What was Madison’s view of funding and assumption?

Assumption of states’ debts was also seen as unfair in that it favored states that still retained large wartime debts. Some states, such as Virginia, had already paid much of their debt and would not benefit as much as states who had been less assiduous about paying their bills . Indeed, the Virginians asserted that, given the opportunity to balance their accounts with the federal government, they would be owed some three million dollars. The opposition called for the balancing of accounts between individual states and the government before making a decision on assumption. The decision, of course, would be based on whatever was more profitable to the states. Madison’s view on this was it was an unfair practice. The same goes for funding. asked how he came to his conclusions on the funding of the public debt, Hamilton might have answered in a Sherlock Holmes deadpan, “why, it’s elementary.” It was not so evident to congress.It took some time for congress to digest the report, but when they did, a bitter controversy ensued. Hamilton obviously had expected some objections to his plan, but he had not bargained for the extent of the outcry, nor for the direction from which it came.The voice of the opposition came from James Madison, whom Hamilton considered a friend and ardent fellow Federalist. He had depended upon Madison’s support for his plans, and his former collaborator’s opposition was to Hamilton a shocking blow both personally and politically. Madison and the opposition did not object to the funding of the debt, rather they disagreed as to who should be paid and how much. During the course of the war and afterward, many holders of continental bonds, often veterans and farmers who had contributed goods and services to the war effort, sold their certificates at depreciated prices for much needed cash. Now that provisions had been made to fund the certificates, those who had bought bargain certificates would reap monstrous profits, leaving nothing for the original bearers. Madison argued that this was unfair, and only served to further enrich an already wealthy class of merchants and “stock-jobbers” at the expense of farmers, soldiers, and backwoodsmen. Madison favored a plan of discrimination, paying the original bearers the nominal value of the certificates they once held, while paying the current bearer the highest market value plus interest. Granting benefits to both types of investors, in Madison’s view, would be more just.... Show More

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https://shorturl.im/akkKFThe decision you refer to was made in 1790. Prior to that, the main “competitors” with the Potomac location were the one on the Susquehanna (approved in 1790) and a site on the Delaware (near Trenton) approved in 1783-4. I believe there was also a group that advocated a capital in the Baltimore area. (Some may have hoped New York City or Philadelphia would be the final choice, but I’m not sure these specific locations ever had widespread support.) _______________________________ Here’s a bit more of the story: Of course, the first national capital –the meeting place at the time of the Declaration of Independence– was Philadelphia. But it was NOT one of the locations seriously considered for a permanent capital in the 1780s and early 1790s when the matter was debated. The Continental Congress was much divided over the issue of the location of a PERMANENT capital –the chief division being between the northern and southern states. In 1783 they Congress thought the solution was to establish TWO capitals, a Northern one, on the Delaware River near Trenton (not far from Philadelphia but NOT in it), and a Southern one on the Potomac (exact location undetermined). But this was obviously too cumbersome, and the following year Congress decided on just the one Trenton-area capital, and to meet in New York City until building was completed. But Southern opponents never supported the funding, so New York remained de facto capital for several years. When the Constitution was drafted, it assigned the choice of a permanent location to Congress (Article 1, sec. 8), which first took the matter up at its first session (1789). (It may be that New Yorkers were encouraged to think New York might end up as the final capital — in order to help gain the needed support of this state in ratifying the Constitution — but it was much too far north to ever be accepted by the Southern representatives.) The First Congress (under the Constitution) actually made two DIFFERENT decisions about this question — in 1789 a location on the Susquehanna River in Pennsylvania was decided on. But the matter was not finally settled before Congress adjourned — in May 1790, the matter was taken up again, from scratch (not where they left up). This time the Southern plan won the day. The decision to build on the Potomac, was established by the Residence Act passed July 16. _________________ The story is often told of how the change took place, supposedly as a result of a compromise made at a dinner party involving Madison (proponent of the Southern view and an important leader of the Jeffersonians [later the ‘Republican Party’] in the House) and Alexander Hamilton, a Northerner (of New York), Federalist and Washington’s Secretary of the Treasury. Supposedly, Hamilton offered Northern support for the Potomac capital in exchange for help (or at least not BLOCKING) his financing plans in Congress (esp. the federal assumption of the war debts of all the states, along with the First National Bank). In fact, it is not certain the decision took place quite that way..though it makes a nice story! A key factor that should not be overlooked was George Washington’s OWN preferences. HIS personal popularity in both sections added great weight to his desire that the capital be located on the Potomac, near his home at Mount Vernon. In fact, the Residence Act left it to the President to chose the specific location. Note also that the Residence Act provided for Philadelphia as the temporary capital for the next 10 years, while arrangements were made for building the District of Columbia (named “Washington” in 1791, though its namesake avoided using that name). It is claimed that this piece helped secure passage, in part because some Northerners (esp. from Pennsylvania) believed the Potomac plan would ultimately fail and Pennsylvania would end up hosting the capital permanently.... Show More