This is Mountaintop History, a podcast from the Thomas Jefferson Foundation at historic Monticello. My name is Kyle Chattleton.

The Hamilton musical has helped popularize early American history, and one of the most famous numbers from the musical details a compromise between Thomas Jefferson, James Madison, and Alexander Hamilton. I’m talking about “The Room Where It Happens.” I’m talking about the “Compromise of 1790.”

Here’s some background: almost as soon as America formed a new system of government through the Constitution, political factions also began to develop. They included the Federalist Party, led by individuals such as Hamilton, John Adams, and John Jay. Federalists believed in a strong central government, supported industry and manufacturing, and in foreign affairs wanted the country to align with the British as opposed to the French.

Over time, the Federalists would be challenged by another faction, the Democratic-Republicans, led by Jefferson and Madison, who opposed expansive federal powers, supported agriculture and an agrarian society, and tended to side with the French on the international stage.

There were numerous policies and national issues where these two parties butted heads, but one of the most consequential involved debt and banks. Alexander Hamilton recognized that state debt accrued during the Revolutionary War was hampering northern economies, and believed that a national bank should be created to take on those state debts. This would also help establish American credit and lead to investment in the new nation.

But southern states, and Jefferson’s political party, thought this was unfair, since most southern states had already paid off their debts. And a national bank, well, that would only grant more power to the federal government.

At the same time, Congress had been at a standstill over where the new capitol should be located. Numerous cities were proposed, but none could be agreed upon.

And so, on June 20, 1790, Thomas Jefferson invited Alexander Hamilton and James Madison to dinner in New York City. The details of this meeting are murky, but according to Jefferson, they used the opportunity to reach a compromise. As he wrote later, “I thought it impossible that reasonable men, consulting together coolly, could fail, by some mutual sacrifices, of opinion, to form a compromise which was to save the union.”

Their compromise: Jefferson’s political faction would support Hamilton in the assumption of state debt, and in exchange the new capitol would be situated further in the south at a site along the Potomac River.

It was in the room where it happened. “No one really knows how the parties get to ‘yes’ / The pieces that are sacrificed in every game of chess / We just assume that it happens / But no one else is in the room where it happens.”

This has been another edition of Mountaintop History, a collaboration between WTJU and the Thomas Jefferson Foundation. To learn more, and to plan your next visit, go to our website at Monticello.org.