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Category Archives: Debt

We must subdue the debt, or it will subdue us!

I consider the fortunes of our republic as depending, in an eminent degree, on the extinguishment of the public debt, before we engage in any war. because, that done, we shall have revenue enough to improve our country in peace, & defend it in war, without recurring either to new1 taxes or loans, but if the debt shall2 once more be swelled to a formidable size, it’s entire discharge will be despaired of, and we shall be committed to the English career of debt, corruption & rottenness, closing with revolution.
To Albert Gallatin, October 11, 1809

Patrick Lee’s Explanation
Far-sighted leaders know growing debt is a ticking time bomb.
Swiss-born Gallatin (1761-1849) was Jefferson’s Secretary of the Treasury for eight years, and he was filling the same role for President Madison. Jefferson had utmost confidence in Gallatin’s skill, crediting him with bringing the nation’s indecipherable financing from opaque under Presidents Washington and Adams to transparent in his administration.

The former President thought America would stand or fall according to its national debt. If it were paid off, the resulting surplus could be used for internal improvements in peace time or defense if war came, without more borrowing or increased taxes. However, if the debt were allowed to grow to the point where paying it off was impossible, we would become like the British. There, perpetual debt led to “corruption & rottenness,” and the inevitable result would be “revolution.”

Curiously, Jefferson didn’t apply the same rigor to his own finances. His personal debt grew throughout his life to the point where it was unmanageable.

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The chickens WILL come home to roost.

It is with real mortification that, instead of a remittance … now due, I am obliged to send you this letter. … I have now been for 13. or 14. years a customer … and have never failed beyond a few days over the term of remittance … my [cash] income is mainly from the produce or the rents of tobacco & wheat farms … we have no banks here to relieve disappointments, & little money circulation. all is barter … I have trespassed on you with these details, that you may perfectly understand my situation, & ascribe a failure, not to a want of faith, but of those accomodations which do not exist here…
To Jones & Howell, August 10, 1809

Patrick Lee’s Explanation
A leader in debt is a compromised one.
Jones & Howell were iron merchants who provided the iron rod that Jefferson’s slave boys turned into nails. It had been profitable when he managed it directly but not during the eight year absence of his Presidency. He hoped to resurrect the business. He needed more raw material but had not paid for his last order.

The man who leased his wheat-grinding mill for $1,200/year had paid him nothing in the last two years. Prospects for future payments were iffy.

There were no banks to provide cash for transactions like buying iron. Everything was bartered. Jefferson had no cash and nothing to trade.

He frequently lived beyond his means. As early as the 1780s, as ambassador to France, his expenses regularly exceeded his income, and he would borrow to cover the shortfall. Then he would borrow more to pay back previous loans.

He often had reasons for his inability to pay his debts … absences while serving in government, bad weather, falling land prices, low crop prices, unfaithful tenants, no banks. Rarely if ever did he identify himself as part of the cause.

In his 1825 “Decalog of Canons for Observation in Practical Life,” 10 points of advice that summarized his life experience, point # 3 was, “Never spend your money before you have it.” It was a lesson he learned too late.

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What in the world do SHEEP have to do with this?

… I wish I were able to assist you in doing it, as I should do it with great pleasure. but the heavy debt, which on winding up my affairs at Washington, I found I had contracted there, has placed me under great difficulties, & will keep me long in a crippled state, as I have to pay it out of the profits of my estate, & the sale of a part of it, which I am endeavoring to effect …
To Joseph Dougherty, June 26, 1809

Patrick Lee’s Explanation
Wise leaders know: “Never spend your money before you have it.”
The line above is from Jefferson’s “Decalogue of Canons for Observation in Practical Life,” 10 points of advice he wrote late in life. Unfortunately, he never followed it himself.

Dougherty had asked Jefferson’s help in building a flock of Merino sheep, a breed both men preferred. The retired President gave some practical advice but declined to invest any money in the operation, citing his “heavy debt” from his years in Washington City.

Some of his financial difficulties were not of his making. Some very definitely were. Taken together, they had rendered this naturally generous man unable to help. His money woes, which began in the 1770s with circumstances imposed by the Revolutionary War, compounded through the decades. By the late 1780s, he was borrowing money to pay off previous loans. At his death in 1826, he was about $100,000 in debt, necessitating the sale of Monticello and most of his possessions.

