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About Heppner gazette-times. (Heppner, Or.) 1925-current | View Entire Issue (Sept. 5, 1935)
PAGE TWO HEPPNER GAZETTE TIMES, HEPPNER, OREGON, THURSDAY, SEPT 5, 1935. BACKGROUND OF NEW DEAL DECISIONS THE GOLD CLAUSE DECISION. By JAMES H. GILBERT. When the Roosevelt administra tion came to power In March, 1933, the banking system of the country had broken down, credit was con tracted, confidence strained, gold was being hoarded by millions of dollars and the outgo of gold was threatened by the monetary policy of foreign countries, most of which had abandoned the gold standard but were frantically striving to strengthen credit abroad and sta bilize international exchanges. With the resolution and dispatch characteristic of the "New Deal" President, the United States joined the leading commercial nations in the abandonment of the gold stand ard. There will always be economists who will question the necessity and expediency of the move. It is not the purpose of this article to pass judgment on this phase of financial policy. Rather it is intended to re cite the facts as a background for the momentous decision in the gold clause cases. The abandonment of gold at the old standard of weight and fineness would of course have been of little consequence if a vast volume of pre-existing contracts to pay gold had been recognized as valid and other contracts of the same kind had been sanctioned and encour aged. Widespread monetary con fusion would have resulted, prices and the standard of value would have rested on no certain basis. To sweep every phase of the old deal monetary policy out of the way and to pave the way for the univer sal use of the same medium of pay ment whatever it turned out to be, was the purpose of the Congress ional resolution of June 5, 1933. In this important piece of legisla tion, contracts for the payment of gold were declared to be "contrary to public policy." Obligations to pay money incurred either before or after the law was passed regard less of provision contained in such contracts, shall be discharged up on payment "in any coin or cur rency which at the time of pay ment is legal for public and private debts." The precise foundation or our currency was somewhat in doubt until the Gold Reserve Act of 1934 (January 30) and the subsequent exercise of the extraordinary pow er granted to the President By proclamation the bullion con tent of the gold dollar underlying the new currency was reduced from the old standard of 25.8 grains (nine-tenths fine) io 15 5-21 grains. Thus the gold content of our dol lar was shoved down forty per cent If contracts to "pay gold of the present weight and fineness" were recognized, the devalued dollar, de spite the resolution of Congress, would not be legal tender for $100, 000,000,000 worth of pre-existing debts and many more that might make their appearance. Despite the far-reaching import ance of the legal issues involved the devaluation of the dollar was of little practical importance. The gold dollar was merely shrunken to cor respond with the depreciation of the paper money that had taken place since suspension of the gold standard. That the devaluation of the dol lar was a matter of no serious fl nal consequence is shown by the fact that it resulted in no material change in the price level. The new dollar in purchasing power matched the one in active circulation and left the price level undisturbed. Since debtors, corporations and Individuals were obligated to pay $100,000,000,000 insgold at the old standard of weight and fineness if the abrogation of the gold clause by the Act of June 5, 1933, were held unconstitutional, it would re quire 69 billions more of current funds to turn the trick. Moreover, most of these debts had been incurred in the prosper ous period of the late twenties and the fall in prices since the panic of 1929 had enormously increased the value of the gold dollar of former weight and fineness and increased immensely the difficulties of laying hands on the old-fashioned dollar. Several cases involving substan tially the same issue came before the Court at the same time. Typical of these was the tender by debtor corporations of current funds in payment of interest on bonds where both interest and prin cipal expressly called for payment in the pre-devalued dollar. Creditors had rejected payment and challenged the power of Con gress to tamper with private con tracts calling for payment In gold of a specified weight and fineness. The precedents were confusing and conflicting. On the surface at least the opinion, Bronson v. Rodes made such contracts agreements "to deliver a certain weight of standard gold" "not distinguishable from a contract to deliver a certain weight of bullion." Literally such contracts would have to be fulfilled "by assay and the scales" and not "by count." If, on the other hand, the court followed the Supreme Court In the legal tender cases after It had re versed the decision in Hepburn v. Griswold, these debts might be dis charged by anything which the law designates as legal tender at the date of maturity. Indeed, the