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Posted at 11:08 AM ET, 01/ 5/2011

Has the U.S. government ever defaulted on its debt?

By Ezra Klein

Yes, as it turns out. Once in 1790, and then again in 1933. Bruce Bartlett has many more links on the politics and consequences of defaulting on the debt here.

By Ezra Klein  | January 5, 2011; 11:08 AM ET
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I assume that you are aware that those birds in Arkansas were killed by a collision with the debt ceiling -- another important reason to raise it!

Posted by: bdballard | January 5, 2011 11:53 AM | Report abuse

It is a bit more complicated than an outright default. On April 5, 1933, Roosevelt ordered all gold coins and gold certificates in denominations of more than $100 turned in for other money. The deadline for turning in gold at a certain set price was May 1st. In short, owning gold after a certain date was illegal. I would call that more "call risk" than outright default because, as far as I know, there was no obligation for the US Government to allow the certificates to last in perpetuity. The tricky part is that they also "called" gold at the same time.

It was part of ending the gold standard. The government stopped allowing people to trade in Silver Certificates for silver in the '60s as well, so that should probably be added.


Posted by: chrisgaun | January 5, 2011 12:03 PM | Report abuse

Actually, neither of these were really "default" default, like the Republicans are threatening.

In 1790, the US just deferred some of the interest on some debt. And in 1933 it paid certain of its debt in currency rather than the stipulated gold -- at the gold price when the bond was issued, not the current gold price.

Here's a quote from a 2009 Post story on this:

How unprecedented would default be? The United States has never failed to repay a debt in its history. But it has twice altered the repayment terms, notes a study by Carmen M. Reinhart of the University of Maryland and Kenneth S. Rogoff of Harvard University. In 1790, when the infant republic took over the states' colonial-era debts, it deferred some interest for 10 years. A more pertinent case occurred during the Great Depression. In 1933, President Franklin D. Roosevelt devalued the dollar by 41 percent against gold. This helped end the vicious cycle of bank failures, deflation and default that had worsened the economic downturn, but it created another dilemma. Since the Civil War, borrowers in the United States, including the government, had routinely issued bonds that allowed the holder to demand repayment in gold or its dollar equivalent, based on the price of gold when the bond was issued. Devaluation would have dramatically raised, in dollar terms, the burden of repayment. So in 1933, Congress repealed the gold clause, a decision the Supreme Court upheld in 1935.


Posted by: RichardHSerlin | January 6, 2011 12:24 AM | Report abuse

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