Guest Essayist: Keith E. Whittington

Soon after his first inauguration, President Franklin D. Roosevelt tried to close the gold window. At the time, the American currency was tied to the value of gold, and the financial crisis was putting serious pressure on government gold reserves. To deal with the problem, the government devalued the dollar. As an emergency measure, Congress passed a joint resolution declaring that the federal government would no longer recognize any debts that required “payments in gold or a particular kind of coin or currency, or in an amount of money of the United States measured thereby.” During World War I, however, the U.S. Treasury had issued Liberty Bonds that provided that the “principal and interest hereof are payable in United States gold coin of the present standard of value.” Some of those bonds were now due, and creditors filed suit against the federal government demanding payment in the promised gold coin.

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