CHAPTER XIII: Suggested Gold Clause Contract
The following is suggested wording for a gold clause contract for X ounces of the new coin:
In consideration of the depreciation of the U.S. paper currency (denominated in dollars) and its failure to serve as an accurate unit of account to measure value and in order that the money paid to Baker have approximately the same buying power at the time of payment as it does when he makes this contract, Adams hereby agrees to pay Baker X one ounce U.S. Treasury gold coins authorized under 31 U.S.C. §5112 (a) (7) as settlement of this debt.
If specific performance in such gold coins is impossible or would impose undue hardship on Adams, Adams may discharge his obligation by paying X one ounce gold coins plus 2% penalty charge or X ounces of gold bullion plus 7% penalty charge. Should the court require this contract to denominate values in dollars, then Adams agrees to pay Baker X 50 dollar U.S. Treasury gold coins authorized under 31 U.S.C. §5112 (a) (7) as settlement. If payment in gold is impossible or would impose undue hardship, Adams may discharge his obligation by paying the number of dollars in U.S. paper currency which is, at the time of payment, exchanging for X one ounce (or 50 dollar) U.S. Treasury gold coins authorized under 31 U.S.C. §5112 (a) (7) on the free market closest to Baker's place of residence, plus 3% penalty charge. Adams agrees not to argue that a paper dollar is equal to a gold dollar in value.
The burden of proof for the conditions allowing escape from specific performance shall be upon Adams. No market shall be considered free where government action sets a price or restricts supply or demand. If two markets differ in price on a regular basis beyond that which can be explained by transportation charges, it shall be considered evidence that at least one of them is not free. If the buying power of the money shall become an issue, then no prices shall be introduced as evidence of buying power which are not actually being paid by significant numbers of people or which obtain during times of shortage.
The idea here is to be fair to both creditor and debtor. U.S. law does not allow a contract to require specific performance only in the coin. The contract thus defines the conditions for payment in other forms of money. If the Government should stop minting the coin, then the debtor would invoke the hardship clause and only have to pay 2% penalty. At the same time, the contract prevents price and wage controls or other government interventions in the free market from influencing the contract.
Eternal Vigilance Pledge
As I have noted, the most important function of government is the establishment of justice, one aspect of which is to ensure that people keep their promises. Thus the upholding of business contracts has traditionally been one of the major realms of government activity. However, it is naive to think that justice can be entrusted to a higher authority. If an injustice is done to us, then we must fight to correct it. If we will not fight, we have no right to count on anyone else.
When the gold standard was abolished in 1933, the nation's savers and lenders acted like a herd of cattle, and soon enough they were led to the slaughter. Meek, humble and obedient, they were easily rounded up by the bankers. The Keynesian program at that time was described as the euthanasia of the rentier -- the slow death of the person living off interest. Tens of millions of people were cheated by a small handful, with hardly a word of protest. We will not submit to that kind of treatment.
If our gold clauses are violated, we will ask the courts for justice, as previous generations did. But we will not stop at that. If the courts do not uphold the law, we will petition for the impeachment of corrupt judges. We will boycott the products of any business who abrogates gold clauses. We will vote out of office any officials, congressmen, senators or President, who do not use the full powers of their offices to uphold the sanctity of contracts. This is the rebirth of the rentier.
They took away our parents' freedom, but they won't take away our freedom because we have decided to fight!
Down with the Chase Manhattan Bank.
Down with the Federal Reserve.
Down with the commercial bankers.
This material is made available with the generous permission of Howard Katz (1931-2012).