Gold Clause Cases

Gold Clause Cases

Several U.S. Supreme Court cases arising out of the Gold Reserve Act of 1934. According to this act, private citizens were no longer allowed to own more than a token amount of gold. However, many contracts enacted before the act contained gold clauses, which allowed one party to demand payment in gold (in order to protect against inflation of the U.S. dollar). The Supreme Court ruled that these clauses became invalid upon the passage of the act and that no party could demand such payment. The argument behind this ruling states that Congress has the authority to invalidate valid contracts if these contracts go against any monetary policy Congress may adopt. These cases were decided jointly in 1935.