The First U.S. Party System: Events, Issues, and Positions — http://edsitement.neh.gov/view_lesson_plan.asp?id=557
Federalist Group Handouts
Issue 1: Funding the Public Debt
With Hamilton’s urging, the early federal government assumed the debts of the states. What was
the benefit of doing so? How would the debt be repaid?
• Excerpts from the Report on Public Credit [http://memory.loc.gov/cgi-
bin/ampage?collId=llac&fileName=002/llac002.db&recNum=382], beginning on page 2041
of the Appendix to The Annals of Congress for the 1st Congress, on the EDSITEment
resource American Memory:
…loans in times of public danger, especially from foreign war, are found an indispensable
resource, even to the wealthiest of them. And that in a country, which, like this, is possessed
of little active wealth, or in other words, little monied capital, the necessity for that resource,
must, in such emergencies, be proportionably urgent.
…To justify and preserve their confidence; to promote the encreasing respectability of the
American name; to answer the calls of justice; to restore landed property to its due value; to
furnish new resources both to agriculture and commerce; to cement more closely the union of
the states; to add to their security against foreign attack; to establish public order on the basis
of an upright and liberal policy. These are the great and invaluable ends to be secured, by a
proper and adequate provision, at the present period, for the support of public credit.
…The benefits… are various and obvious… First. Trade is extended by it; because there is a
larger capital to carry it on, and the merchant can at the same time, afford to trade for smaller
profits; as his stock, which, when unemployed, brings him in an interest from the
government, serves him also as money, when he has a call for it in his commercial
operations.
Secondly. Agriculture and manufactures are also promoted by it: For the like reason, that
more capital can be commanded to be employed in both; and because the m