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Debt Assumption, or simply assumption, was a US financial policy executed under the Funding Act of 1790. The Washington administration pursued the policy, under Secretary of the Treasury Alexander Hamilton 's leadership, to assume the outstanding debt of states that had not yet repaid their American Revolutionary War bonds and a scrip.
The Funding Act of 1790, the full title of which is An Act making provision for the [payment of the] Debt of the United States, was passed on August 4, 1790, by the United States Congress as part of the Compromise of 1790, to address the issue of funding (debt service, repayment, and retirement) of the domestic debt incurred by the state governments, first as Thirteen Colonies, then as states ...
The key provision in Hamilton's fiscal reform was termed "assumption" and called for the 13 states to consolidate their outstanding debt of $25 million [68] and to transfer it to the federal government for servicing under a general funding plan. [69] Hamilton's chief objectives were both economic and political.
Hamilton also proposed the federal assumption of state debts, many of which were heavy burdens on the states. Congressional delegations from the Southern states, which had lower or no debts, and whose citizens would effectively pay a portion of the debt of other states if the federal government assumed it, were disinclined to accept the proposal.
The Compromise of 1790 was a compromise among Alexander Hamilton, Thomas Jefferson, and James Madison, where Hamilton won the decision for the national government to take over and pay the state debts, and Jefferson and Madison obtained the national capital, called the District of Columbia, for the South.
Alexander Hamilton, a portrait by William J. Weaver now housed in the U.S. Department of State. In United States history, the Hamiltonian economic program was the set of measures that were proposed by American Founding Father and first Secretary of the Treasury Alexander Hamilton in four notable reports and implemented by Congress during George Washington's first term.
A seven-dollar banknote issued by the Second Continental Congress in 1775. As the war went on, however, America's economic prosperity began to fall. British warships began to prey on American shipping, and the increasing upkeep costs of the Continental Army meant that wealth from merchant ships decreased.
The Second Continental Congress met in May 1775, and established an army funded by Congress and under the leadership of George Washington, a Virginian who had fought in the French and Indian War. [2] On July 4, 1776, as the war continued and two days after endorsing the Lee Resolution to break from British control, Congress adopted the ...