 p.m.) RUGBY, Feb. 18. Satisfaction was shown in the stock market to-night at tho gold clause decision of the United States Supreme Court having declared the action of administration to be not unconstitutional. All trans-Atlantic stocks sharply advanced, while mines also showed gains.
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Bibliographic details
Hawke's Bay Tribune, Volume XXV, Issue 57, 19 February 1935, Page 5
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699GOLD CLAUSE BONDS Hawke's Bay Tribune, Volume XXV, Issue 57, 19 February 1935, Page 5
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