Invalidation of the Gold Clause

Report Outline
The Gold Clause Resolution and the Gold Standard
Significance of the Gold Clause in Contracts
The Supreme Court and the Gold Clause
Impairment of Obligations and Due Process of Law
Special Focus

The Gold Clause Resolution and the Gold Standard

Purposes of the Administration's Resolution

The swift-moving chain of events which began on the night of March 5, 1933, with President Roosevelt's gold embargo-bank holiday proclamation will culminate this week in the adoption by both houses of Congress of a resolution “to assure uniform value to the coins and currencies of the United States” by declaring gold clauses in all existing obligations, public and private, contrary to public policy and invalid. Under the resolution all obligations expressed as payable in gold may be discharged dollar for dollar in “legal tender” and no future obligations, public or private, may be expressed in any specific coin or currency. The resolution, in addition to prohibiting the use of the gold clause in future obligations, will affect some $75,000,000,000 of public and private obligations now outstanding in the United States.

A memorandum made public by Senator Fletcher (D., Fla.), chairman of the Senate Banking and Currency Committee, when he introduced the administration's gold-clause resolution, May 26, said its immediate enactment was of the utmost importance because:

1. It completely regularizes the present de facto situation as to both public and private debts.