language of the Con gressional resolution of June 5, 1933, clearly suggests Chase's opin ion in the legal tender cases. Debts are to be "discharged upon pay ment ... in any coin or currency which at the time of payment Is le gal tender ..." The Court In the gold clause de cision disposes of Bronson v. Rodes as a precedent by pointing out that monetary conditions In 1934 were very different from those when the debt owed by Bronson came up for settlement in 1869. Despite the issue of depreciated paper in the Civil War, the United States mint had not stopped coin-J age of gold and silver at the old standard of weight and fineness and Congress had not withdrawn the legal tender quality of metallic money. Two forms of currency of unequal value were equally recog nized by law and debtor and credit or might lawfully choose to pay and be paid in either. The resolution of Congress in 1933 and the delegation of the pow er to devalue had set up but one standard for the payment of debts, namely, (devalued) dollar for dol lar which alone is lawful tender for debts maturing after January, 1934. These bonded obligations despite the gold clause contained therein were merely contracts to pay a cer tain number of dollars. In the gold clause decision we find the broadest assertion of the power of Congress not only to coin money but to establish a monetary sys tem" and to invalidate the provis ions of existing contracts that may interfere with the exercise of this power. The Court, held, in keeping with Julliard v. Greenman, that the pow er to set up this monetary system does not reside wholly In the coin age clause of the Constitution but resides also in the sovereign pow ers that belong to the national gov ernment The full exercise of this power to set up a monetary system can not brook the existence of contracts calling for the payment of some other medium than that specified by Congressional act. Despite the sacredness of con tracts in the realm of law, the pow er to enter into contracts can not remove the transaction from the scope of Congressional authority. Such contracts can not interfere with the power of Congress to reg ulate commerce, coin money, estab lish postofflces, etc., and by the ex ercise of sovereign power the na tional legislature may sweep them aside if they do. The prevalence of the gold clause in bonds and other contracts to the extent of billions of dollars render ineffective the clearly defined pow er of the government to "create a currency and determine the value thereof." These gold clause contracts if al lowed to exist with the sanction of the Court would increase the de mand for gold as a means of pay ment, enhance its value, stimulate hoarding and export and make un workable any attempt to regulate the value of the dollar in the chan nels of commerce. Despite contractual obligations and obstacles the Court concluded that Congress had the right to re ject a dual system of currency and to establish a uniform system by abrogating the gold clause and mak ing all payments in one medium. In the light of the emergency and the far-reaching consequences of an opposite stand, the Court was wise in the selection of its prece dents. PROPOSALS FOR LIMITING POWERS OF THE SU PREME COURT. By WAYNE L. MORSE Although there is probably some truth in the comments of critics of the United States supreme court to the effect that the personal philoso phies of the members influence their decisions, still we should not over look the fact that there has been a marked consistency in the constitu tional decisions of the court. True it is that the flexible clauses of the constitution have been stretched so that they now cover many situations which were not contemplated when the court first started to give meaning to them. But for the most part the consti tutional law decisions, as pro nounced by the court from time to time, show a clear resemblance to parent constitutional law prece dent and also a sensitivity to new conditions and changed, social needs. The position, training, and ex perience of the court, the power ful tradition which surrounds it, have undoubtedly made It the greatest stabilizer in our national life. I believe that its power to exer cise judicial review has exerted an even greater influence on orderly change than its exercise of Judicial review. The number of unconsti tutional proposals and schemes which have not been approved In legislative halls because of this known power of judicial review must be legion. Nevertheless, it Is sometimes pro posed that no act of congress should be declared unconstitutional by the court except by a unanimous vote, or by some ratio other than the ma jority vote rule. Critics of the majority vote rule contend that an issue so important as the constitutionality of an act should not be determined by a bare majority vote because this practice places too much power in the hands of one man. The vote of one man may, and often does, decide the fate of important legislation in other branches of the government. The proposal to require a six-tO' tnree or seven-to-two vote, or a unanimous vote, likewise places a great emphasis