Why did Alexander Hamilton think it was important to pay off the government bonds and why did Madison oppose the plan?

Answer 1

Hamilton hoped to strengthen the American economy by paying off the national debt. He thought it was very important for America to establish good credit with foreign countries so America would be able to secure loans in the future. His plan called for the issuing of government bonds to help pay the debt. The US would pay the interest on these bonds as they matured. This gave many wealthy people who bought up the bonds direct interest in the success of the new government as success would ensure they'd make profit on their investment. Madison challenged part of this plan. While he eventually agreed it was a good idea to pay off foreign debts, he disagreed with Hamilton's idea of the federal government assuming any remaining state debts. Madison believed this gave way too much power to the federal government and penalized states such as his home state of Virginia, which had already repaid most of their debt. This marked an ideological change for Madison, who to this point had been a supporter of a strong national government.