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

Jeremy Kreisberg & Kelley O’Mara (Under the Supervision of Professor Howell Jackson)Perry was decided on the same day as four other cases 149 relating tothe constitutionality of the Joint Resolution of June 5, 1933 (the“Joint Resolution”), which permitted the government to satisfy itsobligations with any legal currency when the bondholder’s contractrequired payment in gold. 150 The Supreme Court in Perry stated,“[h]aving this power to authorize the issue of definite obligations forthe payment of money borrowed, the Congress has not been vestedwith authority to alter or destroy those obligations.” 151 However, theplaintiff did not collect the value of his contract in gold because hedid “not show[] . . . that in relation to buying power he has sustainedany loss whatever.” 152279While some academics interpret the decision in Perry as prohibitingthe government from breaching its obligations, 153 Professor HenryHart questioned how the bondholder could have suffered no damageif the Joint Resolution was unconstitutional. 154 Professor Hart didnot have a “conviction” of what was the proper interpretation of thePerry decision. 155 However, he reconciles the conflicting messagesfrom Chief Justice Hughes by noting that “it was not easy to comeout baldly and announce that the public credit has no integrity,”but when the Court had to decide on an ultimate resolution ofwhether the United States would have to satisfy its obligations ingold, “different considerations solicited its judgment.” 156 WhileProfessor Hart considered the remedy as “manifestly useless” for thebondholder in Perry, he argued that it “may not always be useless”under different circumstances. 157If the Public Debt Clause is insufficient, the President’s emergencypowers may not permit unilateral executive action. Congress has149These five cases are known as the “gold clause cases.” Henry M. Hart, Jr., The Gold Clausein United States Bonds, 48 Harv. L. Rev. 1057, 1057-58 n.2 (1935). The cases are: Norman v.Baltimore & Ohio R. R., 294 U.S. 240 (1935), United States v. Bankers Trust Co., 294 U.S. 240(1935) (two cases), and Nortz v. United States, 294 U.S. 317 (1935).150See infra Appendix D.151294 U.S. at 353.152Id. at 357.153Abramowicz, supra note 103, at 13.154Hart, supra note 149, at 1060.155Id. at 1094.156Id.157Id. at 1096.