FIGURE 7.1 Hamilton’s Fiscal Structure, 1792
As treasury secretary, Alexander Hamilton established a national debt by issuing government bonds and using the proceeds to redeem Confederation securities and assume the war debts of the states. To pay the annual interest due on the bonds, he used the revenue from excise taxes and customs duties. Hamilton deliberately did not attempt to redeem the bonds because he wanted to tie the interests of the wealthy Americans who owned them to the new national government.