The Writings of Thomas Jefferson, Vol. 6 (of 9)

TO JOHN W. EPPES

Monticello, June 24, 1813.

Dear Sir,—This letter will be on politics only. For although I do not often permit myself to think on that subject, it sometimes obtrudes itself, and suggests ideas which I am tempted to pursue. Some of these relating to the business of finance, I will hazard to you, as being at the head of that committee, but intended for yourself individually, or such as you trust, but certainly not for a mixed committee.

It is a wise rule, and should be fundamental in a government disposed to cherish its credit, and at the same time to restrain the use of it within the limits of its faculties, "never to borrow a dollar without laying a tax in the same instant for paying the interest annually, and the principle within a given term; and to consider that tax as pledged to the creditors on the public faith." On such a pledge as this, sacredly observed, a government may always command, on a reasonable interest, all the lendable money of their citizens, while the necessity of an equivalent tax is a salutary warning to them and their constituents against oppressions, bankruptcy, and its inevitable consequence, revolution. But the term of redemption must be moderate, and at any rate within the limits of their rightful powers. But what limits, it will be asked, does this prescribe to their powers? What is to hinder them from creating a perpetual debt? The laws of nature, I answer. The earth belongs to the living, not to the dead. The will and the power of man expire with his life, by nature's law. Some societies give it an artificial continuance, for the encouragement of industry; some refuse it, as our aboriginal neighbors, whom we call barbarians. The generations of men may be considered as bodies or corporations. Each generation has the usufruct of the earth during the period of its continuance. When it ceases to exist, the usufruct passes on to the succeeding generation, free and unincumbered, and so on, successively, from one generation to another forever. We may consider each generation as a distinct nation, with a right, by the will of its majority, to bind themselves, but none to bind the succeeding generation, more than the inhabitants of another country. Or the case may be likened to the ordinary one of a tenant for life, who may hypothecate the land for his debts, during the continuance of his usufruct; but at his death, the reversioner (who is also for life only) receives it exonerated from all burthen. The period of a generation, or the term of its life, is determined by the laws of mortality, which, varying a little only in different climates, offer a general average, to be found by observation. I turn, for instance, to Buffon's tables, of twenty-three thousand nine hundred and ninety-four deaths, and the ages at which they happened, and I find that of the numbers of all ages living at one moment, half will be dead in twenty-four years and eight months. But (leaving out minors, who have not the power of self-government) of the adults (of twenty-one years of age) living at one moment, a majority of whom act for the society, one half will be dead in eighteen years and eight months. At nineteen years then from the date of a contract, the majority of the contractors are dead, and their contract with them. Let this general theory be applied to a particular case. Suppose the annual births of the State of New York to be twenty-three thousand nine hundred and ninety-four, the whole number of its inhabitants, according to Buffon, will be six hundred and seventeen thousand seven hundred and three, of all ages. Of these there would constantly be two hundred and sixty-nine thousand two hundred and eighty-six minors, and three hundred and forty-eight thousand four hundred and seventeen adults, of which last, one hundred and seventy-four thousand two hundred and nine will be a majority. Suppose that majority, on the first day of the year 1794, had borrowed a sum of money equal to the fee-simple value of the State, and to have consumed it in eating, drinking and making merry in their day; or, if you please, in quarrelling and fighting with their unoffending neighbors. Within eighteen years and eight months, one half of the adult citizens were dead. Till then, being the majority, they might rightfully levy the interest of their debt annually on themselves and their fellow-revellers, or fellow-champions. But at that period, say at this moment, a new majority have come into place, in their own right, and not under the rights, the conditions, or laws of their predecessors. Are they bound to acknowledge the debt, to consider the preceding generation as having had a right to eat up the whole soil of their country, in the course of a life, to alienate it from them, (for it would be an alienation to the creditors,) and would they think themselves either legally or morally bound to give up their country and emigrate to another for subsistence? Every one will say no; that the soil is the gift of God to the living, as much as it had been to the deceased generation; and that the laws of nature impose no obligation on them to pay this debt. And although, like some other natural rights, this has not yet entered into any declaration of rights, it is no less a law, and ought to be acted on by honest governments. It is, at the same time, a salutary curb on the spirit of war and indebtment, which, since the modern theory of the perpetuation of debt, has drenched the earth with blood, and crushed its inhabitants under burthens ever accumulating. Had this principle been declared in the British bill of rights, England would have been placed under the happy disability of waging eternal war, and of contracting her thousand millions of public debt. In seeking, then, for an ultimate term for the redemption of our debts, let us rally to this principle, and provide for their payment within the term of nineteen years at the farthest. Our government has not, as yet, begun to act on the rule of loans and taxation going hand in hand. Had any loan taken place in my time, I should have strongly urged a redeeming tax. For the loan which has been made since the last session of Congress, we should now set the example of appropriating some particular tax, sufficient to pay the interest annually, and the principle within a fixed term, less than nineteen years. And I hope yourself and your committee will render the immortal service of introducing this practice. Not that it is expected that Congress should formally declare such a principle They wisely enough avoid deciding on abstract questions. But they may be induced to keep themselves within its limits.

