William Hogeland’s Founding Finance is the latest volume in “Discovering America,” the book series that I’m editing for the University of Texas Press.
ONLINE DECEMBER 4, 2012
How Big Finance Won the American Revolution
An Interview with William HogelandDavid V. Johnson
In his latest book, Founding Finance: How Debt, Speculation, Foreclosures, Protests, and Crackdowns Made Us a Nation, William Hogeland argues that America was born less from the fight between founding fathers and the British Crown, which we’ve all heard about, than from the fight between the founding fathers and American economic populists, which we haven’t heard enough about. The much-ballyhooed conflicts among John Adams, Thomas Jefferson, James Madison, and Alexander Hamilton over the federalist project belie their unity against pro-democratic financial and economic measures that would benefit the indebted masses at the expense of financial elites allied with the founders. That we still fight today over similar issues shows how central they are to our national identity. BR Web Editor David Johnson asked Hogeland about who Herman Husband was, why Robert Morris would feel at home working for Citigroup, and how George Washington would greet the Occupy and Tea Party movements.
David Johnson: How did you come to write the book?
William Hogeland: It comes out of things I had bumped into in my first two books,Whiskey Rebellion and Declaration. I kept coming up against the fact that so many conflicts among Americans during the founding period seemed to be over matters of finance and economics that we’re still fighting over today. I decided that this would be a good time, given the financial crisis and some of the debates of Election 2012 about public debt and private debt, regulation, and so forth, to bring those founding financial issues out very explicitly. So I focused on the founding as a series of conflicts among Americans over finance, if finance can be defined the way my extremely lengthy subtitle defines it: debt, speculation, foreclosures, crackdowns, protests, etc.
DJ: You begin the book with a quote from Edmund Randolph, General Washington’s aide-de-camp and the country’s first Attorney General, speaking to the Constitutional Convention: “Our chief danger arises from the democratic parts of our [state] constitutions.” It should be no surprise to those well-read in American history that our founders were critics of democracy. But you argue that “democracy” in that context means something much more than what we commonly understand. What did Randolph mean by that statement?
WH: When we note, as you just did quite rightly, that the founding fathers were wary of the excesses of democracy, we take it to mean something that’s only partially true—it’s not a full description of what they feared. We think they worried that too much input from too many people might lead to a sort of general instability, possibly mob rule, and so forth. The part we tend to leave out, I think, is the financial and economic dimension. When Randolph was calling the convention to order and saying that what we need to do is form a national government, he was speaking in a specific context of economic and financial turmoil, and everyone else in the room would have known what he was talking about. He meant that the state governments were too weak in resisting the onslaught of democratic approaches to finance, in which the lending classes’ investments would be devalued, laws would be passed by state legislatures to provide what the founders would have seen as excessive debt relief to ordinary people, and a host of other democratic financial policies that the elites of the time, for perfectly cogent reasons, felt would destabilize all good policy. Most people don’t discuss Randolph’s remarks at the constitutional convention, because those remarks are distressing to those who believe in democracy today and wish to connect democratic ideals to the founders.