US Government Debt Different - Finance Department - University of ...

Charles W. Mooney, Jror gold coin. In 1933, early in the Roosevelt administration, Congresspassed a Joint Resolution providing that a contractual requirementthat payments be made in gold or specific coin or currencywas against public policy, effectively nullifying such gold clauses. 29The resolution further provided that any such obligations could besatisfied by the payment of any currency that was legal tender, dollarfor dollar. 30189Perry’s plurality opinion on behalf of four Justices, 31 confirmed theunconstitutionality of a law that would relieve the U.S. from its obligationto pay federal debt according to its terms. 32 Mr. Perry wasthe holder of a U.S. government bond that made principal and interest“payable in United States gold coin of the present standardof value.” 33 Perry sued to recover the amount in dollars equivalentto gold at earlier exchange rates under the gold clause term of thebond. The plurality opinion recognized that the Constitution empowersCongress to borrow money, which includes the right “to fixthe amount to be borrowed and the terms of payment.” 34 However,the plurality held the Joint Resolution to be unconstitutional insofaras it applied to gold clauses in federal obligations. The Court reliedin part on Section Four. As it explained:We regard [Section Four] . . . as confirmatory of a fundamentalprinciple, which applies as well to the government bondsin question, and to others duly authorized by the Congress, asto those issued before the Amendment was adopted. Nor canwe perceive any reason for not considering the expression “thevalidity of the public debt” as embracing whatever concerns theintegrity of the public obligations. 35The Court also relied directly on the fundamental principle confirmedby Section Four. It reasoned that “[h]aving this power to au-29 H.R.J. Res. 192, 73d Cong., 48 Stat. 112-13 (1933) (enacted).30 Id.31 Mr. Justice Stone wrote a concurring opinion, discussed infra, thereby providinga 5-4 majority.32 Perry, 294 U.S. at 353-54.33 See, e.g., Perry, 294 U.S. at 347 (quoting bond terms).34 Perry, 294 U.S. at 351.35 Id. at 354.