The Constitution Has a 155-Year-Old Answer to the Debt Ceiling
The 14th Amendment, added to the Constitution in the wake of the Civil War, has been back in the news of late, mostly because the Supreme Court has taken aim at past decisions, notably Roe v. Wade, that employed it to protect Americans’ liberties. The amendment remains the most significant addition to the Constitution since the adoption of the Bill of Rights. Its magnificent first section established the principle of birthright citizenship and prohibited the states from denying to any person the equal protection of the laws, laying the foundation for many of the rights Americans prize.
Long-forgotten provisions of the 14th Amendment are suddenly crying out for enforcement. Section 2 provides for a reduction in the number of representatives allocated to states that deny the right to vote to any “male citizens.” (Today this penalty would apply to the disenfranchisement of women as well.) Even at the height of the Jim Crow era, when millions of African Americans were prevented from voting, this penalty was never imposed. But with many states seriously limiting voting rights, its time may have come.
Section 3 bars from public office anyone who took an oath to support the Constitution and subsequently participated in or encouraged “insurrection.” The events of Jan. 6, 2021, have focused new attention on this stipulation, which could be applied to participants in the uprising who previously held military, political, or judicial positions, including former President Donald Trump.
Then there is Section 4, which offers a way out of the current impasse over increasing the debt ceiling. “The validity of the public debt of the United States,” it declares, “shall not be questioned.”
What were those who wrote, debated and ratified this provision trying to accomplish? The section arose from political conflicts over the way the Civil War had been financed. To pay the war’s enormous cost, Congress printed legal tender paper money (the “greenbacks”), raised taxes to unprecedented heights and authorized the sale of hundreds of millions of dollars in interest-bearing bonds.
Nearly all the laws authorizing the issuance of bonds specified that the government would redeem the notes in gold. The one exception was the act related to the “five-twenties,” bonds redeemable in five years and payable in 20, which was silent on how those who had lent money to the government by purchasing these bonds would be repaid.
This oversight, to quote the historian Irwin Unger, led directly to “a decade of intense and exasperating conflict.” Democrats sought to score political points by demanding that the five-twenties be repaid in paper money (which had deteriorated considerably in value), not gold. It would constitute an enormous unearned windfall, they insisted, for banks and large investors who had purchased these bonds with greenbacks to receive gold back from the government.
“Who has asked us to change the Constitution for the benefit of the bondholders?” Senator Thomas Hendricks of Indiana asked when the amendment was being debated. “Why give them this extraordinary guarantee?”
Republicans pointed out that much of the benefit of payment in gold would be enjoyed by ordinary Americans, who had purchased them from a small army of agents deployed by the financier Jay Cooke. They insisted that the sanctity of the national debt was as much a moral legacy of the Civil War as Emancipation itself.
The idea of paying the five-twenties in greenbacks was closely identified with “Gentleman George” Pendleton, the scion of a prominent Virginia family and the Democratic Party’s vice-presidential candidate in 1864, who hoped to ride it all the way to the White House. What came to be called the Pendleton Plan made its way into the Democrats’ national platform of 1868 over the strenuous objections not only of Republicans but also of Democrats tied to Wall Street, like the financier August Belmont, the Rothschild banking family’s representative in the United States, who naturally preferred to be paid in gold rather than paper money.
Section 4 was the Republicans’ response. While the language is certainly infelicitous (surely Congress could have found better wording than declaring it illegal to “question” the validity of the national debt), the historical context makes its purpose clear.
In the Reconstruction Acts of 1867, Congress began the nation’s first large experiment in interracial democracy, granting the right to vote to African American men in all the former Confederate states except Tennessee. This propelled Republicans to control of governments throughout the South. But Republicans feared that at some future time, former Confederates might return to power there. Their congressional representatives might join Northern Democrats in repudiating all or part of the national debt while honoring the Confederate one (this latter possibility was explicitly prohibited by Section 4).
The nation needed to be made “safe from the domination of traitors,” declared Representative James Ashley, Republican of Ohio, “safe from repudiation.” The 14th Amendment would help accomplish these goals. Whatever one thinks of Civil War-era fiscal policy, the amendment’s language is mandatory, not permissive — the validity of the public debt “shall not be questioned.” Today, over a century and a half after the amendment’s ratification, this promise is no longer considered an “extraordinary guarantee”; it is an essential attribute of a modern economy.
Our Constitution is not self-enforcing. The 14th Amendment concludes by empowering Congress to carry out its provisions. But if the current House of Representatives abdicates this responsibility, throwing the nation into default by refusing to raise the debt limit, President Biden should act on his own, taking steps to ensure that the federal government meets its financial obligations, as the Constitution requires.
Eric Foner is an emeritus professor of history at Columbia and the author, most recently, of “The Second Founding: How the Civil War and Reconstruction Remade the Constitution.”
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