Chrysler Debtholders v US Treasury: "Davidson" Opines

Todd,

The conflict in our society between the rightful owners of property thru legally executed contracts and those who do not understand the values behind legal obligations entered into freely and transferred freely to others has been basic to the development of the United States as a great economic power and is the basis of our democracy.

Jefferson after the Revolutionary War decried that soldiers had sold their pay vouchers to speculators seeking immediate cash when some years later Hamilton created the first Bank of the United States to issue debt to fund these obligations in full. Jefferson believed that the soldiers should get their pay in full even though they had sold the vouchers for immediate cash at substantial discounts to speculators before it was known if the vouchers would be made whole. Hamilton made good on the vouchers to whoever presented them as long as they could prove legal ownership. He paid them in full thus establishing the US as a sovereign and responsible nation that paid its obligations. More importantly, he affirmed the legal standing of contracts, freely entered and freely exchanged. Legal contracts cannot be abrogated by any other than the owners of those contracts as long as ownership has been legally obtained.

It is this rule of law that has made the US a great economic power and is vital to the US remaining so. The attempt to abrogate the contracts of the senior debtors of Chrysler by the US Treasury unfortunately misses this point. It is impossible for me to overstate how important a point this is to the underlying value of the not only the US economy but to the existence of the US as a political entity.

“Davidson”

Disclosure (“none” means no position):