Thomas Jefferson Warned Us About Massive National Debts
Thomas Jefferson Warned Us About Massive National Debts
A 1789 letter from Thomas Jefferson to James Madison has lessons for our bankrupt nation
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The following letter from Thomas Jefferson to James Madison (dated September 6th, 1789) has been known as “The earth belongs to the living” letter to generations of American historians. With America’s national debt standing at more than $33 trillion dollars, the letter’s topicality has never been more urgent. Jefferson anticipated the nightmare of a monstrous national debt which no later generation could fully repay: “I am not among those who fear the people. They, and not the rich, are our dependence for continued freedom. And, to preserve their independence, we must not let our rulers load us with perpetual debt. ”
DEAR SIR,
— I sit down to write to you without knowing by what occasion I shall send my letter. I do it because a subject comes into my head which I would wish to develop a little more than is practicable in the hurry of the moment of making up general dispatches.
The question Whether one generation of men has a right to bind another, seems never to have been started either on this or our side of the water. Yet it is a question of such consequences as not only to merit decision, but place also, among the fundamental principles of every government. The course of reflection in which we are immersed here on the elementary principles of society has presented this question to my mind; and that no such obligation can be transmitted I think very capable of proof. I set out on this ground which I suppose to be self evident, “that the earth belongs in usufruct to the living;” that the dead have neither powers nor rights over it. The portion occupied by an individual ceases to be his when himself ceases to be, and reverts to the society. If the society has formed no rules for the appropriation of its lands in severalty, it will be taken by the first occupants. These will generally be the wife and children of the decedent. If they have formed rules of appropriation, those rules may give it to the wife and children, or to some one of them, or to the legatee of the deceased. So they may give it to his creditor. But the child, the legatee or creditor takes it, not by any natural right, but by a law of the society of which they are members, and to which they are subject. Then no man can by natural right oblige the lands he occupied, or the persons who succeed him in that occupation, to the payment of debts contracted by him. For if he could, he might during his own life, eat up the usufruct of the lands for several generations to come, and then the lands would belong to the dead, and not to the living, which would be reverse of our principle. What is true of every member of the society individually, is true of them all collectively, since the rights of the whole can be no more than the sum of the rights of individuals. To keep our ideas clear when applying them to a multitude, let us suppose a whole generation of men to be born on the same day, to attain mature age on the same day, and to die on the same day, leaving a succeeding generation in the moment of attaining their mature age all together. Let the ripe age be supposed of 21 years, and their period of life 34 years more, that being the average term given by the bills of mortality to persons who have already attained 21 years of age. Each successive generation would, in this way, come on and go off the stage at a fixed moment, as individuals do now. Then I say the earth belongs to each of these generations during its course, fully, and in their own right.
The 2d. generation receives it clear of the debts and encumbrances of the 1st, the 3d of the 2d and so on. For if the 1st could charge it with a debt, then the earth would belong to the dead and not the living generation. Then no generation can contract debts greater than may be paid during the course of it’s own existence. At 21 years of age they may bind themselves and their lands for 34 years to come: at 22 for 33: at 23 for 32 and at 54 for one year only; because these are the terms of life which remain to them at those respective epochs. But a material difference must be noted between the succession of an individual and that of a whole generation. Individuals are parts only of a society, subject to the laws of a whole. These laws may appropriate the portion of land occupied by a decedent to his creditor rather than to any other, or to his child, on condition he satisfies his creditor. But when a whole generation, that is, the whole society dies, as in the case we have supposed, and another generation or society succeeds, this forms a whole, and there is no superior who can give their territory to a third society, who may have lent money to their predecessors beyond their faculty of paying.
What is true of a generation all arriving to self-government on the same day, and dying all on the same day, is true of those on a constant course of decay and renewal, with this only difference. A generation coming in and going out entire, as in the first case, would have a right in the 1st year of their self dominion to contract a debt for 33 years, in the 10th for 24, in the 20th for 14,. in the 30th for 4, whereas generations changing daily, by daily deaths and births, have one constant term beginning at the date of their contract, and ending when a majority of those of full age at that date shall be dead. The length of that term may be estimated from the tables of mortality, corrected by the circumstances of climate, occupation &c. peculiar to the country of the contractors.
