Madison to stop this betrayal of the spirit
of ’76: “Never have I heard more rage expressed against the
Oppressors of our Country during the late War,” Rush fumed, “than I
daily hear against the men who … are to reap all the benefits of the
revolution, at the expense of the greatest part of the Virtue & property
that purchased it.” 14
Hamilton was
both surprised and mystified when Madison came out against his funding scheme.
On February 11, Madison delivered a long speech in the House, denouncing the
Hamilton proposal as a repudiation of the American Revolution and recommending
his own plan for payment, which he called “discrimination.” It was
a vintage Madisonian performance: utterly reasonable, flawlessly logical,
disarmingly temperate. The original holders of the securities had justice on
their side, he noted, and justice must be honored. The current holders had the
obligations of contracts on their side, and such obligations must be observed.
The options then revealed themselves with lawyerlike precision: “one of
three things must be done; either pay both, reject wholly one or the other, or
make a composition between them on some principle of equity.” (In the
twentieth century students of this mode of reasoning within policy-making
circles called it “the Goldilocks principle” and later
“triangulation.”) Madison, of course, favored the third option. But
the House voted 36 to 13 against his motion. It was his first major legislative
defeat after a long string of triumphs. 15
It was not
just that Madison hated to lose. (Unlike Jefferson, he could be genuinely
gracious in defeat.) It was instead that an ominous picture was congealing in
his mind of patriot soldiers being fleeced by an army of speculators whose only
loyalty was to their own profit margins. Or perhaps it was a slightly different
picture, this one of the nascent national government, which he had visualized
as an exalted arena where only the ablest and most intellectually talented
officials would congregate, the finest fruits plucked from the more motley
state governments, now replaced by an obnoxious collection of financiers and
money changers, the kind of social parasites whom Jesus had symbolically driven
from the temple. The promise of the American Revolution, at least as Madison
understood it, was falling into enemy hands.
The debate over
assumption, which followed on the heels of the vote on funding, only
intensified the sense of betrayal and made matters worse. Again, on the face of
it, Hamilton’s proposal looked seductively simple. The federal government
would take on—which is to say, assume—all the accumulated debts of
the states, most of which had their origins during the war. Instead of thirteen
separate ledgers, there would be but one, thereby permitting the fiscal policy
of the new nation to proceed with a coherent sense of its financial obligations
and the revenues required to discharge them. On February 24 Madison rose from
his seat in the House to suggest that the matter was a good deal more
complicated than it might appear at first glance, and that this apparently
sensible proposal called “assumption” struck him as an alarmingly
sinister idea.
If you read Madison’s speeches against assumption
in the House during the spring of 1790, you get the impression that his core
objections were economic. Most of the southern states, Virginia among them, had
paid off the bulk of their wartime debts. The assumption proposal therefore did
them an injustice, by “compelling them, after having done their duty, to
contribute to those states who have not equally done their duty.” A
subsidiary theme, also economic in character but implying grander suspicions,
called for what he termed “settlement” to precede assumption. As
Madison expressed it, “I really think it right and proper that we should
be possessed of the ways and means by which we should be most likely to
encounter the debt before we undertake to assume
of ’76: “Never have I heard more rage expressed against the
Oppressors of our Country during the late War,” Rush fumed, “than I
daily hear against the men who … are to reap all the benefits of the
revolution, at the expense of the greatest part of the Virtue & property
that purchased it.” 14
Hamilton was
both surprised and mystified when Madison came out against his funding scheme.
On February 11, Madison delivered a long speech in the House, denouncing the
Hamilton proposal as a repudiation of the American Revolution and recommending
his own plan for payment, which he called “discrimination.” It was
a vintage Madisonian performance: utterly reasonable, flawlessly logical,
disarmingly temperate. The original holders of the securities had justice on
their side, he noted, and justice must be honored. The current holders had the
obligations of contracts on their side, and such obligations must be observed.
The options then revealed themselves with lawyerlike precision: “one of
three things must be done; either pay both, reject wholly one or the other, or
make a composition between them on some principle of equity.” (In the
twentieth century students of this mode of reasoning within policy-making
circles called it “the Goldilocks principle” and later
“triangulation.”) Madison, of course, favored the third option. But
the House voted 36 to 13 against his motion. It was his first major legislative
defeat after a long string of triumphs. 15
It was not
just that Madison hated to lose. (Unlike Jefferson, he could be genuinely
gracious in defeat.) It was instead that an ominous picture was congealing in
his mind of patriot soldiers being fleeced by an army of speculators whose only
loyalty was to their own profit margins. Or perhaps it was a slightly different
picture, this one of the nascent national government, which he had visualized
as an exalted arena where only the ablest and most intellectually talented
officials would congregate, the finest fruits plucked from the more motley
state governments, now replaced by an obnoxious collection of financiers and
money changers, the kind of social parasites whom Jesus had symbolically driven
from the temple. The promise of the American Revolution, at least as Madison
understood it, was falling into enemy hands.
The debate over
assumption, which followed on the heels of the vote on funding, only
intensified the sense of betrayal and made matters worse. Again, on the face of
it, Hamilton’s proposal looked seductively simple. The federal government
would take on—which is to say, assume—all the accumulated debts of
the states, most of which had their origins during the war. Instead of thirteen
separate ledgers, there would be but one, thereby permitting the fiscal policy
of the new nation to proceed with a coherent sense of its financial obligations
and the revenues required to discharge them. On February 24 Madison rose from
his seat in the House to suggest that the matter was a good deal more
complicated than it might appear at first glance, and that this apparently
sensible proposal called “assumption” struck him as an alarmingly
sinister idea.
If you read Madison’s speeches against assumption
in the House during the spring of 1790, you get the impression that his core
objections were economic. Most of the southern states, Virginia among them, had
paid off the bulk of their wartime debts. The assumption proposal therefore did
them an injustice, by “compelling them, after having done their duty, to
contribute to those states who have not equally done their duty.” A
subsidiary theme, also economic in character but implying grander suspicions,
called for what he termed “settlement” to precede assumption. As
Madison expressed it, “I really think it right and proper that we should
be possessed of the ways and means by which we should be most likely to
encounter the debt before we undertake to assume
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