The Net Worth of the US Federal Government, 1784–1802.

The article focuses on how the U.S. government managed the enormous debt generated by the War for Independence in the period 1784-1802. Before the enactment of the U.S. Constitution in 1789, Congress had no power to tax, and could only request funds from the states. Until then the U.S. was essentially in default of all its loan obligations, including the Continental currency it formally repudiated in 1790. After that year, Congress paid interest on its debt through tariff revenues, lifting the country from default and keeping the debt burden constant. The assets of land owned by the government backed its interest-bearing loans, enabling its escape from payments on principle. The repudiation of the Continental currency thus made the U.S. a solvent institution.