A Permanent National Debt Is Not an American Institution

Abstract

This chapter looks at questions surrounding Civil War debt once the war ended. Domestically, the challenges of the Civil War debt would prove a political football in the immediate post-war period as Democrats and Republicans jostled for control within Congress. The issue eventually made its way into debates over the Fourteenth Amendment. At the core of the argument was a debate over who benefitted from the bonds. After the debate over honoring the debt was settled by Ulysses Grant, there remained a heavily partisan and increasingly sectional divide over the bonds that still remained. In addition, the explosion of international investment would prove a lasting legacy of the conflict. Partnerships built during the war, either silent or formalized, carried over into the Reconstruction era as elaborate financial networks continued to sell American debt abroad. By 1870, more than half of the US debt was held abroad. The opening of European branches for American firms in the post-war period marked the beginning of a new chapter in American investment banking and the opening of a US Treasury office in London further revealed the expanding fiscal presence of America on the international stage.