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State defaults in the United States are instances of states within the United States defaulting on their debt. The last instance of such a default took place during the Great Depression , in 1933, when the state of Arkansas defaulted on its highway bonds, which had long-lasting consequences for the state. [ 1 ]
By 1841, nineteen of the twenty-six U.S. states and two of the three territories had issued bonds and incurred state debt. [1] Of these, the aforementioned states and territory were forced to default on payments. Four states ultimately repudiated all or part of their debts, and three went through substantial renegotiations. [2]
If the individual citizen or corporate citizen is a creditor of the state (e.g. government bonds), then a default by the state can mean a devaluation of their monetary wealth. In addition, the following scenarios can occur in a debtor state from a sovereign default: a banking crisis, as banks have to make write downs on credits given to the state.
"Without enough money to pay its bills, any of the payments are at risk, including all government spending, mandatory payments, interest on our debt and payments to U.S. bondholders.
The U.S. needs to keep borrowing to fund expenditures, and a default would make that stop immediately. Internationally, the U.S. dollar is where countries keep their currency for international ...
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The bonds were tied up in a lot of real estate in the state and the carpetbagger government was looking for ways to fund infrastructure projects, many of which turned out to be phony ways to funnel money into their own pockets. The Arkansas legislature passed laws to refund the bonds on April 6, 1869 [4] with 30 years interest. Afterward they ...
This is a list of U.S. states by credit rating, showing credit ratings for sovereign bonds as reported by the three major credit rating agencies: Standard & Poor's, Fitch and Moody's. The list is given as of May 2021.
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