When did large-scale debt begin in the United States?

Question:
You presented an excellently infuriating and easy-to-understand description of how FDR financed recovery from the depression, not by taxing the wealthy but by borrowing their money and paying them 4% to repair the damage that they themselves had caused.

However, that does not seem to be -- as you claimed -- the way large-scale public debt began. I believe, instead, that it began not in the 30s under FDR but in 1917 under Woodrow Wilson, with passage of the Liberty Bond Act. This seemed to be an almost identical creation of huge public debt, on a previously unknown scale, by borrowing money (this time not just from the wealthy but from the entire population) and paying 3.2%-4.5% for its use in order finance WW I. Wilson could have gotten this money through taxation, as FDR could have gotten it in the 30s, but like FDR he decided to take an easier, less politically painful way out.

Answer:
You are quite right that large scale US public debt did not start with FDR, and I should have made that clear. In fact, until FDR, US debt was mainly a mechanism for funding wars (the Revolutionary War, 1812, the civil war and WW1). However, because of prevailing attitudes about government debt, most of the debts run up for those wars were subsequently paid back by means of federal budgetary surpluses. What changed with and after FDR was the use of debt for much more than wars (although wars remained a major driver of US debt). The new phenomenon - and that is what I wanted to stress on the program - was the use of debt as a basic political ploy by politicians in capitalist societies to "manage" the system's contradictions - and especially its costly recurring business cycles - in an ongoing way. By means of debt, governments could (1) maintain more or less generous mass public services without the heavy taxes on the masses to pay for them, and (2) simultaneously provide all sorts of supports to business and the rich without taxing them. Moreover, the government sweetened the deal for the corporations and the rich by borrowing from them at interest the money that otherwise likely would have been taxed from them to pay for the government's outlays. And all this was theoretically legitimated by Keynes's notion of deficit finance as the appropriate counter-cyclical policy. No one worried that accumulating debts (and not retiring most or all of them as had been the practice before FDR) might one day reach the point that creditors would balk at more lending and thereby set off all sorts of other economic consequences of varying difficulty and danger (our present situation from Greece to the US).