Thomas Jefferson and President Obama had similar concerns about financial speculators. In 1790, Thomas Jefferson opposed funding the domestic part of the Revolutionary War debt if the financial speculators who bought bonds at a depressed price would benefit. Instead Jefferson hoped that the original buyers of the bonds would get some money even if they no longer owned them. Fast forward to this week’s town hall meeting. Referring to the depressed housing market, President Obama said, “And we think it’s very important that speculators…that they’re not getting help.”
The similarity between Jefferson and Obama? Both wanted to be sure that when government acted, speculators would not profit.
Alexander Hamilton’s response to Jefferson also relates to today. Hamilton believed that whoever legally purchased the Revolutionary War bonds, legally owned them, and could legally profit from them. He was not concerned with speculators.
The Economic Lesson
Many call the U.S economy a market system but a mixed economy would be more accurate. Together, the market system and the government guide economic activity. We could say that we have a continuum with government at one end and the market at the other. Since 1790, we have moved to the left and right along that continuum, continually debating the role of government.