“He that goes a borrowing goes a sorrowing,” warned Benjamin Franklin's Poor Richard. Generations of schoolchildren have been taught to heed this advice. Yet even in Franklin's day, time and season said otherwise. To be able to borrow in the eighteenth century was vital to any farmer who had to pay for seed, tools, and labor before the harvest, to any merchant who wished to conduct distant commerce, to any tradesman who wanted to set up his own shop. Still, debt remained in Revolutionary America what it had been throughout the history of Western civilization: a moral problem. For many, to take on debt may have been necessary; but it was not a good thing to be in debt.

Preindustrial America was still very much a traditional society; and in traditional societies, to be in debt was to be in thrall, often to lenders who might set exorbitant terms for the use of their funds. Neither individuals nor communities ought to be in debt, according to Thomas Jefferson, the icon of American republicanism. The national debt, if not extinguished, would lead inevitably to “corruption and rottenness,” Jefferson said, worrying about the power it gave to banks and governments alike. He made it his policy as president to retire the modest federal government obligations that his political arch-enemy Alexander Hamilton had incurred in the name of stimulating national credit, taxes, and fiscal policy.