Hamilton's Blessing: The Extraordinary Life and Times of Our National Debt

Rating:
Summary: A captivating read!
Review: Gordon's book outlines the historical themes and historical influences underlying management of the US national debt. He carefully selects events to report and presents them with authority: Hamilton's creation of a National Bank and his vision of its value to the new Republic; Jackson's distrust of bankers and his elimination of both the National Bank and the national debt; the debt's importance in financing the Civil War and transforming the US into a World Power; Andrew Mellon's role in lowering personal taxes and its impact on the economy; the management of debt by the Federal Reserve system; how the debt saved the country during the Depression and saved the world during the second World War; and the post-WWII expansion of the debt for no apparent purpose other than self-gratification.

In his conclusion, Gordon asserts that the national debt has produced great value in the past, and we should be conscious of its expected value when we choose to expand it. He points out that we have have inflated the debt to two thirds the size of the GDP during the most prosperous time in US history, but the value produced was returned primarily to politicians rather than to citizens.

While reading Gordon's conclusion, I was reminded of the Old Testament story of Joseph, who interpreted the Pharoah's vision of seven fat cattle being eaten by seven skinny cattle. Joseph successfully managed a nation through a cycle of feast and famine because he understood how to prepare for lean years during years of plenty. The message Gordon sends is similar -- pay down the debt during our Feast years, and credit will be available to return value during our years of Famine.

This short book makes a nice supplement to a course in Money, Banking & Finance or a survey of American Public Policy. An appendix details annual growth of the national debt and displays it as a percentage of GNP/GDP.

Rating:
Summary: An insightful look into the making of the national debt
Review: I tip my hat to Mr. Gordon for providing a compelling short history of national debt, and how it has been shaped by tariffs, taxation and ever-increasing spending that has run amok in recent decades. It is a fascinating study into the competing visions of fiscal responsibility, notably the balanced budget extolled by Jeffersonians, which has actually been achieved on numerous occasions, versus deficit spending espoused by Hamiltonians, and of which John Maynard Keynes became the leading exponent in the inter-wars years between WWI and WWII.

While debts traditionally run high during wars, Gordon notes that since WWII, the yearly budget has rarely been balanced. It is during this time that Keynesian theory took hold and in Gordon's view led to a budget deficit that quickly spun out of control as entitlement programs took up fully three-quarters of the yearly budget. These programs have been virtually untouchable, but in 1995 (the point to which Gordon takes his history) a new reckoning emerged with the Republican landslide in Congress. Bill Clinton duly responded by proposing a balanced budget.

Gordon is a fiscal conservative, but recognizes the need to run in the red during hard economic times. He notes that this was Hoover's mistake at the onset of the Great Depression, as he continued to push for a balanced budget despite warnings that it would make the recession worse. However, the federal deficit, which has mushroomed to over $5 trillion, threatens to bankrupt many of the entitlement programs including social security.

Rating:
Summary: Intersting Little Book on US Fiscal History
Review: John Steele Gordon is an excellent writer, one whom I have enjoyed very much in the pages of American Heritage and who wrote a nifty history of Wall Street called "The Great Game."

This book, "Hamilton's Blessing: The Extraordinary Life and Times of Our National Debt" is a good, if brief, overview of the fiscal history of the American government. It is somewhat misnamed, since the National Debt serves as a background and tie in to each period of fiscal history studied.

The author does a superb job of explaining Alexander Hamilton's establishment of our financial, banking, debt and money system. Here is a woefully under appreciated founder explained succinctly and whose brilliance and indispensability are brought forth by Gordon.

Descriptions of attitudes towards and major changes in financial policy and tools follow. Gordon covers the major aspects: the struggle over the Second National Bank, Jackson's paying off the debt (the only time the US Gov't has been debt free), Lincoln and Chase's tax, greenback and bond finance of the Civil War, the long fight to establish the income tax, the fight over high marginal rates and an efficient system of taxation, and the change in view in the last century from one that deficits and debt were something to be controlled to our current sorry state of view whereby no one worries about much about deficits anymore.

Debt, when properly used, has allowed us to primarily wage wars. It was retired in times of peace. We face an interesting time now, when debt as a percentage of GDP is much higher than it has been in most peacetimes. This raises the question that if we have to fight a truly massive and long war in the future, will we have the capacity to borrow what we need (based on historic statistics, it is a question well worth pondering).

Gordon finishes the book with a polemic against the political culture that has lost its way in terms of providing an efficient and fair and economically sound system of taxation and the willingness to moderate the nation's debt.

This is a good and interesting book. Anyone looking for a succinct telling of the development of our government's fiscal structure will appreciate this gem.

