Debts Incurred During Rebellion
The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.
The effort to make the national debt sacrosanct and to repudiate the Confederate debt was the least controversial of the sections of the Fourteenth Amendment, at least in the North. As Representative Thaddeus Stevens of Pennsylvania put it, “I need say nothing of the fourth section, for none dare object to it who is not himself a rebel.” The only objection to it was from owners of slaves in the loyal slave states who thought they should be compensated.
In applying the section, federal courts held that no contracts involving Confederate bonds could be enforced and that “a court of the United States must hesitate to give them any recognition whatever.” Contracts involving Confederate currency, on the other hand, were enforceable “to prevent injustice to people who, when war was flagrant, had no other currency in which to make the exchanges required in the ordinary business of life.” Branch v. Haas (1883).
The issue of the repudiation of the United States debt again emerged when Congress took the United States off the gold standard, and some of The Gold Clause Cases (1935) involved United States bonds. The Supreme Court did hold that Congress had exceeded its power under the Constitution in refusing to repay the bonds in gold, but it concluded that the bondholders had suffered only nominal damages and could not recover. Although Section 4 “was undoubtedly inspired by the desire to put beyond question the obligations of the Government issued during the Civil War, its language indicates a broader connotation [that embraces] whatever concerns the integrity of the public obligations.” The Gold Clause Cases.
In fact, scholarly research indicates that the original purpose of the framers of the clause was to place a constitutional bar to any attempt by Congress to repudiate or undo debt obligations that Congress itself has incurred. Default, in others words, is constitutionally prohibited by this clause. Yet in 2011, former President William J. Clinton asserted that the clause had an entirely different meaning. As the Treasury approached its congressionally set debt ceiling, he and other commentators argued that the Fourteenth Amendment’s debt clause means that the Treasury does not need congressional authorization to continue to borrow. This clause, they argued, mandates any and all means to avoid defaulting on the public debt. In other words, the president could unilaterally borrow without congressional authorization.
Others responded that Congress’s power under the Spending Clause (Article I, Section 8, Clause 1) could not be circumvented in that way. Rather, they asserted that this clause prevents the president and the Congress from threatening default. The clause affirmatively requires that the federal government pay its debts, even if that means that it has to take extraordinary measures to reduce expenditures and borrowing to do so. President Barack Obama indicated that he did not support Clinton’s view.
Outside of the Supreme Court’s brief consideration of the issue in The Gold Clause Cases, the federal courts have shown little interest in fashioning a judicial method for enforcing the limitations required by the clause. At the present time, this clause remains but an historical artifact of the post–Civil War era.
Michael Abramowicz, Beyond Balanced Budgets, Fourteenth Amendment Style, 33 TULSA L.J. 561 (1997)
James Bond, No Easy Walk to Freedom: Reconstruction and the Ratification of the Fourteenth Amendment (1997)
HORACE E. FLACK, THE ADOPTION OF THE FOURTEENTH AMENDMENT (1908)
Joseph B. James, The Framing of the Fourteenth Amendment (1956)
VIRGINIA COMMISSION ON CONSTITUTIONAL GOVERNMENT, THE RECONSTRUCTION AMENDMENTS’ DEBATES: THE LEGISLATIVE HISTORY AND CON-TEMPORARY DEBATES IN CONGRESS ON THE THIRTEENTH, FOURTEENTH, AND FIFTEENTH AMENDMENTS (Alfred Avins ed., 1967)
Branch v. Haas, 16 F. 53 (1883)
Gold Clause Cases, 294 U.S. 330 (1935)