Take, for instance, the table of M. de Buffon wherein he states that 23,994 deaths, and the ages at which they happened. Suppose a society in which 23,994 persons are born every year and live to the ages stated in this table. The conditions of that society will be as follows. First it will consist constantly of 617,703 persons of all ages. Secondly, of those living at any one instant of time, one half will be dead in 24 years 8 months. Thirdly, 10,675 will arrive every year at the age of 21 years complete. Fourthly, it will constantly have 348,417 persons of all ages above 21 years. Fifthly, and the half of those of 21 years and upwards living at any one instant of time will be dead in 18 years 8 months, or say 19 years as the nearest integral number. Then 19 years is the term beyond which neither the representatives of a nation, nor even the whole nation itself assembled, can validly extend a debt.
To render this conclusion palpable by example, suppose that Louis XIV and XV had contracted debts in the name of the French nation to the amount of 10.000 milliards of livres and that the whole had been contracted in Genoa. The interest of this sum would be 500 milliards, which is said to be the whole rent-roll, or net proceeds of the territory of France. Must the present generation of men have retired from the territory in which nature produced them, and ceded it to the Genoese creditors? No. They have the same rights over the soil on which they were produced, as the preceding generations had. They derive these rights not from their predecessors, but from nature. They then and their soil are by nature clear of the debts of their predecessors. Again suppose Louis XV and his contemporary generation had said to the money lenders of Genoa, give us money that we may eat, drink, and be merry in our day; and on condition you will demand no interest till the end of 19 years, you shall then forever after receive an annual interest of 12.’5 per cent. The money is lent on these conditions, is divided among the living, eaten, drank, and squandered. Would the present generation be obliged to apply the produce of the earth and of their labor to replace their dissipations? Not at all.
I suppose that the received opinion, that the public debts of one generation devolve on the next, has been suggested by our seeing habitually in private life that he who succeeds to lands is required to pay the debts of his ancestor or testator, without considering that this requisition is municipal only, not moral, flowing from the will of the society which has found it convenient to appropriate the lands become vacant by the death of their occupant on the condition of a payment of his debts; but that between society and society, or generation and generation there is no municipal obligation, no umpire but the law of nature. We seem not to have perceived that, by the law of nature, one generation is to another as one independent nation to another.
The interest of the national debt of France being in fact but a two thousandth part of its rent-roll, the payment of it is practicable enough; and so becomes a question merely of honor or expediency. But with respect to future debts; would it not be wise and just for that nation to declare in the constitution they are forming that neither the legislature, nor the nation itself can validly contract more debt, than they may pay within their own age, or within the term of 19 years? And that all future contracts shall be deemed void as to what shall remain unpaid at the end of 19 years from their date? This would put the lenders, and the borrowers also, on their guard. By reducing too the faculty of borrowing within its natural limits, it would bridle the spirit of war, to which too free a course has been procured by the inattention of money lenders to this law of nature, that succeeding generations are not responsible for the preceding.
On similar ground it may be proved that no society can make a perpetual constitution, or even a perpetual law. The earth belongs always to the living generation. They may manage it then, and what proceeds from it, as they please, during their usufruct. They are masters too of their own persons, and consequently may govern them as they please. But persons and property make the sum of the objects of government. The constitution and the laws of their predecessors extinguished them, in their natural course, with those whose will gave them being. This could preserve that being till it ceased to be itself, and no longer. Every constitution, then, and every law, naturally expires at the end of 19 years. If it be enforced longer, it is an act of force and not of right.