upon the vote of one man because under such a plan a very small minority of the court, by holding out can prevent a two thirds vote, or a unanimous vote, and thus succeed In having declared constitutional an act which a clear majority of the court believe to be unconstitutional. Thus is seems that such proposals place a false emphasis on the mechanisms of Ju dicial review. It should be remembered that pro- posals to change the votes necessary I to declare an act unconstitutional would affect only a small part of the problem. After all, the five-to-four decisions on constitutional ques tions are few In number when com pared with the total number of con stitutional law cases. It is true that many of the five-to-four decisions were rendered in cases Involving vital social and economic problems, such as the in come tax, child labor, and interstate commerce decisions, but in many more instances the court has not been divided even though the Issues involved have been just as signifi cant Thus, the vote ratio proposals would seem to exaggerate the Im portance of split decisions and ig nore the real problem of adjusting legislative needs to constitutional safeguards. Another proposal is that congress should be empowered to overrule a decision of the United States su preme court on a constitutional question by a two-thirds vote of both houses of congress. This plan strikes at the very vi tals of the doctrine of judicial re view and would inaugurate a gov ernment of legislative supremacy rather than of judicial supremacy. Its proponents contend that the constitution reserves legislative powers to the legislative branch of the government and that the court often functions as a superlegisla ture when by way of judicial legis lation, it declares acts of congress unconstitutional. Of course it Is true that the court also legislates when it sustains acts of congress as contitutional by in terpreting phrases of flexible mean ing in a light favorable to the leg islation. Judicial legislation in this sense is unavoidable and under our present form of government can be checked by the amendment process. However, it is contended that the amending process is too slow and cumbersome and the history of the income tax and child labor cases is cited in support of the argument. Although it cannot be said that such a plan would destroy our con stitution, neither does it follow that such a plan would assure us that the constitution would be more readily adjusted to social needs and ends, at least not until we have a better trained class of political servants. After all, the doctrine of judicial review has met with a great deal of favor in this country because we have come to distrust waves of hys teria and populism which often con trol legislative power and popular assembly. We have learned also that mi nority rights are easily overridden by popular opinion and are best protected by the judiciary. Fur thermore we must recognize that private property and the rights of the property class are likely to be victimized by an unthinking public. Undoubtedly the day of constitu tional interpretation which placed a predominant emphasis upon the rights of private property often at the expense of human rights has passed, nevertheless, we are a long way, let us hope, from a re pudiation of the rights of private property. The preservation of the doctrine of judicial review would seem to be essential, if we are to preserve and protect the contributions to our so cial interests and national life which the institution of private property can make. At the same time, we must not permit political dogma to blind us to the fact that millions of Ameri cans are economically destitute, made so, for the most part by econ omic and social forces over which they have had no control. The maintenance of national sta bility depends in a large measure upon a program of social legislation which will advance, protect and balance their interests to the maxi mum degree compatible with the interests and welfare of all groups within the country. In accomplishing such an end, it is essential that necessary social legislation designed to protect and advance human rights be adjusted quickly to constitutional demands and, incidentally, it is paramount that the constitution be adjusted to changed and changing social real ities. In furtherance of such an ideal, the slogan might well bo changed from "Back to the Constitution" to "Forward Into an ever-changing fu ture with an expanding Constitu tion." Hog Production Low Till 1937, Late Report Shows Conditions are greatly Improved In the meat animal Industries com pared with a year ago, and the out look is favorable for some time ahead, according to a report just released by the state college agri cultural extension service. Produc ers with hogs to sell are favored by prices more than twice as high as a year ago, with feed grain consid erably lower. The Index of the av erage farm price of hogs in Oregon at mid-July was 84 per cent of the 1926-1930 average. With industrial activity and con sumer purchasing power running ahead of 1934, and even a smaller supply of hogs expected to be