(Edit: As gwern notes below, this was repealed about 40 years later; my point was that the government can de facto stop you from using Gold or Silver as a medium of exchange, if they so wish)
Such gold clauses were intended to protect against the United States devaluing the dollar. When the Emergency Banking Act of 1933 and the Gold Reserve Act of 1934 outlawed the use of gold, such contracts became sources of controversy. In the gold clause case Norman vs. Baltimore & Ohio Railroad Co., 294 U.S. 240 (1935), the U.S. Supreme Court ruled that gold clauses were invalid. However, Congress later reinstated the option to use gold clauses for obligations (new contracts) issued after October 1977 in accordance with 31 U.S.C. § 5118(d)(2). The 2008 decision 216 Jamaica Avenue, LLC vs S&R Playhouse Realty Co.[3] established that a gold clause in contracts signed before 1933 was only suspended not erased, and under certain limited circumstances might be reactivated.
The limitation on gold ownership in the U.S. was repealed after President Gerald Ford signed a bill legalizing private ownership of gold coins, bars and certificates by an act of Congress codified in Pub.L. 93–373[6] which went into effect December 31, 1974. Pub.L. 93-373 did not repeal the Gold Clause Resolution of 1933, which made unenforceable any contracts which specified payment in a fixed amount of money or a fixed amount of gold. That is, contracts remained unenforceable if they used gold monetarily rather than as a commodity of trade. However, the Act of October 28, 1977, Pub.L. 95–147, § 4(c),[7] amended the 1933 Joint Resolution and made it clear that parties could again include so-called gold clauses in contracts formed after 1977.[8]
Yes. I didn’t mean to say anything about their current legal status—my point was just that if the government doesn’t want you to use something as a medium of exchange, they can make it extremely inconvenient.
By the way, it’s not quite true that ” If I hire a plumber to clear my drains, I can legally pay him with whatever we can both agree on.”
If you agree to pay in cocaine, no US court will enforce the contract—it is void as against public policy. Likewise, starting in 1934, the US government declared Gold clauses in contracts unenforceable.
(Edit: As gwern notes below, this was repealed about 40 years later; my point was that the government can de facto stop you from using Gold or Silver as a medium of exchange, if they so wish)
https://en.wikipedia.org/wiki/Gold_Reserve_Act
https://en.wikipedia.org/wiki/Gold_Clause_Cases
Yes. I didn’t mean to say anything about their current legal status—my point was just that if the government doesn’t want you to use something as a medium of exchange, they can make it extremely inconvenient.
In an amusing bit of synchronicity, it seems that Satoshi Nakamoto picked a fake birthdate for his P2P Foundation profile which references both the original executive orders banning gold and the relegalization: http://www.reddit.com/r/Bitcoin/comments/229qvr/happy_birthday_satoshi_nakamoto/