Memorandum Returning Without Approval a Bill for the Relief of Certain Silver Dealers

I am withholding my approval of H.R. 5858, a bill for the relief of three silver dealers who suffered business losses as a result of their short market positions resulting from a decision by the Department of the Treasury to terminate the sale of Government-owned silver on May 18, 1967, without honoring the dealers' telephonic requests made that day to purchase almost seven million ounces of silver.

These claims were the subject of very extensive proceedings before the former United States Court of Claims, which on May 18, 1967, held that no legally binding contracts to purchase the silver had been established by these claimants, because the claimants (1) were clearly on notice that the Treasury's involvement in the silver market was altogether inseparable from monetary policy, (2) had reason to expect that Treasury would abandon the marketplace just as soon as doing so would serve monetary policy, and (3) knew that Government silver sales would end soon in view of the published reports that Treasury's supply of silver was being rapidly depleted. (Primary Metal & Mineral Corp. v. United States, 556 F.2d 507 (Ct. C1. 1977).)

In parallel proceedings before a trial commissioner of the same court pursuant to a Congressional Reference proceeding under 28 U.S.C. Sections 1494 and 2509 (1970), the trial commissioner had earlier found that the same dealers had valid breach of contract claims, even though he, too, found that they were well aware of the potential for a sudden termination of the sales program. After the court had rejected his analysis, he nevertheless concluded that the claimants had "equitable" claims sufficient to justify private relief legislation merely because (in his opinion) the Court of Claims was wrong in disagreeing with his legal theory. In its report to the Congress, a review panel of three trial commissioners, without explaining its reasoning, stated that it agreed with this unprecedented rationale for the existence of an equitable claim against the Government.

To permit the silver dealers covered by H.R. 5858 to recover over $3.3 million without any findings that they received inequitable treatment from the Government, in the face of the unappealed holding of the Court of Claims that they had no legal claims against the Treasury, would establish an undesirable precedent for payment of a host of claims to claimants who may have encountered hardships due to business decisions made with full awareness of the risks that a change in a Government property disposal program might entail. No doubt many similarly situated individuals have had their expectations frustrated in the past by similar program changes. To single out these three claimants for special relief would be unjust to the others, while payment to all for frustrated expectations would result in an unacceptable interference with the Government's ability to decisively and expeditiously respond to developments affecting vital national policies. For these reasons I find the bill unacceptable.

RONALD REAGAN

The White House,

January 4, 1983.