USA HISTORY

Detailed explanation-1: -Hamilton issued a bold proposal. The federal government should pay off all Confederation (state) debts at full value. Such action would dramatically enhance the legitimacy of the new central government. To raise money to pay off the debts, Hamilton would issue new securities bonds).

Detailed explanation-2: -He wanted the government to buy up all the bonds issued by both the national and state government before 1789. He then planned to issue new bonds to pay off the old debts. As the economy improved, the government would then be able to pay off the new bonds.

Detailed explanation-3: -The assumption of state debt would increase the size of the national credit market Hamilton hoped to create. The market would also help establish America’s international credit rating and hinder individual states from becoming too powerful in the new nation.

Detailed explanation-4: -At the inauguration of the constitutional government in 1789 Alexander Hamilton (1757-1804), George Washington’s former military aide and a renowned financier, was appointed the first Secretary of the Treasury and thus he became the architect of the structure of the Department.

Detailed explanation-5: -His motive was as much political as economic. Through payment by the central government of the states’ debts, he hoped to bind the men of wealth and influence, who had acquired most of the domestically held bonds, to the national government.