Editing Alexander Hamilton (section)

===Report on Public Credit===
{{main|First Report on the Public Credit}}

Before the adjournment of the House in September 1789, they requested Hamilton to make a report on suggestions to improve the public credit by January 1790.<ref name=Murray121>Murray, p. 121.</ref> Hamilton had written to Morris as early as 1781, that fixing the public credit will win their objective of independence.<ref name=Murray121/> The sources that Hamilton used ranged from Frenchmen such as [[Jacques Necker]] and [[Montesquieu]] to British writers such as [[David Hume|Hume]], [[Hobbes]], and [[Malachy Postlethwayt]].<ref name=chernow296-299>Chernow, [https://archive.org/details/alexanderhamilto00cher/page/n315 pp. 296–299].</ref> While writing the report he also sought out suggestions from contemporaries such as [[John Witherspoon]] and Madison. Although they agreed on additional taxes such as distilleries and duties on imported liquors and land taxes, Madison feared that the securities from the government debt would fall into foreign hands.<ref name=chernow121>Chernow, [https://archive.org/details/alexanderhamilto00cher/page/n136 p. 121].</ref><ref name=schachner />{{rp|244–245}}

Hamilton divided the debt into national and state, and further divided the national debt into foreign and domestic debt. While there was agreement on how to handle the foreign debt, especially with France, there was not with regards to the national debt held by domestic creditors. During the Revolutionary War, affluent citizens had invested in bonds, and war veterans had been paid with [[promissory notes]] and [[IOU]]s that plummeted in price during the Confederation. In response, the war veterans sold the securities to speculators for as little as fifteen to twenty cents on the dollar.<ref name=chernow296-299/><ref>Murray, p. 124.</ref>

Hamilton felt the money from the bonds should not go to the soldiers who had shown little faith in the country's future, but the speculators that had bought the bonds from the soldiers. The process of attempting to track down the original bondholders along with the government showing discrimination among the classes of holders if the war veterans were to be compensated also weighed in as factors for Hamilton. As for the state debts, Hamilton suggested consolidating them with the national debt and label it as federal debt, for the sake of efficiency on a national scale.<ref name=chernow296-299/>

In the report, Hamilton felt that the securities should be paid at full value to their legitimate owners, including those who took the financial risk of buying government bonds that most experts thought would never be redeemed. He argued that liberty and property security were inseparable, and that the government should honor the contracts, as they formed the basis of public and private morality. To Hamilton, the proper handling of the government debt would also allow America to borrow at affordable interest rates and would also be a stimulant to the economy.<ref name=chernow296-299/>

The last portion of the report dealt with eliminating the debt by utilizing a ''[[sinking fund]]'' that would retire five percent of the debt annually until it was paid off. Due to the bonds being traded well below their face value, the purchases would benefit the government as the securities rose in price.<ref name=chernow300-305>Chernow, [https://archive.org/details/alexanderhamilto00cher/page/n319 pp. 300–305].</ref>{{rp|300}} When the report was submitted to the House of Representatives, detractors soon began to speak against it. Some of the negative views expressed in the House were that the notion of programs that resembled British practice were wicked, and that the balance of power would be shifted away from the representatives to the executive branch. [[William Maclay (politician)|William Maclay]] suspected that several congressmen were involved in government securities, seeing Congress in an unholy league with New York speculators.<ref name=chernow300-305/>{{rp|302}} Congressman [[James Jackson (Georgia politician)|James Jackson]] also spoke against New York, with allegations of speculators attempting to swindle those who had not yet heard about Hamilton's report.<ref name=chernow300-305/>{{rp|303}}

The involvement of those in Hamilton's circle such as Schuyler, [[William Duer (Continental Congressman)|William Duer]], [[James Duane]], Gouverneur Morris, and [[Rufus King]] as speculators was not favorable to those against the report, either, though Hamilton personally did not own or deal a share in the debt.<ref name=chernow300-305/>{{rp|304}}<ref name=schachner />{{rp|250}} Madison eventually spoke against it by February 1790. Although he was not against current holders of government debt to profit, he wanted the windfall to go to the original holders. Madison did not feel that the original holders had lost faith in the government but sold their securities out of desperation.<ref name=chernow300-305/>{{rp|305}} The compromise was seen as egregious to both Hamiltonians and their dissidents such as Maclay, and Madison's vote was defeated 36 votes to 13 on February 22.<ref name=chernow300-305/>{{rp|305}}<ref name=schachner />{{rp|255}}

The fight for the national government to assume state debt was a longer issue and lasted over four months. During the period, the resources that Hamilton was to apply to the payment of state debts was requested by [[Alexander White (Virginia)|Alexander White]], and was rejected due to Hamilton's not being able to prepare information by March 3, and was even postponed by his own supporters in spite of configuring a report the next day, which consisted of a series of additional duties to meet the interest on the state debts.<ref name=schachner />{{rp|297–298}} Duer resigned as Assistant Secretary of the Treasury, and the vote of assumption was voted down 31 votes to 29 on April 12.<ref name=schachner />{{rp|258–259}}

During this period, Hamilton bypassed the rising issue of [[Slavery in the United States|slavery]] in Congress, after [[Quaker]]s petitioned for its abolition, returning to the issue the following year.<ref name=chernow307>Chernow, [https://archive.org/details/alexanderhamilto00cher/page/n326 p. 307].</ref>

Another issue in which Hamilton played a role was the temporary location of the capital from New York City. [[Tench Coxe]] was sent to speak to Maclay to bargain about the capital being temporarily located to Philadelphia, as a single vote in the Senate was needed and five in the House for the bill to pass.<ref name=schachner />{{rp|263}} Thomas Jefferson wrote years afterward that Hamilton had a discussion with him, around this time period, about the capital of the United States being relocated to Virginia by means of a "pill" that "would be peculiarly bitter to the Southern States, and that some concomitant measure should be adopted to sweeten it a little to them".<ref name=schachner />{{rp|263}} The bill passed in the Senate on July 21 and in the House 34 votes to 28 on July 26, 1790.<ref name=schachner />{{rp|263}}