Alexander Hamilton’s Eurozone Tour
For many Europeans, Alexander Hamilton’s negotiation in 1790 of the new US federal government’s assumption of the states’ large debts like a tempting model. But, as Hamilton knew well – and as subsequent US history showed – debt mutualization by itself could not guarantee political union.
PRINCETON – Europe’s debt crisis has piqued Europeans’ interest in American precedents for federal finance. For many, Alexander Hamilton has become a contemporary hero. Perhaps one day his face should appear on the €10 banknote.
Specifically, for European states groaning under unbearable debt burdens, Hamilton’s negotiation in 1790 of the new federal government’s assumption of the states’ large debts looks like a tempting model. Indeed, after Thomas Sargent won the Nobel Prize in Economics last year, he cited it as a precedent in his acceptance speech.
Hamilton argued – against James Madison and Thomas Jefferson – that the debts accumulated by the states during the War of Independence should be assumed by the federation. There were two sides to his case, one practical, the other philosophical.
To continue reading, please log in or enter your email address.
To access our archive, please log in or register now and read two articles from our archive every month for free. For unlimited access to our archive, as well as to the unrivaled analysis of PS On Point, subscribe now.