Business World Online
March 7, 2012
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-euro 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.
This article was posted: Wednesday, March 7, 2012 at 12:07 pm