Why do you think Alexander Hamilton wanted to pay back the bonds from the confederation government?

1 Answer
Jun 7, 2016

He didn't, really. He wanted to continuously pay the wealthy bondholders so that they were invested in the U.S. government.


This is something that gets misinterpreted a lot. One of Hamilton's big, early policy goals was to have the federal government adopt the war debts from the states. Most of the states had sold government bonds, meaning the investors loaned money to wealthy men, who expected to be paid back, with interest, by the state governments when the war had ended.

Hamilton was a proponent of a large federal government, and he was a vocal proponent of giving the wealthy classes more influence over the country. He wanted the federal government to inherit state's debts. This upset a lot of people, including most Southerners (who had been more successful in paying war debts, because of the extra revenue produced by slave-labor based plantations).

Hamilton's main goal, however, was not to pay off the war debt. Instead, he wanted to inherit the debts and make small payments on the interest and not the principle. That meant that the government would continue to owe the bondholders money, and would receive extra interest payments.

Hamilton argued that by holding the bondholder's money and continuing to increase their interest payments, the bondholders (who were the most influential citizens) would have a larger stake in preserving the new United States Government.