Gold Clause Cases

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Gold Clause Cases
Seal of the United States Supreme Court.svg
Argued January 8–10, 1935
Decided February 18, 1935
Full case nameNorman v. Baltimore & Ohio R. Co;
United States v. Bankers Trust Co.;
Nortz v. United States;
Perry v. United States
Citations294 U.S. 240 (more)
55 S. Ct. 407; 79 L. Ed. 885; 1935 U.S. LEXIS 257; 95 A.L.R. 1352
Congress has power expressly to prohibit and invalidate contracts, although previously made and valid when made, when they interfere with carrying out any monetary policy Congress is free to adopt.
Court membership
Chief Justice
Charles E. Hughes
Associate Justices
Willis Van Devanter · James C. McReynolds
Louis Brandeis · George Sutherland
Pierce Butler · Harlan F. Stone
Owen Roberts · Benjamin N. Cardozo
Case opinions
MajorityHughes, joined by Brandeis, Stone, Roberts, Cardozo
DissentMcReynolds, joined by Van Devanter, Sutherland, Butler
Laws applied
U.S. Const. art. I, § 8, cl. 3.;
U.S. Const. art. I, § 8, cl. 5.;
U.S. Const. art. I, § 8, cl. 18.
U.S. Const. amend. XIV

The Gold Clause Cases were a series of actions brought before the Supreme Court of the United States, in which the court narrowly upheld restrictions on the ownership of gold implemented by the administration of U.S. President Franklin D. Roosevelt in order to fight the Great Depression. The last in this series of cases is notable as the most recent Supreme Court opinion whose outcome was leaked to the press before the official release of its decision. The cases were:

  • Norman v. Baltimore & Ohio Railroad Co.
  • United States v. Bankers Trust Co., 294 U.S. 240 (1935)
  • Nortz v. United States, 294 U.S. 317 (1935)
  • Perry v. United States, 294 U.S. 330 (1935)


Gold clauses specified within business contracts allow the creditor the option to receive payment in gold or gold equivalent. Within the first week of holding office, Roosevelt closed the nation's banks, fearing gold hoarding and international speculation posed a danger to the national monetary system, basing his actions on the Trading with the Enemy Act.[1] Congress quickly ratified Roosevelt's action with the Emergency Banking Act. The President soon afterward issued Executive Order 6102, requiring the surrender of all gold coins, gold bullion, and gold certificates to the government by May 1, 1933 in exchange for their value in U.S. dollars at the rate of $20.67 per troy ounce. Congress also passed a joint resolution canceling all gold clauses in public and private contracts, stating such clauses interfered with the power of Congress to regulate U.S. currency.

While the Roosevelt administration waited for the court to return its judgment, contingency plans were made for an unfavorable ruling.[2] Ideas floated about the White House to withdraw the right to sue the government to enforce gold clauses.[2] Attorney General Homer Cummings opined the court should be immediately packed to ensure a favorable ruling.[2] Roosevelt himself ordered the Treasury to manipulate the market as to make it appear in turmoil, though Treasury Secretary Henry Morgenthau refused.[2] Roosevelt also drew up executive orders to close all stock exchanges and prepared a radio address to the public.[2]

Opinion of the court[edit]

All three cases were announced on February 18, 1935, and all in favor of the government's position by a 5–4 majority.[2] Chief Justice Charles Evans Hughes wrote the opinion for each case, finding the government's power to regulate money a plenary power. As such, the abrogation of contractual gold clauses, both public and private, were within the reach of congressional authority when such clauses presented a threat to Congress's control of the monetary system.[2] Of note was Hughes's opinion in the Perry case: in a judicial tongue-lashing not seen since Marbury v. Madison,[3] Hughes chided Congress for its immoral—though legal—act.[4] However, Hughes ultimately found the plaintiff had no cause of action, and thus no standing to sue the government.[5]

Subsequent events[edit]

The Gold Reserve Act of 1934 abrogated gold clauses in government and private contracts and changed the value of the dollar in gold from $20.67 to $35 per ounce. This price remained until August 15, 1971, when President Richard Nixon, in what came to be known as the "Nixon Shock", announced that the United States would no longer convert dollars to gold at a fixed value even for foreign exchange purposes, thus abandoning the gold standard.

The limitation on gold ownership in the U.S. was repealed after President Gerald Ford signed a bill legalizing private ownership of gold coins, bars and certificates by an act of Congress codified in Pub.L. 93–373[6] which went into effect December 31, 1974. Pub.L. 93-373 did not repeal the Gold Clause Resolution of 1933, which made unenforceable any contracts which specified payment in a fixed amount of money or a fixed amount of gold. That is, contracts remained unenforceable if they used gold monetarily rather than as a commodity of trade. However, the Act of October 28, 1977, Pub.L. 95–147, § 4(c),[7] amended the 1933 Joint Resolution and made it clear that parties could again include so-called gold clauses in contracts formed after 1977.[8]


  1. ^ Wilson, Thomas Frederick (1992). The Power "to Coin" Money: The Exercise of Monetary Powers by the Congress. Armonk, NY: M.E. Sharpe. p. 209. ISBN 9780873327954.
  2. ^ a b c d e f g McKenna, at 56–66.
  3. ^ 5 U.S. 137 (1803)
  4. ^ Urofsky, at 676–78.
  5. ^ Perry v. United States, 294 U.S. 330, 354 (1935) ("The action is for breach of contract. As a remedy for breach, plaintiff can recover no more than the loss he has suffered and of which he may rightfully complain. He is not entitled to be enriched.").
  6. ^ [1], [2]
  7. ^ See: 91 Stat. 1227, 1229 (originally codified at 31 U.S.C. § 463; note: recodified as amended at 31 U.S.C. § 5118(d)(2)).
  8. ^

Further reading[edit]

  • Urofsky, Melvin I.; Finkelman, Paul (2002). A March of Liberty: A Constitutional History of the United States. 2 (2nd ed.). New York, NY: Oxford University Press. ISBN 978-0-19-512637-2.
  • McKenna, Marian C. (2002). Franklin Roosevelt and the Great Constitutional War: The Court-packing Crisis of 1937. New York, NY: Fordham University Press. ISBN 978-0-8232-2154-7.