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James Madison, Executive Power, and the Question of Consistency
Unformatted Document Text:  discriminated against the original holder of the notes, farmers and veterans of the Revolutionary war who were victims of the Confederacy’s inability to pay its debts, and ultimately sold their notes at rock bottom prices to speculators who were privy to Hamilton’s intentions. Madison advocated paying the assignees of the notes the highest market value that had been achieved, and paying the original holders the difference between that price and full value. He also spoke out against the assumption scheme because he claimed it discriminated unfairly against the States like Virginia that had faithfully and sacrificially paid their debts while favoring the States that had not done so. Hamilton and his supporters were shocked by Madison’s alleged apostasy. Hamilton accused Madison of betraying his previous principles, a charge that has stuck at least until recently. In fact in 1783 Madison had opposed a discrimination scheme similar to the one he now proposed. However, Madison accurately pleaded that the circumstances had changed since 1783. In a speech before Congress, he contended, “At that period, the certificates to the army, and citizens at large had not been issued. The transfers were confined to loan-office certificates, were not numerous, and been in great part made with little loss to the original creditor. At present the transfer extend to a vast proportion of the whole debt, and the loss to the original holders has been immense.” 39 There is no reason not to accept Madison’s own explanation for opposing Hamilton’s funding and assumption plans. Still, on the surface his redistribution scheme in favor of original holders seems very much like the Rhode Island paper money scheme that helped inspire his criticisms of tyrannical majorities in Federalist #10. And if Madison’s opposition to Hamilton’s proposals had really stemmed from a deep conviction that these propositions were unjust one would think that he would not have agreed to the famous deal that required him to cease his active resistance to Hamilton’s funding and assumption plan in exchange for Hamilton’s support for building the new Capital on the Potomac. Lance Banning suggests that there was more to this deal than meets the eye. At the heart of Madison’s resistance to Hamilton’s plan for the public credit, and his willingness to withdraw that opposition in exchange for locating the capital on the Potomac, was his concern about the ultimate 39 James Madison, “Speech,” 18 February, 1790, PJM, 13: 50. 23

Authors: Edwards, Gregory.
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discriminated against the original holder of the notes, farmers and veterans of the Revolutionary war who were
victims of the Confederacy’s inability to pay its debts, and ultimately sold their notes at rock bottom prices to
speculators who were privy to Hamilton’s intentions. Madison advocated paying the assignees of the notes the
highest market value that had been achieved, and paying the original holders the difference between that price and
full value. He also spoke out against the assumption scheme because he claimed it discriminated unfairly against the
States like Virginia that had faithfully and sacrificially paid their debts while favoring the States that had not done
so.
Hamilton and his supporters were shocked by Madison’s alleged apostasy. Hamilton accused Madison of
betraying his previous principles, a charge that has stuck at least until recently. In fact in 1783 Madison had opposed
a discrimination scheme similar to the one he now proposed. However, Madison accurately pleaded that the
circumstances had changed since 1783. In a speech before Congress, he contended, “At that period, the certificates
to the army, and citizens at large had not been issued. The transfers were confined to loan-office certificates, were
not numerous, and been in great part made with little loss to the original creditor. At present the transfer extend to a
vast proportion of the whole debt, and the loss to the original holders has been immense.”
There is no reason not to accept Madison’s own explanation for opposing Hamilton’s funding and
assumption plans. Still, on the surface his redistribution scheme in favor of original holders seems very much like
the Rhode Island paper money scheme that helped inspire his criticisms of tyrannical majorities in Federalist #10.
And if Madison’s opposition to Hamilton’s proposals had really stemmed from a deep conviction that these
propositions were unjust one would think that he would not have agreed to the famous deal that required him to
cease his active resistance to Hamilton’s funding and assumption plan in exchange for Hamilton’s support for
building the new Capital on the Potomac. Lance Banning suggests that there was more to this deal than meets the
eye.
At the heart of Madison’s resistance to Hamilton’s plan for the public credit, and his willingness to
withdraw that opposition in exchange for locating the capital on the Potomac, was his concern about the ultimate
39
James Madison, “Speech,” 18 February, 1790, PJM, 13: 50.
23


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