What was Alexander Hamilton’s argument regarding the bonds that were issued under the Articles of Confederation?

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Alexander Hamilton had a strong interest in restoring the national credit. He wanted to buy back federal debt, as his training in political theory and economics taught him that important political leverage owed to good credit. In 1790, the prominent New York City lawyer issued a tripartite proposal to Congress, called the "Report on Public Credit." His first proposal was for Congress to redeem $55 million in bond debt held by foreign and domestic investors. Next, he proposed a national bank, which would be jointly owned by private stockholders and the national government. Hamilton's aim here was to restore stability to the American economy. The third element in Hamilton's plan was to promote the expansion of American manufacturing. In service of this, he proposed revenue tariffs on products that would help pay the national debt.

The first of these measures concerns bonds. Hamilton proposed buying these bonds (issued under the Articles of Confederation) at face value. Because these bonds had long been dismissed with respect to their value (as the public had little faith in them), Hamilton's plan to buy them back would result in awarding speculators (i.e., those who had already bought up the debt of others at a significant loss). Thus, some disapproved of Hamilton's plan as concentrating a large amount of money among a small, wealthy class. Nevertheless, his plans were ambitious and comprehensive, as he also proposed buying up the war debts of the individual states. Ultimately, Hamilton's ambitions and the scope of his financial program was successful, even in the face of opposition.

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