After the revolutionary war, the United States were left with a massive national debt of $52 million as well as $25 million in debt from individual states. Hamilton needed to develop a financial plan that would re establish U.S. American credit by providing for the payment of the debt that burdened the nation.
The United States’ credit was established by alexander hamilton paying off the national debt. Hamilton had many methods of paying off the national debt with the first method being exchanging old war bonds for new federal reserve bonds. This method showed other nations around the world that the United States were paying off their debts in a responsible manner. The good credit built by the United States allowed them to borrow money once again. Credit was a major factor in the United States’ ability to participate in foreign trade. Without good credit, the United states would not have been able to borrow money and fund businesses to keep a solid economy. The credit built by paying back the national debt was beneficial in a multitude of ways, but the main benefit was that the economy was able to grow.
An unpopular method Hamilton thought up was to fund the debt through taxing. His system raised taxes on imported goods and items like whiskey. This tax didn’t only affect the wealthy, but also affected the common citizen.