CHAPTER FIFTY-TWO

Capital Matters

AFTER MOST OF THE STATES had ratified the Constitution by the summer of 1788, James Madison had broached to George Washington a topic that engaged both their emotional loyalties and their financial interests: the location of the future capital. Aware that New York and Philadelphia would emerge as serious candidates, Madison hoped the banks of the Potomac River might ultimately house the federal government. As flourishing population growth on the western frontier enhanced the prospects for a southern capital, Madison believed that time was on the South’s side. Washington’s red-hot enthusiasm for the Potomac had scarcely cooled, and he still embraced the river as the ideal portal to the interior and hence the optimal site for the capital. The Potomac was the natural “center of the union,” he had explained to Arthur Young. “It is between the extremes of heat and cold . . . and must from its extensive course through a rich and populous country become in time the grand emporium of North America.”1

Since it would exert far-reaching influence, the choice of venue for the capital was fraught with controversy. Most obviously, it would mean a commercial windfall for nearby property owners; Madison and Henry Lee scooped up land along the Potomac to profit from any future capital. The political leanings of the surrounding region would affect legislators isolated from constituents back home. Jefferson and other agrarians also wanted a capital remote from the noxious impact of large cities and northern manufacturing. Finally, many southern legislators preferred a southern city where they could transport their slaves without being harassed by abolitionists. So vexed was the capital question that Madison almost despaired of a satisfactory solution. “The business of the seat of government is become a labyrinth for which the votes printed furnish no clue,” he lamented in June 1790.2

The deadlock over the issue coincided with a stalemate over Hamilton’s plan to have the federal government assume state debts. Washington noted that the two debates had ensnared Congress in ceaseless rancor, telling David Stuart that June that “the questions of assumption, residence, and other matters have been agitated with warmth and intemperance, with prolixity and threats.”3 Washington’s fantasy of nonpartisan civility in politics was being rapidly eroded by growing polarization along north-south lines. Still recuperating from illness, he found it easy to stay aloof from the debates on assumption and the capital, but he clearly supported Hamilton’s objectives, echoing his treasury secretary’s belief that the “cause in which the expenses of the war was incurred was a common cause” and should be borne by the federal government.4 It was also universally known that he favored a Potomac capital. “It is in fact the interest of the President of the United States that pushes the Potomac,” William Maclay protested in his diary. “He by means of Jefferson, Madison . . . and others urges this business.”5

In early June 1790 the House enacted Hamilton’s funding bill but omitted his contentious plan to assume state debt. Maclay, among others, spied a political agenda lodged deep in the proposal, which would give the federal government a “pretext for seizing every resource of government and subject of taxation in the Union.”6 Madison was enraged that states that had mostly paid their debts—Virginia, Maryland, and Georgia—would subsidize profligate states that had not. Complicating matters was the incipient feud between Hamilton and Jefferson. Now detecting signs of monarchy sprouting everywhere, Jefferson associated a funded debt with the British Empire and, despite his presence in the cabinet, secretly joined forces with Madison against Hamilton. He was chagrined by Hamilton’s decision to reward speculators in government debt, whom he saw as “fraudulent purchasers of this paper . . . filched from the poor and ignorant.”7

The twin debates over assumption and the capital grew so venomous that it seemed the Union might dissolve in acrimony. It was against this backdrop that, on June 19, Jefferson ran into Hamilton before Washington’s residence on Broadway. Usually Hamilton cut a dapper figure, but Jefferson found him strangely transformed by the hubbub surrounding him. “His look was somber, haggard, and dejected . . . Even his dress uncouth and neglected,” Jefferson wrote.8 For half an hour the two men paced before Washington’s door as Hamilton expatiated on the dangerous disunity in Congress, the urgent need for cabinet solidarity, and the malaise threatening the new government. The upshot was that, the next day, Jefferson hosted a dinner for Hamilton and Madison at his lodgings at 57 Maiden Lane. During this famous meal, in an apartment adorned with engravings of Washington, a grand deal was brokered. Jefferson and Madison agreed to aid passage of the assumption bill, while Hamilton promised to lobby the Pennsylvania delegation to endorse Philadelphia as the temporary capital and the Potomac as its final destination. For Hamilton, who favored New York as the capital, it was a bitter pill to swallow, but he viewed the assumption of state debt as the crux of federal power. Only belatedly did Jefferson, a states’ rights advocate, realize his colossal strategic error, grumbling to Washington that he had been royally “duped by Hamilton” and saying that “of all the errors of my political life, this has occasioned me the deepest regret.”9 He believed that Hamilton, to consolidate federal power and promote a northern financial cabal, wanted to make the federal debt so gigantic that it would never be extinguished.

In July Congress approved the Residence Act, naming Philadelphia as the temporary capital for ten years, followed by a permanent move to a ten-mile-square federal district on the Potomac by December 1, 1800. There is no firm evidence that Washington was consulted about the dinner deal hatched by Hamilton, Jefferson, and Madison. Nevertheless everybody knew that he had large landholdings along the river, was involved in its improvement, and would benefit immensely from the decision. In his diary, Maclay fumed that Washington stood behind the dinner deal: “The President of the U.S. has (in my opinion) had great influence in this business.”10 He saw Washington as a tool manipulated by the dexterous Hamilton, saying that “the president has become in the hands of Hamilton the dishclout [dishcloth] of every dirty speculation, as his name goes to wipe away blame and silence all murmuring.”11

The Residence Act had not selected the precise spot on the Potomac for the capital, merely specifying a sixty-five-mile stretch of the river and granting Washington the power to choose the site. He would officially supervise the federal district, appointing and overseeing three commissioners charged with surveying and constructing the new city, and he was to exert an incalculable influence on its development. In a proclamation that January that shocked nobody, he announced the choice of a site just north of Mount Vernon. There was muted grumbling about Washington’s conflict of interest here. Long after Washington died, John Adams stated baldly that Washington had profited “from the federal city, by which he raised the value of his property and that of his family a thousand percent at an expense to the public of more than his whole fortune.”12 Washington was also accused of high-handed behavior in arrogating the right to pick the spot instead of yielding to his three commissioners. Maclay seemed overwrought: “I really am surprised at the conduct of the president . . . To take on him to fix the spot by his own authority, when he might have placed the three commissioners in the post of responsibility, was a thoughtless act.”13 The controversy shattered some magic spell that had spared Washington from criticism, and people no longer felt muzzled about challenging him directly.