Momentous is the decision of the Supreme Court to hold up action on the Gold Clause Cases. Attorney-General Cummings intimidates the Court with the warning that the whole financial structure of the New Deal will go to seed with the rest of the country unless a favorable verdict is returned. The President himself seems anxious for an early ruling. But in no uncertain terms, the Court appears to foreshadow an unfavorable stand by the unprecedented action in announcing that the customary Court routine in handing down decisions on Mondays would not be followed this week.
Decision on the five cases which are the basis for action in the gold clause suits now before the Court, hinges upon the validity of Public Resolution No. 10 of the 73rd Congress. In effect, this declared that every debtor who has agreed to pay his debt in gold coin of a certain value, or in any amount of money measured thereby, shall be discharged from that debt upon payment dollar for dollar in any coin or currency which at the time of payment is legal tender for public or private debts. More simply stated, it means: That under the former value of money, the $100,000,000,000 of outstanding gold clause contracts call for the debt to be paid at the old rate of 25.8 grains of gold to the dollar, whereas the new dollar contains only 15 5-21 grains of gold. All five creditors sue in common cause declaring that their contracts call for repayment "in gold coin of the present standard of weight and fineness." Each insists that Congress has arbitrarily interfered with contractual rights and that the whole scheme is but a bald proposal to relieve debtors at the expense of creditors, and as such amounts to deprivation of property without due process of law. The only solid line of defense for the Government rests in the supposition that the sovereign power over money and foreign commerce must not be hamstrung by pre-existing arrangements by contract. Congress, New Dealers contend, may abrogate rights arising under a contract when such action is reasonably necessary to carry out some proper legislative object.
The importance of the ruling of the Supreme Court in the Gold Clause Cases can not be understated. An unfavorable decision by the Court will invalidate the present value of every issue of public and private bonds, contracts and securities on both the open and closed market. The dollar will weaken on the foreign exchange and our international trade balance will be thrown into serious jeopardy. Should the Supreme Court decision be actuated neither on the grounds of interference of contractual rights or the deprivation of property without due process of law, but as some authorities believe, by the misuse of the constitutional provision of delegation of powers, the Administration will have a perplexing and irksome problem to deal with. Undoubtedly the Supreme Court will rule correctly in deciding against the Government on any of the foregoing reasons. A way out of the dilemma would be for the Administration to retrench to a conservative position by raising the dollar back to par on the old gold standard.