When the decade opened, New York was the capital of both the state and the nation. In the summer of 1790, however, the federal government would decamp and move to its temporary home in Philadelphia. In 1797, the state government would move to Albany (where today the legislature is hailed as the country's preeminent clown college).
Thomas Jefferson didn't trust Alexander Hamilton or the moneyed men of New York who were now cheek by jowl with the lawmakers. Jefferson was not a fan of the town, which he frequently referred to as Hamiltonopolis and described as "a cloacina of all the depravities of human nature." His fellow slave-holding agrarian southerners also feared a capital located in one of the most commercial of the northern cities. Southerners thought their fears realized when Hamilton, as first Secretary of the Treasury, proposed a federal absorption of state debts incurred during the Revolution. Most of the southern states, including Virginia, had paid off their debtors. Most of the northern states had not. New York, in fact, had the highest debt.
Jefferson saw in this an opportunity to relocate the capital closer to Monticello. He invited Hamilton and Madison to dinner at his home on Maiden Lane where they came to a preliminary agreement that would later be called the Compromise of 1790. Jefferson and Madison agreed to support Hamilton's proposal for the federal absorption of state debt. In exchange, Hamilton would persuade northern legislators to vote for the transfer of the capital to a swamp between Maryland and Virginia. (Pennsylvanians later pledged their support as long as the government met in Philadelphia while the new city was being built.) Congress had their last meeting in Federal Hall on August 12, 1790, and the president left on August 30.
From New York: An Illustrated History: "Known after as 'the deal,' the simple swap of power for money had profound consequences for the future of New York. Never again in its history would the city be asked to represent the entire spectrum of the nation's political interests. Nor would it be weighted down with the symbolic obligations and ceremonial trappings a national capital entailed. Henceforth, New York would go it alone, and dedicate itself unswervingly to what since the days of the Dutch had come most naturally: making money. Some New Yorkers were devastated by the loss of the capital. But Hamilton was philosophical. To fund the huge new debt he had gotten the federal government to assume, he immediately had the Treasury Department issue $80 million in government bonds, and soon money was pouring into New York City, as the trade in stocks and bonds soared."
Because of the influx of money, there was some unscrupulous activity that led to the Panic of 1792. Later that year, twenty-four brokers who had been trading beneath a buttonwood(sycamore) tree on Wall Street, signed the Buttonwood Agreement, wherein they pledged to trade with each other and set a system of standard fees. This was intended to separate honest, legitimate investors from crooked speculators and it is regarded as the birth of what would become the New York Stock Exchange.
ALSO DURING THIS DECADE:
1790--The second Trinity Church building opens.
1791--The New York Dispensary opens at Beekman and Nassau and the state government finances the reopening of New York Hospital, which provides free health care to the poor and houses the nation's first nursing hospital.
1794--The Common Council authorizes the renaming of streets with royal monikers. King Street becomes Pine, Little Queen becomes Cedar, Crown becomes Liberty, Prince becomes Rose, Princess becomes Beaver, and Duke becomes Stone. (New York itself, named after a duke who became a king of England, remains New York.)
1794--The city buys an estate on the East River called Bellevue and opens up the first contagious disease hospital.
1794--The city's first grand hotel, named simply the City Hotel, opens on Broadway just north of Trinity Church.
1796--South and West Streets are laid out and graded. (Around this time, Wall Street is improved and the last few blocks of Broadway are made to slope gently down to Bowling Green.)
1797--Washington Square is purchased to serve as a potter's field for the victims of the numerous yellow fever epidemics downtown. Greenwich Village is developed by citizens fleeing the outbreaks. One year later, in 1798, the worst of the epidemics will kill 2,086.
1797--The first state penitentiary, Newgate Prison, opens "up the river" at present-day Hudson and Tenth Streets.
Sources: Gotham by Edwin G. Burrows and Mike Wallace; Manhattan in Maps by Robert T. Augustyn and Paul E. Cohen; The Historical Atlas of New York City by Eric Homberger; New York: An Illustrated History by Ric Burns and James Sanders, with Lisa Ades; The Encyclopedia of New York City, edited by Kenneth T. Jackson.
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