THOMAS MAYER: Founding Director, Flossbach von Storch Research Institute, and Professor, Witten/Herdecke University.

German Finance Minister Olaf Scholz celebrated the [euro]750 billion European reconstruction fund as Europe's "Hamilton moment," and one of his advisers spoke of a great gesture of solidarity between the states of the European Union. It seems to me that "Euromanticism" has turned the heads of our finance ministry.

If Scholz had been a little more concerned with American history, he would have known that the takeover of the states' debts by the U.S. federal government in 1790, which was pushed through against fierce resistance in Congress by Alexander Hamilton, the first U.S. Secretary of the Treasury, proved to be a mistake. In the years that followed, the socialization of debt was considered a precedent that would be applied in principle to states in financial difficulty.

This changed in 1842, however, when the states in the West and South of the United States had raised considerable sums of money to finance the development of these regions. The debts were to be serviced from fees for the use of newly built infrastructure facilities. But when the U.S. economy fell into recession in 1839-1843 in the wake of the financial panic of 1837, the hoped-for revenues failed to materialize. The states got into financial difficulties and asked Congress again for financial aid.

But this time Congress refused the bailout. Nine of the then-twenty-nine states and territories went bankrupt (but still paid back their debts afterwards to regain access to the financial markets). It was not Hamilton's socialization of the debt, but the refusal of "bailouts" by Congress that set the precedent for the American fiscal set-up. After the experience of the "no bailout," many states wrote balanced...