News Analysis
Alexander Hamilton, the 32-year-old wunderkind serving as secretary of the Treasury, proposed a bold plan to the first U.S. Congress on Jan. 9, 1790. The federal government should assume the wartime debts of the 13 states, about $25 million worth, and retire them with funds borrowed at a lower rate of interest, then pay the debt with tax revenue, Hamilton asserted.
Doing so would strengthen the role of the federal government, especially in the country’s financial system, and ensure that the fledgling nation enjoyed good credit with other countries of the world.
So began the first debate about the national debt….