TO: JOHN W. EPPES,
FROM: THOMAS JEFFERSON
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 principal 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
unencumbered, and so on, successively, from one generation to another for ever.
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-revelers, 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.

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 principal 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 disposable 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, etc. 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.

Continued... Page 2
Selected Papers of Thomas Jefferson:  Public Debt and Banking
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Philosophy of
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Socialism in America

"The struggle of History is not
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proletariat; it is between government
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Jerry McDaniel
Written for the "common
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