The Fourteenth Amendment's Public Debt Clause

The Fourteenth Amendment was one of the three transformative Reconstruction Amendments that was enacted following the U.S. Civil War. Its main goal was to guarantee that newly emancipated citizens had the same substantial rights, equal protection, and due process as other citizens. Additionally, the Reconstruction Amendments aimed to secure the achievements of the Civil War.

While the Civil War concluded with a clear outcome, Congress faced the challenge of reuniting with its former adversaries, who now had the potential to carry on their struggle within the legislative halls of the House or Senate. One method the opposition might employ to create turmoil was repudiating the public debt, which had grown substantially as the Union sought to quell the Southern rebellion.

Refusing to pay any claims for property loss under the Emancipation Proclamation and the Thirteenth Amendment was also a priority. At that time, many people considered these actions a violation of the Takings Clause.

What the Public Debt Clause Says

The public debt clause is found in the fourth section of the Fourteenth Amendment. It states:

​"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."

Historical Context

Congress passed the 14th Amendment to the U.S. Constitution in 1866, with ratification following in 1868. The Civil War ended in 1865, and Reconstruction ran from 1863 to 1877. Politicians in the Reconstruction Era faced several prominent challenges, including:

• Abolishing slavery
• Ensuring the newly freed population enjoyed citizenship and all associated rights
• Reintegrating the former Confederate states into the Union

Lawmakers in this era had legitimate fears that representatives from former Confederate states would try to repay their war debts from the Treasury. During this period, there was apprehension about compensating former slave owners. The public debt clause mitigated many of these concerns. It clearly distinguishes between the national debt of the U.S. and any debts incurred from supporting an insurrection or rebellion against the country.

What It Means

The Supreme Court has only addressed the public debt clause in one case: Perry v. United States. Perry centered on a "gold bond," a commodity-backed bond popular at the time.

The plaintiff, John Perry, purchased a gold bond worth $10,000 payable in "gold coin of the present standard value." When he bought the bond, standard gold dollars were made of 25.8 grains of gold. But by the time he redeemed it, Congress had changed the standard for gold dollars to 15.2 grains. 

Perry argued that he was entitled to $16,931 cash or 258,000 grains of gold, nearly $7,000 more than the bond's original cash value. The Court of Claims asked the Supreme Court to determine whether it could issue an amount that exceeded the bond's face amount. In a 5-4 decision by Justice Charles E. Hughes, the Court decided the case against Perry. 

The Court found that Congress's power to regulate money is plenary, or essentially without limit. Perry did not show that the change in coin weight caused him actual damages. Therefore, the federal government was not required to pay more than the bond's face value.

Justice Hughes left us with this lasting interpretation of the public debt clause:

"Although § 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. The validity of the public debt embraces whatever concerns the integrity of the public obligations and applies to government bonds issued after and before adoption of the Amendment."

In recent years, legal experts have proposed the Fourteenth Amendment's public debt clause as a method for a president to raise the nation's debt ceiling without congressional approval. However, legal scholars remain split on whether such a move would survive a challenge in the courts — and no president has actually tried this move.