Financial Obligation Quotes
Eli Whitney, the inventor of the cotton gin, tried his hand as a gun manufacturer early in the history of the new nation. He persuaded President Thomas Jefferson that he could manufacture muskets with interchangeable parts in an era where each gun was made uniquely and there were no “spare parts.” So Whitney was the first of the American Defense Contractors. He was also the first to fail to deliver on his contract. His guns were years late and when they were finally delivered, they were very expensive and worse, not very good. The reason that this quotation is cited is that while Irvine was trying to recover the taxpayer’s money, Whitney visited the Secretaries of State and War as well as President Madison and members of Congress. The result was to give Whitney another chance and another big order for 15,000 guns. Even Whitney later admitted that these were not very good. Some argue that this quotation shows that nothing has changed much in military procurement and defense spending.
This is one of the earliest expositions of the legal and economic doctrine that if a borrower is made unable to pay the interest and principle of the loan by an act beyond anyone’s control. The obligation to pay for that year is cancelled. In modern times most cultures go the other way. When the banks caused the economic Meltdown of 2008, millions of Americans could not pay their loan obligations and mortgages. They received no relief whereas in the “primitive” world of 4,000 years ago they would have relief for that year. Note the subtle difference in Hammurabi {611462} where someone had prepaid and rented land for a year and the crop fails, and this situation where there is borrowed money.
Debts accumulated by the allies in World War I was still outstanding a decade later. When it was proposed that the United States help reduce this debt, President Coolidge remarked:
Adams urged paying tribute to the Barbary Pirates who had an incredible extortion racket going in the Mediterranean. If nations would pay them an annual sum each year, they would not attack and seize merchant ships of that country and sell the ships and goods while holding the sailors for ransom. Most of the European powers were paying the annual tribute as they calculated that it was cheaper than patrolling the Mediterranean with warships or going to war with the Barbary States. More important for Adams was that he did not think that the country would support such a military action. See {640847} That was Adams’ thinking. Jefferson however, sent our Navy and Marines to our first foreign war, and they were very effective. However, despite the American military victories, and because of the inability for the European powers to collaborate and share the burden of naval patrol, the United States went back to the craven policy of paying the blackmail. See {640846} & {640848}.
