This is an analysis of pre-WWII records of the national debt,
 going back to 1790. The idea is to look at how things have
 changed and what happened back then to make a difference in how
 the debt has grown since then.

 Details on some of the factors affecting the collection of the
 data found at the end of the commentary.

 **************************************************************************

 The national debt is really not that difficult to deal with, you
 know. Look at history. Yes, there has not been one single year
 since this country was founded that it was debt free, but there
 were multiple times where the debt was drastically reduced.

 In researching that I looked for a reduction of 40%-50% or more
 in the pre-Civil War period, and after the Civil War I looked at
 debt as a percentage of GNP as well as dollar reduction. Before
 1890 I didn't find stats on the GNP.

 readily available. I'm not getting paid for this after all. Oh,
 and they used GNP rather than GDP then. Not enough difference to
 matter for this purpose.

 From 1790 till 1930 I find 7 times when the dollar amount of the
 debt went down to those specs, 1803-1811, 1815-1835, 1838-1839,
 1843-1847, 1851-1857, 1866-1893, 1919-1930.

 From 1890 to 1930 twice it went down enough as percent of GNP I
 feel confident in calling it on the road to, if not paying off
 the debt, then making it trivial. Twice, 1835 and 1915, I call
 it so close to paying off the debt it could have been done.

 The actual debt went from $127 million in 1815 to $38 thousand
 in 1834. I call that on the road to paying it off, but that was
 the dollar amount low point. By 1915 the debt was at aprox 2.5%
 of GNP. IOW, by spending 1/2 of one percent of GNP every year
 for 5 years we could have paid it off. In 1930 the debt debt was
 at 16% of GNP, again, awfully close to payoff range, in my
 opinion.

 So, just how did that happen? Well, graphing federal spending it
 became immediately clear. The debt was brought down drastically
 by cutting federal spending........ on the military.

 You weren't expecting that, were you?

 Yes, it was cuts in military spending that brought the debt
 down. Every time in the pre-1930s US a major reduction in debt
 was during a period of low military spending. So, it appears to
 be simple, just cut military spending and you cut the debt.

 Note, that does not mean low social welfare spending.
 (Republicans call everything not military "social welfare".)
 Much of that time social welfare spending was higher than
 military spending, and it went up while military spending was
 down. Even when military spending went up, social welfare
 spending sometimes went up, yet the debt stayed down. When
 the debt did jump it followed military spending jumps.

 However, that leaves the question, why, if they so drastically
 cut the debt, didn't they continue on that route to pay off the
 debt? Well, let's look. The 1835 and 39 declines seem to have
 ended with recessions so bad as to qualify as depressions, the
 worst this country saw before the Civil War. The 1840s into the
 1850s showcased three major recessions, plus a war. The
 Mexican-American war may not be on the top of your list, but
 spending sure shot up.

 As to the others, oh yeah, when the debt fell by so much, then
 it shot up again, that was when military spending jumped
 drastically.

 Now why was that? I'll just speculate. When you drastically cut
 military spending, you drastically reduce your military. Now,
 nice as we like to think people are, there are always some who
 will look around, find you are weak, and decide it's a good time
 t o take what you have. Or maybe they just want to knock you
 down a peg. So, when the debt drops drastically, we have a war
 to bring it back up.

 That appears to be about how it goes. Major spending increases
 are actually major military spending increases during that time
 frame. So, do we cut the military, drastically reduce the
 budget, then get a war, or do we try to think it through just a
 bit better?

 Notice I focused on the period from 1790, the first year I
 could find these numbers for, until 1930. I chose that time
 frame because, from 1930 on everything changed. Between 1919 and
 1930 the debt dropped, as I said, to 16% of GDP. From 1920 to
 1930 this country had 11 consecutive balanced budgets, the
 longest string of the 20th century. Then came the Great
 Depression. Seems balanced budgets of the 20th century are
 consistently followed by recessions. The longest strings seem to
 have the worst recessions .

 The national debt went up to 50% of GNP by 1940, at which time
 GNP was back to where it was in 1930. Don't even start to think
 that was all because of increased social welfare spending.
 Remember, that $16 Billion in debt was 16% of GNP when the GNP
 was $100 billion. In the first few years of the depression the
 GNP dropped 46%. When that $100 billion dropped 46% that 16%
 turned into aprox 28% of GNP. All that before borrowing one
 penny more. Ten years of depression just under doubled the debt
 to GNP ratio. After that World War II kept it climbing, so fast
 and skyrocketed the economy so much that by comparison the
 depression was trivial. Yes, military spending did it again.

 Since World War II we have not had a year of low military
 spending. Even the Vietnam war only increased military spending
 a relatively small percentage of GDP. Military spending did go
 lower, but not much, and not for long.

 Before World War II we could, and were, attacked by foreign
 foes, but it was difficult for them to launch and supply any
 military effort over that distance. In World War II and after we
 learned, the oceans no longer protect us. We are vulnerable to
 attack, and with today's weapons, destruction.

 **************************************************************************

 Most of the numbers here came from the Govt Printing Office's
 publication, "Historical Statistics of the United States From
 Colonial Times to 1970", Bi-Centennial edition.

  Please note that figures before WWII may differ from post WWII
 figures, and the older they get the more they may differ. In
 earlier years the numbers were far less rigorously collected,
 that and communication difficulties made them much less
 reliable.

 Throughout this I used current dollars, not constant, or
 inflation adjusted, numbers. Since I was looking at the dollar
 amount of the debt so inflation adjustment was not applied. That
 plus, the record difficulties make inflation adjustment for very
 old data difficult. Also, I broke up my research into
 pre-Civil War, pre-WWI, and Pre-WWII. The scale of the numbers
 jumps drastically between those periods.

 I did not, in this case, look much at post WWII because there
 has been no time since WWII that the debt went down
 significantly, and no time that military spending went down very
 much or for very long. Which makes it a different situation.

 Which is another way of saying, after Dec 7, 1941, everything
 changed.


BOB KLAHN bob.klahn{at}bex.net   http://home.toltbbs.com/bobklahn

... War is God's way of teaching us geography.
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