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Virginia’s Remonstrance Against the Assumption of State Debts 16 December 1790 - Lance Banning, Liberty and Order: The First American Party Struggle 
Liberty and Order: The First American Party Struggle, ed. and with a Preface by Lance Banning (Indianapolis: Liberty Fund, 2004).
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Virginia’s Remonstrance Against the Assumption of State Debts 16 December 1790
Though Madison and Jefferson believed that they had struck a necessary bargain, and one which rendered the details of the assumption fairer to Virginia, the alterations in the plan—even when combined with the decision that the seat of government would move to the Potomac—were not enough to reconcile other Virginia politicians. Issuing from a committee that included Henry Lee and Patrick Henry, the remonstrance of the state legislature provoked Alexander Hamilton to his earliest surviving denunciation of opposition to his plans.
The General Assembly of the Commonwealth of Virginia to the United States in Congress assembled, represent:
That it is with great concern they find themselves compelled, from a sense of duty, to call the attention of Congress to an act of their last session, entitled “An act making provision for the debt of the United States,” which the General Assembly conceives neither policy, justice, nor the Constitution warrants. Republican policy, in the opinion of your memorialists, could scarcely have suggested those clauses in the aforesaid act which limit the right of the United States in their redemption of the public debt. On the contrary, they discern a striking resemblance between this system and that which was introduced into England at the Revolution—a system which has perpetuated upon that nation an enormous debt, and has, moreover, insinuated into the hands of the Executive an unbounded influence, which, pervading every branch of the Government, bears down all opposition, and daily threatens the destruction of every thing that appertains to English liberty. The same causes produce the same effects.
In an agricultural country like this, therefore, to erect and concentrate and perpetuate a large moneyed interest is a measure which your memorialists apprehend must, in the course of human events, produce one or other of two evils: the prostration of agriculture at the feet of commerce, or a change in the present form of Federal Government fatal to the existence of American liberty.
The General Assembly pass by various other parts of the said act which they apprehend will have a dangerous and impolitic tendency and proceed to show the injustice of it as it applies to this Commonwealth. It pledges the faith of the United States for the payment of certain debts due by the several states in the Union, contracted by them during the late war.
A large proportion of the debt thus contracted by this state has been already redeemed by the collection of heavy taxes levied on its citizens, and measures have been taken for the gradual payment of the balance, so as to afford the most certain prospect of extinguishing the whole at a period not very distant. But, by the operation of the aforesaid act, a heavy debt, and consequently heavy taxes, will be entailed on the citizens of this Commonwealth, from which they never can be relieved by all the efforts of the General Assembly whilst any part of the debts contracted by any state in the American Union, and so assumed, shall remain unpaid; for it is with great anxiety your memorialists perceive that the said act, without the smallest necessity, is calculated to extort from the General Assembly the power of taxing their own constituents for the payment of their own debts in such a manner as would be best suited to their own ease and convenience.
Your memorialists cannot suppress their uneasiness at the discriminating preference which is given to the holders of the principal of the Continental debt over the holders of the principal of the state debts, in those instances where states have made ample provision for the annual payment of the interest and where, of course, there can be no interest to compound with the principal, which happens to be the situation of this Commonwealth.
The continental creditors have preferences in other respects which the General Assembly forbear to mention, satisfied that Congress must allow that policy, justice, and the principles of public credit abhor discrimination between fair creditors.
Your memorialists turn away from the impolicy and injustice of the said act and view it in another light, in which, to them, it appears still more odious and deformed.
During the whole discussion of the federal constitution by the convention of Virginia, your memorialists were taught to believe “that every power not granted, was retained;” under this impression, and upon this positive condition, declared in the instrument of ratification, the said Government was adopted by the people of this Commonwealth; but your memorialists can find no clause in the constitution authorizing Congress to assume debts of the states! As the guardians, then, of the rights and interests of their constituents; as sentinels placed by them over the ministers of the Federal Government, to shield it from their encroachments, or at least to sound the alarm when it is threatened with invasion; they can never reconcile it to their consciences silently to acquiesce in a measure which violates that hallowed maxim—a maxim, on the truth and sacredness of which, the Federal Government depended for its adoption in this Commonwealth. But this injudicious act not only deserves the censure of the General Assembly, because it is not warranted by the constitution of the United States, but because it is repugnant to an express provision of that constitution. This provision is “that all debts contracted, and engagements entered into, before the adoption of this constitution, shall be as valid against the United States, under this constitution, as under the Confederation;” which amounts to a constitutional ratification of the contracts respecting the state debts in the situation in which they existed under the Confederation; and, resorting to that standard, there can be no doubt that, in the present question, the rights of states, as contracting parties with the United States, must be considered as sacred.
The General Assembly of the Commonwealth of Virginia confide so fully in the justice and wisdom of Congress, upon the present occasion, as to hope that they will revise and amend the aforesaid act generally and repeal, in particular, so much of it as relates to the assumption of the State debts.
1790, December 23.
Agreed to by the Senate
The Constitution and the National Bank
Hamilton’s Second Report on Public Credit, delivered to the third session of the First Congress, recommended the creation of a national bank. A semipublic institution, modeled on the Bank of England (one-fifth of its stock would be held by the federal government, which would appoint a minority of its directors), the Bank of the United States would hold an exclusive charter from Congress and act as an adjunct to the Treasury in several respects. It would hold the government’s funds, shift them around the country on request, and serve as a ready source of short-term loans. In exchange for these services, it would be authorized, as well, to make private loans in notes that were to be receivable for taxes and payable in specie on demand. With an initial fund of $10 million—four times the capital of America’s three existing banks, a sum exceeding all the country’s coin, and an amount sufficient to permit some regulation of the country’s other lenders—the bank would concentrate the capital required for major commercial ventures. Circulating through the country, its notes would be a valuable resource for merchants, providing the nation, for the first time in its history, with an ample, stable substitute for cash. Starting with only $500,000 in specie, it would be capable quite safely of extending its commitments to the limits of its capitalization. The private holders of the bank stock were to pay in four installments: one-fourth in specie, three-fourths in government certificates of debt. They would be nearly guaranteed a good return on their investment, both from private loans and from the interest payments on the government’s bonds. This proposal, though, provoked an even fiercer resistance than had funding and assumption, since opponents saw it not only as objectionable in itself, but as a violation of the new Constitution.