Leadership by George Washington: The Assumption Act of State Debts (1790) & How DC Became the Capital

In his first administration as president, George Washington appointed Alexander Hamilton and Thomas Jefferson as Secretary of the Treasury and Secretary of State, respectively. He did not realize it at first, but these two had divergent ideas on government. Hamilton was for a strong central government and a central banking system. He also wanted the national government to assume all states' debts. Jefferson, on the other hand, wanted a weak central government with no assumption of states' debts and certainly not a central bank! [More on their attitudes about banking in this book discussion about Den of Vipers.]

Early in Washington's first administration, the two factions - led by Jefferson vs. Hamilton - stalemated Congress. Something had to be done. So, Washington invited Hamilton and Jefferson to accompany him on a three-day fishing trip. He figured they would either learn to get along or else kill each other. On the boat, they agreed to sponsor a dinner and invite their supporters.

The Jeffersonians (mostly from down South) agreed to vote for the federal government's assumption of the states' debts, which was favored by the Hamiltonians (who were mostly in the North). In return, the Hamiltonians would vote for the permanent national capital to be down South, something that the Jeffersonians wanted. Most national capitals are also the financial centers of their countries, i.e. London, Berlin, Paris, etc, but in America, this was not the case, because of this compromise between the statesmen.

President Washington selected the site of the future capital of Washington, District of Columbia, which was just 7 miles north of his home at Mt. Vernon, Virginia. For the 10 years it took to build the city that would be the seat of the federal government, Philadelphia was the temporary capital. The Pennsylvania representatives tried desperately to make it the permanent capital, but to no avail. However, as a sop to the losing side, the principle street in DC was named "Pennsylvania Ave."

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James P. Hodges, Ph.D.