Constitution of the United States/Art. VI/Clause 1 Obligations of New Federal Government
Article VI Supreme Law
Clause 1 Obligations of New Federal Government
|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.|
Debts and Engagements Clause[edit | edit source]
This provision, variously called the "Debts Clause," "Engagements Clause," or "Debts and Engagements Clause," provides that the United States will recognize the debts and engagements of its predecessor governments--namely, the Continental Congresses and the federal government under the Articles of Confederation. This "declaratory proposition" served to assure the United States' foreign creditors, in particular, that the adoption of the Constitution did not have "the magical effect of dissolving [the United States'] moral obligations."
To finance the American Revolutionary War, the Continental Congress borrowed money from foreign and domestic sources. To assure creditors that the new government would honor these obligations, the Articles of Confederation provided:
All bills of credit emitted, monies borrowed, and debts contracted by, or under the authority of Congress, before the assembling of the United States, in pursuance of the present confederation, shall be deemed and considered as a charge against the United States, for payment and satisfaction whereof the said United States, and the public faith are hereby solemnly pledged.Articles of Confederation of 1781, art. XII.
The question of whether the new constitution should include a similar provision arose at the Constitutional Convention. As originally proposed, the Debts Clause provided that "The Legislature of the U.S. shall have 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." There followed some debate over whether the Debts Clause should provide that the new Congress "shall discharge the debts," or merely that it has the power to do so.
Eventually, Edmund Randolph proposed a version stating prior debts "shall be as valid against the United States under this constitution as under the Confederation," which the Convention approved. The second part of the original proposal, concerning Congress's power to pay debts, was separated from the Debts Clause and became part of Congress's Article I spending power. Both of these provisions were quickly put to use by the First Congress, which in 1790 enacted Secretary of the Treasury Alexander Hamilton's plan to settle the Confederation's debts (and, more controversially, those of the states).
After the federal government satisfied the financial obligations inherited from the Confederation, the Debts and Engagements Clause has rarely been a topic of debate. The few Supreme Court cases that discuss the Clause concern the question of whether the Northwest Ordinance of 1787--particulary its prohibition on slavery in what was then the Northwest Territory--was among the "engagements entered into" by the Articles of Confederation, which the new federal government was obliged to respect.
- See, e.g., David M. Golove & Daniel J. Hulsebosch, A Civilized Nation: The Early American Constitution, the Law of Nations, and the Pursuit of International Recognition, 85 N.Y.U. L. Rev. 932, 1066 n.282 (2010) (referring to this provision as the "Debts Clause"); Vasan Kesavan, When Did the Articles of Confederation Cease to Be Law?, 78 Notre Dame L. Rev. 35, 51 (2002) (referring to this provision as the "Engagements Clause"); Stephen E. Sachs, Constitutional Backdrops, 80 Geo. Wash. L. Rev. 1813, 1827 (2012) (referring to this provision as the "Debts and Engagements Clause").
- Article VI Supreme Law.
- The Federalist No. 43 (James Madison); accord 3 Joseph Story, Commentaries on the Constitution of the United States §§ 1826-28 (1833); The Federalist No. 84 (Alexander Hamilton); Lunaas v. United States, 936 F.2d 1277, 1278 (Fed. Cir. 1991) ("[Through the Debts and Engagements Clause] the nation undertook to assure creditors that the adoption of the Constitution would not erase existing obligations recognized under the Articles of Confederation.").
- See generally David P. Currie, The Constitution in Congress: Substantive Issues in the First Congress, 1789-1791, 61 U. Chi. L. Rev. 775, 802 (1994) ("The Revolution had been fought in substantial part on credit, and many creditors had not been paid.").
- 2 The Records of the Federal Convention of 1787, at 355-56 (Max Farrand ed., 1911).
- See id. at 377 (Gouverneur Morris introduces version stating the legislature "shall discharge the debts"), 412 (objection of George Mason to the "shall" language as "too strong").
- Id. at 414. Randolph's version is substantially the same as the final constitutional clause, save that the Committee of Style changed the description of the debts as contracted "by or under the authority of Congress" to "before the adoption of this Constitution." Compare id. at 414, with id. at 693 (Committee of Style draft).
- See id. at 497; Art. I, Section 8 Enumerated Powers ("The Congress shall have Power . . . to pay the Debts and provide for the common Defence and general Welfare of the United States . . . .").
- See Act of Aug. 4, 1790, 1 Stat. 138.
- See Jeffrey Sikkenga, Debt Assumption, in The Heritage Guide to the Constitution, !/articles/6/essays/132/debt-assumption ("After some political struggles in the early 1790s, the new federal government made good on the bond obligations inherited from the Articles of Confederation, thus vitiating the possibility for serious constitutional controversy.").
- Compare Strader v. Graham, 51 U.S. 82, 97 (1850) (Chief Justice Roger Taney) (expressing view that the Northwest Ordinance "ceased to be in force upon the adoption of the Constitution"), with Pollard's Heirs v. Kibbe, 39 U.S. 353, 417 (1840) (Baldwin, J., concurring) (relying on the Engagements Clause to argue that the Northwest Ordinance, "the most solemn of all engagements, has become a part of the Constitution, and [remains] valid"), and Strader, 51 U.S. at 98 (Catron, J., dissenting) (similar). See generally Downes v. Bidwell, 182 U.S. 244, 320-21 (1901) (White, J., concurring) (summarizing this debate). Chief Justice Roger Taney's view prevailed for a time, infamously, in Dred Scott v. Sanford, 60 U.S. 393, 438 (1857) (holding that the Northwest Ordinance "had become inoperative and a nullity upon the adoption of the Constitution"), superseded by constitutional amendment, U.S. Const. amend XIV. This issue was rendered moot by the passage of the Thirteenth Amendment, whose language parallels the Ordinance and prohibits slavery throughout the United States. Compare Ordinance of 1787 art. VI ("There shall be neither slavery nor involuntary servitude in the said [Northwest] territory, otherwise than in the punishment of crimes whereof the party shall have been duly convicted . . . .") with Thirteenth Amendment Abolition of Slavery ("Neither slavery nor involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction."). See generally Thirteenth Amendment Abolition of Slavery.