Current events leave no doubt. American politics and public opinion are polarized and divided. Rarely, it seems, are heated issues resolved by compromise. Yet, key compromises have contributed to the nation’s formation and to its development.
They are achieved when, and only when, one or both adversaries are willing to make concessions. A case in point: The Compromise of 1790, sometimes called “The Jefferson-Hamilton Compromise.”
Grounds for The Compromise of 1790 appeared early in President George Washington’s first term. Following his inauguration in New York, City on April 30, 1789, Alexander Hamilton became Secretary of the Treasury. Thomas Jefferson was appointed Secretary of State.
The new government soon faced issue number one: government finance — state and federal. Congress asked Hamilton to submit a plan for managing the public debt. Hamilton responded with his “Report on the Public Credit.” It calculated the debt at $77.1 million. More than half was domestic debt, largely caused by the Revolutionary War. However, $25 million was debt of the several states, also a legacy of the War.
Hamilton and President Washington agreed; if the new government were going to accept the power it must assume responsibility for public revenues. A main feature of their plan included federal assumption of the state debt. Opposition was immediate, vigorous and sustained.
Leading the opposition were Thomas Jefferson and Congressman James Madison. The two Founders argued that assumption of state debt concentrated too much power in the federal government — a holdover sentiment from the Revolution and their cordial hatred of the British King.
Pending before Congress at the time were proposals for the permanent location of the federal capitol. That issue, too, was heavily contested.
On both landmark measures, Congress came to an impasse. In mid-June 1790, Jefferson and Hamilton appeared together while awaiting their appointments with President Washington. Jefferson recalled being struck by Hamilton’s haggard appearance. He would later describe Hamilton’s attitude as mournful and dejected. The Secretary informed Jefferson that his plan for financial recovery was in jeopardy, caused primarily by opposition from the esteemed James Madison. According to Jefferson, the dejected Hamilton stated: “The new government and the national union will soon collapse.”
Sensing he might be of help, Jefferson proposed a dinner for all three politicians. He suggested discussions of their differences over good food in a cordial atmosphere. Invitations were received and accepted and the dinner was held, in Jefferson’s New York residence on or about June 20, 1790.
No record exists of the dinner table conversations. It is undisputed, however, the parties agreed to compromise their positions: First, the national capitol would move south to a location on the Potomac River; Following an accounting, the federal government would assume the state debt; Madison agreed not to rise in opposition when debt assumption reached floor of the House, although he would not vote to approve it.
On July 9, the House passed the Residence Act by a vote of 39 to 29, establishing the U.S. Capitol in Washington, D.C. (The Act authorized a temporary capitol in Philadelphia.) On July 26, the House, by a vote of 34 to 28, passed the Assumption Bill authorizing the government’s payment of state debt.
Once in place, Hamilton’s financial plan produced the benefits he anticipated. Public credit was hastily restored. Government bonds were soon selling at prices even or above par — at home and abroad.
And, it did not end there. Hamilton persuaded Congress to set up a mint and create a safe currency. He proposed a national bank that was duly chartered.
(Sources: Time Magazine, May 26,2025, p12; Founding Brothers, Joseph J.Ellis, 2000, Random House, New York, pp, 48,49; A New Gilded Age, James M. Thomas, 2017, Dorrance Publishing Company, Pittsburg, PA, pp 118120.)
