Question

Why did Hamilton pay off the old bonds at 100% of their value?​A.) It was cheaper and would save the governments money.B.) He wanted to help speculators who had paid too much for the bonds. C.) Britain demanded it as part of the Jay TreatyD.) It would build trust in the government so more people would buy bonds in the future.

Answer 1

Hamilton paid off the old bonds at 100% of their value to establish trust in the government's financial reliability and to encourage future investment, thereby promoting the nation's economic growth.

Step-by-step explanation:

Alexander Hamilton decided to pay off the old bonds at 100% of their value because it would build trust in the government so more people would buy bonds in the future. The face value payment demonstrated to future creditors that the United States was reliable and capable of meeting its financial obligations. Hamilton's approach aimed to stabilize the nation's finances, promote investor confidence, and stimulate economic growth by mirroring the successful British model of public credit.

Hamilton's plan was also designed to establish a reliable base of capital for industrial projects. His strategy included assuming state debts to build national loyalty and issuing new securities for the existing debt to streamline payments and finance. Importantly, while Hamilton's proposal certainly benefited investors, including speculators who had acquired bonds at lower rates, it also laid the foundation for a strong financial system that was crucial for the nascent nation's development.