Book IV. "Alexander the Great"
Chapter XIX

The immediate consequences of Hamilton's Report were a rise of fifty per cent in the securities of the bankrupt Confederation, and a bitter warfare in Congress. All were agreed upon the propriety of paying the foreign loan, but the battle raged about every other point in turn. One of the legacies of the old Congress was the principle of repudiating what it was not convenient to redeem, and the politicians of the country had insensibly fallen into the habit of assuming that they should start clear with the new government, and relegate the domestic debt to the limbo which held so many other resources best forgotten. They were far from admitting the full measure of their inheritance, however, and opened the battle with a loud denouncement of the greedy speculator who had defrauded the impoverished soldier, to whose needs they had been indifferent hitherto. Most of this feeling concentrated in the opposition, but many Federalists were so divided upon the question of discrimination that for a time the other great questions contained in the Report fell back. Feeling became so bitter that those who supported the assignees were accused of speculation, and personalities were hot and blistering. Many of the strongest men, however, ranged with Hamilton, and were in sight of victory, when Madison, who had hoped to see the question settle itself in favour of the original holders without his open support, came out with a double bomb; the first symptom of his opposition to the Federal party, and an unconstitutional proposition that the holders by assignment should receive the highest market-price yet reached by the certificates, by which they would reap no inconsiderable profit, and that the balance of the sum due, possibly more than one-half, should be distributed among the original holders. For a time the reputation for statemanship which Madison had won was clouded, for his admission of the claims of the assignees nullified any argument he could advance in favour of the original holders. But he had his limitations. There was nothing of the business man in his composition. One of the most notable and useful attributes of Hamilton's versatile brain was excluded from his, beyond its comprehension. His proposition was rejected by thirty-six votes to thirteen.

Then the hostile camps faced each other on the questions of the domestic debt and assumption. In regard to the former, common decency finally prevailed, but the other threatened to disrupt the Union, for the Eastern States threw out more than one hint of secession did the measure fail. Madison, without further subterfuge, came forth at the head of his State as the leader of the anti-assumptionists. He offered no explanation to his former chief and none was demanded. For a time Hamilton was bitterly disgusted and wounded. He shrugged his shoulders, finally, and accepted his new enemy with philosophy, though by no means with amiability and forgiveness; but he had seen too much of the selfishness and meanness of human nature to remain pained or astonished at any defection.

When June came, however, he was deeply uneasy. On March 29th the resolutions providing for the foreign debt and for paying in full the principal of the domestic debt to the present holders passed without a division. So did the resolution in favour of paying the arrears of interest in like manner with the principal of the domestic debt. But the resolution in favour of assumption was recommitted. The next day the friends of assumption had the other resolutions also recommitted, and the furious battle raged again. Finally, on June 2d, a bill was passed by the House, which left the question of assumption to be settled by a future test of strength.

The anti-assumptionists were triumphant, for they believed the idea would gain in unpopularity. But they reckoned without Hamilton.