------------ 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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