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Alexander Hamilton’s Capital Compromise
Hamilton traded away a free national capital for one that would within a few years become one of the country’s busiest slave markets, and that protected the institution of slavery from serious political challenge for another 70 years.

By Fergus M. Bordewich: appeared in the Wall Street Journal July 5, 2008

LAST MONTH, workmen jacked up a 206-year-old yellow clapboard house, levered it onto a set of remote-controlled dollies, and trundled it two blocks to a new site in St. Nicholas Park, overlooking East Harlem in New York City.

The Grange, as it is called, was the home of Alexander Hamilton, best known as co-author of the Federalist papers and America’s first secretary of the Treasury. But this founding father also had an extraordinary role in the infant nation’s attempt to come to grips with the curse of slavery.

Born in the West Indies, Hamilton was one of the most ardent abolitionists of his generation. Rare among white men of his time, he grasped the basic psychology of racism and rejected the notion of black inferiority. ‘The contempt we have been taught to entertain for the blacks,’ he wrote to fellow founding father John Jay during the Revolutionary War, ‘makes us fancy many things that are founded in neither reason nor experience."

He even proposed recruiting slaves to fight in return for their freedom. Arming them, he said, would ‘secure their fidelity, animate their courage and I believe have a good influence upon those who remain [in slavery], by opening a door to their emancipation.’ Hamilton was a driving force behind the New York Manumission Society, and in 1785 issued a then-radical proposal for gradual emancipation.

When he took office as secretary of the Treasury in 1789, the United States of America was in financial crisis. The federal government and the states together owed a staggering $79 million, or more than $2 trillion in present-day money, with an annual interest bill of $4.5 million — triple the foreseeable national income.

Hamilton came up with an audacious plan to consolidate the states’ debts, and to create a system of credit for the national government which would enable it to recover the trust of the foreign bankers upon whom it depended for future loans. Anti-Federalists, many of them Southerners, fiercely opposed the plan, predicting that it would lead to overbearing centralization and tyranny by New York and Philadelphia money men.

Meanwhile, Congress was also at loggerheads over the site for a permanent national capital. More than 30 sites had been proposed, from Kingston, N.Y., to the frontier port of Marietta, in the future state of Ohio.

In the spring of 1790, the leading candidate was centrally located Pennsylvania, where with the assistance of local Quakers, emancipated slaves were creating the first autonomous black communities in the U.S. This was a prospect that Southern slave owners deemed horrifyingly subversive.

Snarled Rep. Aedanus Burke: ‘I would as soon pitch my tent beneath a tree in which was a hornet’s nest, as I would, as a delegate from South Carolina, vote for placing the government in a settlement of Quakers.’ Northerners just as ferociously opposed the scheming of Potomac Valley planters and other Southern interests to plant the nation’s permanent capital in the slave-holding South.

The result was a Congress paralyzed. Southerners were threatening secession. Hamilton was desperate: With reason, he believed that the stability of his new country depended on passage of his stalled financial package.

One day Secretary of State Thomas Jefferson found the Treasury secretary, ‘a pathetic picture’ of despair, trudging back and forth in front of President George Washington’s residence in New York City, the nation’s temporary capital. That chance encounter led to the grand-daddy of all political backroom deals.

On the afternoon of June 20, 1790, Hamilton, Jefferson and James Madison met over dinner in Jefferson’s rented quarters at 57 Maiden Lane in what is now New York’s financial district. On the question of the new capital, Hamilton controlled enough Northern votes to sway the decision toward either Pennsylvania or the Potomac. He had already offered his support to the Pennsylvanians. But they were fatally split between advocates for Philadelphia and for a site on the Susquehannah River.

The Virginians were willing to deal. They agreed, albeit ‘with a revulsion of stomach almost convulsive,’ as Jefferson later put it, to trade enough votes to pass Hamilton’s financial plan in return for his support for a capital on the Potomac, far from Philadelphia’s free blacks and those worrisome Quakers.

The decision was a fateful one for the financial stability of the young nation—and for the future of 700,000 Americans held as slaves.

Had the capital been rooted in the free soil of Pennsylvania, Northerners rather than pro-slavery Southerners would have filled the ranks of government service. Southern congressmen would have witnessed the success of Pennsylvania’s policy of emancipation, easing the nation toward a peaceful solution of its most divisive issue. Instead, Hamilton traded away a free national capital for one that would within a few years become one of the country’s busiest slave markets, and that protected the institution of slavery from serious political challenge for another 70 years.

While the Grange is a national landmark, Hamilton’s house has rarely been visited except by local school groups. Its dramatic new location at the park’s steep crest will, after its restoration, doubtless draw an increasing number of pilgrims hoping to commune, in some fashion, with the spirit of the man who did more than any other to set the U.S. on a firm financial foundation. These visitors should also reflect upon the inspired idealism of a man who grappled early and daringly with the problem of race and slavery — yet who, in a twist of history, betrayed enslaved Americans in the most important decision he ever made that affected their fate.

Although Alexander Hamilton’s contribution to the politics of emancipation was far greater than that of any other founding father, it was also more tragic. Fittingly, when his home reopens to the public next year, it will gaze out from its perch in St. Nicholas Park over one of the most vibrant black neighborhoods in America.

The restored Grange should be more than a hagiographic ‘house beautiful’ monument to a marble-bust version of a founding father. Both Hamilton and black Americans deserve a memorial that squarely faces his racial idealism—as well as the noble intentions that collided with cruel political reality over Jefferson’s dinner table that day in June 1790.

Mr. Bordewich is author of ‘Washington: The Making of the American Capital,’ published in May 2008 by Amistad.

This piece also referenced in John Tierney’s U.S. History Blog.