Over the past couple of decades, our national debt has become a favorite political football for Democrats and Republicans alike. Yet few Americans seem aware that the debt has a long and (mostly) honorable history. Alexander Hamilton considered it a kind of political Krazy Glue, which would also spur American industry by keeping taxes high. This borrowing power enabled the North to win the Civil War without wrecking its economy and rescued us from the Great Depression. John Steele Gordon doesn't deny the dangers of an entire nation living on credit; indeed, he believes that our fiscal affairs are a mess. But he puts this mess in fascinating perspective. And he's quick to see the human side of economic behavior: "One problem," he writes, "is that human nature predisposes us to recognize depression easily and quickly, but prosperity, like happiness, is most easily seen in retrospect." Bull's-eye!


From Publishers Weekly
In a colorful, sweeping narrative, American Heritage business columnist Gordon charts the history of our national debt, a mere $80 million in 1792, but now a staggering $5.1 trillion. Alexander Hamilton, first secretary of the treasury, conceived of a manageable federal debt as a strategic instrument of national policy, and indeed, deficit spending helped the North win the Civil War. President Andrew Jackson eliminated the national debt in 1834, but by shifting federal funds to state-chartered banks he fueled an upsurge in speculation and inflation, sparking the country's first major depression in 1837. Gordon deftly profiles a gallery of financial figures, including aluminum magnate Andrew Mellon (Harding's treasury secretary and the father of "trickle-down economics") and tough, tubercular Federal Reserve boss Benjamin Strong, whose ill-timed death triggered the 1929 crash. Gordon advocates a flat income tax, abolition of political action committees' financing of campaigns, and the creation of an independent accounting board to monitor federal spending. In exposing the underbelly of American political and economic history-our debt-ridden financial system-he has produced an enlightening primer for the layperson. History Book Club selection. Copyright 1996 Reed Business Information, Inc.


From Library Journal
Gordon (Profitable Exporting, Wiley, 1993) provides a comprehensive history of the financing of the federal government aimed at intelligent general readers concerned about public policy. Though he is at times opinionated and makes clear his moderately conservative preferences on fiscal policy, Gordon strives to represent fairly the variety of opinions on financing the federal debt, from Alexander Hamilton's day to our own. His conclusion treats contemporary politics, because Gordon believes the actions of the Congress elected in 1994 were fiscally sound. He also argues that the debt-to-Gross Domestic Product ratio must be reduced to keep the national debt the blessing it has been since Hamilton's day. This enjoyable and informative book is recommended for public libraries.?Susan A. Stussy, Madonna Univ., Kansas City, Kan.Copyright 1997 Reed Business Information, Inc.


From Booklist
Most of what is written about this country's national debt reflects a sturm und drang agonizing over its proportions or promotes the political agenda of the particular author. Gordon takes a step back and helps put it all in perspective, though he concludes with a laudatory plug for the flat tax. Gordon writes "The Business of America" column for American Heritage, and he makes history accessible and entertaining. His Scarlet Woman of Wall Street (1988) is an excellent example of history "come to life." Growing out of a November 1995 article for American Heritage, this book traces the "very human story" of taxation and public debt in the U.S. For contrast, he begins by profiling the huge national debt incurred by Britain by the end of the eighteenth century. From there, he shows how Alexander Hamilton "conceived of the national debt as a strategic instrument of national policy" and ends by noting that in the 10 years since our tax code was "simplified," it has been amended more than 4,000 times! A good choice for public libraries. David Rouse


From Kirkus Reviews
American Heritage columnist Gordon (The Scarlet Woman of Wall Street, 1988) deserves credit for attempting a brief history of the national debt aimed at a wide audience, but the result is somewhat disappointing. Gordon argues that debt can be a valuable economic and political tool when used consciously and wisely, as Alexander Hamilton attempted to do, but poses a real threat when it results from an unwillingness to make difficult decisions, as with the current federal deficit. This distinction loses its sharpness when applied to more complicated events, such as the funding of the Civil War and Roosevelt's policies in the 1930s, and is lost from sight during the discussion of Andrew Mellon's supply-side economics of the 1920s. But this theory nevertheless serves to bracket a quick survey of American public finance. Unfortunately, at times Gordon's tendency to skim the surface of selected events and rely on conventional platitudes results in a rather skewed account. It is impossible, for example, to understand why early proponents of the income tax were intent on soaking the rich unless their proposals are considered in relation to the equally unbalanced burdens imposed on the less affluent by tariffs and monetary policies. A one-paragraph discussion of the balanced- budget amendment, labeling it a ``chimera,'' though perceptive, hardly covers the range of relevant concerns. Advocating a flat tax so simple that returns can be mailed in on a postcard and then referring to deductions for business expenditures even suggests a lack of systematic thought. Most importantly, the failings of contemporary politicians cannot be the whole story behind the recent, persistent deficits, for Gordon supplies considerable evidence that politicians have always had failings. For those seeking to understand the national debt, this book is a good place to start--it's just not a good place to stop. -- Copyright ©1997, Kirkus Associates, LP. All rights reserved.

