• Last updated on November 11, 2022

The Supreme Court’s ruling allowed Congress to pass laws abrogating various contracts that called for payment in gold because the contracts, if honored, would have harmed the U.S. economy.

All three cases were argued and decided together, with Chief Justice Charles Evans HughesHughes, Charles Evans;Gold Clause Cases[Gold Clause Cases] writing the opinion for the 5-4 majority. In fighting the Great Depression, Congress passed laws allowing the abrogation of contracts requiring payment in gold, allowing them to be paid in devalued currency. Bondholders challenged these laws as depriving them of property without due process and as a breach of contract. Writing for the Court, Hughes stated that the gold clause simply provided for payment in money. He further stated that Congress had the constitutional authority to regulate the monetary system and its enactments were within the scope of that authority, although he did find Congress erred in rescinding the gold clauses in its own government bonds. These must be paid, but the bondholders could recover only nominal damages and could not use the court of claims to pursue their loss. Justice James C. McReynolds dissented vehemently in each case, calling this abrogation of contracts a seizure of property and suggesting financial chaos would result.[case]Norman v. Baltimore and Ohio Railroad Co.[Norman v. Baltimore and Ohio Railroad Co.][case]Nortz v. United States[Nortz v. United States][case]Perry v. United States[Perry v. United States]Fiscal and monetary powers;Gold Clause Cases[Gold Clause Cases]

Capitalism

Contract, freedom of

Contracts clause

Fiscal and monetary powers

New Deal

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