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Hornberger's Blog is a daily libertarian blog written by Jacob G. Hornberger, founder and president of FFF.
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The Protection Provided by Gold


A case before the Six Circuit federal Court of Appeals in Cincinnati demonstrates how our American ancestors relied on gold to protect themselves from U.S. officials.

The case involves a long-term lease entered into in 1912 requiring the tenant to pay the agreed-upon rent in gold coins. This type of gold clause was common in both contracts and bonds issued during the 1800s and early 1900s. Their purpose was to protect the landlord or creditor against the risk of constantly depreciating paper money issued by federal officials in the future.

During the 1930s, in one of the most infamous acts in U.S. history, the Franklin Roosevelt regime nationalized the gold holdings of the American people, made gold ownership a federal criminal offense, and nullified gold contracts in both contracts and debt instruments. The Supreme Court upheld the nullification of gold clauses in private contracts and instruments, enabling tenants and debtors to pay their obligations in debased paper money.

In the 1970s, however, Congress repealed the ban on owning gold and allowed private parties to once again include gold clauses in their contracts.

The tenant in the Six Circuit case assumed the 1912 lease in 1982 and has been paying the sum of $35,000 a year in rent ever since. The landlord claimed that the gold clause in the original lease was fully enforceable and that the tenant had voluntarily assumed that obligation when it took over the lease. The landlord was demanding payment of the gold coins required in the original 1912 lease.

Overturning the decision of the district court, the appellate court agreed with the landlord and upheld the gold clause. According to an attorney for the landlord, “The amount of gold that is due and owing is 1,693 ounces. If the price was about $900 an ounce, that would be approximately $1.5 million annually.”

What better picture of what government has done to our money since 1912 than that?

This post was written by:

Jacob G. Hornberger is founder and president of The Future of Freedom Foundation. He was born and raised in Laredo, Texas, and received his B.A. in economics from Virginia Military Institute and his law degree from the University of Texas. He was a trial attorney for twelve years in Texas. He also was an adjunct professor at the University of Dallas, where he taught law and economics. In 1987, Mr. Hornberger left the practice of law to become director of programs at the Foundation for Economic Education. He has advanced freedom and free markets on talk-radio stations all across the country as well as on Fox News’ Neil Cavuto and Greta van Susteren shows and he appeared as a regular commentator on Judge Andrew Napolitano’s show Freedom Watch. View these interviews at LewRockwell.com and from Full Context. Send him email.