CBSMarketWatch report on hearing in Howe case


11:26p ET Monday, November 5, 2001

Dear Friend of GATA and Gold:

The case of Howe vs. Bank for International
Settlements et al. -- I like to call it Howe
vs. All the Money in the World -- was roughed
up a little today but survived its first day
of hearing in federal court in Boston.

During 2 1/2 hours of oral argument, U.S.
District Judge Reginald C. Lindsay dismissed
two counts of the lawsuit involving securities
fraud charges against defendant J.P.
Morgan/Chase, and ruled that the plaintiff's
method of serving lawsuit notice papers against
the BIS -- by mail in English instead of by
personal service in German -- was insufficient.

But the two dismissed securities fraud counts
were secondary to the lawsuit's substance, and
the problem with the lawsuit notice probably
can be fixed by a pricey translator if the
lawsuit is allowed to proceed.

The judge took the remainder of the case back
to his chambers for drafting a written
decision on the plaintiffs' motions to dismiss
the rest of the lawsuit. That could take weeks
or months.

The case was called at 2:30 p.m. in a beautiful
and huge courtroom in the opulent new U.S.
courthouse just across Fort Point Channel from
gleaming downtown Boston. About 30 people sat
in the audience section at the back of the
courtroom, some of them GATA supporters,
including a few who had come quite a long
way to watch.

Plaintiff Howe sat alone at the counsel's
table on the audience's left. At the counsel's
table on the right sat his opponents, nine
lawyers representing the BIS, Goldman Sachs,
Deutsche Bank, J.P. Morgan/Chase, Citigroup,
the U.S. Treasury Department, the Federal
Reserve Board, and the New York Federal
Reserve Bank. Behind them in the gallery
were still a few more defendants' lawyers.
The defendants' lawyers seemed to be smirking
over their having had to come all this way
just to confront a mere pro-se litigant, but
they seemed to be smirking less when it was

About two-thirds of the hearing consisted of
Judge Lindsay's questioning Howe about the case
and its likely weaknesses. The judge was
exceptionally well-informed about both the
legal technicalities and the broader issues
behind them. While he sought to move the
hearing along, he also was pretty indulgent
in letting Howe explain things.

The hearing wasn't really about whether the
gold market is manipulated. It was about
whether there is any basis in law for the
suit. Thus it turns on legal issues and
technicalities that will interest few of
the partisans of gold and free markets --
issues like the very limited circumstances
under which the government and government
officials may be sued for official acts.
But a few observations from this partisan
may be of interest:

* The judge had trouble seeing in the
lawsuit's claims possible evidence that
the bullion banks had conspired with each
other rather than with the federal
government, other than what was called
"parallel conduct" -- their doing the
same things in the market at the same
times. I thought Howe answered this well
by noting that the bullion bank defendants
had issued the overwhelming majority of
gold and interest rate derivatives and
essentially were themselves the markets
for those instruments.

* The judge seemed almost obtuse in not
understanding Howe's claim that there
was fraud in the BIS' forcibly redeeming
the shares of its private shareholders
at less than fair value when there had
never been any indication to the private
shareholders that their shares could be
taken this way.

* One of the lawyers for the government
asserted the government's right, under
the laws establishing the Federal Reserve
Board and the U.S. Treasury Department's
Exchange Stabilization Fund, to trade in
gold in a way affecting gold's price.
That is, he almost seemed to be claiming,
on behalf of the government, the right to
do exactly what the lawsuit complains of,
without actually admitting that this was
happening. (Whether he is right is
exactly the legal issue the suit seeks
to settle.) Howe was excellent in rebutting
this claim. He argued that prior to 1974
Congress had fixed the gold price, but
since then has left gold's price to the
market. Thus, Howe said, any government
trading in gold cannot constitutionally
aim to fix the price, and certainly not
surreptitiously. (I thought Howe got by
far the better of this exchange, at
least establishing a point worth
litigating. Unfortunately I was sitting
on the wrong side of the courtroom. We'll
just have to wait to find out what the
judge thinks.)

* Howe was just as effective in describing
the unfairness of the BIS' liquidating its
private shareholders without recourse and
without arbitration. While the judge at
first had wanted to skip argument on the
arbitration issue, considering it examined
adequately in the legal briefs, Howe managed
to get his approval to make one point and
then another and another, and the effect
was very strong politically -- it gave the
impression of ordinary small investors
getting screwed by arrogant and powerful
people. This happened to be the last issue
discussed, so Howe finished strong, the
other side weak.

When it was over, the courtroom cleared
out quickly, and Howe was left alone at
the counsel table packing his books and
papers into his briefcases. Forgive the
editorializing, but I couldn't help but
think of the scene at the end of the trial
in that wonderful movie, "To Kill a
Mockingbird," when Gregory Peck, playing
the quietly heroic defense lawyer, Atticus
Finch, does the same thing, seemingly alone
-- and yet he is not alone, but rather
watched by the oppressed people in the
gallery with awe, admiration, and respect
for standing up against the most hateful
and vicious power. What I saw today was
really not so different.

I won't guess what will happen with this
case; anything can. Maybe the essence of
what has happened today is that we could
have lost the whole case but didn't. (I
spent some time later with Howe and his
business associate, Bob Landis, and,
analyzing the day clinically, almost as
a sport, they seemed ready to be hopeful.)

We still may lose the case on the
technicalities in a few weeks and should
be prepared for that.

But two things:

* Enough of the cursed cynicism that the
courts are as rigged as the markets, that
there is no fighting the power. We know
some things about market rigging but there
is no evidence that anything in court
today was rigged. We got a day in court if
not quite yet OUR day in court. And for
all its faults this remains a country
where one brave man pleading his own case
can summon the representatives of all the
money in the world and put the bastards
in danger of having to answer for themselves.

* The lawsuit is an important front in our
struggle for free markets and honest dealing
but it is not the only front, and, win or
lose here, our strategy and plan will be,
in Churchill's words, KBO: Keep buggering
on. Thanks to GATA Chairman Bill Murphy and
Howe and those who have come to their
assistance, we have discovered that the
scheme against gold is only part of a
bigger scheme involving interest rates
and currencies to deprive the financial
markets of any standards of value and to
expropriate the world for the benefit of
certain Wall Street interests and to make
the world the slave of the U.S. dollar.
This deeply shames Americans who
understand it. That is why they will
continue to oppose it as best they can
regardless of what happens in court. It is
an anti-imperialist cause and thus a great
cause. And, as Churchill said, "When great
causes are on the move in the world, we
find that we are spirits, not animals, and
that something is going on in space and
time, and beyond space and time, which,
whether we like it or not, spells duty."

CHRIS POWELL, Secretary/Treasurer