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Excerpt from "Financial Founding Fathers"...

For those who are interested in how Hamilton dealt with the scripts and national debt.

Making a proposal was one thing. Getting it through Congress was quite another. Americans were generally agreed that the portion of the national debt owed to foreigners, the foreign national debt, should be paid in full. They differed, however, on the best way to service or pay off those debts. The question of the national debt owed to citizens, the domestic national debt, was even stickier. Some, including Madison, wanted to discriminate against most public creditors by compensating the original holders of the debt in lieu of the current owners. Much of the national debt was composed of promissory notes given by field officers to soldiers and by commissary officers to farmers. The soldiers and farmers had often immediately sold the notes at steep discounts for cash or goods. Madison wanted to make the soldiers and farmers whole, at the expense of those who subsequently purchased the notes.

Hamilton eventually crushed the discrimination argument with his usual barrage of logic and first principles. The debt instruments were simply a species of property, the value of which fluctuated with the government's fortunes and interest rates. They were, moreover, fully negotiable instruments. In other words, exchanging them was perfectly legal. The original holders had not been coerced into selling and had received a valuable consideration for the ownership of the obligations. Only the current owners of the bonds, Hamilton concluded, could be compensated. For those who could not follow his reasoning, Hamilton offered the Continental Congressional resolution of April 26, 1783, authored ironically enough by Madison, that solemnly pledged that there would be no discrimination against those who obtained government debt in the secondary market.