A History of U.S. Debt Limits
Congress first imposed an aggregate debt limit in 1939 when it delegated decisions about designing US debt instruments to the Treasury. Before World War I, Congress designed each bond and specified a maximum amount of each bond that the Treasury could issue. It usually specified purposes for which proceeds could be spent. We construct and interpret a Federal debt limit before 1939.
We thank William Berkley, Don Wilson and the Becker-Friedman Institute of the University of Chicago, and the National Science Foundation (SES-0417519) for financial support. We thank Andrew Abel, Andrew Atkseson, James Alt, Marco Bassetto, Michael Bordo, Randall Calvert, Jeffrey Frieden, and Hugh Rockoff for helpful conversations. We thank Yuval Yossefy for outstanding research assistance and Andrew Young at the U.S. Department of Treasury Library for helping us track down numerous government documents. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.