FROM THE PUBLISHER

Measured at the staggering amount of $5.1 trillion (and growing every day) the national debt is unfathomable to most Americans. What we may not realize is that the United States was born out of debt. After the Revolution, the brilliant Alexander Hamilton was less interested in paying down the Revolutionary war debt than in using it to create a vibrant national economy. "If it is not excessive," he declared, "a national debt will be to us a national blessing." In a fascinating narrative brimming with colorful characters, historical accidents, and American ingenuity, business historian John Steele Gordon leads us on a tour of an American institution whose largely unknown story has been integrally entwined with our country's destiny. At key points in U.S. history, Gordon shows how the national debt has been a potent instrument of fiscal policy in keeping the world safe for democracy. But how much debt is too much? At a time when we despair of balancing even a single year's budget, Hamilton's Blessing provides much needed perspective - and hope. Author writes the "Business of America" column in American Heritage magazine and is heard often on public radio's "Marketplace."

FROM THE CRITICS

Publishers Weekly

In a colorful, sweeping narrative, American Heritage business columnist Gordon charts the history of our national debt, a mere $80 million in 1792, but now a staggering $5.1 trillion. Alexander Hamilton, first secretary of the treasury, conceived of a manageable federal debt as a strategic instrument of national policy, and indeed, deficit spending helped the North win the Civil War. President Andrew Jackson eliminated the national debt in 1834, but by shifting federal funds to state-chartered banks he fueled an upsurge in speculation and inflation, sparking the country's first major depression in 1837. Gordon deftly profiles a gallery of financial figures, including aluminum magnate Andrew Mellon (Harding's treasury secretary and the father of "trickle-down economics") and tough, tubercular Federal Reserve boss Benjamin Strong, whose ill-timed death triggered the 1929 crash. Gordon advocates a flat income tax, abolition of political action committees' financing of campaigns, and the creation of an independent accounting board to monitor federal spending. In exposing the underbelly of American political and economic history-our debt-ridden financial system-he has produced an enlightening primer for the layperson. History Book Club selection. (Feb.)

Library Journal

Gordon (Profitable Exporting, Wiley, 1993) provides a comprehensive history of the financing of the federal government aimed at intelligent general readers concerned about public policy. Though he is at times opinionated and makes clear his moderately conservative preferences on fiscal policy, Gordon strives to represent fairly the variety of opinions on financing the federal debt, from Alexander Hamilton's day to our own. His conclusion treats contemporary politics, because Gordon believes the actions of the Congress elected in 1994 were fiscally sound. He also argues that the debt-to-Gross Domestic Product ratio must be reduced to keep the national debt the blessing it has been since Hamilton's day. This enjoyable and informative book is recommended for public libraries.-Susan A. Stussy, Madonna Univ., Kansas City, Kan.

Booknews

Examines the origins and early uses of the national debt, tracing the history of American government and economic thinking over the past 200 years. Covers key events such as the invention of the war bond and federal income tax and the establishment of the federal reserve, showing how policies instituted by Alexander Hamilton and Thomas Jefferson still affect us today. For general readers. Annotation c. by Book News, Inc., Portland, Or.

Kirkus Reviews

American Heritage columnist Gordon (The Scarlet Woman of Wall Street, 1988) deserves credit for attempting a brief history of the national debt aimed at a wide audience, but the result is somewhat disappointing.

Gordon argues that debt can be a valuable economic and political tool when used consciously and wisely, as Alexander Hamilton attempted to do, but poses a real threat when it results from an unwillingness to make difficult decisions, as with the current federal deficit. This distinction loses its sharpness when applied to more complicated events, such as the funding of the Civil War and Roosevelt's policies in the 1930s, and is lost from sight during the discussion of Andrew Mellon's supply-side economics of the 1920s. But this theory nevertheless serves to bracket a quick survey of American public finance. Unfortunately, at times Gordon's tendency to skim the surface of selected events and rely on conventional platitudes results in a rather skewed account. It is impossible, for example, to understand why early proponents of the income tax were intent on soaking the rich unless their proposals are considered in relation to the equally unbalanced burdens imposed on the less affluent by tariffs and monetary policies. A one-paragraph discussion of the balanced- budget amendment, labeling it a "chimera," though perceptive, hardly covers the range of relevant concerns. Advocating a flat tax so simple that returns can be mailed in on a postcard and then referring to deductions for business expenditures even suggests a lack of systematic thought. Most importantly, the failings of contemporary politicians cannot be the whole story behind the recent, persistent deficits, for Gordon supplies considerable evidence that politicians have always had failings.

For those seeking to understand the national debt, this book is a good place to start—it's just not a good place to stop.