Diagram of the British slave ship Brookes, published in 1788. Public domain, British Library.
Hamilton honored the old war certificates for their full face amount, including paper speculators had bought cheap.
A veteran who had already sold his certificate watched the buyer receive federal bonds for the whole sum.
A household that had kept its paper, and could meet its taxes, held a promise that was finally being funded.
Men who had bought certificates below face, and state creditors brought in by assumption, received new federal bonds for the full amount.
In January 1790 Alexander Hamilton proposed to fund the domestic debt at its face amount, to assume the state debts, and to support new federal bonds with federal revenue.
James Madison wanted original holders preferred to later buyers, and Hamilton refused, because he wanted the market to trust the promise itself.
Congress adopted the plan, and later that year the capital was placed on the Potomac as assumption was settled.
Alexander Hamilton, Report on the Public Credit, 14 January 1790