The Washington times., 1935-01-12

II the Administrator loses, the
value of gold bonds will rise, the
whole initiation policy will be
brought to a head for early deci-
sion, and the eventual return to
the gold standard will be as
Sured.
The New Deal arguments are:
N Congress had the power to
repudiate promises to pay gold,
and to make others repudiate.
(2) The President was juSti-
fled in putting through this
action because Of panic cOndi-
tions.
, (3) If now these promises are
kept, "chaOS" will result.
az 1t would increase the bur.
den of debt.
- ~ It would handicap the
United States in dickering with
foreign nations.
(6) Other nations have re-
.pudiated.
Not a word of this goes to prove
that the repudiation was right.
The Government merely argues
that it had the power, that its
action was expedient. It then as
- serts that others did it too!
The bondholders and certificate
holders, on the other hand, argue
as follows:
1. The Government may have
the power to break its own
promises, but it does not have
the power to make others break
theirs.
(a) The Government has the
power to decide what kind of
money shall be legal tender and
g.. be in any coin. But it does not
have the power to prevent its
citizens from promising to pay
more or less money, nor to
make them break such prom
iSes when given. 1t can change
the dollar; but it can't change
promises to pay dollars.
(b) It has exceeded its power
in that, while it can issue notes
and control currency, it cannot
annuI the promises to pay the
equivalent Of gold which are
contained in the notes issued.
(c) It has exceeded its power,
In that it has annulled private
contracts made to protect the
parties to such contracts against
just such money-changing as has
occurred. The railways could
not have sold lOng-term bonds
unless they had promised to pay
In terms Of gold.
(d) 1t has exceeded its power
in that it has infrirged the
power of the States to promise
to pay in terms Of gold.
2. The Government has taken
private property without due
process of law, in that it has
robbed bOndhOlderS Of the
value of their bonds, and GER
tificates holders of their Sc
curity.
Counsel correctly points out
that no small "privileged class"
Is thus robbed. Millions of people
who have insurance policies and
bank deposits, are affected.
It is pointed out that the Ad-
ministration has written up
"profit" on it's seized gold, and
has smilingly called this a "nest
egg" But whence comes this
New Deal profit? Obviously if it
is a profit, it has been made at
the expense of those citizens who
had money or claims to money in
terms of gold. 1t is their property
that was taken away.
Searching questions by several
members of the court show that
the fundamentals will be conSid-
cred. One asked what the Gov
ernment means by ''value"-doeS
the power of Congress to regulate
value mean to change the guam
tity of metal in a coin, or does
1t mean to fix the purchasing
power of money? These are two
very different things.
Congress can make coins, but it
cannot make. value in the sense of
purchasing power. (Only the law
of supply and demand can do
that.) What bond and certificate
holders are entitled to is the pur-
chasing power which was taken
from them.
Another justice suggested that
foreign bonds referred to by the
Administration lawyers were not
gold bonds like the ones now in
question. He asked, even if they
had been, would that entitle our
Government to act like Germany?
-. Of course. it can't be proved
that any disturbance that might
come from upholding the gold
clauses would be as bad as the
losses and confusion caused by
their reputation. Anyhow, what
would you think of a man who
argued, IT may be wrong. but look
at the trouble it would make If I
did the right thing?"