General Washington implored Congress to pay debts due to Revolutionary War soldiers and other creditors when the colonies obtained independence in 1783. Congress, however, had no power to tax and states refused to pay. Washington–who had returned to private life–wrote three years later that “we have probably had too good an opinion of human nature when forming our confederation.” He compared the situation to a “house that was reduced to ashes” while people debated “the most regular mode of extinguishing” the fire.

In 1787 he agreed to return to public life by attending and then presiding over a meeting to decide what to do next, a meeting that produced a Constitution that included a Congress with the power to tax.

On leaving office Washington asked his fellow citizens to “discharge the debts” rather than “ungenerously throwing upon posterity the burden that we ourselves ought to  bear.”   In the next dozen years Congress, and the Jefferson and Madison administrations, devoted much of federal revenues to debt reduction, and paid down debt by almost 50 percent  even though they borrowed to make the Louisiana Purchase.

Today balanced budgets, much less debt reduction, would be called “austerity,” but the United States grew  in its early decades while paying down debt. Debt repayment freed savings for use in private enterprise and reserved credit for use in emergencies. The nation needed every last penny of that credit during the War of 1812, which ended just days before the US was scheduled to default on its debt service.