Alexander Hamilton and the National Debt

Secretary of the Treasury •  President George

Washington selected Alexander Hamilton to serve on his Cabinet as the nation’s first Secretary of the Treasury • Hamilton was given the task

of solving the problem of the $71 million national debt

A Plan to Reduce the Debt •  During the Revolution, both

national and state governments borrowed money from foreign countries and ordinary citizens to pay for the costs of the war •  Hamilton proposed creating a

national bank, collecting tariffs and excise taxes to raise revenue, and having the federal government assume the debt incurred by each state

A Plan to Reduce the Debt •  Hamilton’s plan called for

the national government to assume both debt incurred by both the nation and individual states •  Southern states opposed

the plan to have the national government assume all state debts because they had mostly paid off their debt from the war

A Plan to Reduce the Debt •  Hamilton proposed a

compromise in which he would support a plan to move the capital of the United States be moved from Philadelphia to Washington D.C. if the southern states accepted his plan to pay off the national debt •  In 1791, Hamilton called on

Congress to also establish the first Bank of the United States