Hamiltons financial plan was designed to address the large national debt that the United States faced in the late 1700s. The plan had several key components, including:
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Assumption of state debts: Hamilton proposed that the federal government should assume responsibility for the states unpaid debts, which totaled about $25 million. This would help to establish credit at home and abroad and strengthen the national government at the expense of the states.
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Creation of a national bank: Hamilton proposed the creation of a Bank of the United States, modeled after the Bank of England. The bank would collect taxes, hold government funds, and make loans to the government and borrowers. This would help to establish a more stable paper currency and encourage economic growth.
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Issuance of new securities bonds: To raise money to pay off the debts, Hamilton proposed issuing new securities bonds. Investors who had purchased these public securities could make enormous profits when the time came for the United States to pay off these new debts.
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Support for American manufacturers: Hamilton aimed to make American manufacturers self-sufficient by protecting them from foreign competition through high tariffs, government subsidies, and government-financed transportation improvements. This would help to break Britains manufacturing hold on America and encourage economic growth.
Hamiltons financial plan was controversial and faced opposition from some quarters, but it was ultimately successful in establishing the United States as a good credit risk and encouraging economic growth.
