of my favorite Presidents, Thomas Jefferson, wished (...in 1798
anyway) that the federal government did not have the power to
borrow money. In other words, he was saying he hated deficits
and debt. That kind of rhetoric is common among politicians. In
general, it goes something like this:
up deficits or debt as the bogeyman, then
Promise to conquer the bogeyman if elected.
Feigned frugality is a tried-and-true vote-getter. Even Thomas
Jefferson, one of our greatest Presidents, was not immune to using
such powerful rhetoric. Fortunately for the USA, he didn't follow
through on it. Take a look at Thomas Jefferson's actions five
years later, after he had become President
Jefferson comes to his senses
1803 (...five years later), President Thomas Jefferson bought
the Louisiana Territory from France's cash-hungry emperor, Napoleon.
How did Jefferson come up with the cash? That's right -- he borrowed
quotes regarding the USA's 1803 purchase of the Louisiana Territory:
was the greatest land bargain in U.S. history. The purchase doubled
the size of the United States, greatly strengthened the country
materially and strategically, provided a powerful impetus to westward
expansion, and confirmed the doctrine of implied powers of the
- Encyclopedia Britannica
Jefferson's greatest achievement, the purchase of Louisiana, was
made possible only by foreign loans, which would not have been
forthcoming if Hamilton had not established the credit of the
United States so solidly."
-- Hugh Brogan, The Penguin History of the United States of America
Louisiana Purchase caused the national debt to skyrocket from
$77.1 million (1802) to $86.4 million (1803). In other words,
Jefferson piled up 12 percent additional debt in one single year
- 1803 - to fund the deal. [Increasing the debt by that much in
this day and age would mean adding $650 billion to it in one year
-- think of the field day the debt-phobes would have with that
The Louisiana Territory: One of our best-ever investments
cents an acre to double the size of our country. Would you call
that a good investment? I would, too. Napoleon was desperate for
cash to fund his military adventures; Jefferson's agents, Robert
Livingston and James Monroe, knew this, and they wisely drove
home the bargain, knowing full well that the United States of
America would have to borrow the money to fulfill the agreement.
they knew we'd be able to borrow it, too. By that time, Alexander
Hamilton, our first Secretary of the Treasury, had successfully
established the good credit of the fledgling federal government.
As a result, countries who had money to lend us viewed the USA
as a safe-enough place to invest their money, and correctly viewed
the Louisiana Territory as a good investment for America. In short,
they were happy to lend Jefferson the money for such a good, safe
investment. Both the lenders and the borrowers in 1803 knew, just
as well as we do today, that borrowing or lending for a good investment
is sound financial practice.
the Louisiana Territory from France was an excellent infrastructure
investment decision which defined the zenith of Thomas Jefferson's
Presidency. No wonder our history books shower unanimous praise
on him and his agents for acting swiftly and decisively in Paris
in April and May of 1803. In spite of his prior anti-borrowing
rhetoric, Jefferson demonstrated through his actions that he understood
very well what's really important: making good investments.
sure am glad Thomas Jefferson reversed his anti-borrowing position,
aren't you? He ended up doing the right thing, in spite of his
prior anti-borrowing rhetoric. (I wish some of today's politicians
would follow his lead.)
the necessary money for a good investment is the right thing to
do. Jefferson seems to have figured this out just in time to make
one of the best investments in the history of our nation.