When we ran out a front-page article on the news that the price of Manhattan apartments as measured in gold was declining, it prompted quite a complaint from the real estate industry. But as a case recently decided by the judges who ride the Sixth Circuit shows, looking at real estate values in terms of gold was once a common practice — and the landlord who bet on it has just won big.

The case, 216 Jamaica Avenue LLC v. S & R Playhouse Realty LLC, involves a 99-year lease signed in 1912 on a piece of land in downtown Cleveland, Ohio. The rent escalated to $35,000 a year, but it contained a “gold clause” providing that “said rents shall be paid in gold coin of the United States of the present standard of weight and fineness.”

As the opinion by Judges Harold Ackerman, Damon Keith, and Jeffrey Sutton recounts, “In the early 1930s, as part of a series of measures designed to implement the Roosevelt Administration’s overhaul of American monetary policy, Congress withdrew gold from circulation and banned nearly all private ownership of it. … And in 1933, Congress passed a Joint Resolution that declared gold clauses to be ‘against public policy,’ barred their inclusion in any future contract and suspended the operation of existing gold clauses by allowing all contract obligations to be paid in paper currency instead.”

However, the opinion goes on, “Four decades later, Congress changed course. It repealed the ban on private ownership of gold in 1975. And in 1977, it amended the 1933 Joint Resolution, providing that the resolution ‘shall not apply to obligations issued on or after’ the amendment’s date of enactment. … In an effort to clarify the matter, Congress passed a law in 1996 saying that owners could enforce pre-1977 gold clauses only if the parties to a new obligation issued after 1977 ‘specifically agree[d] to include a gold clause’ in their new agreement.”

The case at hand, which was covered in these pages in June under the headline “Count Those Square Feet in Gold” and which Brownstoner.com has linked to an article on the Web site of the Cleveland Plain Dealer, involves two companies with New York City ties. The landlord, Stuart Venner, is a New York-based real estate investor. The renter is an arm of Forest City Enterprises, which is behind the big effort to develop Atlantic Yards in Brooklyn and bring the Nets to play basketball there. If the gold clause is to be enforceable, Forest City’s rent would escalate to about $1.4 million a year from $35,000 a year. The judges, in an opinion issued last week, found that the clause was indeed enforceable.

The landlord who wrote the contract back in 1912 was wise to protect himself against the possibility that a dollar in 2008 would be worth a fraction of what it was in 1912, as measured against gold. Unfortunately, even with Congress’s changes to the law, America’s monetary system, thanks to decisions by the Federal Reserve Bank or the Treasury, at the moment leaves ordinary investors and wage-earners not as well protected against the chance that the dollar will plunge. Recent months have seen a strengthening of the dollar against gold, but not such a strengthening as to close the rent gap between $35,000 and $1.4 million.

Senator Helms, who championed the 1970s legislation, has passed away, but Rep. Ron Paul is still around. Finding some way to assure that the rest of us who don’t have gold clauses in our contracts can be assured of the value of our dollars would be a constructive role for the congressman to play. With this decision, the Sixth Circuit has done what it can, but the real responsibility lies with Congress.