The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1933-05-27

GO long as the treasury department and
~ the author of the new resolution on the
gold standard disagree as to its meaning the
public can not well be expected to understand
the proposal or the necessity for it.
It is exceedingly unfortunate that this con-
fusion exists in the administration, and even
more unfortunate that the recent legislation
on this subject so was drafted as to require
clarifying amendment at this early date
Wild rumors have resulted from this con-
fused stuation-such as the report that the
recent authorization to reduce the gold con-
tent Of the dollar so per cent is not sufficient
and that the present purpose is to depart
from gold 100 per cent The real explana-
ton probably will prove much less sensational.
We are already off the gold standard, and,
so far, with good results in business upturn.
We were not forced off the gold standard by
gold shortage; we had and have the largest
gold reserve in the world and the largest in
our history, with one brief exception
BY stopping gold payments and gold ex-
ports we prevented the loss of a single gold
dollar from that huge reserve, which still is
In addition to protecting our gold reserve
there were two other main reasons why we
chose voluntarily to go off the gold standard
One was the need to relate the dollar to an
honest level, so that persons who borrowed
dollars, say in 1926 could pay the debt with
dollars of approximately the same value in
stead of paying in dishonesty dear dollars of
today.
The other reason was the unfair relation
of the dollar to huctuating foreign curren-
cies and the need to stabilize foreign exchange
Following the presidential emergency de-
cree in early March, taking us off the gold
standard, this action was regularized and ex-
tended by congress through passing the
Thomas amendment to the farm relief law
That amendment made all coins and cur
rencies of the United States government legal
tender for payment of all debts, public and
prlvate-regardless Of any gold payment clause.
Nevertheless, the language of that amend
ment apparently was not sufficiently clear.
Many persons still believed that, if they held
bonds or other obligations specifically pro-
viding for gold payment they would receive
gold.
Neither decision by the British courts
that so-called gold obligations could be paid
in any legal tender nor similar recent de-
cision of the New York supreme court cited
by the secretary of the treasury, has stopped
the argument about the gold clause.
Doubtless the debate will continue until
the United States supreme court decides
test case on the constitutionality of the new
law.
Meanwhile, as a matter of public informa-
ton and also to clarity the legal record, the
administration proposes to amend the new
law Apparently the new resolution does not
materially change the recent law insofar as
past and present obligations are concerned
they still can not be paid in gold.
But it does add the provision that future
obligations, public and private shall not con-
tain any gold payment clause
We do not believe that either the Justice
or the necessity of making all obligations
payable in legal tender is open to serious
question AS the British court stated. the
gold clause is contract for payment in
money and not in gold as commodity.
Money is legal tender. If legal tender can
be refused legally as payment for any none
tary debt it obviously ceases to be legal tender
which would be denial OF the right Of the
government to fix legal tender. govern
ment which could not fix legal tender could
not govern; it would cease to be a govern
ment.
AS practical matter, it is. of course. i'm
possible for an individual to pay any debt in
gold, because he can not get the gold, all of
which has been taken out of circulation bv
the government. Thus the law and the pro-
posed amendments merely record on the stat
ute books condition which already exists in
fact
Concerning the justice involved we can
not see that persons holding so-called gold
clause bonds are any more entitled to nav
ment in gold than are the millions of citi
zens who deposited gold certificates in banks
and can not withdraw gold or gold certificates
The real test of justice here is whether
there is discrimination. Gold payments to
gold clause bond holders would be an inius-
tice to the others, because it would be dis
elimination.
What is legal tender for one must be legal
tender for all. Otherwise, money is not
money.