Tag Archives: Debt

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.

“Thank you for your appearance at Jefferson College last week …
It was extremely enjoyable and educational.”
President, Jefferson College
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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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into the realm of actual interactive theater.”
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He is TRYING to confuse us, and it’s working!

… I do not at all wonder at the condition in which the finances of the US. are found. Ham[ilton]’s object from the beginning was to throw them into forms which should be utterly undecypherable. I ever said he did not understand their condition himself. I ever said he did not understand their condition himself, nor was able to give a clear view of the excess of our debts beyond our credits, nor whether we were diminishing or increasing the debt.  … The accounts of the US. ought to be, and may be, made, as simple as those of a common farmer, and capable of being understood by common farmers.
To James Madison, March 6, 1796

Patrick Lee’s Explanation
Careful leaders want the finances clear to every citizen.
Jefferson, retired as Secretary of State and a year before becoming Vice President, expressed these thoughts to Madison, a member of the House of Representatives:
1. Treasury Secretary Hamilton intended to confuse the nation’s finances.
2. Succeeding at that, he created a system even he didn’t understand.
3. It was impossible to understand the nature or extent of our debt.
4. Always fond of the farmer, Jefferson used him as the measuring stick. The nation’s finances should be understandable by “common farmers.”

Jefferson expressed the same thoughts five years later to his Albert Gallatin, who would serve as his
Treasury Secretary for eight years. He eventually credited Gallatin with creating the first clear record of the nation’s finances since its founding.

Too bad Jefferson couldn’t be as tough on his personal finances! From the late 1780s on, he continually spent money he didn’t have. He often had to borrow more to pay debts as they came due. In 1825, at age 81, near the end of his life and hopelessly indebted, he would write to a youngster, “Never spend your money before you have it.”

“Clearly the visits with President Jefferson and Captain Clark
have set the standard for future conferences.”
Indiana Historical Society, Director of Education

Thomas Jefferson will maintain a high standard for your audience!
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In whose debt are you? Get out! Stay out!

My Dear Maria:
I have received your letter of May 23 which was in answer to mine of May 2nd, but I wrote you also on the 23rd of May, so that you still owe me an answer to that, which I hope is now on the road. In matters of correspondence as well as money, you must never be in debt.

To Maria Jefferson, June 13, 1790
From Koch & Peden’s Life and Selected Writings of Thomas Jefferson, P. 459-60

Patrick Lee’s Explanation
Wise leaders avoid all kinds of debt.

President Washington’s Secretary of State was writing to his almost 12 year old daughter, also known as Mary or Polly, who was in the care of a relative in Virginia. Jefferson was known to place high expectations on Maria and her older, recently married sister Martha. Two of those expectations are contained in this excerpt: 1. When someone writes to you, write back promptly. 2. Live within your means. Jefferson himself was diligent in the first command, woefully lacking in the second.

He believed if someone had written him, he had an obligation to reply. It was a commitment he kept until well into his retirement years, until he finally was overwhelmed by the volume of mail he received and the time and effort it to reply. At that point, he limited himself only to that correspondence he wished to answer.

By 1790, Jefferson was already in debt. There were a number of reasons why, some beyond his control, some directly related to his choices to indulge himself or his family and friends. Over time the debt continued to grow. It would overwhelm him, too, as the correspondence had done.

Jefferson was a diligent and faithful correspondent. A personal money manager, not so much at all.

“You gave us an excellent program!”
Executive Director, New Mexico Federal Executive Board

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“I’ll pay you back. Later. Really!”

Again suppose [French King] Louis XV … had said to the money lenders of Genoa, give us money that we may eat, drink, and be merry in our day; and on condition you will demand no interest till [our death and then] you shall then forever after receive an annual interest [from our successors] … The money is lent on these conditions, is divided among the living, eaten, drank, and squandered. Would the present generation be obliged to apply the produce of the earth and of their labour to replace their dissipations? Not at all.
To James Madison, September 6, 1789

Patrick Lee’s Explanation
Honest leaders don’t bind future generations.
This comes from a long, complicated letter addressing the question whether the current generation can bind future ones. That binding could be through laws, a constitution, or debt.
In this excerpt, Jefferson suggested an outrageous scenario:
– Loan us money with no repayment during our lifetimes.
– We will spend that money on our own pleasure.
– When we die, our descendents will make exorbitant interest payments to you forever.

Would those descendents be obligated to repay? “Not at all,” said Jefferson.

Sound familiar? Are your children and grandchildren obligated to repay?

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