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Let my people go!

Whereas David Brown … [on June 1, 1799] … was convicted of certain misdemeanors, in writing, uttering and publishing certain false, scandalous, malicious and seditious writings against the Government … was adjudged to pay a fine of four hundred dollars … suffer eighteen months imprisonment … And whereas the said David Brown hath suffered the said term of imprisonment, and it appears that from poverty he is unable to pay the … [fine]. Now Therefore be it known, That I Thomas Jefferson, President of the United States of America … do pardon … the said David Brown …
Pardon for David Brown, March 12, 1801

Patrick Lee’s Explanation
Justice-minded leaders work to correct wrong-doing.
David Brown had run afoul of President Adam’s Sedition Laws. He was fined and imprisoned for criticizing the government. Brown served his term but was still in jail because he couldn’t pay his fine.
A new President in office just eight days, who fiercely disagreed with Adam’s Sedition Laws as unconstitutional, acted quickly to right the wrong and pardoned David Brown.

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I do not care what it costs. Just do it.

may I ask the favor of you to present my request to your son that he would be so good as to make a copy of the portrait he took of me, and of the same size? it is intended for a friend who has expressed a wish for it; and when ready I will give directions to whom it shall be delivered if he will be so good as to drop me a line mentioning it & the price.
To Charles Willson Peale, February 21, 1801

Patrick Lee’s Explanation
Smart people, not just smart leaders, know the cost in advance.
Peale (1741 – 1827) was a noted Philadelphia painter. He also owned a distinguished natural history museum there. (Many of Lewis & Clark’s specimens from their western expedition found a permanent home in Peale’s museum.)

Peale had sons who were also painters. The son referred to here is Rembrandt Peale (1778 – 1860), named after you know who. Jefferson wanted Rembrandt to make a copy of his 1800 portrait for a friend. When it was completed, Rembrandt was to notify Jefferson and tell him what it cost.

Some of Jefferson’s financial woes were inflicted on him. Others were of his own making. This is an example of the latter. He was unfailingly generous toward others and gave no thought to the cost of such gifts, even extravagant ones like a duplicate portrait for a friend.

At age 81, he would write 10 points of advice for a young boy, based on his own life experiences. Point #3: “Never spend your money before you have it.” It was a lesson he never learned, and by that time, he was hopelessly in debt.

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Is Washington “rigorously frugal & simple”?

I am for a government rigorously frugal & simple, applying all the possible savings of the public revenue to the discharge of the national debt; and not for a multiplication of officers & salaries …
To Elbridge Gerry, January 26, 1799

Patrick Lee’s Explanation
Realistic leaders reign in bureaucracies.
Massachusetts-born in 1744, Gerry was a businessman, politician and diplomat. In early 1799, Gerry was in France, embroiled in the aftermath of the XYZ Affair, where France tried to extort large amounts from American diplomats as a pre-condition to negotiations. In this lengthy letter, Vice-President Jefferson took great pains to assure Gerry of his unfailing confidence and support.

A portion of this letter is a summary of Jefferson’s views about the rights of citizens and their states, and the need to resist the growth in the national government. Any excess revenue should be for one purpose only, paying off the nation’s debt. Surpluses should not be used to increase government employment, which would simply swell the ranks of those devoted to (and dependent upon) that government.

Jefferson said he would send this letter by a trusted private courier, because mail from him sent through regular public channels could be opened. He expressed his confidence that Gerry would never let the letter “go out of your hand.” He asked Gerry to read it as many times as he wanted, preserve the first page which contains this excerpt, and burn the rest, where, “I have unbosomed myself fully,” with strong partisan opinions. Even with these precautions, the letter ended, “I need not add my signature.” And he did not.

Elbridge Gerry is most noted for an act as governor of Massachusetts in 1812, approving legislative districts that favored the Democrat-Republicans. One of the districts was said to resemble a salamander. From that came the phrase, gerrymander, popularized by a cartoon in a Boston newspaper.

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What is the danger in always being in debt?