It may be said that the succeeding generation exercising in fact the power of repeal, this leaves them as free as if the constitution or law had been expressly limited to 19 years only. In the first place, this objection admits the right, in proposing an equivalent. But the power of repeal is not an equivalent. It might be indeed if every form of government were so perfectly contrived that the will of the majority could always be obtained fairly and without impediment. But this is true of no form. The people cannot assemble themselves; their representation is unequal and vicious. Various checks are opposed to every legislative proposition. Factions get possession of the public councils. Bribery corrupts them. Personal interests lead them astray from the general interests of their constituents; and other impediments arise so as to prove to every practical man that a law of limited duration is much more manageable than one which needs a repeal.
This principle that the earth belongs to the living and not to the dead is of very extensive application and consequences in every country, and most especially in France. It enters into the resolution of the questions Whether the nation may change the descent of lands holden in tail? Whether they may change the appropriation of lands given antiently to the church, to hospitals, colleges, orders of chivalry, and otherwise in perpetuity? whether they may abolish the charges and privileges attached on lands, including the whole catalogue ecclesiastical and feudal? it goes to hereditary offices, authorities and jurisdictions; to hereditary orders, distinctions and appellations; to perpetual monopolies in commerce, the arts or sciences; with a long train of et ceteras: and it renders the question of reimbursement a question of generosity and not of right. In all these cases the legislature of the day could authorize such appropriations and establishments for their own time, but no longer; and the present holders, even where they or their ancestors have purchased, are in the case of bona fide purchasers of what the seller had no right to convey.
Turn this subject in your mind, my Dear Sir, and particularly as to the power of contracting debts, and develop it with that perspicuity and cogent logic which is so peculiarly yours. Your station in the councils of our country gives you an opportunity of producing it to public consideration, of forcing it into discussion. At first blush it may be rallied as a theoretical speculation; but examination will prove it to be solid and salutary. It would furnish matter for a fine preamble to our first law for appropriating the public revenue; and it will exclude, at the threshold of our new government the contagious and ruinous errors of this quarter of the globe, which have armed despots with means not sanctioned by nature for binding in chains their fellow-men. We have already given, in example one effectual check to the Dog of war, by transferring the power of letting him loose from the executive to the Legislative body, from those who are to spend to those who are to pay. I should be pleased to see this second obstacle held out by us also in the first instance. No nation can make a declaration against the validity of long-contracted debts so disinterestedly as we, since we do not owe a shilling which may not be paid with ease principal and interest, within the time of our own lives. Establish the principle also in the new law to be passed for protecting copy rights and new inventions, by securing the exclusive right for 19. instead of 14. years. Besides familiarizing us to this term, it will be an instance the more of our taking reason for our guide instead of English precedents, the habit of which fetters us, with all the political heresies of a nation, equally remarkable for its encitement from some errors, as long slumbering under others. I write you no news, because when an occasion occurs I shall write a separate letter for that. I am always, with great and sincere esteem, dear Sir, your affectionate friend and servant.
-Thomas Jefferson
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The letter is prescient. Unfortunately, our nation is way past any possibility of paying back the debt of $33 trillion. For example, paying back "only" $1 trillion using $1 per second would take 31,688 years. So the U.S. is already insolvent.
There are only three possibilities on how to handle the debt: 1) Austerity (cutting spending), 2) Defaulting, and 3) debasing the currency. Politicians have zero incentives to do #1, as no one will elect them. #2 is not practical, because politicians will never agree to not pay back their own citizens who are holding bonds, etc. That leave #3, which is what has been going on since 1913, so that our dollar has lost 99% of its value. The history of fiat currencies is that they always end up hyperinflating and failing because governments cannot resist overspending to get elected and to get power. The U.S. dollar and our government is no different.
The only solution is bitcoin, so plenty of us are gradually moving out of the U.S. dollar and into bitcoin. Thank God we have an alternative, because the German people didn't have any solution in 1922-24, and the mark went from 4 marks per dollar to 4 trillion marks per dollar!
Perfect to go to our history to look for solutions. Thank you once more, Emerald, for sharing this piece of history. We must never forget the sacrifices made for future generations. Will we learn from our mistakes?