Founding Brothers: Chapter 2 Summary & Analysis

In June 1790, Thomas Jefferson ran into Alexander Hamilton by chance outside George Washington’s office. Jefferson wrote that he remembered Hamilton looking “dejected beyond comparison,” and that Hamilton told him that the financial plan he’d given to Congress in January was stuck in a gridlock. Hamilton felt that he had to resign, and that the whole nation would surely collapse thereafter. Jefferson offered to help by hosting a dinner party where key figures could hash out their views on the financial plan in private. Jefferson’s account of the dinner party is the only one that survives today.

According to Jefferson, at the dinner James Madison agreed that Hamilton’s proposal regarding the assumption of the state debts should be brought to the House again, with an amendment to appease the South: that the nation’s capital be placed on the Potomac River. If this decision was truly reached at the dinner, then it could rightly be lauded as “The Compromise of 1790.” Historians tend to agree that Jefferson’s version of the story is basically true, as Hamilton and Madison did indeed meet at Jefferson’s home in June 1790, and the agreements they supposedly made there were put into effect shortly after.

On the day the deal was made, Jefferson wrote to James Monroe, his “loyal Virginian disciple,” explaining the necessity of the compromise. Monroe responded that the bargain was terrible, as Virginians cared far more about assumption than they did the capital’s location. Two years later, Jefferson admitted to Washington that the deal had been “the greatest political mistake of his life.” The fact that Jefferson came to regret the bargain makes his account of the dinner party seem more believable, as it would be strange to make up a story that put himself in a bad light.

While Jefferson’s account is thus likely true, it is only partial, as other meetings and discussions about the future of the nation were happening simultaneously. What is clear is that leaders at the time were nervous about the fate of the republic, feared that assumption was “threatening,” and that the Potomac was a highly meaningful location for the capital. Why? Different leaders would have given very different answers to this question.

Ellis begins by focusing on James Madison, who at the time was 39 years old, the “favored son of Virginia,” and an exceptionally skilled politician. His contribution to organizing the Constitutional Convention earned him the nickname “Father of the Constitution.” Following this, he co-wrote The Federalist Papers with Alexander Hamilton. After further political victories, he drafted the Bill of Rights and successfully passed it in Congress. As a result, Madison was “at the peak of his powers” in 1790.

This was not obvious from Madison’s looks: he was small and weak, and (wrongly) predicted that he would die young. He was also shy, with none of the public speaking skills that many of the other Founding Fathers possessed. However, his quiet gentleness actually worked in his favor, as it gave the impression that his arguments were serious and thoughtful, rather than brash. Madison is often thought of as Jefferson’s “loyal lieutenant,” however his shyness arguably made him seem more subservient to Jefferson than was actually the case.

In 1790, the truly “great collaboration” was between Madison and Hamilton following their work together on The Federalist Papers. At this moment in time, Jefferson and Madison’s political views were not in fact closely aligned. However, in the leadup to Jefferson’s dinner, Madison switched from believing in nationalism to “the old revolutionary faith of Virginia.” He had become concerned by Hamilton’s proposed method for the recovery of public credit, and gave a long speech in the House of Representatives framing it as a betrayal of the Revolution.

The House voted against Madison’s suggestion of an alternative plan, which was his first legislative failure after so much success. After, there was a debate about assumption. Hamilton’s plan was to have the federal government take on state debts; Madison criticized this plan for being an overly simplistic solution to a complex problem. Because most southern states had already paid off most of their debt, Madison argued that the plan was unfair. Beyond his economic objections, however, Madison was also concerned by how much power this plan would give the federal government.

The assumption debate became increasingly heated, with Madison as a calm presence in the midst of the warring sides. Virginians were horrified by the idea that the states would be consolidated into the federal government, a fear that echoed previous objections to the distant, arbitrary power of the British Imperial government. While Madison shared these fears, he encouraged those around him to remain calm, patient, and rational. He reminded his fellow Virginians that the state’s interests would be defended by Washington, Jefferson, Edmund Randolph, and himself. He was certain that “assumption would never pass.”

Hamilton, meanwhile, was headstrong, determined, and hyper-productive during this period. He argued that Madison’s critiques of his plans were unfounded, irrelevant, and hypocritical—particularly given that not long ago, he and Madison had written The Federalist Papers together. Hamilton was shocked that Madison was now arguing that the assumption was a plan designed to undermine the integrity of the states. Instead, he saw it simply as a way to “nationalize the economy for the benefit of all.”

Hamilton was not afraid of copying the financial institutions of England in order to stimulate economic growth. Nor was he worried about the centralized concentration of economic power (and didn’t seem to understand why others would be). He believed that putting money under the control of a select few was the best way to stimulate the economy, and had faith that the “urban elite” of bankers and businessmen were the future of America. Virginians like Madison and Jefferson were suspicious of this financial class, seeing land ownership as the only true, reliable form of wealth. Many Virginians were also in debt to British bankers, which made them even more suspicious of Hamilton’s plan.

