Asked why his signature on US currency differed from the usual way he had been signing his name, Secretary of the Treasury Timothy Geithner explained that it had to be legible.
With most people assuming that President Obama’s Chief of Staff, Jacob Lew, will replace Geithner, concern has developed over Lew’s signature (below).
Reading about Geithner and Lew, I started thinking about Alexander Hamilton. Much worse than the fiscal cliff and the debt ceiling debate, the huge Revolutionary War debt was Treasury Secretary Alexander Hamilton’s top priority. To guarantee that the US could borrow money at reasonable rates, he knew he had to fund its current obligations. And yet, in 1790, with receipts of only $1.6 million, the US owed $74 million. So Hamilton said, let’s use the money we have now to pay what we owe to Europeans. Then, to fund the domestic part of the debt, we can give people new bonds that mature decades from now.
However, if the new domestic bonds returned 4% annually, he had to be sure the US paid the interest that was due. Hamilton worried Congress could battle interminably, refuse to pay interest, and destroy our public credit. As he expressed it, “Had a single session of Congress passed…without some adequate provision for the debt the most injurious consequences were to have been expected.”
Economic growth and deft political negotiation solved Hamilton’s problem. In 1790, the debt to receipts ratio was 46 to 1. By 1794, it was 15 to 1. Robust economic growth and skilled political negotation would help us now, too.
Sources and resources: I got big smiles from The Washington Post article on Jacob Lew’s signature and enjoyed marketplace.org’s interview with Secretary Geithner about his handwriting. If you are curious about all other Treasury Secretary signatures, you can look here. But for an excellent book on the origins of the US economy and the source of my Hamilton quotes and details, I recommend, The Founders and Finance by Harvard professor Thomas K. McCraw.