Threat of Debt
“ I am not among those who fear the people. They, and not the rich, are our dependence for continued freedom. And, to preserve their independence, we must not let our rulers load us with perpetual debt.”
The Idea
“The accumulation of debts is a most fearful evil.”
- Thomas Jefferson, 1787
“Tho’ much an enemy to the system of borrowing, yet I feel strongly the necessity of preserving the power to borrow.”
- Thomas Jefferson, 1788
Jefferson viewed both personal debt and the national debt as threats to the American experiment in self-government, presenting risks to civic responsibility, endangering government stability and hampering investment to improve individual and national prosperity.
Making the Idea a Reality
“The probable accumulation of the surpluses of revenue, beyond what can be applied to the payment of the public debt …merits the consideration of Congress ... shall it not rather be appropriated to the improvements of roads, canals rivers, education, and other great foundations of prosperity & union…?”
-Thomas Jefferson, 1808
Jefferson's Personal Debt
Jefferson's personal debt resulted from a combination of his borrowing to support his lavish lifestyle, the ups and downs of plantation agriculture, and debt acquired from his father, father-in-law, and friends.
"I am miserable till I owe not a shilling"
Jefferson and the National Debt
Among the Jefferson administration’s enduring achievements was to contain the federal government by restraining its fiscal power. That was Albert Gallatin’s work. He abolished internal revenue taxes in peacetime, slashed federal spending, and repaid half of the national debt and had a plan to retire the debt (before the War of 1812 intervened). Heavy spending during the War of 1812 severely tested Gallatin’s system, but his basic reforms created a culture of fiscal restraint that survived for over 120 years.
As President, Jefferson reduced taxes, paid down the debt, reined in military spending, and embarked on public works programs. Treasury Secretary Albert Gallatin led these efforts to set the country on a course of fiscal restraint.
Jefferson and the National Debt
Jefferson viewed both personal debt and the national debt as threats to the American experiment in self-government, presenting risks to civic responsibility, endangering government stability and hampering investment to improve individual and national prosperity. As President, Jefferson reduced taxes, paid down the debt, reined in military spending, and embarked on public works programs. Treasury Secretary Albert Gallatin led these efforts to set the country on a course of fiscal restraint.
Jefferson and the National Debt
Among the Jefferson administration’s enduring achievements was to contain the federal government by restraining its fiscal power. That was Albert Gallatin’s work. He abolished internal revenue taxes in peacetime, slashed federal spending, and repaid half of the national debt and had a plan to retire the debt (before the War of 1812 intervened). Heavy spending during the War of 1812 severely tested Gallatin’s system, but his basic reforms created a culture of fiscal restraint that survived for over 120 years.
Jefferson's Personal Debts
Jefferson's personal debt resulted from a combination of his borrowing to support his lavish lifestyle, the ups and downs of plantation agriculture, and debt acquired from his father, father-in-law, and friends.
How did Thomas Jefferson amass more than $107,000 of debt - the equivalent of over a million dollars today - during his lifetime? Read about Jefferson's economic ups and downs in this summary by historian Lucia C. Stanton.
The Legacy
Thomas Jefferson spent much of his life burdened by debt—a consequence of inherited obligations, lavish spending, and risky financial decisions. His personal struggles mirrored the young nation’s own battles with debt, revealing how economic instability shaped both individual lives and the course of American history.
“ I, however, place economy among the first and most important of republican virtues, and public debt as the greatest of the dangers to be feared”
The fiscal challenges of the 21st Century
America’s fiscal and economic challenges are serious, but they are also solvable. While partisan gridlock may have prevented meaningful progress to date, there is no shortage of worthy proposals to strengthen our fiscal and economic future. Use these resources to explore topics like: What national budget items and financial challenges contribute most to the national debt? Who really foots the bill on the federal tax system, and how is that determined?
The non-partisan Peter G. Peterson Foundation strives to foster civic engagement to develop and implement long-term solutions to address America's fiscal challenges, ensuring a better economic future for the nation and its citizens.
Thomas Jefferson Quotations on Debt
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“I am conscious that an equal division of property is impracticable. But the consequences of this enormous inequality producing so much misery to the bulk of mankind, legislators cannot invent too may devices for subdividing property, only taking care to let their subdivisions go hand in hand with the natural affections of the human mind…. another means of silently lessening the inequality of property is to exempt all from taxation below a certain point, and to tax the higher portions of property in geometrical progression as they rise.”
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"Be assured that it gives much more pain to the mind to be in debt, than to do without any article whatever which we may seem to want."
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"The accumulation of debts is a most fearful evil.”
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"Tho’ much an enemy to the system of borrowing, yet I feel strongly the necessity of preserving the power to borrow. Without this we might be overwhelmed by another nation merely by the forces of it’s credit."
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Jefferson’s scheme to acquire Native American lands:
“…and by being so essentially useful to the Indians we should of course become objects of affection to them. There is perhaps no method more irresistable of obtaining lands from them than by letting them get in debt, which when too heavy to be paid, they are always willing to lop off by a cession of lands” -
“The probable accumulation of the surplusses of revenue, beyond what can be applied to the paiment of the public debt, whenever the freedom & safety of our commerce shall be restored, merits the consideration of Congress. shall it lie unproductive in the public vaults? shall the revenue be reduced? or shall it not rather be appropriated to the improvements of roads, canals rivers, education, and other great foundations of prosperity & union, under the powers which Congress may already possess, or such amendment of the constitution as may be approved by the states?”
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“I, however, place economy among the first and most important of republican virtues, and public debt as the greatest of the dangers to be feared.”
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“I consider a permanent public debt as a canker inevitably fatal.”
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“If there be anything amiss therefore in the present state of our affairs, as the formidable deficit lately unfolded to us indicates, I ascribe it to the inattention of Congress to it’s duties, to their unwise dissipation & waste of the public contributions. They seemed, some little while ago to be at a loss for objects whereon to throw away the supposed fathomless funds of the treasury.”
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“There does not exist an engine so corruptive of the government and so demoralising of the nation as a public debt.”
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Jefferson’s personal debt:
“In a single unguarded moment of my life, I did what is likely to draw a cloud over all my remaining days.”
More Resources
A Civic Engagement Initiative sponsored by and in collaboration with The New York Community Trust – The Peter G. Peterson Fund.
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