avail able for market until production can be Increased, the immediate market outlook for hogs Is strong. If conditions are favorable, how ever, the pig crop of 1936 may be 25 per cent larger than that of 1935 and by 1937 it will be possible for hog production to be back to the 1932-1933 level, the report says. Although beef cattle prices are materially higher than a year ago, cattle prices are not as high rela tively as prices for hogs, and prices for cattle feed have not declined so much as for hog feeds, especially in the west. The Oregon price in dex is only 67 per cent of the 1926 1930 level. The demand for feeder cattle this fall will be strengthened by the abundance of hay and grain in prospect In the East, while the scarcity of hogs and Improved In dustrial conditions are expected to strengthen market demand for fat cattle during the next several months at least Market supplies of fat lambs and poultry next fall and winter are also expected to be somewhat smaller than usual, the report points out In respect to the long-time out look, the number of beef cattle and sheep In the country next winter Is not expected to be much changed from last winter, but thereafter the trend is expected to be upward for a number of years, If feed condi tions are favorable. The report, which Is available from county agricultural agents, also gives outlook information on poultry, dairy and wheat, and data on numerous other farm commod ities produced in Oregon. Pectin for Jellies Can Be Made Easily at Home Fruit pectin extract for use in making jams and Jellies of fruits naturally low in acid and pectin are easily made at home from the white peel of oranges or lemons or from apples. Directions for mak ing the extract and a number of recipes for using It are contained in a mimeographed circular, HE 767, just issued by the home econ omics extension staff at Oregon State college. To make the apple pectin, use firm, tart apples, scrub and cut in thin slices, discarding imperfect spots. Use 4 pounds of apples and 4 pints of water for the first ex traction. Boil, covered, in a large pan, for 20 minutes, and then strain through four thicknesses of cheese cloth. Using the same pulp, add the same amount of water and repeat the process. This will yield about 3 quarts of Juice, which is then put in a pan wide enough so that the juice will not be more than 2 inches deep, and goil rapidly until only about Vi of the juice remains, us 1M AS THE WORLD MOVES iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii ually 30 to 40 minutes. This should make about 1V4 pints of concentrat ed apple pectin extract Citrus pectin extract can be made from the skins of oranges and lem ons ordinarily used. Pare off the yellow rind, which would impart flavor, using a knife that will not discolor the peel. Then remove the white peel underneath and put it through a meat grinder, using the coarse blade. Add 1 tablespoon tar taric acid to 2 quarts of water and stir until dissolved. Put 1 pound of the white peel into a large flat bottomed pan, cover with the acid solution, and allow It to stand for an hour or two. Measure the depth of the mater ial in the pan and then boil it rap idly, stirring constantly, until it measures less than half the original amount Strain through four thick nesses of cheesecloth. Then, using the same peel, repeat the process twice, adding 2 quarts of water and 1 tablespoon of tartaric acid each time, except that It Is not necessary to let it stand before boiling after the first time. There should be a little less than a pint of liquid from each extraction and the total amount of peel should be about 2V4 pints. If the extract is not to be used at once it should be poured into sterilized Jars or bottles and sealed. Dallas More squirrel poison has been used In Polk county this year than for the past two or three years according to records in the office of County Agent J. R. Beck, with an increase of 30 per cent this year over 1934. Wanted, Heppner residence prop erty, preferably on hill, with place for chickens. Will pay cash up to $1000. Inquire this office. O No greater tribute to the power of advertising can be cited than the large automotive industry of today. Advertis ing was the medium which told the people of the automobile; which created in the people a desire to purchase. It was the medium that brought about quantity production costs to make possible the purchase of an automobile by people of small' means. O Had the story of the automobile never been told, we of the West might still be travellin by horse and buggy over dirt roads, slowly, laboriously and uncomfortably as the dust or mud in season prevailed. O As the world moves its story is told in ADVERTISING. The intelligent shopper reads, and the intelligent merchant tells. m5(. 50 ONE-WAY TO CHICAGO IN DELUXE $57.35 ROUND TRIP Twn east TRAINS DAILY The PORTLAND ROSE At. CHICAGO. 8:50 A.M. Air-conditioned Coach.i, lateit type Tourist and Standard Sleepers, Diner, Observation-lounge car. Barber, Valet, Bath. Radio, da fountain. Porter ser vice and free pillows In Coaches. 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