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.   
      
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    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@bex.net   http://home.toltbbs.com/bobklahn   
      
   ... War is God's way of teaching us geography.   
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