------------ EH.NET BOOK REVIEW --------------  
Published by EH.NET (March 2006)  
  
Robert E. Wright, editor, _The United States National Debt,   
1787-1900_. London: Pickering and Chatto, 2005. xlv + 1578 pp. (four   
volumes) $670 (cloth), ISBN: 1-85196-816-4.  
  
Reviewed for EH.NET by Franklin Noll, Consulting Historian to the   
Bureau of Engraving and Printing.  
  
  
The United States national debt is not an easy subject to study as   
there are probably less than a dozen worthwhile books on the subject,   
while the primary sources are legion and widely scattered. That is   
why back in April 2005, at the Economic History Society conference in   
Leicester, I was excited to come across an advertisement for an   
upcoming set of documents entitled, _The United States National Debt,   
1787-1900_. At last, I thought, someone was taking the bull by the   
horns and attempting an in-depth look at this complicated and   
under-studied topic. I was consequently disappointed. The work does   
not live up to its broad, encompassing title. Instead of giving a   
comprehensive look at the history of the national debt, the   
collection presents a view that is limited in both scope and depth.  
  
_The United States National Debt, 1787-1900_, edited by Robert   
Wright, is a four-volume set of texts (all facsimile reprints)   
bearing on the United States public debt that includes a general   
introduction, brief introductions to each text, and an index. The   
selections are arranged chronologically. Volume 1 contains the   
editor's introduction and works on "The First National Debt,"   
covering the period between 1785 and 1801 and the establishment of   
the national debt. The next volume contains two documents: a review   
of European and United States economic history (1820) and the first   
half of a review of international finance by banker Bernard Cohen   
(1822). Cohen's work, which is 544 pages long (around 60 pages of   
which pertain to the United States), continues in Volume 3. This   
volume also includes three works under the heading of "Antebellum   
Debt" that reflect contemporary concerns over defaults by some of the   
states. The last volume is subtitled "The Civil War Debt," covering   
the latter half of the nineteenth century and such matters as   
inflation, the international market for bonds, and the complicated   
structure of the post-war public debt.  
  
Wright's view of the United States national debt is not clearly   
presented in his introduction, but it becomes apparent that Wright   
approaches the history of the national debt from a market   
perspective. Accordingly, the texts he has presented tend to focus on   
the varying state of the market, possible changes in the public   
debt's structure, and the milieu of forces that affect bond market   
performance. Thus, we see works addressing market confidence,   
confusion over the structure of the public debt, arguments over bond   
rates at issuance, and the state of overseas markets. No doubt this   
reflects Wright's interest in pursuing Richard Sylla's argument that   
economic growth in the early national period was finance-led with the   
spark for growth coming from the creation of the national debt and a   
government securities market.  
  
Viewed from this perspective, Wright's collection has real merit. It   
opens a window onto the complexity of bond markets in the past. This   
is a service to not only public debt scholars but also to financial   
historians. Of special note is Wright's inclusion of texts dealing   
with the overseas market for Treasury securities. At least five of   
the twenty-five texts in the collection deal with the foreign market   
for United States debt instruments or put the public debt in   
international perspective. Such views of the public debt are rarely   
seen. This is mostly because, as Wright points out, the overseas   
market was so small for most of the period covered in the collection   
(4: 439). However, the collection is entitled _The United States   
National Debt, 1787-1900_, not _Readings in the United States Bond   
Market, 1787-1900_; and much of what is the national debt is left   
unexamined.  
  
Now, "national debt" is a fuzzy term. It has been used in the past to   
refer to everything from the public debt (Hamilton's usage) to the   
total debt owed by all individuals, corporations, and governments in   
the United States. Prudently, Wright supplies his own definition of   
national debt (one which I agree with): "the acknowledged liabilities   
(things owed) of a sovereign government" (1: ix). However, Wright   
does not stick to this definition, but restricts his analysis to only   
one group of liabilities -- those for which the government was wholly   
liable -- the public debt. Wright does not appear aware that by the   
end of the nineteenth century "the acknowledged liabilities" of the   
United States included the public debt, railroad debt, and District   
of Columbia debt as well as liabilities to various Indian tribes,   
money and securities held in trust, National Bank redemption funds,   
and any number of odd funding adventures listed in the Treasury's   
annual reports. As a result, a great range of important topics is   
left untouched. For example, can one really talk about   
nineteenth-century government financing without discussing railroads?  
  
