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A Free Nation Deep in Debt

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A Free Nation Deep in Debt

The Financial Roots of Democracy


15 min read
10 take-aways
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What's inside?

Who pays for war? Well, you do. Ever since the Romans, national war debts have been paid out of the citizens’ pockets.

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Editorial Rating



  • Innovative


This impressively researched opus reflects an obsession with One Big Idea that never comes quite clearly into focus, but revolves around the critical historical role played by national credit. Behold an author who not only quotes the Biblical book of Numbers, but also interprets it as a document of financial history, ignoring the contentious issues of authorship and anachronism that make scriptural exegesis such challenging work for specialists. He traces the way government and conflict are funded from Herodotus to the Hanoverian Court to Woodrow Wilson. Like the River Platte, this work is a mile wide and an inch deep; but the river has a definite direction, and this meanders. If you fancy an intriguing browse through major and minor points of political and fiscal history, has found just the book for you. Some scenes are indelible, like the Germans celebrating WWI bond purchases by driving iron nails into a big wooden statue of a Field Marshall, and may jolt you if you think Allied and Axis powers were funded differently. The U.K. and the U.S. sponsored similar popular financial mobilizations, complete with bombastic slogans (no statues, though).


Public Credit in Ancient Times

Public credit began in ancient Greece, following the Peloponnesian War, about 404 BC, with loans from Sparta to those who would lose Athens to the democrats. Borrowing and lending in Greece, sometimes voluntary and sometimes not quite completely voluntary, continued for several hundred years, but never quite developed into a financial system. Rome seldom borrowed but, in some cases, the upper classes agreed to give money for a particular campaign with the understanding that they could expect a share of the plunder.

The relationship between public credit and democratic power in various forms began, for practical purposes, in Italy during the Renaissance. Especially in the north, merchants dominated the Italian states. The city-states established their autonomy, appointed consuls and more or less representative assemblies, stopped paying imperial levies and started borrowing. Most of these city-states wound up dominated by strong men but Venice managed to remain a republic. Free citizens could not be taxed, so Venice relied on loans, sometimes compulsory, to fund its wars. Venice also developed a market in which debt could be traded.

About the Author

James Macdonald was an investment banker for many years, and this is his first book.

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