assumed" by the United States government and placed on the same secure
foundation as the continental debt. This measure he defended not merely
on grounds of national honor. It would, as he foresaw, give strength to
the new national government by making all public creditors, men of
substance in their several communities, look to the federal, rather than
the state government, for the satisfaction of their claims.

=Funding at Face Value.=--On the question of the terms of consolidation,
assumption, and funding, Hamilton had a firm conviction. That millions
of dollars' worth of the continental and state bonds had passed out of
the hands of those who had originally subscribed their funds to the
support of the government or had sold supplies for the Revolutionary
army was well known. It was also a matter of common knowledge that a
very large part of these bonds had been bought by speculators at ruinous
figures--ten, twenty, and thirty cents on the dollar. Accordingly, it
had been suggested, even in very respectable quarters, that a
discrimination should be made between original holders and speculative
purchasers. Some who held this opinion urged that the speculators who
had paid nominal sums for their bonds should be reimbursed for their
outlays and the original holders paid the difference; others said that
the government should "scale the debt" by redeeming, not at full value
but at a figure reasonably above the market price. Against the
proposition Hamilton set his face like flint. He maintained that the
government was honestly bound to redeem every bond at its face value,
although the difficulty of securing revenue made necessary a lower rate
of interest on a part of the bonds and the deferring of interest on
another part.

=Funding and Assumption Carried.=--There was little difficulty in
securing the approval of both houses of Congress for the funding of the
national debt at full value. The bill for the assumption of state debts,
however, brought the sharpest division of opinions. To the Southern
members of Congress assumption was a gross violation of states' rights,
without any warrant in the Constitution and devised in the interest of
Northern speculators who, anticipating assumption and funding, had
bought up at low prices the Southern bonds and other promises to pay.
New England, on the other hand, was strongly in favor of assumption;
several representatives from that section were rash enough to threaten a
dissolutio