ABSTRACT
Under the circumstances of the writing of the US Constitution, and the prevailing state of belief about gold and silver, the value of a national money was its value in terms of precious metal. As the gold standard development through the nineteenth and early twentieth centuries, the main problem appeared to be "the instability of credit" and the need for explicit acceptance of a "lender-of-last-resort" responsibility on the part of the central bank. In England, where the central bank was a purely private institution, it took a series of crises to drive home the need for responsibility of the central bank to the monetary system as a whole. It is important to note that the distributional implications of the gold-clause abrogations vary according to the circumstances postulated. The post-1929 price deflation already involved unexpected gains to lenders on securities denominated in dollar terms, which would have been greatly increased by enforcement of the gold clauses.
