Hamilton’s Report on Public Credit (Great Events from History: North American Series)
Article abstract: The basis for the federal government’s economic policy, giving high priority to paying interest and principal on the securities constituting the national debt.
Summary of Event
The United States government, operating under the Articles of Confederation, had incurred large debts in the successful Revolutionary War, but the Articles of Confederation provided no tax resources for the national government. The securities issued to borrow money declined in value after the war. Desire to provide a stronger fiscal system and pay off these securities was one of the motives for adopting the new federal Constitution. When the newly formed Congress convened, one of its first acts was a resolution in September, 1789, instructing the secretary of the Treasury to “prepare a proper plan for the support of the Public Credit.” Secretary of the Treasury Alexander Hamilton submitted his plan in January, 1790. The Report on Public Credit touched off a vigorous congressional debate and was the basis for the Funding Act of August, 1790. This act gave high priority to the payment of the principal of and the interest on the securities constituting the public debt. As a result, investors came to regard United States government securities as a high-grade investment with no significant risk of default.
The Report on Public Credit was the first of three classic reports emanating from...
(The entire section is 1265 words.)
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