Smyth v. United States, 302 U.S. 329 (1937)

Author: Justice Stone

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Smyth v. United States, 302 U.S. 329 (1937)


I concur in the result.

I think the court below, in the Machen case, 87 F.2d 594, correctly interpreted the bonds involved in these cases has reserving to the government the privilege of accelerating their maturity by paying them or standing ready to pay them on any interest date according to their tenor, and upon giving the specified notice fixing the "date of redemption." The words "redeemed" and "redemption," as used in the bonds,* point the way in which the privilege was to be exercised as plainly as when they are written in the bonds of a private lender. Lynch v. United States, 292 U.S. 571, 579; cf. Perry v. United States, 294 U.S. 330, 352. If payment or readiness to pay the bonds in accordance with their terms was essential to "redemption," the one or the other, equally with the required notice, was a condition of acceleration.

The obligation of the bonds, read in the light of long established custom and of our own decision in Holyoke Water Power Co. v. American Writing Paper Co., 300 U.S. 324, 336, decided since the Perry case, must, I think, be taken to be a "gold value" undertaking to pay in gold dollars of the specified weight and fineness or their equivalent in lawful currency. Compare Norman v. B. & O. R. Co., 294 U.S. 240, 302; Feist v. Societe Intercommunale Belge D’Electricite, L.R. [1934] A.C. 172, 173. The suppression of the use of gold as money, and the restriction on its export, and of its use in international exchange by Acts of Congress, 48 Stat. 1, 337, did not relieve the Government of its obligation to pay the stipulated gold value of the bonds in lawful currency. Hence, it has not complied, or ever stood ready to comply, with one of the two conditions upon performance of which the bonds "may be redeemed and paid" in advance of their due date; the payment to the bondholder of the currency equivalent of the stipulated gold value.

It will not do to say that performance of this condition can be avoided or dispensed with by the adoption of any form of words in the notice. Nor can it be said that a declaration, in the notice, of intention to pay whatever can be collected in court, see the Perry case, supra,354, is equivalent to a notice of readiness to pay the currency equivalent of the gold value stipulated to be paid, or that a statement of purpose to pay what will constitutionally satisfy the debt suffices to accelerate although no payment of the currency equivalent is made or contemplated or is permitted by the statutes. It follows that judgment must go for the bondholders unless the Joint Resolution of Congress of June 5, 1933, 48 Stat. 112, requiring the discharge of all gold obligations "dollar for dollar" in lawful currency and declaring void as against public policy all provisions of such obligations calling for gold payments, is to be pronounced constitutional.

Decision of the constitutional question being in my opinion now unavoidable, I am moved to state shortly my reasons for the view that government bonds do not stand on any different footing from those of private individuals, and that the Joint Resolution in the one case, as in the other, was a constitutional exercise of the power to regulate the value of money. Compare Norman v. B. & O. R. Co., supra,304, 309. Without elaborating the point, it is enough for present purposes to say that the undertaking of the United States to pay its obligations in gold, if binding, operates to thwart the exercise of the constitutional power in the same manner and to the same degree pro tanto as do bonds issued by private individuals, Norman v. B. & O. R. Co., supra,311 et seq., except insofar as the Government resorts to its sovereign immunity from suit. Had the undertaking been given any force in the Gold Clause cases, or the meaning which we have since attributed to it when used in private contracts, it would, if valid, and, but for the immunity from suit, have defeated the Government policy of suspension of gold payments and devaluation of the dollar. Compare the Norman case, supra, with the concurring memorandum in Perry v. United States, supra,360-361.

The very fact of the existence of such immunity, which admits of the creation of only such government obligations as are enforceable at the will of the sovereign, is persuasive that the power to borrow money "on the credit" of the United States cannot be taken to be a limitation of the power to regulate the value of money. Looking to the purposes for which that power is conferred upon the National Government, its exercise, if justified at all, is as essential in the case of bonds of the National Government as it is in the case of bonds of states, municipalities, and private individuals. See Norman v. B. & O. R. Co., supra,313 et seq. Its effect on the bondholders is the same in every case. Compare Norman v. B. & O. R. Co., supra, with Nortz v. United States, 294 U.S. 317. No reason of public policy or principle of construction of the instrument itself has ever been suggested, so far as I am aware, which would explain why the power to regulate the currency, which is not restricted by the Fifth Amendment in the case of any obligation, is controlled, in the case of government bonds, by the borrowing clause which imposes no obligation which the Government is not free to discard at any time through its immunity from suit. I cannot say that the borrowing clause, which is without force to compel the sovereign to pay, nevertheless renders the government powerless to exercise the specifically granted authority to regulate the value of money with which payment is to be made.

* The redemption clause is as follows:

The principal and interest of this bond shall be payable in United States gold coin of the present standard of value. . . . All or any of the bonds of the series of which this is one may be redeemed and paid at the pleasure of the United States on or after June 15, 1932, or on any semi-annual interest payment date or dates at the face value thereof and interest accrued at the date of redemption, on notice published at least three months prior to the redemption date, and published thereafter from time to time during said three months period as the Secretary of the Treasury shall direct. . . . From the date of redemption designated in any such notice, interest on the bonds called for redemption shall cease, and all coupons thereon maturing after said date shall be void. . . .


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Chicago: Stone, "Stone, J., Concurring," Smyth v. United States, 302 U.S. 329 (1937) in 302 U.S. 329 302 U.S. 361–302 U.S. 364. Original Sources, accessed June 5, 2023,

MLA: Stone. "Stone, J., Concurring." Smyth v. United States, 302 U.S. 329 (1937), in 302 U.S. 329, pp. 302 U.S. 361–302 U.S. 364. Original Sources. 5 Jun. 2023.

Harvard: Stone, 'Stone, J., Concurring' in Smyth v. United States, 302 U.S. 329 (1937). cited in 1937, 302 U.S. 329, pp.302 U.S. 361–302 U.S. 364. Original Sources, retrieved 5 June 2023, from