When was the last time the U.S. was debt free?
January 1835 was the first and only time all of the government’s interest-bearing debt was paid off, according to the Treasury Department. President Andrew Jackson, who was suspicious of banks and did not trust the paper money they issued, liquidated the Second Bank of the United States, returning the government’s original investment plus a profit.
As a result, the government had a huge surplus of money, at $17.9 million, far greater than the actual government expenditures for the year. Congress divided the surpluses up among the states, which were bogged down with debt.
The last time the federal government ran a surplus was in 2001.
Has the U.S. ever defaulted before?
It depends on who you ask. Yellen, the Treasury Secretary, has said that “the U.S. has always paid its bills on time” and that if Congress does not raise the debt ceiling, “America would default for the first time in history.”
The White House has also claimed that the U.S. faces a first-ever default if Congress is unable to raise the debt limit.
But Alex Pollock, a former Treasury Department official, argued in a 2021 op-ed in The Hill that there are four precedents for U.S. defaults: 1) During the Civil War in 1862, when the U.S. printed paper money after the Union’s reserves of gold and silver coin were depleted; 2) during the Great Depression in 1933, when the government refused to repay bondholders with gold, as agreed to when the securities were sold; 3) in 1968, when the U.S. did not honor silver certificates with an exchange of silver dollars; and 4) in 1971, when the government abandoned the Bretton Woods Agreement, which included a commitment to redeem dollars held by foreign governments for gold.
https://time.com/6281003/debt-ceiling-history/