Isabella Carter
The acknowledgment of pre-existing debt in the US Constitution is addressed in the Debts and Engagements Clause, also known as the Prior Debts Clause. This clause provides that the US government recognizes and assumes responsibility for the debts and engagements of its predecessor governments, specifically the Continental Congresses and the federal government under the Articles of Confederation. The inclusion of this clause was intended to assure creditors that the new government would honor the obligations incurred during the American Revolutionary War. The final version of the clause, proposed by Edmund Randolph, states that all debts contracted and engagements entered into before the adoption of the Constitution shall remain valid against the United States under the new Constitution. This assurance of continuity in debt obligations helped maintain the confidence of both foreign and domestic creditors.
| Characteristics | Values |
|---|---|
| Clause | Debts and Engagements Clause |
| Article | Article VI |
| Clause Number | Clause 1 |
| Description | All debts contracted and engagements entered into, before the adoption of this Constitution, shall be as valid against the United States under this Constitution, as under the Confederation |
| Interpretation | The United States will recognize the debts and engagements of its predecessor governments, assuring foreign creditors that the adoption of the Constitution did not dissolve moral obligations |
| Fourteenth Amendment | The validity of the public debt of the United States, authorized by law, shall not be questioned. The United States shall not assume or pay any debt incurred in aid of insurrection or rebellion against the United States |
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What You'll Learn
The US Constitution's Debts Clause
The Debts Clause was a subject of debate during the Constitutional Convention, with questions arising over whether the new constitution should include a provision similar to that in the Articles of Confederation. The original proposal for the Debts Clause stated that:
> "The Legislature of the U.S. shall have the power to fulfil the engagements which have been entered into by Congress, and to discharge as well the debts of the U.S. as the debts incurred by the several States during the late war, for the common defence and general welfare."
However, there was disagreement over the use of the word "shall," with some arguing that it implied a mandatory obligation too strongly. Edmund Randolph proposed a compromise version, stating that prior debts:
> "shall be as valid against the United States under this Constitution as under the Confederation."
This proposal was approved by the Convention and formed the basis for the final constitutional clause, with a slight modification made by the Committee of Style regarding the description of the debts. The second part of the proposal, pertaining to Congress's power to pay debts, was separated from the Debts Clause and incorporated into Congress's Article I spending power.
The Debts Clause served to assure creditors, particularly foreign creditors, that the new government would honour the obligations incurred during the American Revolutionary War. It provided confidence that the adoption of the new Constitution would not nullify the nation's moral and financial commitments.
Additionally, the Fourteenth Amendment to the Constitution, passed in 1866 and ratified in 1868, includes a Public Debt Clause in its fourth section. This clause reinforces the validity of the public debt of the United States and specifically addresses debts incurred during the Civil War. It prohibits the assumption or payment of any debt or obligation incurred in aid of insurrection or rebellion against the United States.
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The validity of public debt
The Public Debt Clause ensures that the government meets all its financial obligations. This clause is violated when government actions create substantial doubt about the validity of the public debt. This standard encompasses actions that fall short of defaulting on or directly repudiating the public debt. The statutory debt limit restricts the funds that can be borrowed to fulfil the government's financial obligations.
The Debts and Engagements Clause, or Article VI, Clause 1 of the Constitution, recognises the debts and engagements of the Continental Congresses and the federal government under the Articles of Confederation. This clause assures creditors that the adoption of the Constitution does not dissolve the nation's moral obligations. The Articles of Confederation of 1781 provided that all debts contracted by Congress before the assembling of the United States shall be deemed a charge against the United States, and that the nation's public faith is pledged to their repayment.
During the drafting of the Constitution, there was debate over the language of the Debts Clause, specifically regarding whether it should state that the new Congress "shall discharge the debts" or merely have the power to do so. Edmund Randolph proposed a version stating that prior debts "shall be as valid against the United States under this constitution as under the Confederation," which was approved by the Convention. This version is similar to the final constitutional clause, with a few changes made by the Committee of Style.
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The US's assurance to creditors
The assurance of the US government to its creditors is enshrined in the country's constitution, specifically in the Debts and Engagements Clause. This clause recognises the debts and engagements of its predecessor governments, including the Continental Congresses and the federal government under the Articles of Confederation.
