ID: Report on the Public Credit ## When: January 1790
Who:
- Proposed by: Alexander Hamilton, the first Secretary of the Treasury
- Presented to: Congress
What:
A plan to address the national debt incurred during the American Revolution. The key elements were:
- Funding the national debt: The federal government would assume all state debts at face value.
- Assumption of state debts: States with large debts (mostly in the North) favored this, while Southern states with smaller debts were opposed.
- Creating a national bank: A central bank would help manage the nation’s finances and issue a stable currency.
Impact? Why Significant?:
- Strengthened the national government: By taking on state debts, the federal government gained more power and influence.
- Promoted economic growth: Establishing a stable financial system encouraged investment and trade.
- Fueled partisan divisions: The report sparked intense debate between Federalists (who supported Hamilton’s plan) and Democratic-Republicans (who opposed its expansion of federal power), foreshadowing the two-party system.
- Compromise & the “Dinner Table bargain”: Led to a compromise where the South agreed to assumption in exchange for the nation’s capital being located in the South (Washington D.C.). This demonstrated the growing sectionalism in the new nation.