Would retire confederation bonds by exchanging them

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Gov. would retire Confederation bonds by exchanging them for new federal bonds dollar for dollar Gov. would assert its financial reliability Hamilton attributed the British gov’s perpetual indebtedness by its dependable steady payment of interest to its creditors The First Debate: Funding Hamilton’s proposal met stiff resistance in Congress Most of the domestic debt was created when thousands of Americans bought government bonds in an act of patriotism Many veterans lost hope over the years and sold their claims on the gov. At big discounts to speculators to collect full value on the paper James Madison explained that they should not reward parasitical profiteers He proposed to fund debts at face value only when the people who presented them for redemption had themselves loaned money to the gov. Or fought in the army Those who hadn’t would get half face value Morally appealing argument Hamilton replied that morality was beside the point and the issue was the gov’s credit By rewarding capitalists his funding bill would encourage those people to be lenders to the future Hamilton believed that the support of the monied classes was a key to the success of the new gov. He won and Funding was approved Assumption Hamilton’s second program proposed that the federal government should assume responsibility for and fund the debts that the states had contracted since independence a total of $25 million Motive: Assumption would demonstrate that the new constitution gov. Was serious about its credit
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Wanted to reduce the prestige of the states relative to the federal gov. Just enough congressmen from other states joined Virginia in the House of Representatives to defeat assumption by a vote of 31 to 29 Madison,Secretary of State Jefferson, Washington, and many other southerners wanted the permanent capital of the US located in the south Horse Trade: Assumption for the Capital In 1790, New York, Hamilton’s hometown, was the nation’s capital However, everyone agreed it would not stay there New York was not centrally located-too far north It was not a national metropolis as it is today The city was a poor second to Philadelphia in size,sophistication, etc Philadelphia had been the capital during most of the confederation period and was an easy trip from Virginia Problem for southerners: Pennsylvania’s hostility to the institution of slavery Pennsylvania southerners enacted a law providing that slaves who accompanied their masters to the state would remain slaves for 6 months Slaves would be legally free but Congress did not sit for 6 months However, Southerners pointed out that some served in the executive branch of the federal gov. And were long-term or even permanent regardents Some Philadelphia Quakers were already providing assistance in court to slaves with a legal claim to freedom
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