What would the founders do about America’s looming debt crisis?
First, they would have to learn the word “trillion.” The first loan to the U.S. Treasury, under the new constitution in September 1789, was for $20,000, drawn on the Bank of New York (it was to help the new federal government cover immediate expenses). Once we introduced the founders to all the new decimal places, they would probably say, “Been on a little binge, haven’t you, bro?”
I can imagine three practical responses to our crisis. The first would be the handiwork of a certain sort of run-of-the-mill founding-era politician — repudiation. That’s what some of the states were doing in the 1780s as they struggled with the debts they had amassed in the Revolutionary War. Rhode Island was notorious for printing paper money; North Carolina simply announced that it would knock 20 percent off all the debts it owed. Chicanery and sharp practice exist in every country and every era.
Thomas Jefferson would not be so irresponsible, but neither would he be particularly constructive. He would use America’s current debt travails as an opportunity to sing, “I told you so,” in every key his eloquence could reach. Jefferson had always been fundamentally uncomfortable with modern finance and modern economics. He claimed to admire Adam Smith, but the ideal of his heart was agrarian life, with a landscape dotted by small farmers, large farmers (like himself) and their slaves. The mobs of cities, as he once wrote, added as much to the health of a nation “as sores do to the strength of the human body.”
Alexander Hamilton would roll up his sleeves. He had weathered a financial crisis, like ours of 2008, during his years as the nation’s first secretary of the Treasury. He handled his crisis, in 1792, so well that historians can afford to ignore it. He would have favored something like TARP I — in 1792, as in 2008, liquidity was pumped into the system to tide honest bankers over the hump. (But he also let rascals go down.) He would put his green eyeshade on when it came to bailouts and the stimulus. Though he believed in an early form of industrial policy, he looked to boosting new businesses, not saving sick ones or spreading around pork.
Hamilton would also cast a cold eye on Obamacare, Medicaid, Medicare and Social Security. Providing for the weak and the ill was a family, not a federal matter. One reason he liked the factory system was that it pulled idle women and children out of their homes and put them to work. He had to go to work when he was an illegitimate orphan in the Caribbean; why not everyone else?
Such views would probably ensure that he could never be elected to anything in our time. But he might provide cover to Paul Ryan, or to President Obama’s debt commission.
• Journalist and historian Richard Brookhiser is the author of the biographies “Alexander Hamilton, American” and “Founding Father: Rediscovering George Washington.”
WHAT: “Rediscovering Alexander Hamilton”
WHEN: On PBS stations Monday at 10 p.m. (check local listings)