Ron Chernow On U.S. Debt In The 19th Century

Ron Chernow, The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance

(New York: Simon & Schuster, Inc.; 1991), pp. 5-7.

‘The United States relied on British capital to finance development and often resented that its economic fate was decided abroad.

As one congressman said in 1833, “the barometer of the American money market hangs up at the stock exchange in London.” . . .

[F]ive American states Pennsylvania, Mississippi, Indiana, Arkansas, and Michigan and the Florida territory defaulted on their interest payments. In an early debtors’ cartel, some American governors banded together to favor debt repudiation. . . .

British investors cursed America as a land of cheats, rascals, and ingrates. State defaults also tainted federal credit, and when Washington sent Treasury agents to Europe in 1842, James de Rothschild thundered, “Tell them you have seen the man who is at the head of the finances in Europe, and that he has told you that they cannot borrow a dollar.

Not a dollar.” . . . Even Charles Dickens couldn’t resist a jab, portraying a nightmare in which Scrooge’s solid British assets are transformed into “a mere United States’ security.”’

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