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

Charles W. Mooney, Jrpre-1933 legislation, a gold coin could have been legal tenderonly for its face amount, not for the value of its gold content.Thus even if the bond had been paid in gold coin and even assumingthat gold coin did not have to be surrendered to thegovernment at the $ 20.67 price under the 1933 regulations,the bondholder could not have exchanged his gold coin at thethirty-five dollar price because no recipient would have been requiredto treat it as legal tender for more than its face amount.Moreover, he could not have exported the gold coin or sold it forits gold content. As a result, the holder had no legally cognizableloss of purchasing power. Since there was no “actual loss,” recoveryof money at the gold value—$ 1.69 per $ 1.00 face amountof the bonds—would “constitute not a recoupment of loss inany proper sense but an unjustified enrichment.”[ 42 ]191The Perry plurality was clear that Congress has the power to dealwith gold coin as a medium of exchange and that the requirementthat gold be redeemed and the prohibition against export and saleof gold on the international market were lawful. 43 Thus, the Courtheld that the lawful acts of Congress permitted it to take an unlawfulact—modification of the terms of its obligations—with impunity.The U.S. had modified its obligations de facto. 44 Mr. Justice Stone’sconcurring opinion made clear what the plurality opinion obfuscated(but clearly provided in result):While the Government’s refusal to make the stipulated paymentis a measure taken in the exercise of that power [to coin andregulate money], this does not disguise the fact that its actionis to that extent a repudiation of its undertaking. As much asI deplore this refusal to fulfill the solemn promise of bonds ofthe United States, I cannot escape the conclusion, announcedfor the Court, that in the situation now presented, the Government,through the exercise of its sovereign power to regulate the42 Quoting from id. at 358 (footnotes omitted).43 Perry, 294 U.S. at 355-56.44 Dam, supra note 28, at 518 (“The reasoning of the Perry plurality on the constitutionalissue was, however, less important to the future of gold than was theresult, which rendered gold clauses just as ineffective in government obligations asin private obligations.”)