A Biography of Alexander Hamilton (1755-1804)
Unfinished business: last report on public credit (January 1795)Hamilton resigned from the Treasury on January 31, 1795, but not without one final exhortation to the government and the people to support his fiscal plan. In what was described by Madison as his "valedictory," Hamilton issued his Report on a Plan for the Further Support of Public Credit to congress. His objective, in addition to defending his program thus far, was a plan "for the Redemption of the public debt," to complete and stabilize the current system of funding, and to "prevent that progressive accumulation of Debt which must ultimately endanger all Government." Hamilton outlined the current system by enumerating existing sources of revenue, provisions for funding the debt and its interest, and provisions for extinguishing the debt completely. In essence, the plan addressed the fears of the Republicans that the debt would become unmanageable in the future.
In the report, he reminds congress that the United States is still quite young, and needs to maintain its vitality and energy through the "invigorating principle" of credit:
"It is impossible for a Country to contend on equal terms, or to be secure against the enterprises of other nations without being able equally with them to avail itself of [credit]. And to a young Country with moderate pecuniary Capital and not a very various industry, it is still more necessary than to Countries, more advanced in both."
In addition to external benefits, Hamilton states that private credit is equally necessary in a developing country for people of all occupations to begin their endeavors: "lt is a matter of daily experience . . . One man wishes to take up and Cultivate a piece of land--he purchases upon Credit, and in time pays the purchase money out of the produce of the soil improved by his labour." And so it is with trades people and mechanics, all can benefit equally from access to credit. Always cognizant of system, Hamilton ties together his program in its entirety, explaining that each part of his program is carefully crafted to work as a whole. "Credit is an intire thing. Every part of it has the nicest sympathy with every other part."
He adds a warning to those who would upset the delicate balance: "Wound one limb, and the whole Tree shrinks and decays. The security of each Creditor is inseparable from the security of all Creditors."