Alexander Hamilton (1755 - 1804) the nation's first Secretary of the Treasury, believed that our country needs a strong government that would be controlled by the rich and famous. After seeing what kind of trouble the country was in, he immediately wanted to establish economic policies. In his Reports on the Public Credit, Hamilton proposed that the federal government funded all national and state debts, giving America good credit with other countries. He later proposed the creation of a national bank, which helped to stabilize the economy by controlling inflation. Hamilton also encouraged governmental influence on industry through his Report on Manufactures. .
Hamilton's efforts in initiating of national bank, debt assumption, and a protective tariff helped establish a stable economy through which the newly created United States could grow and prosper. When he got the job of treasurer in September of 1789, the nation owed more than 12 million dollars to foreign countries for loans to finance the war. The government owed its American citizens 40 million for bonds issued during the war. The American economy was at a breaking point in its existence and needed a solution to its financial problems. .
The first part of the plan for the nation's economic success was to pay off the nation's debts in full. Congress agreed that the debts to foreign countries had to be paid off in order to establish good federal credit with other nations. The 12 million were paid off, however, the 40 million borrowed from U.S. citizens were harder to reimburse. Federal assumption of the states debts, however, was a challenging plan for Congress to allow. Most of the southern states, except South Carolina, had already paid most of their debts and did not want to assume the debts of the northern states that still owed 25 million. The first time that the assumption bill was voted on in Congress it was defeated. The assumption bill passed later on, ensuring that the state's debts would be paid.
