THE DEBATE OVER DEBT MANAGEMENT VERSUS DEFAULT WAS SETTLED IN THE BEGINNING. According to Article VI, Clause 1, “All debts contracted and engagements entered into, before the adoption of this Constitution, shall be as valid against the United States under this Constitution, as under the Confederation.” And James Madison removed any doubt when he dismissed “...the pretended doctrine that a change in the political form of civil society has the magical effect of dissolving its moral obligations.” (The Federalist Papers, No. 43; JM on “All debts and engagements”)
Alexander Hamilton, the former artillery officer in the Continental Army and aide de camp to the Commander in Chief, gave force and effect to Article VI, Clause 1. His measures made meaningful the related power “to borrow money on the credit of the United States.” (Article I, Section 8, Clause 2) He established the good faith of the nation and gave us our good name. As Secretary of the Treasury, Hamilton began his report, requested by the House of Representatives, citing their resolution that “an adequate provision for the support of the public credit is a matter of high importance to the honor and prosperity of the United States”; and he continued: (Emphasis Hamilton’s)If the maintenance of public credit, then, be truly so important, the next enquiry which suggests itself is: By what means is it to be effected? The ready answer to which question
…(T)he last seven years have exhibited an earnest and uniform effort, on the part of the government of the union, to retrieve the national credit, by doing justice to the creditors of the nation; and that the embarrassments of a defective constitution, which defeated this laudable effort, have ceased.
In nothing are appearances of greater moment than in whatever regards credit. Opinion is the soul of it; and this is affected by appearances as well as realities.... (Emphasis added)
So if the “original intention” was to make our word true, can we act in a way that makes our word worthless? And should that even be a consideration? Section 4 of the Fourteenth Amendment—“The validity of the public debt of the United States…shall not be questioned”—is a reaffirmation of Article VI, Clause 1 that was to overcome “the embarrassments of a defective constitution,”—the Articles of Confederation—“which defeated this laudable effort”; and, therefore, all debts and engagements entered into shall be valid against the United States under the Constitution. Finally, as Hamilton noted in his report, it ought to be “a fundamental maxim, in the system of public credit of the United States, that the creation of debt should always be accompanied with the means of extinguishment.”
Although the appearance of an issue has been created by the debt ceiling threat of the House Republicans, their arguments are as empty as the cupboard of Old Mother Hubbard. In reality, there is no debate, if the words of James Madison and the deeds of Alexander Hamilton and George Washington are accepted as precedent. On the one side of the scale is the debt ceiling, a statutory provision, the technicality of technicalities and of dubious constitutionality. On the other is the Fundamental Charter itself, The Federalist Papers, the reports of the first Secretary of the Treasury, and Chapter XIV of the Second Treatise of Civil Government by John Locke. The oath requires the President to “preserve, protect and defend the Constitution”; and he must “take care that the laws be faithfully executed”—and the Constitution is the first law. (Article II, Section 1, Clause 8 & Article II, Section 3) Therefore, if forced to choose between the Constitution and the Second Liberty Bond Act of 1917, the Executive shall faithfully execute “the supreme law of the land” to “promote the general welfare and secure the blessings of liberty to ourselves and our posterity.” (Article VI, Clause 2 & Preamble) Such action is consistent with “the executive power” as conceived by the Founders and John Locke who stated that “(P)rerogative is nothing but the power of doing public good without a rule.” (Article II, Section 1, Clause 1 & Second Treatise of Civil Government) Accordingly, after giving due notice by a Proclamation on Public Credit to the press and the public and a delinquent Congress, the President would issue an Executive Order on the Means of Extinguishment and invoke the Gephardt Rule which simply stated that the debt ceiling was “deemed to have passed” when a budget resolution was approved, and therefore direct the Secretary of the Treasury to take appropriate action.
Copyright 2023 Marvin D. Jones. All rights reserved.
https://founders.archives.gov/documents/Hamilton/01-06-02-0076-0002-0001
[First Report on Public Credit]
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