is owned and operated by the Economic History Association
with the support of other sponsoring organizations.

Jefferson’s Treasure: How Albert Gallatin Saved the New Nation from Debt

Author(s):May, Gregory
Reviewer(s):Wright, Robert E.

Published by EH.Net (November 2018)

Gregory May, Jefferson’s Treasure: How Albert Gallatin Saved the New Nation from Debt. Washington, DC: Regnery History, 2018. xxxii + 512 pp. $35 (hardcover), ISBN: 978-1-62157-645-7.

Reviewed for EH.Net by Robert E. Wright, Thomas Willing Institute, Augustana University.

International tax expert Gregory May’s entertainingly written birth-to-death biographical treatment of U.S. Treasury Secretary Albert Gallatin (1761-1849) covers Gallatin’s public career and private life in ten chapters and 300 pages of chronological narrative. Despite make passing reference to concepts like regulatory capture, May did not try to write a biography that would pass muster with economic historians. While generalists will find much merit in the book, economic historians, at least those who do not place a heavy premium on newness, have no clear reason to favor this Gallatin biography over those of Henry Adams (J. B. Lippincott, 1879) or Raymond Walters (Macmillan, 1957). Specialists interested in the history of the American System, higher education, Indian affairs, diplomacy, and so forth, also will find little new here.

Like most biographies, this one covers far more ground than can be summarized in even a long review. Much of it provides general context of only passing interest to economic historians. The most important background discussions justify the author’s views of Gallatin’s motivations when Gallatin himself remained silent on important issues, like why he never took a strong stand against slavery or why he emigrated from Geneva to the United States, in 1780 of all years. The political and social contextualization of the latter conundrum runs a half dozen pages, but the economic depression and monetary chaos gripping America in 1780 merits only four general sentences. Personal details of Gallatin’s life, like the tragic death of his first wife after just a few months of marriage, consume many more pages. Such scenes render the book compelling reading for general consumption but seem of minimal value to economic historians.

The conceit of the book’s subtitle, that Gallatin saved America from its debt, is untenable, as the author himself seems to concede. As Bill White showed in America’s Fiscal Constitution: Its Triumph and Collapse (PublicAffairs, 2014), Alexander Hamilton, not Gallatin, established the fiscal constitution that provided the basic policy frame by which the United States managed its national debt from the Washington administration until at least the Nixon years. When David Cowen (mistakenly cited as Cohen) and I published a prosopography of early U.S. financiers (Financial Founding Fathers, Chicago, 2006), we styled Gallatin “the savior,” not because he saved the early nation from its debt but because he protected Hamilton’s fiscal constitution from Thomas Jefferson’s palpably suboptimal financial policy preferences.

May sometimes ignores or distorts evidence that runs counter to his case. For example, he pushes the Jeffersonian view that ownership of U.S. debt securities in the 1790s was highly concentrated among a few hundred wealthy men in the big Northern seaports. In support of that tired canard, he cites several old studies based more on innuendo than data, and also my own One Nation Under Debt: Hamilton, Jefferson, and the History of What We Owe (McGraw-Hill, 2008), which most emphatically shows the opposite (The dataset undergirding the book is stored here on EH.NET: Federal bond registers reveal that considerable numbers of women, rural folks, and Southerners owned federal bonds, which traded prodigiously in secondary securities markets that were remarkably liquid and integrated given the technology of the era (on which point see and my book based on it, The Wealth of Nations Rediscovered [Cambridge, 2002]). May even disappoints on tax policy because he fails to explain that the infamous whiskey tax, resistance to which helped to launch Gallatin’s political career, was not primarily designed to increase federal revenue but rather was meant to offset the protection granted domestic distillers by the relatively high tax on imported spirits, which of course leveraged liquor’s notorious inelasticity.

This biography, like many, sometimes gives too much credit to the protagonist, for example presenting Gallatin as a major force in the formation of the Philadelphia-Lancaster Turnpike Company when his actual role was limited to some committee work in the Pennsylvania legislature. Similarly, the author almost invariably simply summarizes Gallatin’s policy pamphlets, insinuating that they were brilliant without subjecting them to informed critique. He does make clear, however, that Gallatin’s Eurocentric worldview rendered his work on Indian language and culture antiquarian, in the racist sense of the term.

Errors of omission and commission, too numerous and tedious to recount here, stand as solemn testament to the fact that penning the biographies of major political and policy figures is difficult business, especially for authors with no formal academic research training. The errors, though, signal only the writing of a non-specialist. To make up for his lack of formal credentials, May read extremely widely but, alas, with insufficient expert guidance. Two hundred pages of citations seem impressive at first glance but May often misses the most important citations and contextualizations, and not just in economic history. He misses, for example, Joanne Freeman’s work when discussing “affairs of honor” and provides readers with no context for the “rough music” or charivari that Federalists in Reading, Pennsylvania subjected Gallatin to one night after he became the opposition leader in the U.S. House of Representatives. Authors must be selective but not mentioning or explaining the ubiquity of that transplanted European social practice could be construed as authorial ignorance, another example of overplaying Gallatin’s importance, or a snide insinuation that the midnight revelers were Federalist extremists.

On that last point, it is unsurprising that Regnery History, which recently published a book that claims that Hamilton “screwed up America,” published this book, which gels with a certain strain in ahistorical libertarian scholarship that vilifies Hamilton, largely unfairly, on three important points. First, May regurgitates the claim that Hamilton advocated protective tariffs, an ancient but mistaken assertion demolished, yet again, by Richard Sylla and David Cowen in their Alexander Hamilton on Finance, Credit and Debt (Columbia University Press, 2018), and Sylla in his illustrated biography of Hamilton (Sterling, 2016). Hamilton understood Harberger triangles more than a century before Arnold was born!

Second, Hamilton wanted a vigorous federal government, not a large one, and he was a debt realist, not an advocate of a forever growing national debt. May, like others motivated to exaggerate Hamilton’s views on government size, conveniently leaves off the “if it is not excessive” (page 66) qualifying clause from Hamilton’s claim that the national debt could be “a national blessing.” Hamilton believed that population and economic growth would ease the nation’s real debt burden over time without unduly restraining government or taxing the private sector. Gallatin, by contrast, believed that all government debt was bad and should be paid off as quickly as possible, even at the expense of economic growth and national defense. Both policies are better than those of policymakers who think the debt can balloon to any size because we “owe it to ourselves” and can “always print money to service it,” but selectively quoting Hamilton to associate him with that group needlessly perverts the historical record. All this has been exhaustively explained by Richard Salsman in The Political Economy of Debt: Three Centuries of Theory and Evidence (Edward Elgar, 2017) and the books by Richard Sylla and David Cowen referenced above.

Third, although typographically the difference between adopting and adapting the British financial system is only one letter, interpretively it is huge. To play up his protagonist, May claims that Hamilton only did the former, on the basis of a comment made by Gideon Granger, Jefferson’s postmaster general and otherwise an insignificant politician and thinker. Several scholars, including myself and Sylla, have explained in detail that adaptation is a more apt characterization of Hamilton’s fiscal and financial policies.

In sum, read this well-crafted biography for general interest but not for new insights into the early U.S. financial system.

Robert E. Wright is the Nef Family Chair of Political Economy at Augustana University and the coauthor, with Bucknell’s Jan Traflet, of a forthcoming biography of NBC radio financial reporter and corporate governance “gadfly” Wilma Soss.

Copyright (c) 2018 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator ( Published by EH.Net (November 2018). All EH.Net reviews are archived at

Subject(s):Government, Law and Regulation, Public Finance
Geographic Area(s):North America
Time Period(s):18th Century
19th Century