The Revolution left the United States burdened with national and state debts. Hamilton believed public credit was essential to independence, prosperity and governmental authority. His program called for federal payment of the national debt at full value, federal assumption of state war debts, reliable customs and excise revenue, a national bank and policies encouraging manufacturing. Assumption tied creditors to the success of the federal government and prevented competing state policies from weakening national credit. Opposition was intense: states that had paid much of their debt objected, while critics feared enrichment of speculators. A political bargain helped secure passage: support for assumption was linked to locating the permanent national capital on the Potomac.
THE BANK AND IMPLIED POWERS
Jefferson argued that the Constitution did not expressly authorize a national bank and that federal powers should be interpreted narrowly. Hamilton replied that the Necessary and Proper Clause permitted reasonable means to execute enumerated powers such as taxation, borrowing and regulation of commerce. Washington signed the bank bill in 1791. The dispute established an enduring constitutional argument over implied powers and the scope of national authority. Hamilton’s system stabilized credit and strengthened the federal government. It also favored commercial development and concentrated influence among financiers and merchants, convincing opponents that a moneyed elite might capture the republic.
“Hamilton asked how national power could create prosperity. Jefferson asked how national power could be prevented from endangering liberty
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