The Compromise of 1790 comprised the political accommodations that led to the passage of the Residence and Assumption Acts in July 1790, overcoming a protracted legislative deadlock in Congress. The compromise averted a political crisis that contemporaries believed would undermine the newly organised American nation and lead to disunion.
At the centre of the debate lay commercial versus agrarian sources of wealth and the authority of the new central government to promote urban and industrial development at the expense of westward agricultural expansion. Statesmen at both the federal and state level sought to break the legislative deadlock over "assumption" and "residence" 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 on 57 Maiden Lane, New York City:
They came. I opened the subject to them, [acknowledged] that my situation hadn't permitted me to understand it sufficiently but encouraged them to consider the thing together. They did so. It ended in Mr. Madison's acquiescence in a proposition that the question [i.e., assumption of state debts] should be again brought before the house by way of amendment from the Senate, that he wouldn't vote for it, nor entirely withdraw his opposition, yet he wouldn't be strenuous, but leave it to its fate. It was observed, I forget by which of them, that as the pill would be a bitter one to the Southern states, something should be done to soothe them; and the removal of the seat of government to the [Potomac] was a just measure, and would probably be a popular one with them, and would be a proper one to follow the assumption.
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 centre of the country at the time rather than in a metropolitan and financial centre 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.
Hamilton, Madison, and Jefferson "as highly placed as they were, lacked the influence to determine by themselves the vote on two such controversial pieces of legislation" and the outcome was beyond the direct control of any single group or individual.
The Compromise of 1790 stands as "the first great compromise of the new federal government" with "a decidedly far-reaching significance."