Chair. Thell turn it over to manual introduce our chairman of the board. Hello everyone. It is not nice to see so many people here celebrating best 261st0 birthday. Augmenting interpretive programming there. Special thanks to david callan and nizam of American Finance staff for host into this program. This is the seventh year where we partnered with both exhibits. We think museum for that. Cspans American History tv continues is valuable role in sharing the key historical record nationwide. Three initiatives have happened in the last year in part of celebrating hiltons birthday to ensure a more accurate understanding of who he was. Hamiltons birthday. The city tavern in philadelphia, that had all of the Founding Fathers except for him, that has been remedied. Another moment in june of last year, hamilton was inducted into the new york state writers hall of fame. And major news for the first time to be announced publicly. New discoveries related to Alexander Hamiltons life are now being posted weekly by National Hamilton scholar michael newton, including the oldest known hamilton documents before 1768 and 1769. These detailed hamiltons biological details of hamiltons maternal grandfather are available. On st. Croix, a 10yearold Alexander Hamilton was introduced to dueling. Last week, there was a detailed sourcing of funding of hamiltons education in new jersey and new york. It was not because of the hurricane letter he wrote. It was not a reference. A reverend. New discoveries are going to be going on for months and months. I want to encourage those of you at home in upper manhattan to see it. It has been restored. Our speaker, now. Richard sylla is Professor Emeritus of economics at the stern school of business at new york and if you knew new york university. He was Henry Kaufman professor of the history of financial institutions. Dr. Sylla is also Research Associate of the National Bureau of economic research. The professor received his ba, ma, and phd from harvard. His research focuses on the financial history of the United States and comparative contexts. He is the author of a number of books, including Alexander Hamilton the illustrated biography, beautiful. Pictures help us understand the financial dimension of it. The doctor will be signing those after the question and answer today. He has also written the American Capital markets 18461914. He has coauthored a book on Alexander Hamilton that is going to be available this year. He coedited the Economic Policy of the 1790s, as well as articles, essays, and reviews on business, economic, and financial history. Dr. Sylla is a former editor of the journal of economic history. He has served as the chairman of the board of trustees and in the association of quantitative economic historians. He has served as president of the Business History conference, the leading professional association, which presented their Lifetime Achievement award to him in 2011. Dr. Sylla currently serves as chairman of the board of trustees of the museum of American Finance. We are privileged today too. About hamilton on financial responsibility, with one of our nations foremost financial and economic historians. Ladies and gentlemen, dr. Richard sylla. [applause] dr. Sylla thank you for that kind introduction. Thank all of you for coming out on hamiltons 261st birthday. Thank you to the society and museum for sponsoring the event. It is an honor to be here. My topic is timely. As Congress Passed a tax cut, that is estimated will add 1,000,000,000,000. 5 . 15 trillion dollars to the National Debt, my topic is hamilton on fiscal responsibility. Whatever will be the merits of the recent tax cut, and i think there are some, there is little doubt hamilton would regard the law as not passing the test of fiscal responsibility. Hamilton would regard many of the fiscal policies and some of the monetary policies of the past halfcentury, the middle of the 1960s, as not passing the fiscal and monetary responsibility tests as he defined them in the early to mid1790s, during and after his tenure as our first secretary of the treasury. There is probably a good site to that good side to that. Maybe before 50 years ago, the first part of our history, maybe the policies would have passed hamiltons tests. It is a matter of your arithmetic, but you may be surprised when i tell you, i have lived through slightly more than a third of u. S. History. [laughter] since George Washington took office in 1789. Anyone in his or her late 70s could probably say the same thing. We have a young country. Even someone born in 1940 has lived 77 years. If you go back to 1789, when washington famously took the oath of office, what is it in 2015, it was 75 years from 17901865 to the end of the civil war. Another 75 years until i was born. In 2015, i could say i lived through a third of u. S. History, under the constitution. Now it is 2017, and i have lived through more than a third of u. S. History. When i look at some of her monetary policies over the past halfcentury, i am talking about an era i witnessed in my adult life, and as a historian, i have studied quite a bit of history in those 150 years when i wasnt around. For the most part, from the 1790s into the middle of the 1960s, was a long time of responsibility as hamilton defined it. To set the stage, in 1965, when i was a 25yearold phd student, our National Debt, the debt. Over 175 years of history was 317 billion. That sounds like a pretty big number. Three times jeff bezos net worth. [laughter] it is a big number. By 1981, i was 41 years old. The debt is 317 billion in 1955. By 1981, it had traveled tripled to almost a trillion dollars. By 1990, it tripled again, to 10 trillion 3. 2 trillion dollars. By 2008, it tripled again, 10 trillion. Since 2008, it has doubled to more than 20 trillion in another nine years. 