Winter has turned to spring and spring has turned to summer, but Congress and the White House are still debating how to handle the limit on our national debt. In the 1830’s, however, President Andrew Jackson set about an even more daunting task: paying the debt off entirely. America accomplished that feat in 1835, and to this day it is the only time we have done so.
According to the US government, outstanding public debt totaled approximately $80 million (or $1.8 billion in 2010 dollars) by the start of President George Washington’s second term in 1793, and it was an immediate priority to begin paying off some of it. By 1812, the government had managed to shrink that sum to about $45 million ($741 million in 2010 dollars). For comparison, today’s debt is on the order of $14 trillion (with a t), albeit for a much larger economy. Even so, President Jackson made it a priority to pay down the debt he inherited at the start of his term, just over $58 million (about $1.4 billion in 2010 dollars).
Now, Jackson was hardly a sophisticated economic thinker. The Panic of 1837 partially stemmed from his elimination of the Second Bank of the United States, his executive order to require payment for government lands to be made in gold or silver (the so-called “Specie Circular”), and his decision to place the federal surplus into financially unstable hand-picked “pet banks.”
Yet setting aside those policies, we can still appreciate his understanding of the undesirability of a permanent national debt, which he called a “national curse” in 1824. The borrowing clause of Article I, §8 of the Constitution was designed for temporary shortfalls like wars or other emergencies, not permanent imbalances between taxes and spending like the one we have today. Justice Joseph Story, in his famous Commentaries on the Constitution, saw the borrowing power as one for exceptional times, not a permanent policy:
“Though in times of profound peace it may not be ordinarily necessary to anticipate the revenues of a state; yet the experience of all nations must convince us, that the burthen and expenses of one year, in time of war, may more than equal the ordinary revenue of ten years. … Even in times of peace exigencies may occur, which render a loan the most facile, economical, and ready means of supply, either to meet expenses, or to avert calamities, or to save the country from an undue depression of its staple productions.”
It would probably seem strange to the Founders and Story that we have such a permanent, massive national debt, especially because national debts were understood to corrode the liberty and virtue of a free state. While many of Jackson’s other economic policies are no wiser now than they were in the 1830’s and we won’t be paying off the national debt anytime soon, his achievement remains an example for us today.