1. What did Hamilton recommend America do with its national debt, and why did he think this help the country’s economy

Answer 1

In September 1789, President George Washington directed Alexander Hamilton to come up with a plan to solve the nation’s debt.

The United States owed almost $80 million that included foreign, domestic and state debts. Most of it was debt acquired by soldier pay and supply the Continental Army.

Federal tariffs and excise taxes brought in only $4.4 million. Many original bond owners had sold their government debts to speculators, and the U.S. could no longer rely on a politically and financially unstable France.

Hamilton advocated looking at the debt more as an asset than as a problem.

He suggested that Congress service the debt through a gradual implementation of dependable tax resources, assume state debts as a measure of good policy, and create new revenue through the sale of western lands and taxes on luxuries such as alcoholic beverages.

When Congress finally agreed to his recommendations, there were immediate positive effects on the public credit. U.S. government securities tripled in value and gave Americans $30 million in capitalization that heretofore did not exist. 

This success gave him incentive to propose the establishment of a national bank. Such a national financial institution would stabilize the nation's credit status and create an active national economy. The bank would expedite the processing of receipts, collection of taxes, and regulation of commerce, thereby setting the foundation for a unified economy.