Once the Constitution was ratified, Alexander Hamilton proposed a financial plan for our country. Hamilton knew it was important for our country to pay our debt. If we were going to be taken seriously as a country, we needed a strong financial system. Hamilton proposed combining the state and national debt. New bonds would be issued to pay the debt. Some tax dollars would also be used. This was somewhat controversial since many people had sold their old state bonds for pennies on the dollar thinking they would never be redeemed. Since speculators bought these bonds and most of the speculators lived in the North, there was a concern Hamilton’s plan would benefit rich northerners. To convince southerners to accept the plan, Hamilton proposed moving the capital to the South. As a result of this compromise, Hamilton’s tax plan was accepted.
Another part of Hamilton’s financial plan was to create a national banking system. This touched off a debate about the constitutionality of the plan since the Constitution said nothing about creating a bank. The bank was created with the headquarters being in Philadelphia. There would be branches in other locations. Hamilton believed a banking system would strengthen our country and its financial system.