The paper looks into the debt histories of three European countries, Britain, France, and Germany, to study three questions. First, are there historical parallels to the accumulation of high debt in peacetime that has taken place in the past decades? The answer to this is mostly in the negative. National debt was high during long periods but usually related to wars or their financial aftermath. Second, how were large debts reduced, and that were the factors determining decision-making? Recent research has emphasized the role of social conflict in this context. We find that although this may play a role, the dominant effect may have come from international financial relations. Third, what are the macroeconomic effects of budget stabilization, and does it pay off for a country to repudiate or inflate away its debt? The short-run evidence is mixed, as the success of debt default has varied considerably. In the long run, however, stabilizing the budget pays off, as there seem to be no lasting adverse effects of fiscal austerity on a nation's growth performance.