The state of our finances continues to fulfill our expectations. Eleven millions & an half of Dollars recieved in the course of the year ending on the 30th. of Sep. last, have enabled us, after meeting all the ordinary expences of the year to pay 3,600,000. Dollars of the principal of the public debt. This paiment, with those of the two preceding years, has extinguished upwards of twelve millions of principal and a greater sum of interest within that period, and, by a proportionate diminution of interest, renders already sensible the effect of the growing sum yearly applicable to the discharge of principal.
To United States Congress, November 8, 1804
Patrick Lee’s Explanation
Principled leaders make debt their servant, not their master.
President Jefferson’s annual report to Congress detailed in simple fashion the nation’s financial health.
1. Income for the fiscal year ending September 30 was $11.5 million.
2. Expenses were $7.9 million.
3. The $3.6 million surplus was applied to paying down the national debt.
4. $12 million had been applied to that debt in the previous three years.
5. Interest saved and applied to the debt would lower it even faster in coming years.
Jefferson reduced the size of the federal government, including its army and navy, repaying debt with the savings. His administration reduced that debt in seven of its eight years, from $83 million to $57 million. The one exception was 1803, when the U.S. borrowed $11.25 million to finance the purchase of Louisiana.