A Letter to The President on The National Debt

Reader and sometime contributor Michael Newton from The Path To Tyranny Blog sent me this quote from Thomas Jefferson.  Jefferson was writing to George Washington in 1792 regarding the Federalist financial system and the danger he imagined it posed to the union:

The ultimate object of all this is to prepare the way for a change, from the present republican form of government, to that of a monarchy, of which the English constitution is to be the model. That this was contemplated in the Convention is no secret, because it’s partisans have made none of it. To effect it then was impracticable, but they are still eager after their object, and are predisposing every thing for it’s ultimate attainment.

Somewhat amused, Michael wondered, “Did Jefferson really believe that the Federalists wanted to establish a monarchy?  Or was he simply playing politics? ”

I suspect it was some of both, Hamilton had made statements of admiration for the British system of government while attending a dinner party with some notables.  These statements were repeated widely (and somewhat out of context) by his political enemies.  It was John Adams who argued for the pomp and circumstance in choosing the name of the nation’s chief executive (His Highness or His Most Benign Highness) – he was overruled in favor of the simple “Mr. President.” So there were plenty of  opportunities for the emerging Republican party to accuse the Federalists of monarchical leanings.

But when I went in search of the original letter so that I would have the context of the quote, I discovered some arguably more interesting (and more accurate) prognostications by Jefferson which have relevance for today.

The purpose of Jefferson’s letter was to encourage Washington to remain in office for a second term.  At this point in the country’s history there was no one else with the stature to hold things together.  Whether Federalist or Republican, all seemed to agree on that.

In reading the letter it seems clear that Jefferson did not have the keen understanding of economics that Hamilton did.  He is clearly distrustful of paper money and financial instruments (maybe he was right after all).

Even if his convoluted reasoning is off the mark (Federalists seeking to create a monarchy), some of his observations on the results of a corrupt congress are not.

Of all the mischiefs objected to the system of measures beforementioned, none is so afflicting, and fatal to every honest hope, as the corruption of the legislature. as it was the earliest of these measures it became the instrument for producing the rest, & will be the instrument for producing in future a king, lords & commons, or whatever else those who direct it may chuse. withdrawn such a distance from the eye of their constituents, and these so dispersed as to be inaccessible to public information, & particularly to that of the conduct of their own representatives, they will form the most corrupt government on earth, if the means of their corruption be not prevented. the only hope of safety hangs now on the numerous representation which is to come forward the ensuing year. some of the new members will probably be either in principle or interest, with the present majority. but it is expected that the great mass will form an accession to the republican party. they will not be able to undo all which the two preceding legislatures, & especially the first have done. public faith & right will oppose this. but some parts of the system may be rightfully reformed; a liberation from the rest unremittingly pursued as fast as right will permit, & the door shut in future against similar commitments of the nation. …

Although the context is different, the words fit almost perfectly with the situation today!  Jefferson was arguing against a mounting national debt held by foreign creditors.

That this accumulation of debt has taken for ever out of our power those easy sources of revenue, which, applied to the ordinary necessities & exigencies of government, would have answered them habitually, and covered us from habitual murmurings against taxes & tax-gatherers, reserving extraordinary calls, for those extraordinary occasions which would animate the people to meet them: That though the calls for money have been no greater than we must generally expect, for the same or equivalent exigencies, yet we are already obliged to strain the impost till it produces clamour, and will produce evasion, & war on our own citizens to collect it and even to resort to an Excise law, of odious character with the people, partial in it’s operation, unproductive unless enforced by arbitrary & vexatious means, and committing the authority of the government in parts where resistance is most probable, & coercion least practicable. They cite propositions in Congress and suspect other projects on foot still to increase the mass of debt. They say that by borrowing at 2⁄3 of the interest, we might have paid off the principal in 2⁄3 of the time: but that from this we are precluded by it’s being made irredeemable but in small portions & long terms: That this irredeemable quality was given it for the avowed purpose of inviting it’s transfer to foreign countries.

And if he was off the mark in his assertions that the establishment of a monarchy was the Federalists objective in building a mounting debt and establishing a paper currency, his observations on government seem spot on.

The debate in Congress today rages around raising the debt ceiling and cutting spending.  The most pressing problem faced by the US today is the skyrocketing debt.  The foreign creditors holding that debt are of no little concern either.

Jefferson may have been a little fuzzy in his knowledge of international banking and economics, but he had faith in Washington as the right man to guide the country through the storm.

… the confidence of the whole union is centered in you. your being at the helm, will be more than an answer to every argument which can be used to alarm & lead the people in any quarter into violence or secession. North & South will hang together, if they have you to hang on: and, if the first corrective of a numerous representation should fail in it’s effect, your presence will give time for trying others not inconsistent with the union & peace of the states. …

George, where are you when we need you?