by Douglas M. Charles
Our economic crisis of 2008, rooted in the over-borrowing and over-lending of bad mortgages which resulted in a credit crisis after various financial institutions failed, has led to a rancorous debate centered largely on whether and how to “bail out” Wall Street. American history is chock full of events that might shed light on the current crisis or help us to better comprehend where we stand today. There is, for instance, the 1920s issues of First World War debt, reparations, and the 1929 stock market crash; there is the financial panic of 1907 and the bail out single-handedly arranged by financier J. P. Morgan (there was no central bank at the time); and there is the late 19th Century and one economic depression, or “panic,” atop another. What I think is enlightening, however, is an economic crisis involving debt, what could be regarded as a “bail out,” a fierce political debate, and the end results. While it might not be a perfect match for today — history actually never does repeat itself so much as it rhymes — the economic issues addressed by our first treasury secretary, Alexander Hamilton, and our first federal government might inform our 21st century perspective.
