Page:Stabilizing the dollar, Fisher, 1920.djvu/218

164 was intended to safeguard the creditor against payment in silver dollars which, it was justly feared, would be greatly depreciated in purchasing power, if the 16 to 1 proposal were adopted.

The statute enacting stabilization ought to include a specific settlement of this gold-clause question.

Otherwise, it would be left for the courts to interpret, and long and costly litigations would be sure to result. Pending a decision by the Supreme Court the status of all gold-clause contracts would be uncertain. In attempting legally to resolve this uncertainty there would be two widely different views possible. It might plausibly be argued that in the gold clause, "coin" was specified only for its convenience to handle, as compared with bullion. According to this interpretation gold-clause contracts ought, under stabilization, to be reckoned in terms of gold bullion, and when the gold dollar became greater or less than 23.22 grains of pure gold, contracts containing the gold clause would still have to be measured in dollars of bullion of 23.22 grains each.

But, on the other hand, it might with almost equal plausibility be argued that the word "coin" must be taken literally and that the creditor had the right to require the delivery of such coins or their equivalent. If such were the interpretation and (as supposed in Appendix I, § 5) gold coin were not retired but continued in existence as token coins, i.e. at a value above that of the contained bullion, the technical fulfillment of the gold clause by the payment of these "over-valued" coins, or their equivalent, would coincide with the use of stabilized dollars to which they would be equivalent (as explained in Appendix I, § 5).

This interpretation, insisting on "coins," would, however, encounter difficulties if gold coins were abolished entirely (as suggested in the text) or if, though not recalled by law, they were all melted into bullion because the bullion in them had come to be worth more than their face value (as supposed in Appendix I, § 5).