Evening star., 1935-03-11
j. s. REF|NANC|NG
IS THREATENED BY
LIBERTY BOND SUIT
New Gold Policy Test Pos.
sibIe in Court of Claims
Action.
RIGHT TO PAY PRIOR TO
MATURITY CHALLENGED
Robert A. Taft Is Plaintiff in
Move-$5o Gold Liberty Lien
Basis of Complaint.
BY G. GOULD LINCOLN.

A suit fled To-Day in the United
States Court of Claims may upset the
whole program of the administration
for refinancing outstanding Govern
ment bonds. 1t is likely to bring a
new test on the gold policy of the
Government.
The Dixie Terminal Co. of Cincin-
natl is suing the Government to test
the right of the Treasury to call gold
bonds for payment in advance of their
maturity, lnless the Government pays
the bonds in gold
Robert A. Taft. son of the late
Chief Justice and President of the
United States, as president and counsel
Of the Dixie Terminal Co. filed the
suit in the Court of Claims.
Gold Payment Pledged.
The petition sets forth that the
company is the owner Of a $50 bond
of the fourth Liberty loan. known as
the fourth Liberty loan Al per cent
gold bond of l93338 Under the terms
Of the bond, the Government promised
to pay the bearer on October Is. 1888,
the principal sum of $50, in gold coin
of the standard value on the date of
issuance, october "a. 1918, and to pay
interest on the principal sum in like
gold coin at the rate of Al per cent
per annum until the principal should
be payable upon presentation and sur
render Of the interest coupons as they
mature.
The petition cites the fact that on
October 10, 1893. the Government,
through the Secretary of the Treas
ury called for redemption on April
Is. 1884. Of this bond. and other
bonds. The company is the holder of
three interest coupons formerly at
tached to the bond. maturing April
/ Is. 1888, October Is, 1888, and April
/ Is, 1884
Payment Refused.
Through Taft. the company pre-
( sented these coupons at the Treasury
Department today and demanded
payment in gold dollars. Payment
was refused except in legal tender
currency equal to the face value Of
the bond. which at present is con-
siderably less than the gold value.
Following this Taft also presented
to the Treasurer of the United States
the bond, and demanded that it be
redeemed by the payment of so gold
dollars. This demand also was re-
fused. although the offer was made
to pay $50 in legal tender. Taft de-
clined to accept payment of that ma
ture.
Then Taft presented to the Treasury
Department another interest coupon
through october Is. 1884 calling for
/ the payment of S107, either in gold
| coins or legal tender The Treasury
I Department refused payment of this
coupon on the grounds that the bond
to which it had been attached had
| been previously called for redemption.
Calling Bonds at Stake.
If the contention of the terminal
company should be sustained by the
| courts, it would mean that the Gov
eminent could not call its gold bonds
before the date of maturity and at the
same time cease to pay interest on
| these bonds. in accordance with the
terms of the bonds, before they ma
ture. Only by the satisfying of the
/ terms Of the bonds. which calls for
payment of the interest in gold or its
/ equivalent, would the contract be full
( filled
/ In its petition the company claims
/ the Government had no right to call
| the gold bond for redemption except
on the payment of so gold dollars. It
says also that the Government has
announced publicly that it will not
| pay the fourth Liberty loan bonds in
gold dollars, and has thereby for
feited, while such reputation con-
tinues. any rights -or privileges con-
ferred on it by the terms of said bonds,
including the right or privilege to re-
deem the said bond before the ma
| turity thereof"
Test Suit.
Following the filing Of the suit, Taft
made this statement:
The suit filed today in the United
States Court of Claims by the Dixie
Terminal Co. of Cincinnati, of which
/ am president and counsel. is for the
purpose Of testing the right OF the
Treasury to call gold bonds for pay
ment in advance of their maturity
unless the Government performs its
agreement to pay in gold.
Since the Supreme Court has de-
cided that the gold clause in the
United States bond is valid. it is our
contention that the Government has
forfeited any right to call the bonds
before their maturity. that the Treas
ury can exercise privileges given in its
bonds only after the performance of
them according to their terms in ac-
cordance with the decision of the Su-
preme Court.
THE suit takes the form of a claim