What does the 14th Amendment mean by ordaining that the “validity of the public debt” of the United States “shall not be questioned”? We ask because some Democrats — including, to name but two, the Judiciary Committee chairman, Senator Durbin, and Senator Warren — are claiming that if Congress refuses to raise the debt ceiling, President Biden can go ahead anyhow and borrow money on the credit of the United States.

This is no small moment as Mr. Biden plunges ahead on spending, with no reserve for paying obligations in respect of debts already run up. He is “considering” invoking the 14th Amendment to evade the debt ceiling, but has concerns that “it would have to be litigated.” Mr. Biden’s sense of danger is wise — and raises echoes of the debt crisis that roiled America after the Civil War and led Congress to propose the 14th Amendment to the states.

Then as now, the debt turmoil was intertwined with a monetary crisis. Most Republicans sought to ensure that America repaid its debts in gold. Pro-inflation lawmakers, many of them Democrats, sought to default — lightening the burden on the federal fisc by repaying the debt in paper money, which traded at a discount to gold. It was “the great financial problem now before the country,” said a GOP congressman, and future president, James Garfield.

The debate resounded in Congress in 1866 as the solons were hammering out the text of the 14th Amendment. The greenback faction “have embarked on the sea of paper money, and they ask us to keep the flood rising so they may float,” Garfield observed in a debate over whether to require the debt to be repaid in specie, and not paper money. He averred that “the tide must be checked” and “we must bring values back to the solid standard in gold.”

When the 14th Amendment’s public debt clause came up for debate, an Indiana Democrat, Senator Hendricks, emerged in opposition. “Who has asked us to change the Constitution to protect the bond-holders?” he boomed. Are they “not receiving their interest, even in advance, and in gold? Why then do they ask this extraordinary guarantee?” Instead he sought to protect the debt with plasters like “just laws” and “equal taxation.”  

Yet the Senate backed the debt clause. Its proper meaning would go on to become a campaign issue in the presidential election of 1868. In response to arguments, like Hendricks’, that “bloated bondholders” were burdening “the laboring masses” by demanding repayment in gold, The New York Sun issued an editorial just before election day noting that the bondholders “comprise a very large share of the thrifty and industrious poor.”

The election, the Sun said, would be decided by “these people, who have all their little savings secured by these Government bonds.” The choice was between those “who propose to repudiate these public obligations,” and those who will “strengthen the public credit.” It was General Ulysses Grant, the GOP candidate, who pledged to repay the debt in gold and restore the greenbacks to convertibility in specie.

“How politics affect the public credit,” the Sun opined, “is pretty clearly shown in the gold market.” As the election neared, the value of the dollar had risen to a 27.8th of a gold ounce from a 29.2nd. “In other words, the currency and Government bonds” had “increased in value,” the Sun observed, “in view of the growing confidence of the public that Grant will be elected and the country be at peace.”

Grant’s election vindicated the 14th Amendment. At his inaugural, he vowed that, “to protect the national honor, every dollar of government indebtedness should be paid in gold,” and to restore gold convertibility of the greenbacks. Amid the debt ceiling turmoil, the words of Congressman Thaddeus Stevens, chief driver of the 14th Amendment resonate. Its strictness was needed, he said, “because I live among men and not among angels.”