The Writings of
Thomas Jefferson

editor H.A. Washington
New York :  H.W. Derby
To John Wayles Eppes
[son-in-law, at the time Chairman of the Committee of Ways and Means of the House of Representatives, 13th Congress]
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 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 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 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.

I was in Bedford a fortnight in the month of May, and did not know that Francis and his cousin Baker were within 10. miles of me at Lynchburg.  I learnt it by letters from themselves after I had returned home.  I shall go there early in August and hope their master will permit them to pass their Saturdays & Sundays with me. Ever affectionately yours.

To William H. Crawford.
Monticello, July 20, 1816.

Dear Sir,—I am about to sin against all discretion, and knowingly, by adding to the drudgery of your letter-reading, this acknowledgment of the receipt of your favor of May the 31st, with the papers it covered.  I cannot, however, deny myself the gratification of expressing the satisfaction I have received, not only from the general statement of affairs at Paris, in yours of December the 12th, 1814, (as a matter of history which I had not before received,) but most especially and superlatively, from the perusal of your letter of the 8th of the same month to Mr. Fisk, on the subject of draw-backs.  This most heterogeneous principle was transplanted into ours from the British system, by a man whose mind was really powerful, but chained by native partialities to everything English;  who had formed exaggerated ideas of the superior perfection of the English constitution, the superior wisdom of their government, and sincerely believed it for the good of this country to make them their model in everything;  without considering that what might be wise and good for a nation essentially commercial, and entangled in complicated intercourse with numerous and powerful neighbors, might not be so for one essentially agricultural, and insulated by nature from the abusive governments of the old world.

The exercise, by our own citizens, of so much commerce as may suffice to exchange our superfluities for our wants, may be advantageous for the whole.  But it does not follow, that with a territory so boundless, it is the interest of the whole to become a mere city of London, to carry on the business of one-half the world at the expense of eternal war with the other half.  The agricultural capacities of our country constitute its distinguishing feature;  and the adapting our policy and pursuits to that, is more likely to make us a numerous and happy people, than the mimicry of an Amsterdam, a Hamburg, or a city of London.  Every society has a right to fix the fundamental principles of its association, and to say to all individuals, that, if they contemplate pursuits beyond the limits of these principles, and involving dangers which the society chooses to avoid, they must go somewhere else for their exercise;  that we want no citizens, and still less ephemeral and pseudo-citizens, on such terms.  We may exclude them from our territory, as we do persons infected with disease.  Such is the situation of our country.  We have mast abundant resources of happiness within ourselves, which we may enjoy in peace and safety, without permitting a few citizens, infected with the mania of rambling and gambling, to bring danger on the great mass engaged in innocent and safe pursuits at home.  In your letter to Fisk, you have fairly stated the alternatives between which we are to choose :  1, licentious commerce and gambling speculations for a few, with eternal war for the many;  or, 2, restricted commerce, peace, and steady occupations for all.  If any State in the Union will declare that it prefers separation with the first alternative, to a continuance in union without it, I have no hesitation in saying, "let us separate."  I would rather the States should withdraw, which are for unlimited commerce and war, and confederate with those alone which are for peace and agriculture.  I know that every nation in Europe would join in sincere amity with the latter, and hold the former at arm’s length, by jealousies, prohibitions, restrictions, vexations and war.  No earthly consideration could induce my consent to contract such a debt as England has by her wars for commerce, to reduce our citizens by taxes to such wretchedness, as that laboring sixteen of the twenty-four hours, they are still unable to afford themselves bread, or barely to earn as much oatmeal or potatoes as will keep soul and body together.  And all this to feed the avidity of a few millionary merchants, and to keep up one thousand ships of war for the protection of their commercial speculations.  I returned from Europe after our government had got under way, and had adopted from the British code the law of draw-backs.  I early saw its effects in the jealousies and vexations of Britain;  and that, retaining it, we must become like her an essentially warring nation, and meet, in the end, the catastrophe impending over her.  No one can doubt that this alone produced the orders of council, the depredations which preceded, and the war which followed them.  Had we carried but our own produce, and brought back but our own wants, no nation would have troubled us.  Our commercial dashers, then, have already cost us so many thousand lives, so many millions of dollars, more than their persons and all their commerce were worth.  When war was declared, and especially after Massachusetts, who had produced it, took side with the enemy waging it, I pressed on some confidential friends in Congress to avail us of the happy opportunity of repealing the draw-back;  and I do rejoice to find that you are in that sentiment.  You are young, and may be in the way of bringing it into effect.  Perhaps time, even yet, and change of tone, (for there are symptoms of that in Massachusetts,) may not have obliterated altogether the sense of our late feelings and sufferings;  may not have induced oblivion of the friends we have lost, the depredations and conflagrations we have suffered, and the debts we have incurred, and have to labor for through the lives of the present generation.  The earlier the repeal is proposed, the more it will be befriended by all these recollections and considerations.  This is one of three great measures necessary to insure us permanent prosperity.  This preserves our peace.  A second should enable us to meet any war, by adopting the report of the War Department, for placing the force of the nation at effectual command;  and a third should insure resources of money by the suppression of all paper circulation during peace, and licensing that of the nation alone during war.  The metallic medium of which we should be possessed at the commencement of a war, would be a sufficient fund for all the loans we should need through its continuance;  and if the national bills issued be bottomed (as is indispensable) on pledges of specific taxes for their redemption within certain and moderate epochs, and be of proper denominations for circulation, no interest on them would be necessary or just, because they would answer to every one the purposes of the metallic money withdrawn and replaced by them.

But possibly these may be the dreams of an old man, or that the occasions of realizing them may have passed away without return.  A government regulating itself by what is wise and just for the many, uninfluenced by the local and selfish views of the few who direct their affairs, has not been seen, perhaps, on earth.  Or if it existed, for a moment, at the birth of ours, it would not be easy to fix the term of its continuance.  Still, I believe it does exist here in a greater degree than anywhere else ;  and for its growth and continuance, as well as for your personal health and happiness, I offer sincere prayers, with the homage of my respect and esteem.