Archive for August, 2013

Why You’re Living in a Swamp. (Or if you don’t live in DC: Why DC is Where it is.)

Aug 17 2013 Published by under DC,History

Thank the usual suspects: Hamilton, Madison, and Jefferson (those dogs…).

You see, following America’s victory in the revolutionary war, the American states collectively carried a considerable amount of debt, much owed to Europeans who sympathized with their struggle against the British (though not sympathetic enough to forgive the debt owed to them).  The northern states like NY, MA, NJ, etc, where most of the war occurred owed a lot (really, a lot) more than the southern states, VA, NC, SC, etc.

Well, along comes Alexander Hamilton who has the brilliant idea to consolidate all of this debt into the first National Debt.  Essentially this would mean that the southern states would assume their share of the debt of northern states.  Hamilton not only wanted to do this because he was a staunch Federalist who wanted to centralize power in the Federal Government, but also because he knew that carrying a national debt was essential to the economic survival of the newly formed country.  Essentially, honoring the debt though issuing government bonds that paid interest allowed the new country to carry credit, and credit was absolutely necessary to conduct any kind of international trade – critical for early America to gets itself on its feet economically.

Madison had an opposing idea.  He wanted to default on (i.e. snub) those who lent money to the colonies.  Jefferson too was wary of federal consolidation and also did not want to burden his state of Virginia with more debt.  But both knew it was indeed necessary to establish credit.

In order to grease the wheels of negotiation, lots of consolidations were made to Virginia regarding the amount of debt it would have to assume, AND included the rather unrelated idea of where to establish the federal district in which the capital of the country would rest (in the South, next to Virginia).  With these consolidations, Jefferson and Madison dropped their opposition to Hamilton’s plan and the agreement was formalized in the Residence Act.

So you’ve living in a swamp.  BUT because of the assumption of debt and establishment of credit, the swamp is still American.

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