317 billion of National Debt is now over 20 trillion. If you do the arithmetic, the National Debt has increased 63fold from that time 50 years ago, when i was writing my phd thesis. I know some of you are thinking, there has been a lot of inflation. We will get back to that. I wont neglect to tell you something about debtgdp ratios later on. Rand mentioned the Alexander Hamilton illustrated biography that has been out able more than a year now. A little more than a year now. David and i have a book and press right now, Alexander Hamilton on finance, credit, and debt. These are a collection of at t documents hamilton 18 documents hamilton wrote over the course of his career related to finance. We have annotated every document as to why it is significant. The writings on finance have not been featured as much as they might have been given. This was the importance of hamiltons work. Hardly anything he did was more important than his financial reforms. You want to read 10 pages of tax increases you wouldnt want to read the 10 pages of tax increases hamilton has in some of his documents. But we make it more interesting to a modern reader. We had to read what hamilton wrote very carefully. As i did so, it became even clearer that hamilton had these very definite ideas, clear and consistent ideas that started when he was very young, and he maintained him throughout his career. The first relevant document was in 1781, when he was a soldier marching in the military at yorktown. The last one is from 1795, which he wrote a few months after he stepped down from treasury secretary. The clearest analysis on the subject of fiscal responsibility and white proves difficult to achieve and how it can be achieved and why it proves difficult to achieve and how it can be achieved came january 7 january 16, 1795, in an address to congress on public credit. He was a private citizen again, having resigned as of january 31, 1795. This is a rather long report that deals with finance and debt management, technical subjects that are often ignored. I am sure there are a bunch of hamiltonians in the room. I am not sure how many of you have dwelled on this one Technical Report longer Technical Report. Most people dont say a lot about it, this technical finance stuff. It proves that the charges of hamiltons political opponents, jefferson and madison and others, they charged that hamilton wanted to perpetuate and grow the National Debt and use it to manipulate congress or markets. Those were the charges leveled against him. This report shows those charges were so much fake news. [laughter] i wrote about earlier this week and then i read the times, this morning. It said that fake news is the phrase of the year. A few years ago, it was selfie. Fake news, which i just use as an expression,s last years word or phrase. I have pages from the forthcoming book. I wanted to show you what hamilton actually said about the problems of fiscal responsibility that he faced. This is from the 1790s, january 1795. Washington had just given the state of the union address, and hamilton says, there is no sentiment which can better deserve the serious attention of the legislators of the country than the one expressed in the speech of the president , which indicates the danger to every government from the progressive accumulation of debt. The tendency is perhaps the natural disease of all government. It is not easy to conceive anything more likely that could lead to great and convulsive revolution. One of the results of creating new causes of expenditure, i will paraphrase now, there is always new things to spend money on. On the other hand, there is a general propensity and those he administer and those who administer the affairs of the government to shift a propensity which may be expected to be strong. The more people get to vote for things, the more they will vote for, dont tax me. Lets borrow it. Hamilton says, to extinguish a debt which exists is almost always favored by public feeling and opinion. To pay taxes for one or the other purpose, the only means of avoiding the evil, if you want to extinguish the debt hamilton says, pay more taxes. This is always more or less unpopular. Spending is popular. Paying taxes is unpopular. It is no uncommon spectacle to see the same ends clamoring for occasion of expense. They have to be in unison with the present humor of the community, claiming against the public debt. For the production of it as an abstract basis. The government against every plan of taxation proposed to discharge old debts. Hamilton called this these unhandsome arts. Artificial embarrassment in the way of administrators of the government serves to promote the accumulation of debt by leaving that which at any time exists without adequate provision for its reimbursement. And preventing or delaying new energy when new taxes or expenses occur. The consequences of the public debt swells, and the burdens of the people gradually increase until they become intolerable. Such a state of things breed disorder in the whole political economy. There can be no more sacred obligation on the public agents of the nation than to guard with provident foresight against so mischievous a results. He refers to his earlier plan, do you want to improve the favorable situation in which the United States stood at the time for extinguishing with reasonable whole or any the country, and fourlane the foundation and fourlane for laying immortality to public credit . He didnt get to his actual plan, but that will become apparent in some of the earlier documents. Hamilton solution to the problem of fiscal responsibility is quite simple. What you need to do is couple borrowing measures with revenue measures to pay the interest of the money borrowed, plus a little bit more. With that little bit more, depending on how much more, it will allow the debt to be retired in some number of years. With the are all pretty familiar with this. We are all pretty familiar with this. We are paying extra to not just pay the interest on a mortgage, but to have it go away in 30 years. Hamiltons idea was this is the way the government should run itself as well. Couple borrowing revenues with revenue measures couple borrowing measures with revenue measures to pay a little bit more. He wanted public credit to always be there when we needed it, when an opportunity arose, like louisiana, or to get through the civil war. Hamiltons fiscal responsibility can be traced to founding documents. 