Why was the Federal government's assumption of state debt so significant?

Question

Alexander Hamilton advocated for the assumption of the states’ debts by the Federal government. Why was this so significant? The reasons Chernow gives in his book are: - the wealthy bond holders would have a stake in preserving a government that owed them money - if the government didn't assume states' debts, states might take import duties which would clash with federal import duties This all makes sense, but these reasons don’t seem as significant if this is just a one-time assumption? I say one-time because today states can take out debt. The only reasons I can think that Hamilton would give up the capital for this assumption was because: - the state debt was so significant and wouldn’t be paid off by the most debt-burdened states - something to do with the fact that it was debt from the revolutionary war - the legislation was not a one-time assumption but a permanent assumption which was later changed in other legislation

Answer 1

The reason to pay debt — essentially any debt — is to establish that you pay your debts (so that you can get loans when you want/need them). The reason to assume a debt — other than altruism/helpfulness towards the person/entity whose debt you're assuming — is to establish that your/their debts will be paid (so that you/they can get loans in the future).

It sounds like taking on this debt, and then actually paying it, was key to establishing the credit of the United States.