It would be well to quote the entire paragraph. You left off this part for some odd reason"
"Mr. Smith founds his claim upon his birthright; his ancestors were among the first settlers of that colony."
That birthright (what most acknowledge as natural citizenship) is dependent on jus sanguinis, not just place of birth.
I left off a lot that was irrelevant. Madison makes clear that the jus sanguinis is irrelevant in his opinion: “place is the most certain criterion; it is what applies in the United States; it will therefore be unnecessary to investigate any other.”
I think that’s pretty clear.