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

Charles W. Mooney, Jring in Perry, Alternative 2 would leave the non-exempted Treasuryobligations unaffected and would even reaffirm their validity andenforceability. As to remedies, in Perry the Court permitted the governmentto substitute the face amount of currency for its obligationto deliver gold coin. By a proper exercise of the government’s powersover monetary policy, it had made it impossible for the holderof the gold clause bond to recover the original value of the gold.Under Alternative 2, the Prosperity Shares would be substituted forthe actual payment of the non-exempted debt as called for underthe terms of the Treasury obligations. As in Perry, Congress wouldhave passed legislation authorizing the issuance of Prosperity Sharesas a step toward rescuing the U.S. economy from an economic crisis.As in Perry, the value provided (the Prosperity Shares) to the nonexemptedTreasuries holders would be less than the value originallypromised (payment in full). But in Perry, the bond was paid anddischarged by payment of the lesser value; Alternative 2 would leavethe validity of the Treasury obligations intact and provide ProsperityShares. In Perry, moreover, the offending joint resolution providedthat gold clauses were “against public policy” and overtly changedthe terms of U.S. obligations by providing that obligations could besatisfied not in gold but with legal tender. 124 Alternative 2 would notpurport to change the terms of Treasuries, however. So long as thevalidity of the public debt remains pristine, arguably neither SectionFour nor the non-abrogation principle (that Congress cannot alter ordestroy U.S. obligations) would prohibit the U.S. from deciding notto pay the Treasury obligations voluntarily.211The power to decline to pay in the face of a national financial threatshould not be confounded with the impairment of the validity oralteration of obligations. The exercise of monetary power relating togold that was involved in Perry was, of course, closely related to thesubstance of the gold clause obligations. The relationship betweenthe adoption of Alternative 2 as a general measure to ameliorate afinancial crisis and the power of Congress over monetary policy issomewhat more attenuated. But there is a substantial connectionnonetheless. Alternative 2 embraces a Congressional decision thatcontinuing to print more money to pay U.S. obligations is bad mon-124 See text at note 29, supra.