Evening star., 1935-01-30
US. READY TO BAN |
GOLD CASE CLAIMS
Prepares to Outlaw Suits
Should Court Uphold
Federal Contracts.
BY DAVID LAWRENCE.

The Roosevelt administration has
made I'D its mind what it will do If
the Supreme Court should decide the
gold clause" cases adversely to the
Government.
But 1t should be emphasized that
the administration expects TO win on
both the major issues before the court
the public and the private contract
cases.
The chances are that If the Gov
ernment suffers any defeat at all, 1t
will be on the ground that a sovereign
must keep its contract with the citi-
zens and that bonds payable In gold
call for such payment in coin or in
equivalent currency.
To pay the holders of Government
bonds $1.69, however, for every dollar
Of bonds issued with the gold clause
in them, would be considered by the
administration to be the setting up
of a special class Of creditors who
would be getting better treatment
than others.
May Limit Claims.
Acting on this principle, the ao-
ministration will request Congress to
amend the existing Court Of Claims
statute SO that the practical effect
will be to deny any claimant the op-
portunity Of recovering the extra SO
cents on the so-called gold bonds.
For it is a matter of legal custom
from time immemorial that the
sovereign-the central Government
cannot be sued without its consent.
Here is the way the present Federal
law, adopted in 1887. formally gives
consent for suits to be brought:
THE Court of Claims shall have
jurisdiction to hear and determine the
following matters:
Claims against United States. All
claims Except for pensions) founded
upon the Constitution of the United
States or any law of Congress, upon
any regulation Of an executive depart
ment. upon any contract express or
implied, with the Government of the
United States, or for damages, hqu-
dated or unliquidated. in cases not
sounding In tort. in respect Of which
claims the party would be entitled to
redress against the United States
either in a court OF law, equity, or
admiralty If the United States were
suable. ."
Now, it is the foregoing statute
which would be amended to read that
no claims will be entertained which
are in any way based upon disputes
arising out Of the gold value of the
dollar.
When Congress wants to reject any
class of claims it does so by mere
amendment to the law quoted above.
Thus the present law has separate
provision which specifically excludes
from consideration by the Court of
Claims all claims arising out Of the
Civil War.
So the practical result Of an amend
ment barring suits to recover under
the gold clause would be to keep the
claimants from recovering anything.
While the private contract cases are
In different category, the remedy for
the administration is not so simple
The Government Is, of course, conf
dent of victory on the broad ground
that no private persons should be al
lowed in their contracts to define
dollar or its value. and that this IS
right reserved to the Federal Govern
ment under the Constitution. which
says Congress shall have the power to
coin money and regulate" the value
thereof.
Tax May Defeat Profit.
But II the Supreme Court should
hold that the private contracts are
payable at sl69 in present currency.
then the administration will levy a
tax of SO cents on all such transac-
tions There may be questions Of con-
stitutionality here, too, but thus far
the processing taxes have not been
held unconstitutional. and hence the
administration will feel that by one
form of tax or another it can make it
undesirable for creditors to insist on
SO cents extra for every dollar In the
contracts or mortgages or bonds pay
able in gold of present standard of
value"
The belief of this correspondent,
based upon talks with some of the
best Federal lawyers of both the last
administration and this administra-
ton, is that the Government will win
the private contract cases but will lose
the public contract cases. In other
words, a sovereign will be held to its
own contract on the promise to pay
in gold value, but private citizen
making contract with another must
bow to the law of the land whenever
the value of the coin of the realm Is
formally altered.
Quick Passage Forecast.
II this should be the outcome, the
President will within an hour or two
after the decision is rendered ask
Congress to amend the Court of
Claims act Approval would be given
instantly by both Houses.
If such an announcement Is made,
it would Immediately remove all un-
certainty as to the real value Of Gov
eminent bonds with the gold clause
In them, and the fluctuations in the
markets would be prevented.
Though the big decisions are ex-
pected Monday, it should not be sur
prising If the opinions are not handed
down for two or three weeks more.
The highest court is not influenced
by reasons of expediency, and, no
doubt. has always before it the fact
that precedents are likely to be bind
ing for generations to come, long after
the present situation will have been
ameliorated.
Copyright. 1887