Some states, he noted, had paid their debts by ignoble means. New York, for instance, had reneged on interest payments to drive down the market value of its debt, making it cheaper for the state to buy it back. Hamilton also made a subtle, sophisticated argument that without assumption, indebted states would have to raise their taxes, while healthy states would lighten their tax loads. This would trigger a dangerous exodus of people from high-tax to low-tax states, producing "a violent dislocation of the population of particular states.
( Ron Chernow )
[ Alexander Hamilton ]
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