The Forgotten New Deal — The Gold Clause Cases
Last month I wrote two posts about The Gold Clause Cases, in which the Court upheld (5-4) FDR’s decision to take us off the gold standard in 1933. Those posts focused on some unusual aspects of the opinions and on the President’s determination not to comply with an adverse outcome. Now I want to think more broadly about the implications of this moment.
Everybody knows that the central issue of the 1896 presidential campaign was whether we should have a gold standard or bimetallism (a gold and silver monetary base). Bryan’s defeat did not make the gold standard constitutional (at least no case said so), but it did establish that system as fixed point for American politics. As a result, FDR’s decision to break with gold was a bold repudiation of the consensus that had prevailed for a generation. Since consensus often turns into constitutional law (whether that consensus is in the text or not), the Gold Clause Cases in early 1935 marked the first crucial clash between the New Deal and the Court.
The currency issue disappeared from public discussion because the Court validated FDR’s policy, but what would have happened, if, for example, Justice Brandeis had acted on his view that the policy was unconstitutional. (Brandeis, it is worth noting, voted for McKinley in 1896.) First, the gold standard would have become the central issue, especially since FDR was ready to take a stand and create a crisis by rejecting the ruling. Second, that confrontation would have energized the Populist voices in the country, as insurgents like Huey Long and Father Charles Coughlin were constantly harping on the need for free silver. (Energized could mean “make them independently stronger” or “make their views more influential.”) Third, the 1936 election might have looked like 1896, at least in terms of how the campaign was framed around the money issue. (I’m not sure how leading Republicans thought about the question–maybe they would not have supported the Court. I need to figure that out.)
In sum, the most important Supreme Court decision in 1935 was not Schechter Poultry, which is what most experts on this period say, but the Gold Clause Cases. This is a function of the tendency to put more attention on things that happen rather than on things that are avoided. The New Deal would have looked more like Bryanism if one Justice had flipped. But that is only part of the story — tomorrow I’ll explain how Carl Weiss delayed the incorporation of the Bill of Rights for a generation.