The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1935-01-14

In another they charge
fourth Al Liberty Bonds
called last spring should be
paid the same way. The fifth
suit charges similar payment
should be made on gold GER
tifcates turned in under the
authorizing orders.
The Government claims that
none Of these claims can be upheld
because they interfere with Con-
gress power to regulate the cur
Tency.
For a clear picture Of the situa-
ton before the court 1t is necessary
to understand what the Government
has been trying to do since that
March day in 1893 when President
Roosevelt declared the bank holiday.
Gold supply Reduced
Prior to that date raids on the
dollar had tended TO reduce the
Governments supply Of gold 1t
was flowing abroad and at home
hOarderS we're gathering in gold and
gold certificates under the free gold
policy which had been maintained
by the United States long after
other nations had abandoned it.
Foreign nations for the most part
had given up the free gold standard
and ceased the use of gold coin. Ir-
stead bullion reserves were main-
tanned as backing for currency. This
Is Just what the United States
sought to do.
The obvious advantage of this
system was to maintain a stable
currency. 1t also permitted the
Government to maintain the value
of the dollar on foreign exchange
on a parity with the currency of
other nations. Raids on the dollar
could be met in open competition.
Thomas Amendment Passes
Soon afterwards Congress passed
the Agriculture Adjustment Act
with the Thomas Amendment.
The latter was the attempt of the
initiation bloc in Congress which
gave the President discretionary
power to do almost as he wished
with the currency. 1t carried per-
miSSive power to devalue the dollar
in terms of gold by as much as so
per cent.
With all other currencieS devalued
IN oil hnl
desirable to use this power. In the
way stood the 100000 100000 of gold
clause bonds which had been issued
by the Government and private long
term borrowers and which de-
manded payment in gold at the Old
standard of value. namely 25.8 grains
nine-tenths fine for every dollar.
Forces that gave rise to these
obligations date back to the days
when Civil War paper currency was
widely printed and C. ire u Ia d.
Afterward this paper varied in re-
lation to gold currency and also to
silver currency. To coax money
from investors to build railroads,
telegraph lines and other highly eX-
penSive undertakings it was neces-
Sary to give them some assurance
that their money would be repaid
in money of an equal value.
Heritage of Civil War
Agitation for greenback currency
and later for 16-to-1 silver gave add
ed impetus for such assurance for
investors.
In its intent to create a forever
stable currency and a parity for all
kinds of currency by maintaining
a gold bullion store. the Government
foreSaw a day when the gold clause
in such obligations would no longer
be necessary.
To have reduced the gold content
of the dollar under the Thomas
Amendment without also voting the
gold clause would have been to
create in these debts of S100.00
600 900 a special class of creditors.
1t also would have created a special
class of debtors by making them pay
lust so many more currency dollars
on the debts.
Gold Clause OutlaWed
These currency dollars would have
been just as hard to get as any
other kind of dollars. This was
what the Government did not wish
TO do.
Accordingly. Congress passed and
the President signed on June 5,
1888. Public Resolution No. 10. The
act declared an emergency and gave
the Congressional intent to make all
dollars equal in terms of currency.
II found gold clause obligations an
impeachment.
Public Resolution No. 10 provided
that such obligations be payable in
any kind Of legal tender.
In January. 1884. Congress 6i-
rected the President to reduce the
gold content of the dollar by not
less then 40 nor more than 80 per