VITAL ISSUE

Dominion, Volume 28, Issue 90, 10 January 1935, Page 9

VITAL ISSUE

Supreme Court Action in America TEST CASE STARTS Basis of Monetary Policy at Stake ATTORNEY-GENERAL FOR DEFENCE By Telegraph.—Press Assn.— Copyright. (Received January 9, 8.5 p.m.) Washington, January 8. Following the Supreme Court’s adverse decision yesterday against the Administration’s petroleum control programme, the tribunal started consideration to-day of perhaps the most vital phase of the New Deal, namely Congressional action in voidihg the socalled gold clause in public and private securities. A test suit involves the holder of a single bond of the Baltimore-Ohio Railroad, who contends that a 22-dollar interest payment should have been equivalent to the old gold value or about 40 per cent, more, and that, in effect, complainant has been deprived of property without due process of law. It is estimated that about 100 billion dollars’ worth of securities are involved in the issue, as well as the entire basis of President Roosevelt’s monetary policy. ' For that reason the Attorney-Gener-al, Mr. H. S. Cummings, took the almost unprecedented action of personally defending the suit against the Government before the Supreme Court tp-day. He argued that the crisis of 1933 wp.s so serious that summary action was necessary “to keep the ]<eople from slipping to a lower level of civilisation.”

A cable published yesterday stated that, in the first decision questioning the validity of President Roosevelt’s New Deal the Supreme Court, by eight votes to one, declared the petroleum control feature of the National Recovery Act un. constitutional. It was made clear, however, that no other of the multiple features of the N.R.A. was effected.

Under the authority Congress granted him in the Recovery Act, the President decreed that petroleum, in commercial interests, should come under the direct control of the Federal Government, and, through various methods, his administrators curtailed production to the extent that the crude product increased in price from 10 to 15 cents a barrel to one dollar.

According to reports from mid-contin-ental producing a_reas. a severe drop in prices is expected immediately. The N.R.A. received another blow when the Governor of New Jersey revoked the State .Recovery Act, designed to supplement and strengthen the national law. He said that code privileges were being abused, and would henceforth be inoperative.