The Long Story of US Debt, From 1790 to 2011, in 1 Little Chart

choi

Matt Phillips, The Long Story of US Debt, From 1790 to 2011, in 1 Little Chart. The Atlantic, November 2012.
www.theatlantic.com/business/arc ... ittle-chart/265185/

My comment:
(a) Despite my efforts, I could not find out WHETHER US paid its war debt accumulated from its War of Independence. France surely loaned a lot, and, with French Revolution, did US simply default?  I knew US paid at least some (mostly through tariff), but did it pay all?  At long last I got the answer.
(b) The graphic, whose heading read “US public debt as percentage of GDP” and whose source was Congressional Budget Office, pointed out the debt is governmental (from federal to state and municipalities), excluding debts incurred by civilians. Blue indicated debt increase and red, decrease (except that War of 1812 raised deb, which were nonetheless marked with red)..

(c) “the Continental Congress, the rough equivalent of the Federal government in revolution-era America, lacked the power to tax. It first tried to pay for stuff by printing money. This currency, known as the Continental, collapsed.”
(i) For Continental, see early American currency
en.wikipedia.org/wiki/Early_American_currency
(section 2 Continental currency)

1775-1781.
(ii) bill of credit
en.wikipedia.org/wiki/Bill_of_credit
("a phrase from Article One, Section 10, Clause One of the United States Constitution. It refers to a document similar to a banknote that is issued by a government and designed to circulate as money")

Because US constitution banned the state from issuing currency, state-chartered private banks picked up the slack and printed money.

(d) “The US was born in debt. * * * The analysis dates to 1790 and puts the newborn US at around a 30% debt-to-GDP ratio, with the debt a bit higher than $75 million. * * * All in, the US owed about $11.7 million to foreigners, mostly to Dutch bankers and the French government, and about $42 million to domestic creditors. The states also had a ton of debt (about $25 million, Hamilton reckoned), which the Federal Government assumed--take a hint, euro zone!--in 1790.”
(i) The debt accounting is found in First Report on the Public Credit
en.wikipedia.org/wiki/First_Report_on_the_Public_Credit
(presented on Jan 9, 1790 by US Secretary of Treasury Alexander Hamilton to US House of Representatives; section 2 Funding the national debt;

Quote:

“Proposals to default on the [wartime] loans were termed partial- or full ‘repudiation.’ None of these, however, suggested defaulting on any portion of the $12 million foreign debt - plus $1.5 million in interest - regarded as a ‘sacred obligation [to be] paid in full.’” (brackets appearing in Wikipedia; not mine)

"5.1 Agrarian opposition to 'Assumption'[:] * * * Most of the southern states, with the exception of South Carolina, had successfully paid down the bulk of their wartime debt. Virginia, relatively debt-free, led the fight against ‘assumption,' with Madison arguing that the proposed national tax [to pay for assumption; later consensus was reached by repayment through tariff] would overburden Virginia planters operating on a narrow margin of profit.

(ii) Agrarian (or Southern) opposition to Assumption Act was mitigated by the simultaneous passing of Residence Act. See

Compromise of 1790
en.wikipedia.org/wiki/Compromise_of_1790
(dinner table bargain; at Secretary of State Thomas Jefferson’s residence in New York City on or about June 20, 1790)

(e) “But the federal government stuck to its guns, literally suppressing an armed anti-tax uprising in western Pennsylvania in 1794, known as the Whiskey Rebellion. Meanwhile,”

Whiskey Rebellion
en.wikipedia.org/wiki/Whiskey_Rebellion
(section 1 Whiskey tax: Besides tariff, Hamilton "promoted passage of an excise tax on domestically produced distilled spirits. This was to be the first tax levied by the national government on a domestic product. * * * Whiskey Act * * * became law in March 1791")

(f) “The Lincoln administration also signed into law the first income tax in the country's history in 1862 [sic; the first federal income tax was signed into law in the form of Revenue Act of 1861, which Congress repealed the next year and replaced with Revenue Act of 1862], which was repealed 10 years later.”
(i) legal history of income tax in the United States
en.wikipedia.org/wiki/Legal_history_of_income_tax_in_the_United_States
(section 1.4 First income tax law: 1861-1873: After the war when the need for federal revenues decreased, Congress (in the Revenue Act of 1870) let the tax law expire in 1873)
(ii) Similarly United States Note (issued by US Department of Treasury; 1862-1971) was issued directly into circulation. It was replaced by Federal Reserve Note.
(iii) The Federal Reserve Banks and Currency, in In Plain English: Making Sense of the Federal Reserve. Federal Reserve Bank of St Louis, undated
www.stlouisfed.org/inplainenglish/banksandcurrency.cfm
(“Did you know that Federal Reserve Banks place the currency you use to make purchases into circulation? Each bill has a number and a letter that denote the Federal Reserve Bank that accounts for that particular bill. For example, a bill with the number 8 will have the letter H (the eighth letter in the alphabet), which means it appears on the balance sheet of the Federal Reserve Bank of St Louis")

(g) Skip. Read only paragraph 1 in the section whose heading was “The Road to $16 Trillion.”