Liberty Street Economics

« | Main | »

February 21, 2014

Historical Echoes: Thomas Jefferson Slept Here on Maiden Lane/The Compromise of 1790

Mary Tao

In a prior blog post, we saw how Maiden Lane evolved over time. It was here that a momentous event occurred in
1790, changing the history of the United States.

While serving as Secretary of State in 1790, Thomas
Jefferson rented a “mean house” at 57 Maiden Lane “for
106 pounds per year
” and “not approving much of the stiff style and
etiquette of New York he gave up all his time to the establishment of his new
department, foreign affairs, and home.” There was much to occupy
Jefferson’s time while he was in residence here—in particular, the debt crisis
of 1790.

One June evening, Jefferson held a dinner
at his Maiden Lane house. But this was no ordinary dinner. Among the
guests were Treasury Secretary Alexander Hamilton and James Madison, who were
on opposite sides of a hot political issue.

In his “Report on the Public
Credit, January 9, 1790
,” Hamilton
proposed refinancing loans owed to foreign creditors,
funding the national debt with the issuance of new federal bonds, assumption of
state debts incurred
from the Revolutionary War, and an excise tax to pay for the assumption. Hamilton
felt that his plan would help to establish America’s
both domestically and abroad.
The combined foreign and domestic debts made up just over $54

Both the debt funding plan and the debt assumption plan met
with opposition. Hamilton’s argument for funding the national debt won him the
votes he needed; however, he faced a much tougher battle over the assumption
plan. The opposition stemmed from the fact that some states owed more than
others: Delaware owed $50,000
while South Carolina owed $5 million, with the total of all state debt equal to
$25 million. Some states, in particular the southern ones, felt that they would
be subsidizing the other states under Hamilton’s plan. Madison, a Virginian,
strongly opposed Hamilton’s plan and blocked the motion each time it came up
for a vote in Congress.

While talks had been ongoing for months, the final compromise
was supposedly hashed out at this dinner party. Philadelphia would replace New
York as the country’s capital for a period of ten years. This gave Hamilton a
chance to win over Pennsylvania’s vote, but he had to defend his action to New York’s
. To appease the southern states, a new town between Virginia
and Maryland would eventually become the permanent U.S. capital. In exchange
for moving the capital south, Madison would get Hamilton the votes he needed
for his debt assumption proposal. The dinner party compromise led to both the Residence Act of
and the Funding
Act of 1790

The residence at 57 Maiden Lane no longer exists. A plaque
marks the spot where the house once stood, with no hint of the drama that
unfolded there on June 20, 1790.


The views expressed in this post are those of the author and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the author.


Mary Tao is a research librarian in the Federal Reserve Bank of New York’s Research and Statistics Group.


Feed You can follow this conversation by subscribing to the comment feed for this post.

The comments to this entry are closed.

About the Blog

Liberty Street Economics features insight and analysis from New York Fed economists working at the intersection of research and policy. Launched in 2011, the blog takes its name from the Bank’s headquarters at 33 Liberty Street in Manhattan’s Financial District.

The editors are Michael Fleming, Andrew Haughwout, Thomas Klitgaard, and Asani Sarkar, all economists in the Bank’s Research Group.

Liberty Street Economics does not publish new posts during the blackout periods surrounding Federal Open Market Committee meetings.

The views expressed are those of the authors, and do not necessarily reflect the position of the New York Fed or the Federal Reserve System.

Economic Research Tracker

Image of NYFED Economic Research Tracker Icon Liberty Street Economics is available on the iPhone® and iPad® and can be customized by economic research topic or economist.

Economic Inequality

image of inequality icons for the Economic Inequality: A Research Series

This ongoing Liberty Street Economics series analyzes disparities in economic and policy outcomes by race, gender, age, region, income, and other factors.

Most Read this Year

Comment Guidelines


We encourage your comments and queries on our posts and will publish them (below the post) subject to the following guidelines:

Please be brief: Comments are limited to 1,500 characters.

Please be aware: Comments submitted shortly before or during the FOMC blackout may not be published until after the blackout.

Please be relevant: Comments are moderated and will not appear until they have been reviewed to ensure that they are substantive and clearly related to the topic of the post.

Please be respectful: We reserve the right not to post any comment, and will not post comments that are abusive, harassing, obscene, or commercial in nature. No notice will be given regarding whether a submission will or will
not be posted.‎

Comments with links: Please do not include any links in your comment, even if you feel the links will contribute to the discussion. Comments with links will not be posted.

Send Us Feedback

Disclosure Policy

The LSE editors ask authors submitting a post to the blog to confirm that they have no conflicts of interest as defined by the American Economic Association in its Disclosure Policy. If an author has sources of financial support or other interests that could be perceived as influencing the research presented in the post, we disclose that fact in a statement prepared by the author and appended to the author information at the end of the post. If the author has no such interests to disclose, no statement is provided. Note, however, that we do indicate in all cases if a data vendor or other party has a right to review a post.