THERE ARE nervous nellies among us who fret about our country's financial future now that our national debt has passed the trillion-dollar mark. Some even want to balance the budget to help matters out, and have concocted constitutional amendments to that effect.

They know not what they do. It's time we learned to love and cherish the national debt -- to understand that the one time America was a debt-free nation, it resulted in little but grief.

That little-known period lasted only briefly, from late 1834 to the middle of 1837, but it was a bad couple of years. "For God's sake, send no more money among us," was one of the cries that went up in 1837, when the country could stand it no longer.

True, times have changed, and it is difficult to imagine such a plea today. But it is a fai bet that, as with solutions to other public concerns, erasing the national debt would only create new problems to take its place, even if of a different kind. It therefore behooves those who seize on this issue to recall what happened when America was without debt, a prospect which had worried the Founding Fathers.

Back in 1805 President Jefferson, in his inaugural address, warned that a policy of economy coupled with national prosperity might lead to a bursting Treasury. But it was not until after the War of 1812 that the country was afflicted with the Midas touch.

Wealth poured into the Treasury from the tariff imposts and the sale of public lands in the West. In 1835, receipts from the sale of Western lands totaled $15 million; in 1836, $25 million; in 1837, $6 million.

President Jackson viewed the surplus with alarm, but year after year the spondulix kept piling up in the Treasury. On Dec. 1, 1834, in a message to Congress, Jackson announced: "Thus it appears that after satisfying all appropriations and after discharging the last item of our public debt which will be done on the first of January next, there will remain unexpended in the Treasury an effective balance of about $450,000."

On Dec. 26, 1834, the millenium arrived: The Treasury issued the last warrant required to pay the national debt. The next day leaders of the Jackson forces in Congress passed a resolution declaring that the extinguishment of the debt was "an unprecedented event in the annals of nations," and they celebrated the event at a banquet at Brown's Hotel on the night of Jan. 8, 1835.

But then it was time to decide what to do with the new surplus -- and the wrangles over how to cut the melon rank among the fiercest in the history of Congress.

Sen. Thomas Hart Benton of Missouri, great uncle of the noted muralist and leader of the Jackson forces in the Senate, proposed spending the money for fortifications. Another bill would have used the money to pay the railroads for transportation of mail, munitions and other government matter.

A Senate committee headed by John C. Calhoun in 1834 brought in a bill to amend the Constitution to permit the outright distribution of the surplus revenue as a gift to the states. The surplus, Calhoun opined, was a "disease that threatens the most dangerous consequences."

Up rose Sen. Benton and, breathing fire and brimstone, delivered himself of a minority opinion against the proposed amendment. "Last year," he roared, "it was a bankrupt Treasury and a beggared government; now it is a Treasury gorged to bursting with surplus millions and a government trampling down liberty, contaminating morals, bribing and wielding vast masses of people, from the unemployable funds of countless treasuries. . . .

"The corruptions of the Romans, the debauchment of the voters, the venality of elections, commenced with the Tribunitial distribution of corn out of the public granaries . . . In our own America . . . begin at once, no matter how, or upon what -- surplus revenue, the proceeds of the lands, or the lands themselves -- no matter; the progress and the issue of the whole game is as inevitable as it is obvious. Candidates bid, the voters listen; and a plundered pillaged country -- the empty skin of an immolated victim -- is the price and the spoil of the last and the highest bidder."

The bill to amend the Constitution to permit outright distribution was never discussed again, and our forefathers cudgeled their brains as to how they could kill this goose that insisted on laying so many golden eggs.

Distribution advocates finally resorted to a subterfuge. Their bill, reluctantly signed into law on June 23, 1836, by President Jackson, stipulated that the surplus was to be "deposited" with the states in proportion to their representation in Congress. The measure's advocates estimated that in 1837 the surplus would total $37 million. According to the bill, states were bound to return their share of the national bonanza on demand.

Specifically, the states were required to sign certificates of deposit which would pledge the faith of the state for the safekeeping and repayment thereof, and "to pay the said moneys and every part thereof from time to time whenever the same shall be required by the Secretary of the Treasury for the purpose of defraying any wants of the public Treasury . . ."

No weasel words here. The money was to be a deposit, repayable on demand. But everyone knew it was an outright gift.

Henry Clay remarked that he did not believe that "a single member of either house imagined that a dollar would be recalled." And hear Sen. Benton, a Jeremiah crying in the wilderness: "It is in name a deposit, in form a loan, in essence and design a distribution. . . . All at once it is discovered that a change of names will do as well as a change of the Constitution."

Sniffed the New York Evening Post: "A handful of copper coins thrown among a crowd of Neapolitan beggars could not have occasioned a greater hurry in each to secure his part nor could the rusty and dirty metal have been clutched by their nimble and dirty hands with more haste than the members of Congress passed the Deposit Bill which gives the state governments the public money to squander as they please."

Most state legislatures had to go into extra sessions at great expense to settle the vexatious problem of what to do with their share of the swag. In some states it was touch and go as to whether they would even accept the money.

The governor of Maryland said the state's share of the cash, $955,838.25, stimulated the Maryland debt. The governor of North Carolina grumbled that the money had turned his office into a loan office. The governor of Tennessee lamented that the tendency was to construct any and every sort of road without reference to its value. A Connecticut senator read to the U.S. Senate a plea from a friend back home: "For God's sake send no more money among us." In Massachusetts, according to the Boston Courier, the money "exposes the towns to endless strife and contentions." Maine and New Hampshire simply distributed the money to their citizens.

The New Hampshire legislature went on record as declaring that distribution of the surplus was "highly dangerous to the liberties of the people." A Virginia congressman asserted that his state's share of the surplus, $2,198,427.99, "was used up, generally speaking, in some visionary project or it was distributed in some way to the emolument of party and wasted by demagogues." Only a few states used their gift prudently.

"Two-thirds of the states have mismanaged and misapplied this great fund in a miserable, time-serving, popularity-hunting fashion," observed Horace Greeley. The New York Journal of Commerce called the surplus and the distribution "a greater curse".

The spree soon came to an end.

In mid-1837, the financial crash came. About 1,000 banks in which the government had deposited money closed their doors. The first and second installments of the "deposits" had been paid in good money. But the third installment in June had to be paid with depreciated currency. There was nothing left in the till for the fourth installment.

The notion of the deposit as an outright gift was so entrenched by then that some states put heavy pressure on Congress when the fourth installment was not paid. Virginia even sued for its share, and the question was not settled until 1883 when the Supreme Court turned thumbs down on Virginia's plea.

Not a dollar was ever called for by the federal government. In 1922 when the veterans were clamoring for a bonus, Rep. William E. Andrews of Nebraska introduced a resolution asking that these funds of 1837 be returned with 4 percent interest. That would have made the interest alone $95,545,525. Another try was made in 1926 by Rep. Robert Simmons of Nebraska. Nothing came of these attempts.

Even today, the Treasury secretary is unable to call in the deposits of 1837 -- the total sum of $28,101,644.91 -- without a special act of Congress.

A chagrined nation finished the year of 1837 with a deficit of $12,300,000. Back it went to borrowing, at the heavy interest rate of 6 percent. The nation has been in debt ever since, blessed with none of the worries about what to do with a federal surplus.