The Gold Clause Cases–Part II
posted by Gerard Magliocca
Last week I talked about the prelude to the Supreme Court’s decisions upholding Congress’s abolition of the gold standard in 1933. The stakes in those cases were incredibly high, as demonstrated by the President’s decision to deliver a radio address in the event of an adverse outcome announcing that he would not comply. The Court responded with its own unprecedented act. On two consecutive Fridays while the cases were under consideration, the Court issued a statement saying that the opinion would NOT be forthcoming on the following Monday. That has never happened since. As for the opinions themselves . . .
The case that gave the Justices the greatest difficulty was Perry v. United States, which assessed the validity of suspending the gold clauses in federal bonds. Chief Justice Hughes wrote for a 5-4 majority, in an opinion that Henry Hart called one of the most baffling ever issued by the Court. Hughes held that Congress lacked the power to change the mode of payment in government bonds, but that the bondholder had no remedy. That was because gold was withdrawn from circulation by other statutes enacted in 1933 and 1934, and therefore the bondholder could not have actually used the gold he would have received. The fact that the value of the bond would have been greater was deemed irrelevant.
If this “you have a right but no remedy” dodge sounds familiar, that’s because the Court often uses it to get out a jam. Marbury is one example. So was Ex Parte McCardle. The Justices were unhappy with what Congress had done in repudiating its debts, but reluctantly concluded that they could not risk the institutional damage that would result from that conclusion. It’s what I called a “white flag” opinion in a prior post.
As I’ll explain in a post tomorrow, I’m trying to figure out whether this is how the individual mandate litigation will play out when it reaches the Court.
July 19, 2010 at 3:09 pm
Posted in: Constitutional Law
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Responses (1)
James - March 29, 2012 at 7:42 pm
Dear Gerard:
I am looking into information about how the commerce clause has been so perverted and expanded, but I found myself here in the gold clause, because I think that it is relative and one note has Justice McRenolds so angry that he told the open court that this was “Nero at his worst-the Constitution is gone.”
Congress abandoning the gold standard-incredible. Is it any wonder that the Depression lasted so long. My question to you is twofold. Did the Supreme Court in 1935 truly fear a court packing scheme by Roosevelt, would the American people have supported that? And two, how does the current (historically speaking) political climate affect the thinking of the court? It seems to me that the election of 1936 giving democrats even more clout in Congress emboldened FDR in his fight against the courts. But this case was in 1935. The elections had not yet taken place. Could it be that the American people were so desperate that they would have forsaken the lessons of the economic expansion at the turn of the century and during the roaring twenties, and double down on a crap shoot?
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