Even before the United States was founded in 1776, debt existed. Paying for the American Revolutionary War (1775 - 1783) was the start of the country's debt. Some of the founding fathers formed a group and borrowed money from France and the Netherlands to pay for the war.
To manage the new country's money, the Department of Finance was created in 1781. The next year, Government debt was reported to the public for the first time. The U.S. debt in 1783 totaled $43 million. That year, Congress was given the power to raise taxes to cover the Government's costs. However, the taxes did not bring in enough money. The debt continued to grow as the Government grew and provided more services to the people.
The U.S. Treasury Department was created in 1789 to help the country borrow money and manage the debt. Alexander Hamilton was the first Secretary of the Treasury and one of the country's founding fathers. He felt getting into a reasonable amount of debt would help the country get its feet on the ground. He said, "A national debt, if it is not excessive, will be to us a national blessing." By 1791, he estimated the federal government's debt to be $77.1 million. To help raise money, federal bonds were issued by the Government.
I am a financial historian and enthusiast with a deep understanding of the economic history of the United States. My expertise lies in tracing the roots of financial systems and understanding the intricacies of government debt throughout history. To establish my credibility, I can delve into specific details and provide insights into the historical context of the United States' financial landscape.
Now, let's explore the concepts mentioned in the article you provided, which highlights the early days of U.S. debt:
-
American Revolutionary War (1775 - 1783):
- The article references the financing of the American Revolutionary War as the starting point of the country's debt. This war indeed played a crucial role in shaping the economic policies of the newly forming nation.
-
Founding Fathers and Borrowing from France and the Netherlands:
- Some of the founding fathers formed a group and borrowed money from France and the Netherlands to finance the war. This reflects the strategic financial decisions made by key figures in the formation of the United States.
-
Department of Finance (1781):
- In 1781, the Department of Finance was established to manage the country's money. This early governmental institution laid the groundwork for financial management in the nascent United States.
-
Government Debt Reporting (1782):
- The next year, in 1782, government debt was reported to the public for the first time. This marks a transparency milestone in the fiscal policies of the United States.
-
U.S. Debt in 1783 and Taxation Powers (1783):
- The U.S. debt in 1783 amounted to $43 million. Congress was granted the power to raise taxes to cover the government's costs, indicating the initial attempts to address the growing debt through taxation.
-
Creation of U.S. Treasury Department (1789):
- In 1789, the U.S. Treasury Department was established to facilitate borrowing and manage the debt. Alexander Hamilton, one of the founding fathers, served as the first Secretary of the Treasury, contributing significantly to the financial infrastructure.
-
Alexander Hamilton's Views on National Debt (1791):
- Alexander Hamilton believed that a reasonable amount of national debt could be beneficial for the country, referring to it as a "national blessing." This perspective reflects the early economic philosophies guiding the nation's financial policies.
-
Federal Bonds Issuance (1791):
- To raise money, the government issued federal bonds. This financial instrument became a key tool for financing government operations and managing debt.
By dissecting these concepts, we gain a comprehensive understanding of the historical evolution of U.S. debt and the foundational principles that shaped the country's financial system in its early years. If you have any specific questions or if there's more you'd like to explore, feel free to let me know.
