“To be able to borrow on good terms, it is essential that the credit of a nation should be well established.”
— Alexander Hamilton
Treasury Secretary, 1790
“Andrew Jackson hated not just the federal debt, he hated debt at all.”
— Professor H.W. Brands
University of Texas
According to the National Debt Clock, the United States’ national debt as of this writing is 18 trillion, 154 billion, 223 million, 419 thousand, 818 dollars and 32 cents. Greece’s national debt is comparatively small at just over 380 billion U.S. dollars. Indeed, Greece’s national debt is also about 40 percent smaller than that of the U.S. per capita.
The major difference is that the U.S. economy is large enough and healthy enough for the U.S. to continue to make payments on its debt while Greece is dangerously close to default. Earlier this week Greek citizens voted to reject austerity measures and European nations have been meeting throughout the week to try to negotiate a new bailout plan for Greece to prevent a Greek default and exit from the Eurozone.
According to the IMF, there were only three nations that finished 2014 without a national debt. They are all small economies — Brunei, Liechtenstein and Palau. The U.S. has the largest debt by far, nearly twice that of the second largest, which belongs to the United Kingdom. (In fairness to the U.S., the U.K.’s per capita debt is almost three times as big as that of the U.S.)
As a percentage of gross domestic product, the U.K.’s debt is the largest among the major economic powers (406 percent of GDP compared to 106 percent of GDP for the U.S.). The debt of Luxembourg dwarfs that of other nations when its size is taken into account, with the tiny nation’s debt totaling more than 3,000 percent of its GDP and equaling more than three million U.S. dollars per citizen.
U.S. debt has risen in a variety of ways, originally as a result of borrowing to fund the Revolutionary War. Additional military actions, recessions and depressions, and just plain overspending have led to further growth in American debt. And that debt has been a fixture of American history. By the time of the ratification of the Constitution, the national debt was about $75 million. It rose again during the War of 1812. A period of relative peace and economic prosperity and the election of a president, Andrew Jackson, who abhorred debt, led to a one-time occurrence in American history — a year with no debt.
It was 1835, the sixth year of Jackson’s presidency. On Jan. 8 of that year, a meeting was held in Washington. Senators, representatives, cabinet members and others were present for the announcement that for the first (and still only) time in our history, America was debt-free.
At the start of Jackson’s term the debt had been $58 million, but Jackson took advantage of a land boom by having the federal government sell off Western land holdings. It worked, and the debt was paid. Unfortunately for Jackson, the land bubble got out of control, the economy wobbled and by 1837 it faltered into what was then the longest depression in U.S. history, driving the debt back up again.
American debt would balloon during the Civil War, World War I, the Great Depression and again in the last quarter of the 20th Century. Two hundred and thirty-nine years into our history, 1835 remains the only year without a national debt.
