Tuesday, November 30, 2010

H. Vernon Eney - Goldbug

On a few occasions I've talked about my great-grandfather, H. Vernon Eney, and his work as president of Maryland's 1967-68 Constitutional Convention. The Constitution failed, but it was an important reform effort that tried to make the state government more efficient and more responsive to the needs of modern society. I've previously called his work an example of a non-reactionary case for states rights.

Well, one thing I don't share as often (that I haven't shared at all) is that in the thirties, Eney also played a small role in pushing back against the Roosevelt administration's most important policy of monetary stimulus: the demonetization of gold. I was reminded of this recently by a Peter Klein post about the "gold clause" cases in 1935. Eney argued a less famous gold case before the Supreme Court in 1937 (I believe this was ten years after he passed the bar). To be honest, the argument on the part of Eney's client (Machen) and two other petitioners was a little contrived. All three petitioners were arguing that they deserved interest payments on their Liberty Loans from after a 1935 redemption call. The argument was that the call was made null because it was a call on the initial bonds but did not stipulate that payment would not be made in accordance with the language of the initial bonds (i.e., in gold). They argued that "the payment that it [the call for redemption] promises is not the payment owing under the letter of the bond", and so was not valid.

The court ruled that the call for redemption was simply a notice that must be construed in the context of current law, and current law had stated that gold would not be paid out by the Treasury (this was the issue at stake in the earlier, more controversial rulings). The notice wasn't nullified by the fact that it didn't explicitly note that payment would be in a manner different than what was laid out in the language of the bond and so the petitioners were unjustified in demanding interest payments after the call.

Riveting stuff, huh? Anyway - I've always thought the small part that Eney had to play in monetary policy during the Great Depression was interesting, and this post by Klein today reminded me of it. It would probably be a stretch, I suppose, to say that if he had won it would have worsened the "depression within a depression" of 1937!
Note: Justice Cardozo, who delivered the opinion of the court in this case, is pictured above. Cardozo was appointed by Hoover in 1932, and was generally considered to be a liberal justice. He has also been said to look like Conan O'Brien, but I personally don't see it.

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