How Did George Washington Feel About the National Debt?
Every February since 1896, the U.S. Senate has observed the birthday of George Washington by having one of its members read his 1796 Farewell Address into the record.
The ceremony is usually purely symbolic. This year, however, it could influence policy: The country’s first president had some interesting ideas about the national debt that might resonate as Congress gears up for more fights over spending and taxes.
In September 1796, as he prepared to retire from public affairs by declining to serve a third term, Washington left his fellow Americans with some parting thoughts in the form of a letter published in the American Daily Advertiser. Initially drafted by James Madison in 1792 (when Washington first contemplated retirement), the letter was later edited by Alexander Hamilton and then heavily amended by Washington himself, who took full responsibility for the advice it contained.
The address is usually remembered for an admonition to avoid “entangling alliances.” (That precise phrase actually never occurs in the address, but Washington did assert that, “It is our true policy to steer clear of permanent alliances with any portion of the foreign world.” Thomas Jefferson used the more media-friendly “entangling alliances” in his first inaugural speech in early 1801.)
Another paragraph, about the national debt, may be more compelling today. Washington, a Federalist, began by advising Americans to “cherish public credit” because it was “a very important source of strength and security.” In the view of most of the Founders, securing life, liberty and property was the major public good that the government had to provide, so endangering public credit, especially in the service of partisan politics, wasn’t something Washington would have countenanced.
One method of upholding public credit, Washington argued, was “to use it as sparingly as possible.” That meant “cultivating peace” by spending just enough on defense to deter any would-be invaders. Presumably, given Federalists’ penchant for efficient administration, Washington also meant that military budgets should be spent wisely, by buying only weapons that were truly needed and at something like competitive prices.
If war became “unavoidable,” the government should pay off the debts incurred during the conflict “by vigorous exertion in time of peace.” That policy would cherish public debt but also not place “upon posterity the burden” that the generation engaged in war “ought to bear.”
Apparently, Washington didn’t foresee 80 years of almost continuous “war,” cold and hot, large and small, against foreign nations, rebel bands, terrorist networks, alcohol, economic depression and drugs. And who could blame him? Surely some of those wars were avoidable, if only the government had followed Washington’s suggestions to “observe good faith and justice towards all nations; cultivate peace and harmony with all” and to be always guided “by an exalted justice and benevolence.”
Washington closed the paragraph on national debt with a few thoughts on taxation. Citizens, he wrote, “should practically bear in mind that towards the payment of debts there must be revenue; that to have revenue there must be taxes; that no taxes can be devised which are not more or less inconvenient and unpleasant.” Once levied due to “public exigencies,” however, Americans were duty-bound to pay their taxes with “a spirit of acquiescence.”
It is important to note that Washington wasn’t calling for blind obedience to the government, simply the separation of cause and effect. If Americans didn’t want to suffer from “the intrinsic embarrassment” of high taxation, they needed to prevent the government from spending and borrowing too much in the first place, by ensuring that it remained focused on its “proper objects.”
Washington acknowledged that delineating the proper role of government was “always a choice of difficulties,” but implied that if the people and their elected officials ensured the execution of his “maxims,” all would end well.
(Robert E. Wright is the Nef Family Chair of Political Economy at Augustana College in South Dakota and the author, with David Cowen, of “Financial Founding Fathers: The Men Who Made America Rich.” The opinions expressed are his own.)
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