Fiscal Federalism: Local Debt and the Construction of the Modern State in the United States and France

This chapter examines the massive accumulation of local public debt in France and the United States during the latter decades of the nineteenth century, identifying it as a primary technology for mobilizing resources, enhancing state power, and spurring economic development. The remarkable fiscal prowess of municipalities—both at these countries’ center and peripheries—raises questions about the assumed connection between state-building, public borrowing, and territorial sovereignty. It also destabilizes the allegedly insurmountable differences between American federalism and French centralization. The chapter instead situates the United States and France on a shared analytical plane alongside other locales in the world economy. Similarly entangled in the redistribution of wealth and power across geographical regions, metropolitan spaces, and social classes, municipal debt intersected with the period’s key struggles over resources and jurisdiction. Subnational government borrowing, the chapter shows, was not only deeply political but also central to the construction of public power.