I am sorry to see our loans begin at so exorbitant an interest. And yet, even at that you will soon be at the bottom of the loan-bag. We are an agricultural nation. Such an one employs its sparings in the purchase or improvement of land or stocks. The lendable money among them is chiefly that of orphans and wards in the hands of executors and guardians, and that which the farmer lays by till he has enough for the purchase in view. In such a nation there is one and one only resource for loans, sufficient to carry them through the expense of a war; and that will always be sufficient, and in the power of an honest government, punctual in the preservation of its faith. The fund I mean, is the mass of circulating coin. Every one knows, that although not literally, it is nearly true, that every paper dollar emitted banishes a silver one from the circulation. A nation, therefore, making its purchases and payments with bills fitted for circulation, thrusts an equal sum of coin out of circulation. This is equivalent to borrowing that sum, and yet the vendor receiving payment in a medium as effectual as coin for his purchases or payments, has no claim to interest. And so the nation may continue to issue its bills as far as its wants require, and the limits of the circulation will admit. Those limits are understood to extend with us at present, to two hundred millions of dollars, a greater sum than would be necessary for any war. But this, the only resource which the government could command with certainty, the States have unfortunately fooled away, nay corruptly alienated to swindlers and shavers, under the cover of private banks. Say, too, as an additional evil, that the disposal funds of individuals, to this great amount, have thus been withdrawn from improvement and useful enterprise, and employed in the useless, usurious and demoralizing practices of bank directors and their accomplices. In the war of 1755, our State availed itself of this fund by issuing a paper money, bottomed on a specific tax for its redemption, and, to insure its credit, bearing an interest of five per cent. Within a very short time, not a bill of this emission was to be found in circulation. It was locked up in the chests of executors, guardians, widows, farmers, &c. We then issued bills bottomed on a redeeming tax, but bearing no interest. These were readily received, and never depreciated a single farthing. In the revolutionary war, the old Congress and the States issued bills without interest, and without tax. They occupied the channels of circulation very freely, till those channels were overflowed by an excess beyond all the calls of circulation. But although we have so improvidently suffered the field of circulating medium to be filched from us by private individuals, yet I think we may recover it in part, and even in the whole, if the States will co-operate with us. If treasury bills are emitted on a tax appropriated for their redemption in fifteen years, and (to insure preference in the first moments of competition) bearing an interest of six per cent. there is no one who would not take them in preference to the bank paper now afloat, on a principle of patriotism as well as interest; and they would be withdrawn from circulation into private hoards to a considerable amount. Their credit once established, others might be emitted, bottomed also on a tax, but not bearing interest; and if ever their credit faltered, open public loans, on which these bills alone should be received as specie. These, operating as a sinking fund, would reduce the quantity in circulation, so as to maintain that in an equilibrium with specie. It is not easy to estimate the obstacles which, in the beginning, we should encounter in ousting the banks from their possession of the circulation; but a steady and judicious alternation of emissions and loans, would reduce them in time. But while this is going on, another measure should be pressed, to recover ultimately our right to the circulation. The States should be applied to, to transfer the right of issuing circulating paper to Congress exclusively, in perpetuum, if possible, but during the war at least, with a saving of charter rights. I believe that every State west and South of Connecticut river, except Delaware, would immediately do it; and the others would follow in time. Congress would, of course, begin by obliging unchartered banks to wind up their affairs within a short time, and the others as their charters expired, forbidding the subsequent circulation of their paper. This they would supply with their own, bottomed, every emission, on an adequate tax, and bearing or not bearing interest, as the state of the public pulse should indicate. Even in the non-complying States, these bills would make their way, and supplant the unfunded paper of their banks, by their solidity, by the universality of their currency, and by their receivability for customs and taxes. It would be in their power, too, to curtail those banks to the amount of their actual specie, by gathering up their paper, and running it constantly on them. The national paper might thus take place even in the non-complying States. In this way, I am not without a hope, that this great, this sole resource for loans in an agricultural country, might yet be recovered for the use of the nation during war; and, if obtained in perpetuum, it would always be sufficient to carry us through any war; provided, that in the interval between war and war, all the outstanding paper should be called in, coin be permitted to flow in again, and to hold the field of circulation until another war should require its yielding place again to the national medium.

