REPUDIATION OPPOSED

Taranaki Daily News, 20 February 1935, Page 5

REPUDIATION OPPOSED

OPINIONS OF MINORITY ATTACK MADE BY JUDGES SOLEMN PLEDGES BROKEN Rec. 7.10 p.m. Washington, Feb, 18. While the minority opinion did not challenge the right of Congress to fix the gold content of the dollar or to call in gold coin, bullion and gold certificates, it opposed devaluation as a means of repudiation. It pointed out that the Government, on the majority’s ruling, could fix the dollar with one grain of gold and give the Treasury a huge profit, enough to cancel the national debt.

As Mr. Justice Mcßeynolds rose to deliver the minority opinion spectators witnessed perhaps one of the most unusual incidents of. the long and dignified history of the Supreme Court. Only occasionally looking at a prepared manuscript, he delivered a blistering attack on the “new deal” currency policies. He declared that Nero undertook the use of debased currency, and then asserted that the Constitution had “gone.” He expressed the “shame and humiliation” of the minority. To share the view of the majority would mean the repudiation of national obligations, and these . things were abhorrent to himself and three colleagues. He scoffed at the idea that the farmers of the constitution would sanction the repudiation of “solemn pledges,” of gold clauses which Congress “swept away with a word.” He implied that the majority used “a multitude of words” to distract the public mind from the basic issues.

Immediate Press reaction to the decision is divided, many implying that while the Government is morally at fault, the emergency justified its actions and by relieving uncertainty in business is to be commended. The New York Times points out that while the President has overcome one hazard in his monetary programme, others have become apparent. It is said that further radical inflationists are urging that the dollar be further devalued to. 50, or even 40 per per cent, of the old gold parity. Some journals are sharply caustic, as the Hartford Courant, which says: “The Administration won its case, but at a heavy price. The Court exposed the clear illegality of the Government’s refusal to pay its obligations as it contracted to do. Morally,' the administration ought to accept the declaration and take steps to return to the proper owners the sums it commandeered.” While some commentators held that the Court’s decision regarding the Government bonds was in some degree a moral stigma on the repudiation of these gold contracts, Administration leaders appeared simply to take the view that their position was legally secure. Although no immediate legislation is expected they make it clear that they will not hesitate to ask Congress expressly to invalidate these clauses if there appear any legal loophole for future court action by bondholders to seek restitution. MARKET PRICES SOAR EFFECT FELT IN ENGLAND HUGE SAVING TO CANADA Rec. 8 pan. Washington, Feb. 18. As its decision was favourable, the court made the announcement at noon. Inflation aspects were immediately reflected in all market prices. The New York Stock Exchange shot upwards to 10 points. The volume of sales was over 2,000,000 shares. Industrial bonds were higher, as were recent Government issues. Wheat soared, as did most commodities. Markets paralysed by uncertainty for weeks leaped into activity and prices soared, with the later profit-taking leaving buying the predominant sentiment. After the reception of the news of the American gold clause decision’ at London there were excited dealings in the street, American shares jumping several points, while British industrials and gold shares also advanced. At the end there was a partial reaction. A British Official message states that satisfaction was shown in the London stock market to-night at the gold clause decision. All trans-Atlantic stocks sharply advanced, while mines also showed gains. An Ottawa message says that the decision of the court means the saving of 65,000,000 dollars to Canada. The difference is made up in paying in notes instead of gold.