Jefferson, the host and third member of the dinner party, admitted that he didn’t understand the issues under discussion as well as Hamilton and Madison did. Jefferson had just returned from five years in France, was dealing with other matters both political and personal, and was suffering from terrible migraines at a time when many other members of the American political elite were also in ill health. At six feet, two inches tall and 47 years old, Jefferson was both much taller and older than Hamilton and Madison, making him “an older brother” figure to the men.

At the same time, Jefferson’s time spent abroad in France meant that he was not properly caught up on the main issues facing the United States in this moment, and his views on the contentious debates of the time were not publicly unknown. He had moved to New York reluctantly, and had a habit of public “reticence.” He was not yet recognized as the author of the Declaration of Independence, which was at the time viewed as a totally collective effort.

Jefferson had been the governor of Virginia during the Revolutionary War, a role that had ended in disaster. He was reluctant to enter public office after that, but accepted the role of Minister to France in order to get away from the memories of the death of his wife in childbirth. He hated partisanship and was “endlessly polite and accommodating”—hence his eagerness to facilitate a discussion between Hamilton and Madison. Moreover, Jefferson’s time abroad made him aware that the United States needed to pay its debts in order to be taken seriously in Europe. This made him less skeptical of assumption than he otherwise might have been.

In September 1789, Congress was faced with the task of purchasing a hundred square mile-large plot of land to serve as the nation’s “seat of government.” Yet the question of where that land would be—known as the “residency question”—was difficult. It had been agreed that there would first be a temporary location, where the capital would exist for ten to twenty years, followed by a permanent location. By March 1790, sixteen sites were under consideration, and it seemed most likely that the capital would be somewhere in Pennsylvania. Madison described the decision of choosing a location as “a labyrinth.”

Madison himself was fighting for a location on the Potomac River. Arguments about which location would be most central were contested from different sides. Because people did not yet know how big the republic would get or in which direction it would stretch, it was hard to know for sure where was most “central.” While Madison and other Virginians insisted that the Potomac was an ideal location for the capital, boasting of qualities that were either exaggerated or completely mythical, northerners scoffed that they were delusional. In June 1790, Madison concluded it was highly unlikely that the Virginians would get their way.

Jefferson’s dinner was surely not the only secret political meeting held during the spring and summer of 1790. There were likely many others, only some of which have been recorded in history. The most significant of these was a meeting on June 15, during which it was agreed that Philadelphia would be the temporary capital and the Potomac location the permanent one. (The Pennsylvanians probably agreed to this on the assumption that the capital would never actually move.) Jefferson’s dinner was thus not a singular occasion, but rather “the final chapter in an ongoing negotiation.”

Jefferson’s description of his dinner party leaves out these other negotiations, making his own dinner seem more fateful and important. Likely the most important thing decided that evening concerned the recalculation of Virginia’s debt. Madison achieved his goal of “settlement before assumption,” though it is likely that Hamilton had always planned to adjust the amount of Virginia’s debt in order to win over Virginians. In the end, the amount of debt assumed and federal taxes Virginia owed was worked out to be the same, 3.5 million dollars, such that they cancelled each other out. The Potomac site was an added bonus.

The time following the dinner was challenging. People were surprised by the Potomac decision, and many were furious. Jefferson and Madison ensured that the “residency question” would never be raised in Congress, where it would be debated to death. This required handing the decision over to Washington. Jefferson and Madison traveled to Maryland and Virginia, surveying the area and sending a report back to the president. Washington made the final decision in January 1791. He knew it would be controversial, and perhaps named the capital’s main street Pennsylvania Avenue in order to appease disappointed Pennsylvanians.

At the same time, a group of antifederalists built a vicious opposition to assumption, claiming that the proposal violated Virginia’s independence and made agriculture subordinate to business. It was clear that there was a threat of secession. Hamilton confided in John Jay about his fears of the republic breaking apart, but did not speak to Madison as Madison’s loyalties were now uncertain.

Looking back, it is obvious that the Compromise of 1790 temporarily dodged a major crisis, but that the fundamental issues at hand were not resolved. Before the Revolution, America’s leaders had been united against a common enemy. Now that the Revolution had been successfully executed, differences between the leaders came into focus in a rather dramatic way. Jefferson and Madison’s efforts meant that Virginia continued to have an outsize role in the ongoing discussions about the nation’s future.

For many years, Washington, D.C. was “not really a city at all,” which symbolized the difference between the American government and European political regimes. Banks and other business institutions were located in Philadelphia, New York City, and other places, which meant that business and government were separated. On a personal level, the compromise meant that Jefferson and Madison were working together again after five years. Together, they responded to Hamilton’s fiscal program by taking control of the federal government (rather than abandoning it).