{
  "id": 5032369,
  "title": "How America got creative when the debt got too big",
  "url": "https://urgent.news/2026/09/02/how-america-got-creative-when-the-debt-got-too-big",
  "topic": "business",
  "section": "Business",
  "published": "2026-09-02T05:41:00.000Z",
  "source": {
    "name": "The Economic Times",
    "slug": "the-economic-times",
    "url": "https://economictimes.indiatimes.com/news/international/business/us-debt-hits-40-trillion-heres-how-washington-has-tackled-funding-crises-before/articleshow/133699187.cms"
  },
  "original_language": "en",
  "account": "As America's fiscal outlook grew increasingly concerning, the nation's debt surpassed $40 trillion. In the past, Washington has encountered daunting financing challenges, but history shows the country has developed innovative methods to raise funds when traditional options are scarce.\n\nDuring the Civil War, federal debt skyrocketed from $65 million in 1860 to $2.7 billion in 1865, almost doubling annually. To accommodate this new issuance, Washington created rules that required federally chartered banks to back their currency with U.S. bonds. Financing magnate Jay Cooke capitalized on this by selling debt nationwide through banks, sub-agents, advertising, and patriotic appeals. These efforts turned federal debt into a mass retail product.\n\nIn 1895, a recession, gold exports, and fears of a shift to silver caused the Treasury's gold reserve to drop to $41.3 million, far below the necessary $100 million. To avert a crisis, Grover Cleveland enlisted J.P. Morgan and August Belmont Jr. to lead a syndicate that supplied over $65 million in gold, much of it from Europe, to stabilize reserves. In return, the syndicate received $62 million in 30-year, 4% Treasury bonds, helping to reassure the public and halt further withdrawals.\n\nAs the U.S. entered World War II, financing required both cheap borrowing and the limitation of civilian spending to curb inflation. To achieve this, Washington turned to war bonds, which were purchased by about 27 million Americans. The Federal Reserve supported this system by pegging Treasury-bill rates at 0.375% and capping long-term Treasury yields at 2.5%. However, this peg eventually led to postwar inflation, prompting the Treasury-Fed Accord of March 1951.\n\nBy the early 1960s, foreign dollar claims had surpassed U.S. gold reserves, threatening confidence in the dollar's convertibility into gold. To prevent capital outflows, the Carter administration sold U.S. government debt denominated in foreign currencies. In November 1978, Carter unveiled a coordinated support program with West Germany, Japan, and Switzerland, assembling up to $30 billion in foreign-currency resources for intervention. This package included foreign currency swaps, U.S. reserve-tranche drawings at the IMF, sales of Special Drawing Rights, and foreign-currency borrowing. To bolster the U.S. currency, Carter bonds were issued in German and Swiss markets, raising foreign cash to buy dollars.",
  "summary": null,
  "key_points": [],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}