Gold Clause Mumbo Jumbo

We love to talk about the Gold Clause Cases from the 1930s and wonder why our colleagues are less enthusiastic. In this episode, we talk with constitutional law expert Gerard Magliocca (Indiana) about the cases, which are the subject of Gerard’s wonderful article, The Gold Clause Cases and Constitutional Necessity. The basic plot is that, in the 1930s, the U.S. needed to devalue the currency but feared that this would bankrupt private borrowers and magnify the government’s own debt burden. The reason? Loan contracts called for repayment in gold dollars indexed to their pre-devaluation value. So the government abrogated these clauses, and the Supreme Court looked the other way. We talk with Gerard about the Court’s motivations, how it dodged a constitutional crisis, the baffling (to us, anyway) reasoning underlying the Perry decision, and the potential relevance of the case to today’s covid-19 crisis.

Producer: Leanna Doty