Analysis: What Europe can learn from Alexander Hamilton
By Alan Wheatley, Global Economics Correspondent
LONDON (Reuters) - He was born out of wedlock, stained his reputation with an extra-marital affair and was mortally wounded in a duel.
In between, U.S. Founding Father Alexander Hamilton, the first Treasury Secretary, laid the foundations of a modern financial system by establishing a national bank, securities markets and the mint.
Crucially, the soldier turned political philosopher also knitted his young country together by having the federal government assume state debts incurred during the American Revolution in return for being granted expanded fiscal powers.
In short, some say, the visionary ideas of this architect of fiscal federalism are exactly what a divided euro zone needs to extract itself from a deep debt mess that threatens the very survival of Europe's single currency.
"As I see it, Europe is at an Alexander Hamilton moment, but there's no Alexander Hamilton in sight," Paul Volcker, a former chairman of the Federal Reserve, the U.S. central bank, told a recent conference in The Hague.
Teasing out conclusions for one continent from the history of another is fraught with risk. For a start, the 27 countries of the European Union will - presumably - never form a unitary state like the United States.
But the evolution of America's system of fiscal governance that Hamilton started offers valuable insights for the euro zone, especially as it squares up to the possibility of a default by one of its members, Greece.
"The fact that states encountered major debt crises and defaulted, yet the union managed to overcome them intact, points to relevant lessons for European policymakers in the current turmoil," write Randall Henning and Martin Kessler, researchers at the Petersen Institute for International Economics in Washington. Continued...