But it will be asked, are we to have no banks? Are merchants and others to be deprived of the resource of short accommodations, found so convenient? I answer, let us have banks; but let them be such as are alone to be found in any country on earth, except Great Britain. There is not a bank of discount on the continent of Europe, (at least there was not one when I was there,) which offers anything but cash in exchange for discounted bills. No one has a natural right to the trade of a money lender, but he who has the money to lend. Let those then among us, who have a monied capital, and who prefer employing it in loans rather than otherwise, set up banks, and give cash or national bills for the notes they discount. Perhaps, to encourage them, a larger interest than is legal in the other cases might be allowed them, on the condition of their lending for short periods only. It is from Great Britain we copy the idea of giving paper in exchange for discounted bills; and while we have derived from that country some good principles of government and legislation, we unfortunately run into the most servile imitation of all her practices, ruinous as they prove to her, and with the gulph yawning before us into which these very practices are precipitating her. The unlimited emission of bank paper has banished all her specie, and is now, by a depreciation acknowledged by her own statesmen, carrying her rapidly to bankruptcy, as it did France, as it did us, and will do us again, and every country permitting paper to be circulated, other than that by public authority, rigorously limited to the just measure for circulation. Private fortunes, in the present state of our circulation, are at the mercy of those self-created money lenders, and are prostrated by the floods of nominal money with which their avarice deluges us. He who lent his money to the public or to an individual, before the institution of the United States Bank, twenty years ago, when wheat was well sold at a dollar the bushel, and receives now his nominal sum when it sells at two dollars, is cheated of half his fortune; and by whom? By the banks, which, since that, have thrown into circulation ten dollars of their nominal money where was one at that time.

Reflect, if you please, on these ideas, and use them or not as they appear to merit. They comfort me in the belief, that they point out a resource ample enough, without overwhelming war taxes, for the expense of the war, and possibly still recoverable; and that they hold up to all future time a resource within ourselves, ever at the command of government, and competent to any wars into which we may be forced. Nor is it a slight object to equalize taxes through peace and war.

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Ever affectionately yours

TO JOHN ADAMS

Monticello, June 27, 1813.

 
Ιδαν ες πολυδενδρον ανηρ ὑλητομος ελθων
Παπταινει, παρεοντος αδην, ποθεν αρξεται εργου
Τι πρατον καταλεξω; επει παρα μυρια ειπην.
 

