By the Act, the newly-inaugurated federal government under the U.S. Constitution assumed and thereby retired the debts of each of the individual colonies in rebellion and the bonded debts of the States in Confederation, which each state had individually and independently issued on its own "full faith and credit" when each of them was, in effect, an independent nation.
With the formation of the new government in 1789 under the recently-adopted U.S. Constitution, the settlement of the Revolutionary War debt was a matter of prime importance.
As a result, the first House of Representatives directed the first Secretary of the Treasury, Alexander Hamilton, during the presidential administration of George Washington, to draw up a plan for the support of public credit.
Finally, the funding program resulted in the settlement of accounts between the states and the national government completed in 1793.
Each state was credited with the amount it spent during the war and debited for sums received from the federal government.