1789 history homework!?

Question

it's about paying the national debt that occured after the American Revolution. alexander hamilton had to choose how to repay all the bonds that were issued. however, so much money had been printed that it lost almost all its value. so, people were selling their bonds to speculators for less than the regular price.
there were three ways to pay it off:
1. pay them at face value. the speculators would get a huge profit
2. market value - theyd get the price they thought theyd get
3. discrimination, thought of by madison.

number three is the one i'm having a hard time understanding.my packet says "his plan was iamed at helping the original holder of the bond, who had sold it. he would get the difference between face value (the $100) and market value ($20). the original holder who kept the bond would get face value and the speculator would get market value."
so does the original holder get the difference between the two numbers or does he get face value! it contradicts! please help!

Answer 1

The original holder of the bond would get the nominal value (face value) of the bond. Speculators who bought these bonds would get the market value -- the difference between the face value (which is what they would have paid the original holder) and the market value (which is what the bond is worth on the day it is sold).

Madison thought this was a fair plan - a win win situation for both the original owner and the speculator. Previously, it usually was the case that the original owners of the bonds (farmers, soldiers, etc.) would sell them at bargain prices because they needed the cash. Wealthy speculators would swoop in and buy them up and make a huge profit. The rich would get even richer this way. Madison thought that the discrimination method was a fairer system for everyone.

Answer 2

Here you are. Read this piece I am providing and it will spell out what you need.

How exactly the debt should be handled was an inflammatory issue. During the Revolution, many affluent citizens had invested in government paper, and many veterans had been paid with IOUs that plummeted in price after they were demobilized. In many cases, these upright patriots, either needing cash or convinced they would never be repaid, had sold their certificates to speculators for a pittance. Under the stimulus of his funding scheme, with government repayment guaranteed (albeit at lower interest rates), Hamilton expected these bonds to soar from depressed levels and regain their full face value.

This pleasing prospect, however, presented a political quandary. If the bonds appreciated, should speculators pocket the windfall? Or should the money go to the original holders -- many of them brave soldiers -- who had sold their depreciated government paper years earlier? Hamilton knew the answer to this riddle would define the future character of American capital markets. Doubtless taking a deep breath, he wrote that "after the most mature reflection" about whether to reward original holders, he had decided against this approach as "ruinous to public credit." Among other things, such "discrimination" in favor of former debt holders was simply unworkable. The government would have to track them down, ascertain their sale prices, and trace all intermediate investors who had held the debt before it was bought by current owners -- an administrative nightmare, only made worse by missing paperwork.

In taking this stand against "discrimination," Hamilton established the legal and moral basis for securities trading in America: the notion that securities are freely transferable and that buyers should assume the right of profit or loss from their transactions. The principle that government couldn't interfere retroactively with a financial trade was so vital, Hamilton thought, as to outweigh short-term expediency, even if this meant a one-time windfall for speculators. It was a courageous stand but one that endowed Hamilton with an almost satanic aura among his critics.

Answer 3

the original holder gets face value as the total

so if the original holder still has it, he gets the whole face value

if the original holder sold it, he gets the difference between face and whatever he sold it for

Answer 4

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