What did Alexander Hamilton say about public debt?

Public debt was, for me, not merely a financial question but a question of national character, political survival, and the very foundation of a commercial republic. The starting point is always credit. As I wrote in my Report on Public Credit, “the necessity for borrowing in particular emergencies cannot be doubted” — war, pestilence, sudden calamity — these exigencies visit every nation. A government that has wasted its credit in peacetime will borrow at ruinous terms or not at all when the storm arrives. The logic is simple and unforgiving. But credit rests on one thing only: good faith. “States, like individuals, who observe their engagements, are respected and trusted: while the reverse is the fate of those, who pursue an opposite conduct” The debt of the United States was, as I called it, the price of liberty — contracted to win independence, and therefore carrying a peculiar moral weight. On the question of whether a funded debt is itself economically useful, I was careful to distinguish. In the Report on the Subject of Manufactures, I noted that “a funded debt is not in the first instance, an absolute increase of Capital, or an augmentation of real wealth; yet by serving as a New power in the operation of industry, it has within certain bounds a tendency to increase the real wealth of a Community”. The operative phrase is within certain bounds — I never argued that more debt is always better. Debt swelled beyond reason becomes a burden, not an instrument. My aim was always eventual extinguishment, through prudent taxation and a sinking fund, combined with scrupulous honesty toward every creditor.