Rating:
Summary: Intersting Little Book on US Fiscal History
Review: John Steele Gordon is an excellent writer, one whom I have enjoyed very much in the pages of American Heritage and who wrote a nifty history of Wall Street called "The Great Game."

This book, "Hamilton's Blessing: The Extraordinary Life and Times of Our National Debt" is a good, if brief, overview of the fiscal history of the American government. It is somewhat misnamed, since the National Debt serves as a background and tie in to each period of fiscal history studied.

The author does a superb job of explaining Alexander Hamilton's establishment of our financial, banking, debt and money system. Here is a woefully under appreciated founder explained succinctly and whose brilliance and indispensability are brought forth by Gordon.

Descriptions of attitudes towards and major changes in financial policy and tools follow. Gordon covers the major aspects: the struggle over the Second National Bank, Jackson's paying off the debt (the only time the US Gov't has been debt free), Lincoln and Chase's tax, greenback and bond finance of the Civil War, the long fight to establish the income tax, the fight over high marginal rates and an efficient system of taxation, and the change in view in the last century from one that deficits and debt were something to be controlled to our current sorry state of view whereby no one worries about much about deficits anymore.

Debt, when properly used, has allowed us to primarily wage wars. It was retired in times of peace. We face an interesting time now, when debt as a percentage of GDP is much higher than it has been in most peacetimes. This raises the question that if we have to fight a truly massive and long war in the future, will we have the capacity to borrow what we need (based on historic statistics, it is a question well worth pondering).

Gordon finishes the book with a polemic against the political culture that has lost its way in terms of providing an efficient and fair and economically sound system of taxation and the willingness to moderate the nation's debt.

This is a good and interesting book. Anyone looking for a succinct telling of the development of our government's fiscal structure will appreciate this gem.

Rating:
Summary: A Good Primer on the History of U.S. Fiscal Policy
Review: Just two years ago, John Steele Gordon's book on the history of the U.S. federal debt would have seemed dated, even though it was published in 1997. After more than twenty consecutive years of operating in the red, the U.S. federal government had not only erased its annual deficits and began paying down the debt, but surpluses were projected over the next ten years.

This is no longer the case. A tax cut, the war on terrorism, and a slowdown in the economy have combined to push the U.S. government's outlays above its revenues. They have also made this book -- "Hamilton's Blessing" -- relevant again.

Gordon's book is two things: 1) a basic history describing the twists and turns of U.S. fiscal policy over the last two hundred-plus years and 2) a political tract condemning the latest turn U.S. fiscal policy has taken since the Great Society.

By combining the two, Gordon seeks to show that the most recent practice of U.S. fiscal policy -- that of habitually running deficits in peacetime -- is not only unprecedented in U.S. history, but also, more importantly, unsupported by any sound theory of economics.

"Hamilton's Blessing" is well-written and interesting. The book is only slightly marred by a lack of detail in some areas. How exactly does a large public debt hurt your average citizen and by how much? We never find out.

Gordon also should have kept his own political bent out of the book. Among other things, he spends three pages in a less than 200-page book detailing Jack Kemp's personal and political history, including his football career. All very interesting, but not really relevant to the history of the U.S. debt.

Rating:
Summary: Good Background on the Origin of our Nation's Debt
Review: This book is detailed, but easy to read, giving a good background on how our national debt came to be what it is today. Teh book also covers several of the more popular schools of thought on economics, specifically the teachings of John Maynard Keynes, the namesake of Keynesian Economics. I recommend this book to anyone who has ever questioned our government's inability to pay down the national debt as that debt is known as "Hamilton's Blessing."

Rating:
Summary: Loses something towards the end
Review: This book starts out very good with an insightful depiction of Hamilton's initial achievement, but gets progressively weaker as it advances into the present, as the author begins to lose interest in the historical importance of the debt and concentrates more on his polemic against the tax system. While he makes some very valid points about the Byzantine complexity of the revenue code, to me he did not draw a clear enough connection between this and the central topic. Although Gordon shows that the current debt is very different in origin from obligations of the past, his depiction of the events since World War II is altogether too skimpy. He also does not do enough to distinguish between the so-called "publicly held debt" and the debt held by other government accounts (such as Social Security), a relatively new cleavage with highly significant ramifications for fiscal policy. Finally, and this is certainly not the author's fault, the book has become just a bit dated with the projection of large surpluses and the current debate over their best use--perhaps a new edition is forthcoming. All in all, Hamilton's blessing will provide useful insights for those interested in fiscal policy, but the book could have been much better than it is.