The Report on Public Credit

The Report on Public Credit was issued by Alexander Hamilton as a means to encourage order in the American economy for the benefit of commercial and industrial interests.

Specifically, Hamilton argued for full funding of the national debt (approximately $11 million) and assumption of state debts incurred during the War of Independence (approximately $40 million).

Some interest groups had recommended repudiation of the debt and others partial repudiation, but Hamilton argued that the young nation's good credit could be assured only by proper treatment of all creditors. The issue was especially critical in the South: State governments there had worked hard to begin paying off their obligations, but Hamilton’s plan pledged them to assist other states that had let their debts languish.

A compromise was finally achieved in which the South reluctantly accepted Hamilton’s financial plans in return for Northern support of the eventual establishment of a permanent capital on the Potomac. (This turned out to be a good deal for the North and a poor one for the South; the fact that the capital was located in a mosquito-infested swamp between Virginia and Maryland in the end meant little to the South over the years.)