A Nation of Deadbeats

July 30, 2012
Nelson, a professor of history at the College of William and Mary, analyzes the financial crises that propelled the economic evolution of the United States from the earliest years of the republic through the early 20th century, explaining that virtually every one (save the Great Depression) was propelled by excessive consumer debt. His lucid depictions of busted bonds, currency spirals, and foreign trade imbalances ably demonstrate the role of “the farmers, artisans, slaveholders, shopkeepers, and wholesalers whose borrowing had fueled the booms and busts,” while charting the evolution of the country from a borrowing nation for a century and a half after independence to a world lender after WWI. Nelson is unsparing in accounts of the shaky fiscal infrastructure through the 19th century, observing that the postrevolutionary economy was based on spending binges for fashionable “monkey jackets,” government land sales, and supplying cotton to British mills, the consequences of which devastated consumers, small businessmen, major financial institutions, and eventually the nation as it plunged toward civil war. This astute account of economic disruption and disaster through the Great Depression is a useful and engaging perspective on our propensity for repeating our financial mistakes. Agent: Deidre Mullane, Mullane Literary.

July 15, 2012
A revisionist history of financial collapses in the United States radiating to other parts of the globe, with implications for what really caused the ongoing economic meltdown. Nelson (Steel Drivin' Man: John Henry: the Untold Story of an American Legend, 2006, etc.) is a professional historian with a nonestablishment focus. The major problem with traditional historic accounts is that they diminish the role of ordinary citizens--i.e., debtors--while overplaying the roles of gigantic banking institutions. Though the economic declines documented here occurred long before the current mess, the author makes the case that each of those declines (in 1792, 1819, 1837, 1857, 1873, 1893 and 1929) share common factors and can teach important lessons for contemporary policymakers. Systemic declines would probably never occur if not for the huge numbers of individual consumers wanting material goods, spending beyond the realm of common sense and then defaulting on promised payments. What happens next rarely stops at national borders, with panics crossing oceans and continents throughout the international economy. Additional fallout includes the formation of new political parties or the rejuvenation of existing but moribund parties. One compelling example, ably delineated by Nelson, is the rise of Andrew Jackson to the presidency due to fallout from a financial disaster. This revisionist account is eminently readable, in large part because Nelson offers flesh-and-blood examples rather than relying on abstractions. He opens the book with the story of his father's career as a repo man. In that job, he dealt with deadbeat consumers every working day, gaining an acute understanding of how widespread financial collapses begin at the community level. A fascinating historical narrative, even if Nelson occasionally confuses cause and effect with correlation or even coincidence in some of his case studies.

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August 1, 2012

The major strength of Nelson's (Leslie and Naomi Legum Professor of History, Coll. of William and Mary; Steel Drivin' Man: John Henry, the Untold Story of an American Legend) latest work is in showing that the 2007-09 recession is not unique. Throughout U.S. history, murky monetary ties and unwarranted financial risks have periodically, almost predictably, incited panics and doomed investors. The recent Great Recession is only one of many crises Nelson documents, covering from 1792 to 1929. What seems to change each time is the underlying commodity appraised and (over)valued--land, cotton, even plantation and slave prices. What stays constant is the ensuing doubt over valuations, fear, sell-off, panic, and political and economic repercussions. The author explains the monetary links in sometimes painstaking detail, but this proves his point all the more: the very fact that links are numerous and opaque ultimately leads to the lender's inability to correctly assess risk, which in turn leads to speculative bubbles in various commodities. VERDICT Recommended as a resource to put financial crises in proper perspective. Nelson's broad historical knowledge allows him to contextualize policy developments, geopolitical movements, and personal stories. Readers will gain a deeper grasp of the ebbs and flows of the American economy, and may be more likely to recognize the patterns of the next panic before it is too late.-- Jekabs Bikis, Dallas Baptist Univ., TX

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