Compromise of 1790

The Compromise of 1790 was a compromise between Alexander Hamilton on the one hand and Thomas Jefferson and James Madison whereby Hamilton won the decision for the national government to take over and pay the state debts, while Jefferson and Madison obtained the national capital (District of Columbia) for the South. The compromise resolved the deadlock in Congress. Southerners were blocking the assumption of state debts by the treasury, thereby destroying the Hamiltonian program for building a fiscally strong nation state. Northerners rejected the proposal, much desired by Virginians, to locate the permanent national capital on the Virginia-Maryland border. The compromise made possible the passage of the Residence and Assumption Acts in July 1790. Historian Jacob Cooke says it is, "generally regarded as one of the most important bargains in American history, ranking just below the better known Missouri Compromise and the Compromise of 1850."

Politicians at both the federal and state level sought to break the legislative deadlock through unofficial negotiations. A number of clandestine meetings and political dinners were held in New York City – then serving as the nation's temporary capital – in the summer of 1790.

The "dinner table bargain" was a pivotal episode in the final stages of these compromise efforts. Based on an account given by former Secretary of State Thomas Jefferson, two years after the event, the "dinner" was a private meeting between Secretary of the Treasury Alexander Hamilton and U.S. House of Representative member James Madison. Shortly after the Assumption Bill failed for a second time in June in the House, Hamilton, despairing that his financial plan would be scuttled, appealed to the newly appointed Jefferson to apply his influence on the matter. According to Jefferson's account, he arranged the dinner for the two officials at his residence in New York City on or about June 20, 1790. The meeting produced a political settlement on the "assumption" and "residency" crisis.

Jefferson described the encounter between the men at his lodgings in New York City:

The key provision of Secretary Hamilton's First Report on the Public Credit won approval with the passage of the Assumption Bill, establishing the foundation for public credit. The Residence Bill located the permanent capital in the agrarian states of Maryland and Virginia, the demographic center of the country at the time rather than in a metropolitan and financial center such as New York City or Philadelphia. Jefferson and Madison secured a lucrative debt adjustment for their state of Virginia from Hamilton, as part of the bargain.

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