Conditional Strategic Retreat: The Court’s Concession in the 1935 Gold Clause Cases

Though forgotten by history, the 1935 Gold Clause cases concerning abrogation of gold-indexed bonds were instantly dubbed historical landmarks. Perry v. U.S., the case addressing federal bond contracts, should be remembered as an important instance of strategic judicial retreat. Expecting that the wrong outcome would provoke an attack and harm its legitimacy, the Supreme Court granted the administration an important technical victory. This paper elucidates three conditions necessary for retreat: (1) very strong government outcome preferences, (2) signals of a direct attack, and (3) an environment which makes these threats credible. It compares the Gold Clause cases with a control case, U.S. v. Butler. It shows that the former strongly met the conditions while the latter, in which the Court made a sincere decision, did not. Finally, it refutes legal and attitudinal explanations and argues that the Perry opinion was written to grudgingly reach the strategically necessary result by granting a technical victory in the remedy.