What does it mean that Hamilton "made American credit competitive"?
score:9
In my eagerness to write about Hamilton, I missed that the core of the question was the word "competitive". As @T.E.D points out, the use of that word is doubtless influenced by meter and rhyme. I would have to check to see if the playwright's use is supported by contemporary language, but the meaning is that those who have capital and want to lend it are looking for the best deal. Primarily, they want to get their capital back, and with the best mix of risk and reward. One can view this as a competition for the capital. The Articles of Confederation were not competitive credit risks - there was strong evidence that they couldn't even make the interest payments. After Hamilton's reforms, there was enough evidence that the USA was a competitive potential creditor.
At the end of the Revolutionary war the United States had a massive war debt (If I recall correctly, it was higher than any time other than the present, or possibly WWII). The new countries primary trade partner was Great Britain, who was reluctant to trade with a country that had a huge war debt to Great Britain and no practical way to pay that debt.
The new country was also a Republic - a type of government that was effectively untested (my Dutch ancestors force me to qualify the statement), and there was widespread doubt that the government could be effective - the rest of the world employed some form of Monarchy to maintain order and property rights, and the notion of giving a bunch of debtors the right to vote themselves money from the public purse was perceived as quite insane.
Aside: How creditworthy is a republic?
technically most European and colonial municipal governments were non independent republics. There were a number of semi independent republics in Europe at the time - Venice, Genoa, Swiss cantons, imperial free cities, etc., so a republic was not exactly a totally untested form of government in Europe. @magolding in a comment
Excellent point - I believe that the tax collection powers of a sovereign republic (vice the subordinate republics you mention) affect the competitiveness of credit. Development of that thesis in the context of your observation would, I think, be interesting, but outside the scope of OP's question.
The new country rapidly demonstrated a thorough and complete inability to collect taxes. Any state could veto any tax collection, or could vote yes and simply fail to provide any money. Functionally the Articles of Confederation was what we would now call a failed state.
Given those things, who in their right mind would lend to the new country?
Hamilton consolidated the debt and organized the revenue service to begin to make payments on the debt. He created a national bank to stabilize the money supply. American credit had been a bad junk bond; after Hamilton, our was competitive with other countries. We were still a huge credit risk, but Hamilton raised our credit rating to the point where we could borrow.
Upvote:5
As Secretary of the Treasury, Hamilton produced the First Report on the Public Credit of the U.S. This was the kind of report that would nowadays be published by the rating agencies like Moody's or Standard & Poor's, except that it was a "self-report." Basically, it broke down the public debt and outlined a plan to pay it, using tariffs and excise taxes.
Such a plan was exactly what creditors wanted to see. This allowed the U.S. to "refinance" at an interest rate of 4%, which was the high end of "competitive."
More post
- 📝 Why did some colonies of the British Empire have their own currencies?
- 📝 Thoroughbred horse history on British Islands prior to 1686
- 📝 When has the U.S. refused to pay its debts?
- 📝 Why did the Republic of China retract its simplified Chinese characters?
- 📝 How did the election of one-third of Senators every two years stay in sync with addition of new states?
- 📝 Why didn't Hannibal attack Rome after the Battle of Cannae?
- 📝 What was the status of peasants who left to join the People's Crusade?
- 📝 Are there any old paintings (medieval period onwards) that actually depict the female genitalia rather than just leaving the pubic region empty?
- 📝 How, just how you can burn down a stone structure?
- 📝 What does "setting up a trophy" mean in ancient Greece 5th century B.C.?
- 📝 What model was used to explain stellar energy before nuclear fusion was discovered?
- 📝 Is there any resource to learn interiors of a house for particular classes in 17th Century in Bohemia?
- 📝 At 300 AD, how many christians were there?
- 📝 Why did the Chinese not use military power to force out early Portuguese, Dutch and English trade encroachments?
- 📝 Why did early attempts to transport milk to London by rail meet with 'much criticism'?
- 📝 How long did the battle of Bosworth last?
- 📝 Was literacy ever used as a tool to oppress the population by higher social classes?
- 📝 What is the spiral-looking device shown in this wall painting?
- 📝 How widespread was astronomy in prehistoric times?
- 📝 Why have wheat and rice been consumed in different forms?
- 📝 Did Spain and the Republic of China (Kuomintang) have diplomatic relations between 1931 and 1939? Were they friendly or unfriendly?
- 📝 What prevented slaves in Classical Greece from running off?
- 📝 Who thought there might be a war between the British Empire and the United States of America in the 1920s?
- 📝 What factors led to the US government issuing nutrition guidelines in 1916?
- 📝 Was there a city called "Margorin" or "Margorum" in Prussia in 1885?
- 📝 Which countries protested against the Anschluss?
- 📝 Was there a bribery attempt by the UK to get the Ottomans to switch sides in World War I?
- 📝 What is the current state of historical thought on the Aryan invasion/migration theory?
- 📝 Why didn’t Christianity spread southwards from Ethiopia in the Middle Ages?
- 📝 Can you identify this ship of 1922?
Source: stackoverflow.com
Search Posts
Related post
- 📝 What does it mean that Hamilton "made American credit competitive"?
- 📝 A German immigrant ancestor has a "Registration Affidavit of Alien Enemy" on file. What does that mean exactly?
- 📝 What does it mean that the early supreme court "gave themselves" the power of judicial review?
- 📝 What does "setting up a trophy" mean in ancient Greece 5th century B.C.?
- 📝 What does "Brown-Bread Eater" mean when used as an insult?
- 📝 What does "Depot Battalion" mean in Hart's Annual Army List?
- 📝 What does CONOB mean on ancient Roman coins?
- 📝 What evidence is there that English Political divisions from the 1600s are replicated in American politics today?
- 📝 What does it mean to grant a church to a priory?
- 📝 What does "two ells within the selvages" mean in the Magna Carta?
- 📝 What does this Rx glyph mean in what looks like Latin?
- 📝 What does it mean to have a "proved son?"
- 📝 What does the forward "Bullnose" of a Bailey Bridge that is under construction look like?
- 📝 What does the abbreviation "adhib." mean in historiography or archival science?
- 📝 What does this image symbolize or mean and who is in the image?
- 📝 What does it mean to "take the Cross"
- 📝 What does a "wage" mean in the time of 'The Odyssey'?
- 📝 What does 'des' mean in ancient Egyptian?
- 📝 What does the Latin "prorex" mean in reference to Louis II de Bourbon?
- 📝 What does 'trade in' mean in this article on the Westway project?
- 📝 What does Spivak mean by "epistemic violence" in her paper "can the subaltern speak"?
- 📝 What did it mean that Italy was an Empire?
- 📝 What does Tuchman mean by transition to a "money economy" in the Middle Ages?
- 📝 What does "APT" mean in box 34 of the WD AGO 53-55?
- 📝 What was the most important change that took place in American society as a result of the New Deal?
- 📝 What does Carlyle mean by 'essence' in 'History is the essence of innumerable Biographies'?
- 📝 What does MLK mean by "lonely island" and "vast ocean"?
- 📝 What does "SS" mean in box 5 of the WD AGO 53-55 form?
- 📝 What does "Central Europe AG 2006" mean in discharge papers?
- 📝 What does Deng Xiaoping mean by "Hide your capacities, bide your time '?