This focus on the public debt is only one way that the collection   
falls short of a full review of the national debt. Wright's market   
perspective also works against any systematic look at the structure   
of the national debt, its larger role in the United States economy,   
and its political nature. Do not get me wrong; all these topics do   
get touched upon in the four volumes Wright has assembled. Given the   
inherent complexity of the national or even the public debt, it would   
be hard to create such a large collection and not bring up these   
items. My criticism is that these topics are not dealt with in a way   
that provides sufficient understanding and a more complete picture of   
either the national or public debt to the reader.  
  
In terms of the national debt's structure, somewhere the basics need   
to be discussed. The differences between the public debt and other   
forms of debt issued by the United States government need to be   
defined as well as the differences between a bond, a note, and the   
other securities used by the Treasury. Further, many fundamental   
questions have to be answered either through introductory material or   
selected texts to help make sense of the national debt and the market   
for bonds. These would include: Why are some securities denominated   
in foreign currency? Is United States currency debt? What is the   
circulation privilege? How were Treasury securities actually sold?  
  
Briefly touched upon in Wright's texts is the public debt's   
interconnectedness with the rest of the economy. In various ways and   
to varying extents currency, banking, tariffs, taxes, and popular   
investing in bonds were influenced by the size and structure of the   
debt. The most conspicuous absence in the collection is a reference   
to the public debt's relationship with the money supply after the   
Civil War. Though it is occasionally alluded to in the documents, the   
relationship between budget surpluses, the retirement of the public   
debt, resumption, and the money supply is never fully explained.   
Especially surprising is the lack of any real discussion of how   
National Bank circulation depended upon the existence of certain   
government bonds, a situation that put an upward pressure on bond   
prices. The only mention in the 1,600 pages of the collection is a   
one and a half-page section in a pro-government pamphlet put out by   
Jay Cooke in 1865 (4: 117-18).  
  
There is also a relative neglect of political matters in the   
collection. The national debt has always been an ideological   
battleground or a club with which to bludgeon the opposition. Wright   
recognizes this to a point but some odd gaps exist in the collection.   
For example, while Wright presents texts that comment on the   
Federalist/Anti-Federalist debate over the role of the national debt   
in the future of the nation, I found it odd that there is no entry   
from Jefferson or Hamilton. There is also no entry on the elimination   
of the public debt under Jackson or the swirl of ideological forces   
manipulated and invoked during the episode. Further, almost no   
mention is made of the impact on the public debt of the silver   
controversy, especially since it spawned an awkward form of debt   
currency, the Treasury Notes of 1890.  
  
However, Wright does touch upon the politics of debt management, an   
under-studied aspect of the national debt, when he presents the   
testimony of Secretary of the Treasury John Sherman before a House   
committee over the terms of the Funded Loan of 1881 (4: 353-74).   
Before the Second Liberty Loan Act of 1917 the responsibility for   
debt management lay with the Congress and not the Treasury. Thus the   
terms of all Treasury securities (interest, maturity, etc.) were   
matters of political argument. I wish that Wright had explained the   
Congressional role in security issuance and explored the topic   
further.  
  
Lastly, something also needs to be said about the quality of   
Pickering and Chatto's four volumes. The use of facsimile reprints   
comes with certain advantages and problems. Readers get a real feel   
for the text but have at times to deal with out-dated spellings and   
meanings (the latter often elucidated by Wright), which can be   
problematic for students. The publisher also has to face the problem   
of expanding or reducing the original text to fit the printed page.   
While a larger font is a relief to us of advancing age, the fonts of   
some texts are extremely small, making reading at times   
uncomfortable. This headache was aggravated at times when, at least   
in my copy, the reproduction was faint and blurry.  
  
In sum, the editorial view of _The United States National Debt,   
1787-1900_ is too narrow and too shallow to be of use to a wide   
audience. It is too narrow in scope for many scholars of the national   
debt or public finance; while it is too shallow in explanation and   
context to make sense to students or novices to the subject. Of   
course any collection of documents that one can have on a topic of   
interest and not have to track down oneself is of value. But, at $670   
a copy this is a costly luxury (though Pickering and Chatto have   
announced that scholars can get the work for half price if they can   
convince their library to buy a copy). I am afraid I will still have   
to wait for that comprehensive study on the history of the national   
debt.  
  
  
Franklin Noll, Consulting Historian to the Bureau of Engraving and   
Printing, specializes in the history of Treasury securities, the   
national debt, the Treasury, and the Bureau of Engraving and   
Printing. Some of his work on the public debt is available at the   
EH.Net Encyclopedia and EH.Net Databases pages.  
  
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Published by EH.Net (March 2006). All EH.Net reviews are archived at   
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