To the editor:
We hear a lot about the supposed “fact” that, in our history, the United States has never defaulted on our debt. In fact, in essence, we have at least 5 times before.
1) Continental currency essentially defaulted in 1779 when Congress redeemed their notes at less then 1/38th their original value.
2) In 1790, the Continental Congress issued notes then refused to pay them back beginning March 1, 1782.
3) In August 1861, Congress created a new currency to finance the war. They were to be repaid “on demand,” but five months later they defaulted by refusing to redeem them on demand.
4) To finance the war, in 1917, Congress issued “Liberty Bonds” which were redeemable in gold. After Roosevelt became president during the Great Depression, he decided to domestically refuse to redeem them any longer in gold. In addition he confiscated private gold and then devalued the dollar by 40 percent which was essentially a default to our trading partners.
5) On Aug. 15, 1971, Nixon did away with the link between the dollar and gold. At that time gold was worth $35 an ounce and today it is around $1,600 an ounce. So that was essentially a 100 percent devaluation of the dollar — of interest to foreigners holding our dollars.
6) Currently we have been printing dollars with no additional reserves backing them, which devalues the dollar in the worldwide market.