Evening star., 1935-01-28
PURSES TO FEEL
| DECISION 0N:GOLD
average Citizen and Debtor
4! to Be ,vitaIIy Affected
: When Court Rules.
Nv the Associated Press.

rBy the AbSOCIhIeu EIcoS. - :.
Pccketbooks sre going to be affected
somehow, no matter which way the
Supreme Court of the United States
decides the gold clause cases.
Z For Congress, the decision Is going
ito mean that the Constitution did or
did not give it certain powers; but for
the American citizen, 1t is a question
,of whether the dollar value of debt is
to be increased.
! Essentially, the court is going to an
,swer four major things:
/. Did Congress have the right to
end payments in gold?
:, 2. May Congress alter contracts
promising gold payments?
8. Was the Government right in
beizing the gold profits?
4. Does Treasury refusal to redeem
obligations in gold constitute repudi-
ation? @
1925 Grains in Dollar.
In those interpretations of law, will
be found the answer to whether al
<old gold clause contracts must be car
efied out to the letter. Every contract
4involving debt which carried a gold
clause" stipulated the money should
be paid in gold or in dollars which
would buy 25.8 grains of gold. nine
tenths fine. The new dollar will buy
only 1925 grains, but Congress has
said they must be accepted dollar for
dollar in the payment Of debt.
To the citizen, the courts decision
will say whether payable in gold
means $3.50 or 81 in currency. II 1t
upholds Congress, creditors will lose
rich visions Of getting an additional
90 cents on every dollar they lent.
individuals, vast enterprises and the
Government itself will be saved the
potential outlay of millions of dollars
TO those who have been paid or still
hold their negotiable paper.
Z But, If the court uphols the gold
clause, debtors face the prospect Of
every S100 in old debt suddenly be-
coming debt of Sl69 in the new So
cent dollars.
Congress May Act Quickly.
= There is some solace, however, for
those debtors who wonder whether
they are going to face the prospect
of paying many more present value
dollars than they contracted to pay
on the basis of old gold dollars. In
and out Of Congress there are schemes
2foot to prevent an increase in the
dollar value of debt.
9 One currently popular would be
imposition Of special tax designed
to take away all profit from any per-
son demanding payment Of old debts
in a larger number of new dollars
Thus, if debt to pay S100 in gold
could be discharged only by giving
$169 in new value dollars the Federal
Government would apply $50 or $40
tax and return the proceeds to the
debtor The net effect would be to
leave the debt at S100.
Others suggest a hurried move by
Congress to amend the Constitution,
giving specific powers to the Congress
or the President to do all the things
that have been done with the dollar
advocates say Congress could act
State Legislatures are in session now
10 get action from them in a rela-
lively few days.
: Court Increase Considered.
, Still others, much fewer in num-
Der, suggest Congress exercise its
power to increase the number of
members Of the Supreme Court with
o view to getting new justices who
might influence a desired decision
On only four occasions has Congress
ever exercised its power to, enlarge
or contract the court, and there is
no proof it was done to influence a
decision.
Ever since 1923 there have been
attempts to require that the court
be restricted in its power to hold acts
of Congress unconstitutional. Actu-
ally. however, the court has held rela-
lively few acts of Congress unconsti-
tutional. The number since the Civil
War has been only 54, including the
recent oil decision.