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'The Hamilton Scheme: An Epic Tale of Money and Power in the American Founding'

STEVE INSKEEP, HOST:

The historian William Hogeland set out to write a book about Alexander Hamilton, a founding father many Americans think they already know.

WILLIAM HOGELAND: They're sort of more like, well, he had a marriage; he had an extramarital affair; he was killed in a duel.

INSKEEP: Those are big plot points in the long-running musical "Hamilton."

(SOUNDBITE OF SONG, "MY SHOT")

LIN-MANUEL MIRANDA: (As Alexander Hamilton, rapping) And I am not throwing away my shot. I am not throwing away my shot.

INSKEEP: Hogeland's new book dwells on something the musical mentions, but not in detail - it was Hamilton's plan as the first secretary of the treasury under President George Washington. Hamilton was obsessed with the public debt - money borrowed and owed by the federal government.

HOGELAND: This is a tricky issue, because public debt sounds to us sometimes like, oh, well, that's a problem. To Hamilton, the public debt was a massive opportunity for kind of consolidating the United States.

INSKEEP: Hogeland's book, "The Hamilton Scheme," describes why Hamilton increased the national debt. He got the federal government to take over the debts of the original 13 states. The U.S. took over paying those loans the states had taken out during the American Revolution. Rich Americans had loaned much of the money, and Hamilton wanted to bind that wealthy class to the new nation.

HOGELAND: And to Hamilton, it was more like, wow, if we can feed that desire on the part of the rich class of Americans to get regular interest payments, not just now, but for years to come - i.e. foster the debt and yoke that desire on the part of the rich Americans to great national interests, great national ambitions - well, then we will have consolidated the country, connecting a very active investing class to the aims of the country.

INSKEEP: I want to say out loud an underlying idea here that I think I don't always understand and maybe a lot of people don't. When someone loans money to the government, we may think they then have power because the government owes them money. You're saying it may actually work the other way - the lender may become dependent on the government, 'cause they're getting payback from the government and they need it.

HOGELAND: Yeah. This is what the vision kind of was. You know, you could see it as mutually beneficial, but it's only mutually beneficial if both sides are playing, and Hamilton definitely wanted to find ways to make the lending class dependent on the federal government, not on the individual state governments.

INSKEEP: So I was wrong about this as a kid. I read about this as a kid, 'cause I was a dorky kid and my mom had history books, and I read something about Alexander Hamilton and the federal government assuming the states' debts to pay them off, and I thought that was about good credit and honor and sticking up for the United States and showing we had a good reputation in the world. You're telling me that wasn't really the point at all?

HOGELAND: No, I don't think I am telling you that exactly, because I think it is about good credit, and by establishing this debt as a thriving thing, which is what Hamilton did, well, that did give the country good credit abroad and at home. So this enables further borrowing down the line - in the case of emergency, like war, for one thing, but also in a more steady way, to fund things like infrastructure and other giant national projects - so I don't think this idea that he had was in any way in conflict with the idea of good credit. It's just that, you know, how do you get good credit? Well, you get it by making sure that the people who are going to lend money feel really comfortable and really connected to you, the borrower.

INSKEEP: You make another point about borrowing money. When a government borrows money, they can use the money to build stuff like roads, things that grow the economy, and don't have to wait to pay as they go as money dribbles in.

HOGELAND: Yeah. And this is not something Hamilton made up himself, of course. This is one of the ways the British Empire had found ways to pay for big projects, big expansions, without constantly trying to fund each thing by its own sort of set of taxes or whatever, create a pool of loaned money and you tax in order to fund that pool rather than taxing project by project, and this kind of unleashes a power to expand. Britain had done it; France was into it. Hamilton found ways to do it in a different kind of country, to fund roads and infrastructures; to fund wars; to fund expansion into the territory of indigenous people, and all the other things the United States was into at that time.

INSKEEP: So let me ask you about current events in this context, because I just looked it up and one recent figure for the U.S. national debt - this is money owed by the federal government that we have to pay back over time - was recently $34 trillion, which is an awful lot of money, and people sometimes very fiercely criticize that. When you think about Hamilton's principles, as well as his opponents', and you try to think about that huge debt we have today, are there ways that a giant debt can be good?

HOGELAND: For Hamilton, he wouldn't have put it that way - a giant debt. He would always say a public debt, if not too large, can be good, but compared to what some of his opponents wanted, the debt he defended was indeed quite large.

INSKEEP: I'm also thinking of another aspect of this that maybe applies - in principle - to the present day. We're in a situation where China has loaned the United States enormous amounts of money by buying U.S. government bonds. We often have a public discourse where we feel that China has influence over the United States. Is the opposite also true - China has an interest in the success of the United States because their money is over here?

HOGELAND: Right. Again, looking at that from a Hamiltonian point of view, yeah, I think so. I think from a Hamiltonian point of view, you want foreign investors. That's one reason you're trying to establish good credit, generally, is to be able to get those people interested. I think there are resonances and echoes that the 18th-century formation of the country can help us think about.

INSKEEP: After immersing yourself in Hamilton, did you come away liking the guy?

HOGELAND: Like is a - you know, people read some of my stuff about Hamilton and they think - you know, people think I hate him, because sometimes they read stuff that he did and they think they hate him, because they're reading about it and they think, this guy must hate Hamilton. You know, I don't know if like's the right word. There's no way I could have spent this kind of time with a character that I hate. I was into him, you know, before the musical made him a giant cultural phenomenon, and I'm into him now, and the more I look into him, the more fascinating I find him; the more complicated and compelling, and that's what I'm trying to kind of bring out.

INSKEEP: William Hogeland is the author of "The Hamilton Scheme: An Epic Tale Of Money And Power In The American Founding." Thanks so much.

HOGELAND: Thank you, Steve. It's been really fun.

(SOUNDBITE OF SONG, "MY SHOT")

MIRANDA: (As Alexander Hamilton, rapping) And I am not throwing away my shot. I am not throwing away my shot. Hey yo, I'm just like my country; I'm young, scrappy and hungry, and I'm not throwing away my shot. I am not throwing away my shot. I am not throwing away my shot. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Steve Inskeep is a host of NPR's Morning Edition, as well as NPR's morning news podcast Up First.
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