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fraud, critics said. Speculators with money and inside information—for surely Hamilton was in cahoots with Duer and other New York speculators—were raking in immense unearned profits at the expense of patriotic republicans who had been tricked out of their property. Assumption especially angered the South. Northern states owed a disproportionate share of the debts Hamilton proposed to take over, meaning they stood to gain a financial windfall at the expense of southern taxpayers. Besides, northern speculators had by now bought up so much of the outstanding southern state debt that they would pocket the real profits of assumption—again at southern expense.

In Congress, James Madison of Virginia rallied opponents of Hamilton’s proposals with two of his own: no assumption of state debts at all, and no funding of the national debt without making a distinction between the original and subsequent holders of government paper. The debate over Madison’s alternatives went on, inside Congress and out, for weeks. Toward the end of February, the House defeated his discrimination idea. Assumption failed a preliminary vote in mid-April. By early June, while more or less certain his funding scheme would get through, Hamilton was increasingly fearful that assumption wouldn’t survive a second and decisive ballot.

It was at this juncture, Jefferson later recalled, that Hamilton offered a compromise. The two men chanced to meet one day in the street, just outside the president’s house, Hamilton appearing “sombre, haggard, & dejected beyond despair, even his dress uncouth & neglected.” Hamilton begged Jefferson to reassure southern congressmen that assumption was vital to the well-being of the republic; in return, he would round up enough northern votes to move the national capital to a site on the Potomac River.

Anxious to get the government out of the clutches of New York “moneyed men,” Jefferson suggested that Hamilton and Madison join him for dinner the next evening at his house on Maiden Lane. There the bargain was sealed.2

At the Poughkeepsie convention, New York Federalists had more or less promised that the federal government would remain in New York if the Constitution were ratified. Now, shocked and embarrassed by this latest turn of events, they geared up for a fight to keep the federal government in the city as long as possible (or, failing that, to locate the federal district along, say, the Susquehanna, or even in Baltimore). Hamilton was adamant, however. His financial program, he told Senator Rufus King, was “the primary object; all subordinate points which oppose it must be sacrificed.” King and the others did as they were told. Early in July, Congress voted to build a permanent capital in a ten-mile-square federal district on the Potomac; for the remainder of the decade, pending completion of the necessary construction, the government would return to Philadelphia. In due course, both houses approved assumption as well as funding, completing Hamilton’s victory.

On August 12, 1790, Congress met for the last time in Federal Hall. Two weeks later, on August 30, Washington stepped into a barge moored at Macomb’s Wharf on the Hudson and left Manhattan, never to return. Abigail Adams vowed to make the best of Philadelphia but knew that “when all is done, it will not be Broadway.”

“Cong_ss Embark’d on board the Ship Constitution,” a New Yorker’s satirical view of the decision to move the federal capital to the Potomac. It is the Devil who lures the ship of state onto the rocks, but his words—“This way, Bobby”—echo the widespread belief that Robert Morris and other Pennsylvanians were behind the move. (Library of Congress)

New Yorkers watched the federal departure with both regret and irritation. “No more Levee days and nights, no more dancing parties out of town thro’ the summer, no more assemblies in town thro’ the winter,” lamented one resident. Everyone blamed the Pennsylvanians—to which Senator William Maclay, who had never liked New York anyway, testily replied that its residents “resemble bad school-boys who are unfortunate