June 20, 1790—The reigning spirit of Washington is not the first American President but the longtime host of TV’s “Let’s Make a Deal,” Monty Hall. The origin of our nation’s capital, its financial structure—even, arguably, the federal system itself—bears witness to this point, as Thomas Jefferson
secured a grand bargain between Alexander Hamilton and James Madison during one of the most consequential dinners in American history.
One of my high school history teachers once chuckled over an ingenious but incorrect answer submitted by a nonplussed student on a recent test. “Logrolling
,” he read aloud to our class, was “the process of floating a piece of lumber down a river.”
In actuality, the term—or at least how it applied in this context—meant mutual compromises that facilitated legislation. In other words, trading votes—or one hand washing the other.
The deal sealed between Alexander Hamilton
and James Madison
, our teacher noted, was logrolling par excellence. Most historians would agree with him. Adam Goodheart, for instance, has even called the repast at Jefferson’s apartment on New York’s Maiden Lane one of “10 Days That Changed History
Daniel Patrick Moynihan, I remember reading, bemoaned the increasing need of Congressmen to raise money for re-election back in their home states. Members tended to open up more, his thinking went, when they had a chance to down some sherry with each other.
Seemingly proving this point: Sharing Secretary of State Jefferson’s legendary hospitality, his fellow Virginian, Madison, and Hamilton—already emerging, over at the Treasure Department, as the chief member of George Washington’s Cabinet—temporarily put aside differences that were already looming as crucial in order to get something of what they wanted.
Hamilton was assured that Jefferson and Madison would not throw their weight against his plans for the federal government to assume the staggering Revolutionary War debts of the 13 original states—a cause near and dear to the Northern states, who had not yet gotten around to paying these off.
In return, Hamilton gave up his dream of making New York the permanent political as well as financial and media capital of the U.S. by backing Southerners’ wish that it be located on the banks of the Potomac River—a location below the Mason-Dixon Line, between two slave states.
Well, that’s how the story goes, anyway—only the whole thing sounds just a little too cut and dried. It comes principally from Jefferson himself, who, like Winston Churchill, was determined not merely to make history but to influence its interpretation through his own writing.
Before he died at age 83, Jefferson had not only presented his necessarily biased version of the writing of the Declaration of Independence, but also of the denouement of debates over debt assumption and the nation’s capital. Hamilton, of course, was dead 21 years before, courtesy of his duel with Jefferson’s despised Vice President, Aaron Burr, so he never had the chance to tell his version of events.
Had Hamilton lived, we surely would have had a far different tale—though not, be it said, the definitive word on the subject, either. It’s still an open question whether the secret conversations and silent understandings that took place outside Maiden Lane, before and after the dinner, would have been related. But it’s a virtual certainty that the other side—Northern, Federalist—would have been expressed logically and pungently.
First, let’s see why Jefferson’s intervention on these two matters turned out to be not only timely but providential.
George Washington found waiting for him something of the same thing that confronted Barack Obama when he assumed office 18 months ago: a ticking financial time bomb. To finance the American Revolution, each of the states had gone into debt. But, as Joseph J. Ellis explains in His Excellency: George Washington
, figuring out just how
much debt was involved was nightmarish.
Think of 13 different ways of monitoring floating bond rates, converting currency, and making revenue projections. Even Washington, a business micro-manager if there ever was one, threw up his hands at making sense of it all. Here, he said, handing it off to Hamilton. Why don’t you figure it all out?
Washington’s former aide-de-camp did so. When he was done, he reported that the total debt of the new country—foreign, federal and state—was more than $77 million—a terrifying figure in those days. If the U.S. couldn’t get its house in order, it would, in effect, become a financial ward of the Old World’s financial powerhouses.
Rather than attack the debt problem in components, Hamilton proposed consolidating them, with the federal government taking over responsibility for the whole thing. The federal debt would then be funded at par, with a new National Bank handling everything.
Jefferson and Madison regarded Hamilton’s entire proposal with distaste. They not only feared a central financial colossus, with all kinds of possibilities for the massive corruption that afflicted European capitals, but also were angered because southern states had already paid off their debt. There simply wasn’t any financial justice in Hamilton’s scheme, they felt.
At the same time, Congress was arguing over a provision in the Constitution for a national capital. Hamilton would have liked it for his home state, New York, but others differed. Pennsylvania put in its claim for Philadelphia, and the Southern states—particularly Virginia—clamored for a presence below the Mason-Dixon Line.
One of Ellis’ most amusing sections of his biography of Washington is a discussion of this “residency question.” You can’t help but shake your head at the idea of painfully shy, diminutive Madison earning the frightening nickname “Big Knife” for the way he cut the heart out of other states’ proposals for the capital while the question still circulated in committee. (That was a lot of metaphorical hand-to-hand combat, because 16 different sites had been suggested.)
Hamilton had become known as the go-to guy representing Northern interests in the matter when word got around that he’d arranged to meet Sen. Robert Morris of Pennsylvania, away from the Congressional floor, walking down by the Battery in Lower Manhattan. (Hamilton’s intricately arranged meeting turned out to be less fruitful than he wished: the Pennsylvania and Virginia delegations had already privately agreed that Philadelphia would get the temporary capital while a permanent site would be chosen along the Potomac.)
Jefferson and Madison wanted the capital in the South to reflect the region’s—but especially Virginia’s—prime place in the new union. Locating the permanent capital along the Potomac River would have an even greater implication, however: unlike in, say, Philadephia, where abolitionism was beginning to rise, slaves would find it far harder to slip away from their masters when they were located between two slave states.
Jefferson’s account of how the dinner was set up is seemingly matter of fact, but once you understand the context—i.e., what he left out—it seems self-serving.
When he encountered the “haggard” Hamilton, the Treasury Secretary had complained about “the disgust of those who were called creditor states; the danger of the secession of their “members and the separation of the states.” Jefferson conveniently forgot that slavery was already, even before the invention of the cotton gin, becoming so entrenched in the Southern economy that delegates to the Constitutional Convention had to avoid the subject of slavery altogether, lest it excite the fears of slaveholding states.
It is ironic indeed that Jefferson and Madison, the behind-the-scenes creators of the Virginia and Kentucky Resolutions, would criticize Northerners on the issue of secession. Also, does a Hamilton in "uncouth and neglected" dress sound possible?
Here's what does ring true--Jefferson notes that "as the pill (of assumption) would be a bitter one to the southern states, something should be done to soothe them." That turned out to be an agreement to locate the temporary capital in Philadelphia, with the permanent one being sited on the Potomac.
Debt and real estate: two subjects that politicians still quarrel endlessly about. Do you think it was all that different in 1790?