National Debt.

On 14 January 1790 Secretary of the Treasury Alexander Hamilton submitted his First Report on Public Credit to Congress. Hamilton advised that the federal government should assume the state debts of about $25 million, add the amount to the nation's foreign debt of nearly $12 million and domestic debt of almost $42 million, and "fund," or redeem, the combined debt with new interest-bearing securities. Current holders of the depreciated Continental securities would exchange them for new securities, whose principal and interest would be guaranteed by a percentage of the national revenue. Hamilton's plan contained important principles that guided his bold agenda for the United States. Hamilton believed that a prosperous nation was a commercial nation like Great Britain, and he also believed that men were motivated by self-interest. He wanted to create a permanent national debt that would tie American merchants to their government as...