USA HISTORY

Detailed explanation-1: -The assumption issue had been debated in Congress for months. Northern members supported it because their debts were largely unpaid but Southern members, including Madison, opposed it because southern states had paid off a significant portion of their debt.

Detailed explanation-2: -Hamilton’s plan called for the government to repay both federal and state debts. He wanted the government to buy up all the bonds issued by both the national and state government before 1789. He then planned to issue new bonds to pay off the old debts.

Detailed explanation-3: -His motive was as much political as economic. Through payment by the central government of the states’ debts, he hoped to bind the men of wealth and influence, who had acquired most of the domestically held bonds, to the national government.

Detailed explanation-4: -Opposition to Hamilton’s idea came from political rivals Thomas Jefferson and James Madison who believed the plan gave too much power to the Federal Government. Furthermore, their home state of Virginia had already paid half of its individual debt.