Imagineering the U.S. Public Debt: How Changing Perceptions of the Debt altered the Mechanics of Treasury Debt Management in the 1860s and 1960s

This paper argues that changes in how the Treasury managed the public debt stemmed from changes in perceptions of Government debt. To make this argument, the paper looks at two big shifts in how the public debt was handled. One change was the Government’s printing of its own securities through the Bureau of Engraving and Printing founded in the 1860s. This development reflected a democratization of the public debt in which it was the Government’s task to make sure “the people” profited from Government debt—not bankers or bank note companies. So, Government securities were publicly printed and publicly sold. The second big shift was the implementation of electronic book-entry procedures in the 1960s. The adoption of book-entry by the Treasury corresponded to a new view of debt. Deficits and, therefore, the public debt came to be seen as central to economic success. The public debt was no longer a transient evil to be managed out of existence by the Treasury but a permanent benevolence to be nurtured for the public good to a large degree by the central bank. In this environment, the transaction speed born of computers and electronics was of paramount importance.