Many of the debts were in the form of government notes. The notes promised to pay someone for supplying food, clothing and weapons to the rebel army. Some promised to pay soldiers for joining the army.

The notes, however, were really worth nothing. The wartime Congress had no money. People who got them lost hope of ever getting repaid. So they sold them to anyone willing to pay even part of the value.

Hamilton's plan would repay the full value of the notes to those who owned them last. Hamilton believed that those who bought the notes had a right to earn money from them. He said these men took a chance that the worthless notes would be worth something, someday.

Congressman James Madison of Virginia protested. He said the people who bought the notes at low cost should be paid, but not in full. Some of the money, he said, should go to those who got the notes in exchange for supplies or services.

Madison made an emotional speech in Congress. He described the situation of former soldiers forced by hunger to sell their government notes for almost nothing. He noted that the Union was established to protect the people against such injustice.

Hamilton answered that the purpose of his plan was greater than simply paying debts. He said it was a way to build up the nation's credit so it could borrow money more easily in the future.

Many members of Congress felt sorry for the poor soldiers and their families. Yet they voted against Madison's proposal and supported Hamilton's plan.