The dinner table bargain of June 1790 was supposedly a deal arranged by Thomas Jefferson between James Madison and Alexander Hamilton to locate the U.S. capital on the Potomac River in exchange for the passage of a bill authorizing the national government to assume state debts. Jefferson's recollection of the dinner, which is the only explicit discussion of the "bargain," does not fully explain the ongoing and complicated negotiations surrounding the gathering. In all likelihood, there were several meetings between the different parties and the final resolution went beyond the location of the capital in exchange for the assumption of state debts. Although the U.S. Constitution empowered Congress to "exercise exclusive Legislation" over "a seat of government" of not more than 10 square miles to be purchased from the state in which it was located, the document did not stipulate where that capital should be. Each region sought to claim the capital for its own. Assumption of state debts also divided the states since some of them--for instance, Virginia and other states had already paid off a significant portion of their debt--objected to Hamilton's plan because it would mean they would have to pay other states' debt.

The "bargain" therefore had to take account of a number of interests. The residency bill sought to placate the middle states by promising to have the capital in Philadelphia for 10 years before it was moved to the Potomac, near the home of George Washington. The Pennsylvanians vainly hoped that once the capital was established in their state, it would be almost impossible to move. The assumption part of the deal focused more exclusively on Virginia's concerns and included special consideration of its contribution to paying the state debts. The Virginians believed that originally the Treasury Department would assume $3 million of Virginia's debt but then tax the state $5 million--a net loss of $2 million. Instead, Hamilton agreed to assume $3.5 million in state debt and tax Virginia the same amount, which meant, as Jefferson explained many years later, "Being therefore to receive exactly what she is to pay," Virginia "will neither win nor lose by the measure." With the middle states mollified at least temporarily, and Virginia's interest guarded, Madison still voted against the debt assumption, but he did not press the case, allowing others to pass the measure into law.

Bibliography:

Joseph J. Ellis, Founding Brothers: The Revolutionary Generation (New York: Knopf, 2000)

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