It is very common for governments to borrow money. After all, governments can run into a wide range of emergencies that become more manageable through more spending. As such, the concept of a national debt isn’t exactly a modern invention.

In the case of the United States, the country had a national debt as soon as it was created because of the agreement for the federal government to take the state governments’ war debts. Unsurprisingly, this was a huge political issue. Some U.S. politicians thought that the national debt could be used to grow the country’s economy. In contrast, other U.S. politicians thought that the national debt benefited northeastern elites at the expense of rural citizens.

The national debt of the United States has been paid off exactly once. This happened on January 8 of 1835, which was during the administration of President Andrew Jackson, who cared a great deal about the issue. Unfortunately, his actions towards this end contributed to the Panic of 1837, which created a major depression that would continue until the mid-1840s.

For example, Jackson sold off a huge amount of federal land, which created a real estate bubble. Similarly, Jackson destroyed the Second Bank of the United States by refusing to extend its charter, thus enabling a lot of reckless borrowing and spending because of the lack of central oversight. Combined with other domestic and foreign issues, the U.S. economy was cratered with horrendous consequences. Numerous businesses failed, which included almost half of all U.S. banks. As such, there was massive unemployment, thus contributing to a considerable degree of social unrest. 

In total, the depression lasted for about seven years. However, the U.S. economy wouldn’t enter into a boom until the California Gold Rush started up in the late 1840s.