The Beginning of U.S. Debt
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.
- 1775 - Paying for the American Revolutionary War was the start of the country's debt.
- 1781 - The Department of Finance was created.
- 1783 - The U.S. debt totaled $43 million. Congress was given the power to raise taxes to cover the Government's costs.
- 1789 - The U.S. Treasury Department was created to help the country borrow money and manage debt.