BackStory

Borrowed Times: A History of the National Debt

“A national debt, if it is not excessive, will be to us a national blessing.” – Alexander Hamilton

With Congress at a standstill over whether to raise the nation’s borrowing limit, and the national debt approaching the size of the entire U.S. economy, you’d be hard pressed to find a politician with anything good to say about our debt.  But America’s first Treasury Secretary famously called it a “national blessing.” What did he mean by that, and are there other times in history when Americans have actually celebrated our national debt?

On this episode, the History Guys ask why debt has continued to be so controversial in a nation that was founded on borrowing. What factors have contributed most to our ballooning deficit, and who, historically, have been most concerned about it? To whom does the nation owe all this money, and how has the slate of creditors changed? Is the current debt crisis truly unprecedented? How can history help us understand the extent to which debt endangers our 21st century economy?

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Further Reading

Want to dig deeper into Debt history? The BackStory research team has compiled a comprehensive list of resources for further exploration.

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14 Responses

  • I would be curious to hear about the different strategies the government has used to raise funds (voluntarily) from its citizens, and how it has pitched those projects (various types of bonds, etc).

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    Jessica
    4/27/2011 at 2:05 pm

  • The size of the deficit and the size of the national economy makes it hard to make a comparison between the two, and even harder to understand the scale of every different proposed effort to reduce the deficit.

    Secondly, even when a comparison is made the current proportions are so out of line from what we find in even very poorly run households or businesses. Are comparisons to household or business finances appropriate?

    The fact that there are debates about these first two issues I think is a big problem because not much can be done about the deficit until the firestorm about what the problem actually is subsides.

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    Jonathan H.
    4/27/2011 at 2:19 pm

  • I find it impossible to believe that the national debt is influenced only by two factors: taxing and spending. I would much appreciate it if y’all could cover what sort of other factors went into deepening or lessening the national debt.

    Off the top of my head I would imagine these things might play a part (but I’m sure missing things):
    1) technological advances / lack thereof
    2) movement of industry into or out of the US
    3) war
    4) social unrest
    5) competition / opportunity provided by other nations

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    Utech
    4/28/2011 at 11:49 am

  • Ah yes – debt! Size matters – but the really interesting part is …. who done it! I’ll be interested to see if the history guys feel that Americans are ready to learn the truth about the Fed-not-Federal, not-Reserve, Not-System. Tell em all about Jekyll Island, banksters who buy presidents & politicians of all (two) stripes, the role of tax havens in tax evasion (Google, etc.) and all the other loverly stuff about to batter the nation. Tell em about the alternative to debt – inflation and the delicious effect on pensions. Good luck. Love the podcast – perfect company on my walks.

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    Bob
    5/20/2011 at 12:48 am

  • I’m interested in US Bonds. Were they really generally considered the best and safest investment? Has the US ever defaulted on them? How have people in the past reacted to the possibility of default by the government?

    In another vein:
    It is my impression that China’s position as banker of the world right now is similar to the US’s position post WWI. To what degree is this true and what are the lessons we can learn from this?

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    George Mauer
    6/21/2011 at 4:02 pm

  • This was an excellent jaunt through each of your respective centuries. Thanks!

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    Dylan Giambatista
    6/24/2011 at 7:59 pm

  • Thanks, Guys!
    Now i know why the Post Office in my grade school closed. During WWII, that little one-window Post Office (open once a week?) sold stamps, including the ones we could put on cumulative sheets and use to buy savings bonds. That started a savings habit in many kids which can’t be matched by a commercial bank that the kids can’t get to without Mommy or Daddy.

    No, i don’t know that i would’ve bought one stamp for a savings bond to help pay for our incursions in Afghanistan or Iraq. But a passport-sized folder filled with pretty stamps can encourage kids to add, multiply, and save.

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    Pat F
    8/16/2011 at 12:11 am

  • Let’s see now Peter,…
    Hamilton was able to get the individual states to give up some of their sovereignty in exchange for the transferal of their debts into a new Republic of United States.
    This would allow for a healthy further expansion of trade with other countries.
    Do I have all of this right?
    So what’s preventing the United States and other debtor nations from applying this same principle globally and thus absolving ourselves of our horrendous debt and debit debacle?

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    archivesDave
    8/16/2011 at 12:48 am

  • I’d like to ask Alexander Hamilton a psychology question. Thomas Jefferson was always in debt , lived well beyond his means and died in debt. (Unless perhaps if you counted his slave wealth which were his collateral.) He was not a frugal man. Do you think Thomas Jefferson had an aversion to debt because of a self loathing? Or perhaps because he hated the lenders he was addicted to?

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    John B. Chilton
    10/8/2012 at 9:46 am

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