126 ALEXANDER HAMILTON 



of the problem was to decide what was to be done 

 with the mass of public debt already incurred. There 

 were three kinds of such debt. First, there were the 

 sums due to foreign governments for money lent to 

 the United States for carrying on the War of Inde- 

 pendence. Everybody, agreed that this class of debts 

 must be paid to the uttermost farthing. Secondly, 

 there were the debts due to American citizens who 

 had invested their money in Continental securities. 

 Hamilton's proposal that these should be paid in full, 

 interest as well as principal, met with some opposition. 

 In the chaos which had hitherto prevailed, such 

 securities had fallen greatly in value, and the first 

 glimmer of a better state of things showed that specula- 

 tors had been buying them up in hopes of a rise. It 

 was now argued that, by redeeming all such securities 

 at their full value, the government would be benefiting 

 the speculators rather than repaying the original in- 

 vestors. But Hamilton understood clearly that, with 

 nations as with individuals, credit can be maintained 

 only by paying one's debts in full, without asking what 

 is going to become of the money. After some dis- 

 cussion this view prevailed in Congress. 



Over the third class of debts there was a fierce dis- 

 pute. These were the debts owed by the several state 

 governments to private citizens. Much distress had 

 ensued from the inability of the states to discharge 

 these obligations. The discontent in Massachusetts, 

 which had culminated in Shays's rebellion, was partly 

 traceable to such a cause. On every side creditors 

 were clamorous. Nothing would go so far toward 

 strengthening the new government as to allay this 

 agitation and awaken a feeling of confidence in busi- 



