Deadbeat Nation

The long history of Americans failing to pay their debts.


I haven't read Scott Reynolds Nelson's recent history A Nation of Deadbeats, but this interview by Tim Murphy makes it sound pretty interesting. Murphy's takeaway from the book is that "American history consists of a never-ending string of defaults at the individual, municipal, and state levels." Here's an excerpt from the conversation:

It takes a nation of deadbeats to hold us back.

Nelson:…Part of what the book is about is all the bad debt—consumer debt, and private debt, some state debt, municipal debt, and stuff like that. It's just packaged garbage that collapses and leads to these financial downturns. We've had an amazingly kind of corrupt and ingenious sell-side [financial system]. And it's sold lots and lots of debt, under our name, that has turned out to be bad debt.

Murphy: And this all starts off in 1789—

Nelson: —with the Constitution itself. I talk about Alexander Hamilton creating this first Bank of the United States, and crafting it with William Duer. Insiders make a huge amount of money, but the person who becomes our first millionaire is actually William Duer, who is assistant secretary of the Treasury. Selling problematic debt and making a huge amount of money and then kind of laughing when others take it on is kind of the story in the United States.

Murphy: "Deadbeat" has pretty negative connotations. What's the problem?

Nelson: It contributed to the rise of slavery in the Deep South. There was tremendous borrowing in the 1820s and 1830s; slaves got sold down the river in booms, because lots and lots of European capital was flowing into the US to lend planters money to build cotton plantations. It's the exploitation of Indians—we couldn't have expanded to California, really, without all of this lending. So was it a good thing or bad thing for the nation? As a whole, it's kind of good thing. But for our global conscience, not especially good, I suppose.

Also discussed: debt's role in the rise of Mormonism. Read the whole thing here.