Debt Assumption

Debt Assumption, or simply assumption, was a US financial policy executed under the Funding Act of 1790. The Washington administration pursued the policy, under Secretary of the Treasury Alexander Hamilton's leadership, to assume the outstanding debt of those states which had not yet repaid their American Revolutionary War bonds and scrip. Some states, such as Virginia, had already repaid their debt. The policy of assumption, Hamilton argued, required expanded federal taxation. Hamilton instituted the first tax on a domestic product, whiskey. Some western farmers, many of them veterans of the Revolution, who were reliant on whiskey as a medium of exchange said the tax betrayed the ideals of the Revolution. The Whiskey Rebellion and other tax resistance movements were consequences of this policy.