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The contribution of alexander hamilton in reducing americas debt

For more on Smithsonian. This was a daunting assignment, to say the least. All solutions seemed to have roadblocks.

How Alexander Hamilton Tackled the National Debt

If he paid only notes and debts still held by their original owners, he would threaten small merchants and open the government up to case-by-case decisions. And if he paid off the debt entirely, he would need to impose the kind of taxes that had sparked Shays' Rebellion two years prior. When it came time to present to Congress, Hamilton suggested that the United States look at debt not as a problem, but as an asset.

He proposed to fund the debt through a gradual schedule of dependable tax resources, assume state debts as a measure of good policy, and generate new revenue through western land sales and taxes on luxuries—notably, booze. Others came to Hamilton's defense. Debate raged until June, when finally the House passed a bill incorporating his recommendations.

The Senate agreed a month later, and the effects on public credit were immediate. Riding this wave, Hamilton decided to implement part two of his plan. In December 1790, he submitted his proposal for a national bank. This proposal was met with an even fiercer round of critics.

Here, James Madison parted company with Hamilton, arguing that the enumerated powers of the government did not include the authority to create a bank. Fortunately, while Jefferson had Washington's one ear, Hamilton had the other. For instance, the bank would act as an instrument to expedite the processing of receipts, collection of taxes and regulation of commerce. Above all, Hamilton said, to deny the power of the government to add ingredients to its plan would be to refine away all government.

While a victory for Hamilton, it marked an ominous note of division in Congress. Shays confirmed our habits and opinions. The men of sense and property, even a little above the multitude, wish to keep the government in force enough to govern.

Robert J. Fisher: Alexander Hamilton knew that defaulting on debt was bad policy

At the southward… A debt-compelling government is no remedy to men who have lands and negroes, and debts and luxury, but neither trade nor credit, nor cash, nor the habits of industry, or of submission to a rigid execution of law. They have continued antis, and have assiduously nursed the embryos of faction, which the adoption of the Constitution did not destroy.

It soon gave popularity to the antis with a grumbling multitude. It made two parties.