Final answer:
The contentious issue of federal assumption of state debts during the early years of the U.S. involved debate over the fairness of taxing states that had settled their debts to pay for those that hadn't. Figures like James Madison opposed this approach due to concerns about state sovereignty and federal overreach.
Step-by-step explanation:
The civil discourse surrounding the federal assumption of state debts during the early years of the United States reflects a significant historical debate. The economic situation after American independence was complex, especially concerning public finances. The fledgling federal government lacked sufficient revenue to cover public expenditures, and the national debt was high. This issue was further complicated as states differed in their financial status, with some having paid off their debts while others had not. James Madison and others opposed the idea of the federal government assuming state debts because it would place an unfair burden on states that had already paid their debts, such as Virginia, Maryland, and Georgia. Their citizens would be taxed again to cover the liabilities of other states, including Massachusetts, Connecticut, and South Carolina.
The underlying contention was not merely fiscal but was tied to broader concerns about the balance of power between the federal government and the states. Some feared that a strong central government would encroach upon state sovereignty. The issue of debt assumption illustrates the early financial policy struggles and the complexities of forming a stable economic foundation for the republic.