Debating the Public Debt in 1866 (and 2023)

The 39th Congress, which framed the 14th Amendment, had a much different debate over the federal debt than the debate that is slated to take place in the very near future in the 118th Congress. Members of both parties in the 39th Congress agreed that the United States must honor the nation’s debt, that is, that Congress was obligated to pay bondholders the interest due when the interest was due. They debated only whether the United States could tax the interest on federal bonds. Today’s Congress, however, may soon debate whether to stiff some federal creditors and renege on some federal obligations, obligations all the Reconstruction framers agreed was paramount.

On March 26, 1866, the House of Representatives made their opinions on federal obligations known when considering three resolutions offered by Rep. Andrew Rogers (D-N.J.). Rogers vociferously opposed the Civil Rights Act of 1866—which he described as giving “Congress such dangerous powers over the liberties of the people”—and the 14th Amendment, the first section of which he maintained was “no more nor less than an attempt to embody in the Constitution of the United States that outrageous and miserable civil rights bill.” Nevertheless, he was far more agreeable on the war debt of the Confederacy and public debt of the United States. His first resolution on the rebel debt declared, “That the Federal Government has no constitutional right to assume or pay the debt of the so-called confederate government of the insurgent States, and that it would be an outrage even to attempt to do so.” And his second resolution on the federal debt declared, “That the honor of the Federal Government and every principle of justice demand that the Federal debt should be paid to the utmost farthing; that repudiation should be discountenanced, and the plighted faith of the country sacredly preserved.”

Rogers proved prophetic when he declared, “I take for granted that the members upon both sides of the House, without one dissenting voice, will record themselves fearlessly and with pleasure in favor of the two resolutions contained in this series.” No Republican or Democrat in the discussion that followed offered any criticism—or even commentary—on the first two resolutions. The sacred status of the national debt and the illegality of the confederate debt were taken for granted.

The only debate in the House that the Rogers resolutions inspired was over the third proposition, which is not relevant to today’s debt ceiling crisis. Namely, bipartisan divisions emerged on whether interest on federal bonds could be taxed. Every Republican who spoke maintained that federal bonds could not be taxed unless the federal government reserved the right to tax when the bonds were issued. Several Democrats disagreed. Rogers pointed to resolutions of “the Democratic conventions of New Jersey, New York, and of the other States” “against a privileged class [of bondholders] being exempted from taxation.” The resolutions were sent to the House Ways and Means Committee and never returned. 

The 39th Congress proved as agreeable with respect to the public debt of the United States when debating Section 4 of the proposed 14th Amendment. The first sentence of that section states, “The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.” Rep. Joseph Defrees (R-Ind.) spoke for the other members of his party when asserting, “The fourth section of the joint resolution ... will meet with little, if any opposition. The good character of the Government depends upon the fidelity with which it meets the contracts and discharges its pecuniary obligations.” 

This consensus was bipartisan. Rep. Aaron Harding (D-Ky.) described the provision on the federal debt as “very sound and wholesome.” Rogers stated that the proposed constitutional amendment on “the validity of the Federal debt would meet the approbation of every State.” 

As was the case with the Rogers resolutions, the only debate that Section 4 inspired concerned the possible taxation of federal bonds. Sen. Thomas Hendricks (D-Ind.) maintained that “the real purpose is to hedge in the bondholders by constitutional provision as that they never may be taxed; that Congress can never assent to their taxation, and so that three billions of capital may bear no portion of the public burden.” No Republican spoke in response to Hendricks’s concern about the taxation of federal bonds. Given their response to the Rogers resolutions two months prior, Republicans most likely thought that taxation without notice of federal bonds violated Section 4. This, however, is an inference from that previous debate and not from anything that was said when members of the 39th Congress debated constitutional reform.

When Republicans spoke about Section 4, they did so not in response to Hendricks, but to make two different points. First, prominent Republicans emphasized that Section 4 constitutionalized the principle that the debts of the United States were to be honored, whether or not those debts were incurred during the Civil War. Second, Republicans who spoke during the debates over Section 4 emphasized that obligations they expected the United States to honor extended far beyond serving the national debt.

Republicans and Democrats were aware that Section 4 referred to “the public debt of the United States,” and not only “the public debt of the United States incurred during the Civil War.” The Republican Senate Caucus proposed a separate section of the 14th Amendment limited to obligations incurred in the Civil War. That provision declared, “The obligation of the United States incurred in suppressing insurrection, or in defense of the Union, or for payment of bounties or pensions incident thereto, shall remain violate.” This limiting language was removed when, on a motion from Sen. Daniel Clark (R-N.H.), the separate provisions on the rebel debt and federal debt were merged into what became Section 4 of the 14th Amendment.

Republicans understood the final text of Section 4 as extended beyond Civil War finances. Prominent Republicans celebrated a constitutional provision that protected all federal obligations, not just those incurred fighting the Confederacy. For example, Sen. Benjamin Wade (R-Ohio) declared that “every man who has property in the public funds will feel safer when he sees that the national debt is withdrawn from the power of a Congress to repudiate it and placed under the guardianship of the Constitution than he would feel it if it were left at loose ends and subject to the varying majorities which may arise in Congress.” “It is a declaration in solemn form,” said Rep. John Bingham (R-Ohio), “that the resources of this great country shall be used in the future, not to liquidate debts contracted in aid of rebellion, not to pay for emancipated slaves, but to maintain inviolate the plighted faith of the nation to all the world.”

Republicans were concerned with public obligations beyond the interest and principal of the national debt. They feared that southerners in power would both “repudiate the national debt in toto” and “stop all pensions now given to Union soldiers, their widows and orphans.” Rep. Ebon Ingersoll (R-Ill.) echoed this sentiment when asserting that unless constitutional reform occurred, “you will no longer be able to pay the pensions to your own disabled soldiers, or the widows and orphans that have been caused by this war.” Section 4 of the 14th Amendment is the only provision that directly addresses this frequently articulated Republican concern.

The 118th Congress seems intent on debating what the Reconstruction framers considered completely off the table: failing to pay the public debt. A congressional failure to raise the debt ceiling will either require the federal government not to honor the “validity of the public debt” or force President Joe Biden to pay federal obligations without congressional authorization. History does not provide clear answers to presidential responsibility when Congress does not provide funding for paying national obligations. History does not provide clear answers to what Republicans and Democrats in 1866 would do when confronted with the trillion-dollar national debts of the 21st century. What is known, however, is that the entire 39th Congress, proponents and opponents of the 14th Amendment alike, believed that the United States in 1866 had a constitutional obligation to pay any debt of the United States that persons in 1866 could conceive. The public debt and obligations of the national government, they believed, were duties that rose above politics, not political footballs for congressional games of chicken.