PERRY V. UNITED STATES, 294 U. S. 330 (1935)

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U.S. Supreme Court

Perry v. United States, 294 U.S. 330 (1935)

Perry v. United States

No. 532

Argued January 10, 11, 1935

Decided February 18, 1935*

294 U.S. 330


1. A provision in a Government bond for payment of principal and interest "in United States gold coin of the present standard of value" must be fairly construed, and its reasonable import is an assurance by the Government that the bondholder will not suffer loss through depreciation of the medium of payment. P. 294 U. S. 348.

2. The Joint Resolution of June 5, 1933, insofar as it undertakes to nullify such gold clauses in obligations of the United States and provides that such obligations shall be discharged by payment, dollar for dollar, in any coin or currency which at the time of payment is legal tender for public and private debts, is unconstitutional. P. 294 U. S. 349.

3. Congress cannot use its power to regulate the value of money so as to invalidate the obligations which the Government has theretofore

Page 294 U. S. 331

issued in the exercise of the power to borrow money on the credit of the United States. Pp. 294 U. S. 350 et seq.

4. There is a clear distinction between the power of Congress to control or interdict the contracts of private parties when they interfere with the exercise of its constitutional authority and a power in Congress to alter or repudiate the substance of its own engagements when it has borrowed money under its constitutional authority. P. 294 U. S. 350.

5. By virtue of the power to borrow money "on the credit of the United States," Congress is authorized to pledge that credit as assurance of payment as stipulated -- as the highest assurance the Government can give -- its plighted faith. To say that Congress may withdraw or ignore that pledge is to assume that the Constitution contemplates a vain promise, a pledge having no other sanction than the pleasure and convenience of the pledgor. P. 294 U. S. 351.

6. When the United States, with constitutional authority, makes contracts, it has rights and incurs responsibilities similar to those of individuals who are parties to such instruments. P. 294 U. S. 352.

7. The right to make binding obligations is a power of sovereignty. P. 294 U. S. 353.

8. The sovereignty of the United States resides in the people, and Congress cannot invoke the sovereignty of the people to override their will as declared in the Constitution. P. 294 U. S. 353.

9. The power given Congress to borrow money on the credit of the United States is unqualified and vital to the Government, and the binding quality of the promise of the United States is of the essence of the credit pledged. P. 294 U. S. 353.

10. The fact that the United States may not be sued without its consent is a matter of procedure which does not affect the legality and binding character of its contracts. P. 294 U. S. 354.

11. Section 4 of the Fourteenth Amendment, declaring that "The validity of the public debt of the United States, authorized by law, . . . shall not be questioned," is confirmatory of a fundamental principle, applying as well to bonds issued after, as to those issued before, the adoption of the Amendment, and the expression "validity of the public debt " embraces whatever concerns the integrity of the public obligations. P. 294 U. S. 354.

12. The holder of a Liberty Bond, which was issued when gold was in circulation and when the standard of value was the gold dollar of 25.8 grains, nine-tenths fine, and which promised payment in gold of that standard, claimed payment after the Government, pursuant to legislative authority, had withdrawn all gold coin

Page 294 U. S. 332

from circulation, had prohibited its export or its use in foreign exchange, except for limited purposes under license, and had reduced the weight of gold representing the standard dollar to 15-5/21 grains and placed all forms of money on a parity with that standard. The Joint Resolution of June 5, 1933, had enacted that such bonds should be discharged by payment, dollar for dollar, in any coin or currency which, at time of payment, was legal tender for public and private debts. The bondholder, having been refused payment in gold coin of the former standard or in an equal weight of gold, demanded currency in an amount exceeding the face of the bond in the same ratio as that borne by the number of grains in the former gold dollar to the number in the existing one -- or $1.69 of currency for every dollar of the bond. The Treasury declined to pay him more than the face of the bond in currency, and he sued in the Court of Claims.


(a) The fact that the Government's repudiation of the gold clause of the bond is unconstitutional does not entitle the plaintiff to recover more than the loss he has actually suffered, and of which he may rightfully complain. P. 294 U. S. 354.

(b) The Court of Claims has no authority to entertain an action for nominal damages. P. 294 U. S. 355.

(c) The question of actual loss cannot be determined without considering the economic condition at the time when the Government offered to pay the face of the bond in legal tender currency. P. 294 U. S. 355.

(d) Congress, by virtue of its power to deal with gold coin as a medium of exchange, was authorized to prohibit its export and limit its use in foreign exchange, and the restraint thus imposed upon holders of such coin was incident to their ownership of it, and gave them no cause of action. P. 294 U. S. 356.

(e) The Court cannot say that the exercise of this power was arbitrary or capricious. P. 294 U. S. 356.

(f) The holder of a bond of the United States, payable in gold coin of the former standard, so far as concerns the restraint upon the right to export the gold coin or to engage in transactions of foreign exchange, is in no better case than the holder of gold coin itself. P. 294 U. S. 356.

(g) In assessing plaintiff's damages, if any, the equivalent in currency of the gold coin promised can be no more than the amount of money which the gold coin would be worth to the plaintiff for the purposes for which it could legally be used. P. 294 U. S. 357.

(h) Foreign dealing being forbidden, save under license, and the domestic market being not free, but lawfully restricted by Congress,

Page 294 U. S. 333

valuation of the gold coin would necessarily have regard to its use as legal tender and as a medium of exchange under a single monetary system with an established parity of all currency and coins, and this would involve a consideration of the purchasing power of the currency dollars. P. 294 U. S. 357.

(i) Plaintiff has not attempted to show that, in relation to buying power, he has sustained any loss; on the contrary, in view of the adjustment of the internal economy to the single measure of value as established by the legislation of the Congress, and the universal availability and use throughout the country of the legal tender currency in meeting all engagements, the payment to the plaintiff of the amount which he demands would appear to constitute not a recoupment of loss in any proper sense, but an unjustified enrichment. P. 294 U. S. 357.

Question answered " No."

Response to questions certified by the Court of Claims in an action on a Liberty Loan Gold Bond.

Page 294 U. S. 346

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