… we must not let our rulers load us with perpetual debt. We must make our election between economy and liberty, or profusion and servitude.
To Samuel Kercheval, June 12, 1816

Patrick Lee’s Explanation
Not much explanation needed. A nation (or an individual) lives within its means [economy] and enjoys freedom [liberty] as a result. Or it lives beyond its means [profusion] and comes under the control of others [servitude.]

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It doesn’t have to be complicated!

I have read and considered your report … and entirely approve of it, as the best plan on which we can set out. … I think it an object of great importance … to simplify our system of finance, and bring it within the comprehension of every member of Congress … we might hope to see the finances of the Union as clear and intelligible as a merchant’s books, so that every member of Congress, and every man of any mind in the Union, should be able to comprehend them to investigate abuses, and consequently to control them.
To Albert Gallatin, April 1, 1802
(Second letter down)

Patrick Lee’s Explanation
Objective leaders simplify to help people to understand.
Gallatin was Jefferson’s Treasury Secretary for eight years. Together, they wanted to replace the indecipherable finances and bookkeeping of the previous Secretary, Alexander Hamilton.  One year into Jefferson’s Presidency, he commented favorably on Gallatin’s plan to do that.
The goal of their plan was simple. The nation’s finances should be so straightforward that every member of Congress and every thinking person could understand them, “investigate abuses,” and thus control those abuses.

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What would I have done without you?

… But why afflict you with these details [about my dire financial difficulties]? Indeed, I cannot tell, unless pains are lessened by communication with a friend. The friendship which has subsisted between us, now half a century, and the harmony of our political principles and pursuits, have been sources of constant happiness to me through that long period … If ever the earth has beheld a system of administration conducted with a single and steadfast eye to the general interest and happiness of those committed to it … it is that to which our lives have been devoted. To myself you have been a pillar of support through life. Take care of me when dead, and be assured that I shall leave with you my last affections.
To James Madison, February 17, 1826

Patrick Lee’s Explanation
Old leaders appreciate faithful friends.
The first portion of this letter dealt with the University of Virginia, the Legislature’s refusal to provide more funds for it and the qualifications needed in the school’s professor of law. From there, Jefferson turned to a summary of his overwhelming debt, reasons for it, and his hopes that a lottery for some of his Monticello lands might eliminate that debt and spare his home. (It did not.) Otherwise, he could be homeless, maybe lacking even ground for burial. It was a sad account.

He found some solace in sharing his difficulties with James Madison, his closest political ally and perhaps his best friend. They had labored together for a half century. He thanked Madison for his faithful friendship and support of the government they helped create, with a single-minded devotion “to the general interest and happiness” of all.


Jefferson knew the end was near and told his old friend so. Death came three and a half months later.

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How long must one person serve?

I acknolege that such a debt exists, that a tour of duty, in whatever line he can be most useful to his country, is due from every individual. It is not easy perhaps to say of what length exactly this tour should be, but we may safely say of what length it should not be. Not of our whole life, for instance, for that would be to be born a slave — not even of a very large portion of it.
To James Madison, June 9, 1793

Patrick Lee’s Explanation
Self-limiting leaders can withdraw from power voluntarily.
Madison had encouraged Jefferson to continue in his position as President Washington’s Secretary of State, suggesting he had a debt to the public which was not yet paid off. Jefferson was determined to leave, and much of this letter was devoted to his reasoning.
Jefferson acknowledged there was a debt of public service due, not only from him but from every person. How long should that time of service be? Hard to tell, but Jefferson claimed his was paid in full. He had served now 24 years, marking that time from his election the Virginia House of Burgesses in 1769. He was almost 26 then. Now, he was 50.
Of this, he was certain: It was not a lifetime debt. Nor should public service consume a large portion of one’s life. For each there was a time to serve and a time to leave. It was his time to leave, and no one, not even his dear friend Madison on behalf of the nation, could claim a portion of his debt was still unpaid.
Jefferson “retired” to Monticello at the end of 1793, but it didn’t last. Less than three years later, he would be the standard-bearer for the anti-federalist (republican) cause, standing for election as President in 1796. He came in 2nd in electoral votes, behind John Adams, thus serving under him as Vice-President. Four years later he would best Adams in a rematch, and serve eight years as President.
Even when he left politics for good in 1809, he devoted much time and energy over the following 15 years to yet another public cause. This one, however, was not a burden but a labor of love, the establishment of the University of Virginia.

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