The Presidents and Money
The first and to date only President to completely pay off the entire national debt was Andrew Jackson in 1835. The United States managed to remain debt free for an entire year. Jackson considered indebtedness to be exhibitive of immorality. The federal government-owned huge tracts of acreage in the west, and Jackson sold the land to speculators and developers to acquire sufficient cash to reduce the national debt to zero. At the same time, projects which required the spending of federal dollars, such as building what was then modern roads, were blocked when the bills authorizing them reached his desk.
Jackson’s policies paid off the $58 million dollar national debt he inherited and created a real estate bubble, which the banks funded by printing more and more paper money. When Jackson demanded that real estate transactions must be paid for with hard money, that is in silver or gold, the bubble burst and the economy collapsed into the Panic of 1837 (depressions were known as panics then), the longest economic downturn in the nation’s history. Within a year the government had to borrow money to operate, and the national debt returned, and has never left since.
The first president to enter office with a net worth exceeding $1 million (in today’s money) was Warren G. Harding of Ohio. Every president since has held a fortune exceeding that amount with the exception of Harry Truman. Harding made his fortune after purchasing a failing newspaper, The Marion Star, and turning it into a success. Profits from the newspaper were then invested in local businesses and projects while the newspaper’s editorial page urged for their success. It was the newspaper’s power that involved Harding in first local and later state-wide politics, and Harding was a success at both.
Although several presidents dealt with severe debt and bankruptcy before or after being in office, only one, Thomas Jefferson, used bankruptcy protection while in office as President of the United States. Jefferson fought with debt his entire adult life, having been saddled with debts incurred by his father and added to by Jefferson throughout his life. Jefferson was paid a salary of $25,000 as President, out of which he had to maintain the expenses of the White House staff and his secretaries, one of whom was Meriwether Lewis. He found annual expenses to exceed $34,000. Land prices in Virginia were depressed, in large part because of the expansion into the western states.
It was not possible to file for bankruptcy protection in the early United States except for a brief period between 1801 and 1804, when Congress passed a law allowing for it in certain circumstances and the President availed himself of its protection. Many of Jefferson’s creditors were loath to foreclose on him during his lifetime anyway, in part because of his reputation and in part because the steadily depreciating land values in Virginia would make it difficult for them to recover their money. After Jefferson died his estate at Monticello was sold to raise money to pay off his debts.