1781, he was would tenant colonel in the Continental Army marching toward yorktown. He was Lieutenant Colonel in the Continental Army marching toward yorktown. He was somewhere between new york and yorktown, marching with washingtons army. He is a 23yearold soldier. He is a 24yearold soldier. One of his insights, the great defect of the confederation, it gives the United States no property, no revenue, other than the means of acquiring it. He says that is a bad idea. He says, congress will do will depend on several grants at the expense of the federal government, and will neither have dignity or credit. Credit supposes specific and permanent funds for the payment of interest, with the moral certainty of the financial redemption of the principal. It will probably require more on account of the general dividends as a result of the past disorder in finance. It will appropriate funds for redemption of the principle of an indeterminate period. Hamilton is a 24yearold soldier, but he sounds like a professor. Key as a footnote to his thought he adds a footnote to his thought, which contends the germ of hiltons later thoughts of fiscal responsibility. It might be a good restraint on the spirit of running in debt which cart which governments argue to be effective, to make it sufficient that they shall be obliged to appropriate funds for the payment of principal as well as interest. In one sentence, that is hamiltons fiscal responsibility. When you borrow money for whatever reason, you should appropriate, increased taxes to pay the interest of the money you borrow, and a little but more so you can repay the principal at some point. As a 24yearold soldier, wondering what is going wrong with the countrys finances, he hits on the solution to the problem. Nine years later, in the famous report on public credit, january 1790, the original printing of it here is in the museums collection. There are several paragraphs to the idea of fiscal responsibility. This is a fairly wellknown passage. He says in the january 1790 report, persuasive as the secretary is, and he is now first secretary treasury of the United States, persuaded as the secretary is that the proper funding will render it a national blessing, yet he is so far from exceeding the position it in latitude in which this is sometimes laid down that public debt or benefit be positioned inviting to reliable and dangerous abuse that the secretary arguably wishes to see it incorporated in the fundamental maxim in the system of public credit in the United States, that the creation of the debt should always be accompanied with a means of extremist meant. If he regards this as the true secret for rendering public credit immortal. This is a situation in which in which there may not be an adherent to the maxim. At least he feels this may be attended by the United States and they may commence their measures for the establishment of credit. In his great report, he is calling for the assumption of state debts and restructuring of the National Debt. He reiterates what he cant do in a footnote some years earlier. Between 1790 and 1795, hamilton did not succeed in Getting Congress to adopt his measure for making public credit immortal. Congress appropriated money, but it did not always bring in new taxes. The financial situation of the country had improved greatly. The United States began growing rapidly. The debt actually rose in 17901795. But i will tell you later it went down a great deal in terms of gdp ratio. The death rows able bit under hamilton, but the gdp for much faster. The debt actually rose, but many congressmen, and others, complained the debt was not being produced, even though it was their own behavior and the failure to adopt hamiltons regulations to make public credit in that was responsible. Immortal that was responsible. Oh no, we cant raise taxes, cut expenditures. But dammit, get us out of this debt hamiltons frustrations about that came out in the 1795 report. The fourth and final hamilton document pertaining to fiscal responsibility is his defense of the funding system, which is incomplete. Perhaps he wrote it in 1795, six months after stepping down from the position of secretary of the treasury. It wasnt even published for another century. The incomplete document discusses the tubing features of hamilton system. First, the reasons for a soul in the state debts for assuming the state debts. Why he did it the way he did in page after page. Second, the reasons for funding the debt. This means specifically dedicating revenues before they could be used for anything else. You promise the bondholders these particular government revenues will first go to paying the interest on the debt. Funding had been attacked by hamiltons enemies and political opponents, one was the charge that funding, by making things better on better terms by making credit available on better terms. It encouraged that. Your own private credit should not be good. Most of us think the opposite. That will encourage you to borrow more money. That will get you in trouble. Hamilton had no trouble undercutting such arguments. An analysis of this argument proves that it turns upon the the death rows able bit under hamilton, but the gdp for much faster. The debt actually rose, but many congressmen, and others, co