Under the proposed constitution, judicial power was to be vested "in one supreme court, and in such inferior courts as the congress may from time to time ordain and establish."
All agreed on the necessity of one supreme court with final jurisdiction, but some took the view that it should not constitute a separate branch of government. Rather, it should be a branch of the legislature since it would be "construing" laws. In Britain, for example, the court of last resort was the House of Lords, a legislative body, a feature that had been imitated in the constitutions of a number of states.
On this point Hamilton replied that members of the legislature were not chosen primarily for their qualifications to sit as judges, and were always subject to party divisions, so that the "pestilential breath of faction may poison the fountains of justice."
As to the power of instituting inferior federal courts, this would enable the national government to authorize in every state or sizeable district a tribunal competent to deal with matters of national jurisdiction. The inferior federal courts would be a screen, as it were, to keep all cases involving federal law from going directly to the Supreme Court. Many cases could be satisfactorily adjudicated in the lower courts.
Some were asking why the same purpose could not be accomplished by using already established state courts, without elaborating federal machinery. Hamilton admitted that there were several different answers to this.
State courts, of course, should be allowed the utmost latitude in the field of their jurisdiction. But they were not competent to sit in judgment on national laws and interpretations of the Constitution. Their decisions might often have a state bias. But the Constitution would not trample on the rights and powers of state courts, or county courts, within the limits of their jurisdiction.
Hamilton made a convincing argument here against the objection that there should be no inferior federal courts, on the grounds that this would undermine and usurp the authority of state courts. Why not let state courts handle federal questions arising within their jurisdictions? Because, said Hamilton, state courts would be likely to be state-biased or regionally oriented in judging national issues.