The inclusion of this clause in the US Constitution served to assure the country's foreign creditors that the adoption of the Constitution did not dissolve their moral obligations. This assurance was particularly important given that the American Revolutionary War had been fought largely on credit, and many creditors had not been paid.
The Debts Clause, as originally proposed, stated that "The Legislature of the US shall have the power to fulfil the engagements which have been entered into by Congress, and to discharge as well the debts of the US as the debts incurred by the several States during the late war, for the common defence and general welfare." However, there was debate over whether the language "shall discharge the debts" was too strong.
Edmund Randolph proposed a version that stated prior debts "shall be as valid against the United States under this constitution as under the Confederation," which was approved by the Convention. This version is substantially the same as the final constitutional clause, with a few minor changes made by the Committee of Style.
The validity of the public debt of the United States, authorised by law, is also affirmed in the Fourteenth Amendment, which states that such debt "shall not be questioned." However, it also specifies that neither the United States nor any State shall assume or pay any debt incurred in aid of insurrection or rebellion against the country.
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The Debts and Engagements Clause
The inclusion of a similar provision in the new constitution was debated at the Constitutional Convention. The original proposal, known as the Debts Clause, stated that "The Legislature of the U.S. shall have the power to fulfil the engagements which have been entered into by Congress, and to discharge as well the debts of the U.S. as the debts incurred by the several States during the late war, for the common defence and general welfare." However, there was disagreement over the use of the word "shall", with some arguing that it was too strong a word.
Edmund Randolph proposed a compromise version, stating that prior debts "shall be as valid against the United States under this Constitution as under the Confederation." This proposal was approved by the Convention and became the basis for the final constitutional clause. The Committee of Style made a minor change to the wording, replacing "by or under the authority of Congress" with "before the adoption of this Constitution."
The second part of the original proposal, pertaining to Congress's authority to pay debts, was separated from the Debts Clause and incorporated into Congress's Article I spending power. This provision was utilised by the First Congress in 1790 to enact a plan to settle the Confederation's debts and those of the states. After fulfilling these financial obligations, the Debts and Engagements Clause has rarely been a topic of debate.
In summary, the Debts and Engagements Clause of the US Constitution recognises and validates the debts and engagements of predecessor governments, assuring creditors that the adoption of the Constitution would not negate existing obligations. The final version of the clause was carefully crafted through debate and compromise at the Constitutional Convention, and it played a significant role in addressing the financial responsibilities of the early US government.
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Congress's power to pay debts
The US Constitution grants Congress the power to pay debts and provide for the common defence and general welfare of the United States. This power is derived from Article I, Section 8, Clause 1 of the Constitution, also known as the Spending Clause.
The Spending Clause gives Congress the authority to spend and appropriate federal funds for the general welfare of the country. This includes the power to induce states to adopt policies that the federal government cannot impose directly by offering federal funds with conditions attached. For example, in South Dakota v. Dole (1987), Congress conditioned federal highway funds on states raising their drinking age to 21. The Supreme Court has affirmed Congress's broad discretion under the Spending Clause, allowing it to pursue a wide range of policy objectives.
However, the Supreme Court has also placed limitations on Congress's spending power. These limitations include factors that ensure the knowing and voluntary acceptance of funding conditions by the states. The Court has held that Congress must unambiguously state any conditions on the receipt of federal funds, allowing states to fully understand the consequences of their participation. Additionally, the conditions must generally relate to the federal interest in specific national projects or programs.
Furthermore, Congress has the borrowing power to create binding obligations to pay debts as stipulated when it borrows money on the credit of the United States. This power is derived from Article I, Section 8, Clause 2 of the Constitution.
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Frequently asked questions
The Debts and Engagements Clause, also known as the Debts Clause, assures the United States' creditors that the debts contracted by the Continental Congresses and the federal government under the Articles of Confederation are still valid after the adoption of the Constitution.
The Debts and Engagements Clause states that "All debts contracted and engagements entered into, before the adoption of this Constitution, shall be as valid against the United States under this Constitution, as under the Confederation."
The Continental Congress borrowed money from foreign and domestic sources to finance the American Revolutionary War. The Debts and Engagements Clause was included in the Constitution to assure creditors that the new government would honour these obligations.
Yes, the Fourteenth Amendment specifies that debts incurred in aid of insurrection or rebellion against the United States, or for the loss or emancipation of slaves, shall be held illegal and void.
