A Thought on the James Madison Problem

The best attempt to reconcile the federalist and Jeffersonian James Madison is Gordon Wood’s Is There a “James Madison Problem”? Unfortunately, that effort is only a fairly brief essay. The devil, however, is in the details. Consider, for example, the following from Ralph Ketcham’s biography:

In drafting the full financial plan submitted to [the Continental] Congress on March 6, 1783, Madison also included a provision that the debts of the states resulting from the “reasonable expenses” of war should in justice and equity be assumed by the general government.

Why, then, did Madison go crazy when Alexander Hamilton introduced just such an assumption of state debts plan seven years later?

On the other hand, I find another claimed inconsistency less compelling – or at least Ketcham’s description is confusing. Ketcham states:

In a plea that would haunt him seven years later, when he opposed Hamilton’s plan for funding the public debt, [Madison] rejected any discrimination between the various kinds of creditors; all had lent in good faith and any distinctions would be “equally unnecessary and invidious.”

It’s the “all had lent in good faith” language that has me confused. As I understand it, Madison did not object to Hamilton’s plan because it treated all original lenders equally. The heart of his objection was that the federal government should discriminate between original “lenders” and second-generation holders who had subsequently purchased notes and debts for less than their face amount.