Imagineering the U.S. Public Debt: How Changing Perceptions of the Debt altered the Mechanics of Treasury Debt Management in the 1860s and 1960s
Noll, Franklin (2007): Imagineering the U.S. Public Debt: How Changing Perceptions of the Debt altered the Mechanics of Treasury Debt Management in the 1860s and 1960s.
This paper argues that changes in how the Treasury managed the public debt stemmed from changes in perceptions of Government debt. To make this argument, the paper looks at two big shifts in how the public debt was handled. One change was the Government's printing of its own securities through the Bureau of Engraving and Printing founded in the 1860s. This development reflected a democratization of the public debt in which it was the Government's task to make sure "the people" profited from Government debt—not bankers or bank note companies. So, Government securities were publicly printed and publicly sold.
The second big shift was the implementation of electronic book-entry procedures in the 1960s. The adoption of book-entry by the Treasury corresponded to a new view of debt. Deficits and, therefore, the public debt came to be seen as central to economic success. The public debt was no longer a transient evil to be managed out of existence by the Treasury but a permanent benevolence to be nurtured for the public good to a large degree by the central bank. In this environment, the transaction speed born of computers and electronics was of paramount importance.
Public Debt; Treasury securities; book-entry; security printing; Bureau of Engraving and Printing
H - Public Economics > H6 - National Budget, Deficit, and Debt > H63 - Debt ; Debt Management ; Sovereign Debt
Franklin Noll
Annual Report of the Secretary of the Treasury on the State of the Finances. Washington, DC: Government Printing Office, 1861-1970.
Bayley, Rafael A. The National Loans of the United States from July 4, 1776, to June 30, 1880. 2d ed., facs. rpt., 1881. New York: Burt Franklin, 1970.
Dewey, Davis Rich. Financial History of the United States. 8th rev. ed., facs. rpt., 1922. Boston: Elibron Classics, 2003.
Fand, David I. and Ira O. Scott, Jr. "The Federal Reserve System's 'Bills Only' Policy: A Suggested Interpretation." The Journal of Business, 31, 1 (Jan. 1958): 12-18.
Friedman, Milton and Anna J. Schwartz. A Monetary History of the United States, 1867-1960. Princeton: Princeton University Press, 1963.
Garbade, Kenneth D. "G-20 Case Study: United States: Innovation and Structural Change in the U.S. Treasury Securities Market." 2003.
-------. "Origins of the Federal Reserve Book-Entry System." FRBNY Economic Policy Review. December 2004: 33-50.
-------. Presentation at the Bureau of the Public Debt, 23 March 2006.
Hammond, Bray. Sovereignty and an Empty Purse: Banks and Politics in the Civil War. Princeton: Princeton University Press, 1970.
Harris, Seymour E. The National Debt and the New Economics. New York: McGraw-Hill, 1947.
Hessler, Gene. An Illustrated History of U.S. Loans, 1775-1898. Port Clinton, OH: BNR Press, 1988.
Hillery, Paula and Stephen Thompson. "The Federal Reserve Banks as Fiscal Agents and Depositories of the United States." Federal Reserve Bulletin, vol. 86 (April 2000): 251-59.
Historical Resource Center. BEP History. Washington: Bureau of Engraving and Printing, 2004.
Kagin, Donald H. "Monetary Aspects of the Treasury Notes of the War of 1812." The Journal of Economic History, 44, 1 (March 1984): 69-88.
Konstas, Panos. "From Bills Only to Operation Twist: A Study of Federal Reserve Open-Market Operations for the Period, 1953-1964." The Journal of Finance, 22, 1 (March 1967): 104-105.
Larson, Henrietta M. Jay Cooke, Private Banker. Cambridge: Harvard University Press, 1936.
Lawson, Melinda. Patriot Fires: Forging a New American Nationalism in the Civil War North. Lawrence: University Press of Kansas, 2002.
Meulendyke, Ann-Marie. U.S. Monetary Policy and Financial Markets. New York: Federal Reserve Bank of New York, 1998.
Mitchell, Wesley C. A History of the Greenbacks. Chicago: University of Chicago Press, 1903.
Niven, John, ed., The Salmon P. Chase Papers, Vol. 3: Correspondence, 1858-March 1863. Kent, OH and London: Kent State University Press, 1996.
Noll, Franklin. "The Beginning of Treasury Security Production at the Bureau of Engraving and Printing, 1863." Historical Resource Center Occasional Papers. Washington, DC: Bureau of Engraving and Printing, 2006.
-------. "The Production of Treasury Securities, July 4, 1862 to October 1, 1864: The Reconstruction of BEP Quarterly Production Figures." October 1, 2004, manuscript.
-------. "The United States Public Debt, 1861 to 1975," EH.Net Encyclopedia, Robert Whaples, ed. May 26, 2004, URL http://eh.net/encyclopedia/article/noll.publicdebt.
Noyes, Alexander D. "The Treasury Reserve and the Bond Syndicate." Political Science Quarterly, 10, 4 (Dec. 1895): 573-602.
Oberholtzer, Ellis Paxson. Jay Cooke: Financier of the Civil War. Philadelphia: George W. Jacobs & Co., 1907.
Public Debt Central Files. OA-155, Book Entry Procedure for Transferable Treasury Bonds, Notes, Certificates of Indebtedness, and Bills, Important Data File, vols. I, II, IV and V.
-------. Series OA (Securities General), OA-719, Seal, 1944-1966.
Records of the Bureau of Engraving and Printing. Record Group 318. National Archives at College Park.
Records of the Bureau of the Public Debt. Record Group 53. National Archives at College Park.
Records of the Treasurer of the United States. Record Group 50. National Archives at College Park.
Records of the Department of the Treasury. Record Group 56. National Archives at College Park.
Redlich, Fritz. The Molding of American Banking: Men and Ideas, Part II: 1840-1910. New York: Hafner Publishing Co., 1951.
"Report of the Joint Select Committee on Retrenchment." Senate Report No. 273, 40th Congress, 3rd session, 3 March 1869.
"Report to the Secretary of the Treasury from the First Division of the National Currency Bureau." House Ex. Doc. No. 50, 38th Congress, 2nd session, 6 February 1865.
Richardson, Heather Cox. The Greatest Nation of the Earth: Republican Economic Policies during the Civil War. Cambridge, MA: Harvard University Press, 1997.
Scalia, Michael. "'I commenced the work…': Origins of the Bureau of Engraving and Printing." Historical Resource Center Occasional Papers. Washington, DC: Bureau of Engraving and Printing, 2006.
-------. "Demand Notes: The Accidental Currency." Historical Resource Center Occasional Papers. Washington, DC: Bureau of Engraving and Printing, 2006.
Sloan, Herbert E. Principle and Interest: Thomas Jefferson and the Problem of Debt. New York: Oxford University Press, 1995.
Stein, Herbert. The Fiscal Revolution in America: Policy in Pursuit of Reality. 2d rev. ed. Washington, DC: AEI Press, 1996.
Tobin, James. The New Economics One Decade Older. Princeton: Princeton University Press, 1974.
Withers, William. The Public Debt. New York: The John Day Co., 1945.
Wood, John H. "William McChesney Martin, Jr.: A Reevaluation." Region Focus (Winter 2006): 2-7.
Zaretsky, Adam M. "To Boldly Go Where We Have Gone Before: A Historical Episode about Long-Term Interest Rates Not Worth Repeating." The Regional Economist (July 1993): 1-8.