And I too, my dear Sir, like the wood-cutter of Ida, should doubt where to begin, were I to enter the forest of opinions, discussions, and contentions which have occurred in our day. I should say with Theocritus, Τι πρατον καταλεξω; επει παρα μυρια ειπην. But I shall not do it. The summum bonum with me is now truly epicurian, ease of body and tranquillity of mind; and to these I wish to consign my remaining days. Men have differed in opinion, and been divided into parties by these opinions, from the first origin of societies, and in all governments where they have been permitted freely to think and to speak. The same political parties which now agitate the United States, have existed through all time. Whether the power of the people or that of the αριστοι should prevail, were questions which kept the States of Greece and Rome in eternal convulsions, as they now schismatize every people whose minds and mouths are not shut up by the gag of a despot. And in fact, the terms of whig and tory belong to natural as well as to civil history. They denote the temper and constitution of mind of different individuals. To come to our own country, and to the times when you and I became first acquainted, we well remember the violent parties which agitated the old Congress, and their bitter contests. There you and I were together, and the Jays, and the Dickinsons, and other anti-independents, were arrayed against us. They cherished the monarchy of England, and we the rights of our countrymen. When our present government was in the mew, passing from Confederation to Union, how bitter was the schism between the Feds and Antis. Here you and I were together again. For although, for a moment, separated by the Atlantic from the scene of action, I favored the opinion that nine States should confirm the constitution, in order to secure it, and the others hold off until certain amendments, deemed favorable to freedom, should be made. I rallied in the first instant to the wiser proposition of Massachusetts, that all should confirm, and then all instruct their delegates to urge those amendments. The amendments were made, and all were reconciled to the government. But as soon as it was put into motion, the line of division was again drawn. We broke into two parties, each wishing to give the government a different direction; the one to strengthen the most popular branch, the other the more permanent branches, and to extend their permanence. Here you and I separated for the first time, and as we had been longer than most others on the public theatre, and our names therefore were more familiar to our countrymen, the party which considered you as thinking with them, placed your name at their head; the other, for the same reason, selected mine. But neither decency nor inclination permitted us to become the advocates of ourselves, or to take part personally in the violent contests which followed. We suffered ourselves, as you so well expressed it, to be passive subjects of public discussion. And these discussions, whether relating to men, measures or opinions, were conducted by the parties with an animosity, a bitterness and an indecency which had never been exceeded. All the resources of reason and of wrath were exhausted by each party in support of its own, and to prostrate the adversary opinions; one was upbraided with receiving the anti-federalists, the other the old tories and refugees, into their bosom. Of this acrimony, the public papers of the day exhibit ample testimony, in the debates of Congress, of State Legislatures, of stump-orators, in addresses, answers, and newspaper essays; and to these, without question, may be added the private correspondences of individuals; and the less guarded in these, because not meant for the public eye, not restrained by the respect due to that, but poured forth from the overflowings of the heart into the bosom of a friend, as a momentary easement of our feelings. In this way, and in answers to addresses, you and I could indulge ourselves. We have probably done it, sometimes with warmth, often with prejudice, but always, as we believed, adhering to truth. I have not examined my letters of that day. I have no stomach to revive the memory of its feelings. But one of these letters, it seems, has got before the public, by accident and infidelity, by the death of one friend to whom it was written, and of his friend to whom it had been communicated, and by the malice and treachery of a third person, of whom I had never before heard, merely to make mischief, and in the same satanic spirit in which the same enemy had intercepted and published, in 1776, your letter animadverting on Dickinson's character. How it happened that I quoted you in my letter to Doctor Priestley, and for whom, and not for yourself, the strictures were meant, has been explained to you in my letter of the 15th, which had been committed to the post eight days before I received yours of the 10th, 11th and 14th. That gave you the reference which these asked to the particular answer alluded to in the one to Priestley. The renewal of these old discussions, my friend, would be equally useless and irksome. To the volumes then written on these subjects, human ingenuity can add nothing new, and the rather, as lapse of time has obliterated many of the facts. And shall you and I, my dear Sir, at our age, like Priam of old, gird on the arma, diu desueta, trementibus œvo humeris? Shall we, at our age, become the Athletæ of party, and exhibit ourselves as gladiators in the arena of the newspapers? Nothing in the universe could induce me to it. My mind has been long fixed to bow to the judgment of the world, who will judge by my acts, and will never take counsel from me as to what that judgment shall be. If your objects and opinions have been misunderstood, if the measures and principles of others have been wrongfully imputed to you, as I believe they have been, that you should leave an explanation of them, would be an act of justice to yourself. I will add, that it has been hoped that you would leave such explanations as would place every saddle on its right horse, and replace on the shoulders of others the burthens they shifted on yours.

But all this, my friend, is offered, merely for your consideration and judgment, without presuming to anticipate what you alone are qualified to decide for yourself. I mean to express my own purpose only, and the reflections which have led to it. To me, then, it appears, that there have been differences of opinion and party differences, from the first establishment of governments to the present day, and on the same question which now divides our own country; that these will continue through all future time; that every one takes his side in favor of the many, or of the few, according to his constitution, and the circumstances in which he is placed; that opinions, which are equally honest on both sides, should not affect personal esteem or social intercourse; that as we judge between the Claudii and the Gracchi, the Wentworths and the Hampdens of past ages, so of those among us whose names may happen to be remembered for awhile, the next generations will judge, favorably or unfavorably, according to the complexion of individual minds, and the side they shall themselves have taken; that nothing new can be added by you or me to what has been said by others, and will be said in every age in support of the conflicting opinions on government; and that wisdom and duty dictate an humble resignation to the verdict of our future peers. In doing this myself, I shall certainly not suffer moot questions to affect the sentiments of sincere friendship and respect, consecrated to you by so long a course of time, and of which I now repeat sincere assurances.