You Never Forget Your First: A Biography of George Washington

by Alexis Coe

Alexander Hamilton, secretary of the treasury, was in charge of solving the debt problem. Emulating the British system, he proposed setting up a central bank. It would issue currency, oversee the national banking system, and assume the interest payments on states’ debts—but the principal loan would never be paid back. And while the federal government would run the Bank of the United States, it wouldn’t own it. A small group of investors would, making relief of the national debt integral to their own prosperity. The plan inflamed regional tensions. Southerners had paid off nearly all their wartime debts already, thanks in large part to slave labor. They disliked ceding a measure of their financial autonomy to the federal government, and they were smarting about the debate over a permanent location for the capital; the majority of the sixteen proposed sites were in the north. Southerners were looking at a situation in which they’d be saddled with others’ debts (thanks to Hamilton, a New Yorker) and stripped of political influence (because of the likely northern capital location).