A president has to deal with debt and the temptation to print money

A federal government struggling to pay debts? A Congress that wants to roll the money-printing presses? These issues apparently aren’t new… from American Ulysses: A Life of Ulysses S. Grant:

A major problem left over from the Johnson administration was the federal debt. When Grant assumed the presidency, the national debt, which stood at $64 million in 1860, had grown to a staggering $2.8 billion. The problem was compounded as hundreds of millions of dollars in unredeemable paper money—“greenbacks”—had pushed gold coins out of circulation. All of this left the nation’s credit in precarious shape. As his first presidential act, Grant signed a law promising that the federal government would pay holders of U.S. bonds in “gold or its equivalent” and would redeem the greenbacks as soon as practicable. Grant initiated strong federal action to pay down the national debt. He believed “sound money” was the best way to restore the economy, whereas Democrats focused on relief for farmers and small-business owners through printing paper money—injecting more money into the economy.

After months of debate, the Senate and House agreed on Bill S.617, known as the “inflation bill.” It would increase the number of greenbacks placed in circulation to $400 million. At the same time, it would advance circulation of specie-backed moneys to an equivalent amount. The Senate-sponsored bill received overwhelming approval in both houses of Congress. Everyone expected Grant to sign it.

Finally, after spending many hours at his desk, he concluded he could not sign it, stating it to be “a departure from true principles of finance, national interest, national obligations to creditors, Congressional promises, party pledges (on the part of both political parties), and of personal views and promises made by me in every annual message sent to Congress and in each inaugural address.” Grant recognized the views of proponents of the bill—a majority in Congress—and stated these views in their best light, then countered them with his own financial convictions.

Grant had the last word: “I dare say the first result will be a storm of denunciation. But I am confident that the final judgment of the country will approve my veto.” Congress attempted to override Grant’s veto, but the Senate could muster only 34 yeas to 30 nays. The veto was sustained. No one was more surprised than Grant at the outpouring of support for his decision.