George Washington and the National Debt

by Burt on February 21, 2011

For Presidents’ Day, we need to remember the strong leadership that George Washington gave our nation during the Revolutionary War and afterward, when he became our first president. His integrity and courage in times of crisis make him an exceptional role model for students today.

One neglected feather in Washington’s cap is his commitment to having the U. S. be a financially sound nation. He knew that no nation ever became strong–or remained strong–on borrowed money. Financial integrity and national power go hand in hand. Thus, he committed the U. S. to paying off all debts incurred in fighting the Revolutionary War. When he took office in 1789, the U. S. owed about $41 million in IOUs to thousands of merchants, bankers, and citizens who loaned money to Washington and other leaders for guns, supplies, and food. Sometimes those IOUs are called “continental bonds.” We also owed about $11 million to the French for financial (and military) aid in overcoming the British.

Some American politicians wanted to renege on these debts, or only pay part of them off. But Washington and his Secretary of Treasury Alexander Hamilton recognized that U. S. credit and international integrity could only be obtained by paying back our creditors all that we owed them. Thus, Washington supported a tariff–usually 5%–on all imports, and he supported a whiskey tax as well as the two methods of raising money to pay off our national debt. In his Farewell Address, he urged his countrymen to avoid “the accumulation of debt,” and asked them not to throw “upon posterity the [debt] burden, which we ourselves ought to bear.”

What was the result of Washington’s effort to set high fiscal standards for the U. S.? Americans followed his leadership and usually spent less federal money that was taken in by the tariff and the whiskey tax. In less than forty years after Washington’s presidency, the entire national was eliminated and the U. S. actually (for a brief period) was a nation of surpluses and no debt. We had laid the foundation to become a great nation thanks in part to the excellent leadership of George Washington.

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February 21, 2011 at 10:50 am

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