Nero at His Worst

When Justice McReynolds read the dissenting opinion in the Gold Clause Cases in the Supreme Court in 1935, he was almost beside himself with rage, departing from his written text to utter such ejaculations as “the Constitution is gone” and “this is Nero at his worst.” If only James Clark McReynolds were here today to witness the government’s bailout of the banks.

McReynolds fumed that the government’s seizure of the country’s monetary gold and its abrogation of all contractual gold clauses, in both private and public contracts, spelled dishonor. “This amounts,” he declared, “to a declaration that the Government may give with one hand and take away with the other. Default is thus made both easy and safe! . . . Loss of reputation for honorable dealing will bring us unending humiliation; the impending legal and moral chaos is appaling.”

None of these objections dented the Roosevelt administration’s zeal to abolish the gold standard and all of its accouterment. These dedicated public servants were too busy saving capitalism to be deterred by plausible claims that they were actually destroying it.

These historical incidents have streamed back into my consciousness often during recent weeks, as I have witnessed the government’s floundering, flailing actions ostensibly to break free the “locked up” credit markets and to induce the banks to lend as freely as they were lending in recent years, when they were inflating the greatest global financial bubble of all time.

Don’t talk to me about heroin or cocaine. If you really want to see an addictive drug, take a look at cheap credit. I have heard that the drug cartel meets in Washington, D.C., in a big white building with a dome and that the drug’s most active pusher is known on the streets as “the Fed.” Although the Fed has been pushing the drug for a long time, everybody is scared of him, and nobody dares to arrest him and shut down his business.