Alexander Hamilton's market-based debt reduction plan
AbstractIn 1790, Alexander Hamilton, the first Secretary of the Treasury of the United States, initiated a program to refund the U.S. debt. Debt that had sold at 75% discount two years earlier would be refunded at par into new funded debt of the new federal government. All foreign indebtedness would be repaid. I present evidence that Hamilton's actual refunding policy did not differ in nature from that envisioned under the recent Brady plan. I will show that the bond package for which the old debt exchanged had a market value well below par. Thus, a large part of the face value of the debt was effectively written off. I compare the Hamilton restructuring package to the recent Mexican restructuring package to find points of similarity to the Brady plan.
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Bibliographic InfoArticle provided by Elsevier in its journal Carnegie-Rochester Conference Series on Public Policy.
Volume (Year): 35 (1991)
Issue (Month): 1 (January)
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Web page: http://www.elsevier.com/locate/jme
Other versions of this item:
- Peter M. Garber, 1991. "Alexander Hamilton's Market Based Debt Reduction Plan," NBER Working Papers 3597, National Bureau of Economic Research, Inc.
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