It has always been true in politics everywhere that what is achieved is what is possible, a compromise if you will, and the story of NYC not becoming the capital of the nation is all about the art of the deal and the personalities of the people involved.
The period between the winning of the Revolutionary War in April in 1783 and the inaugeration of the first President of the United States on April 30th 1789 under the newly agreed upon Federal Constition was a confused time in American Poltical history as the initial Articles of Confederation were fianlly transformed into the American constition as it is known today.
The part of the story that concerns us is from when George Washington was finally sworn as the first President at the then New York City Hall in 1789 and Congress then proceeded to meet to carry out the new government’s business in NYC. Once Washington was in office he appointed 3 men to cabinet positions. They were Henry Knox as Secretary of War, Thomas Jefferson as Secretary of State and Alexander Hamilton as Secretary of the Treasury. Hamilton, a native New Yorker, was heavily in favor of NYC being the continuing site of the national capital but his major concern was establishing the first Federal Bank and getting the agreement of Congress to assume the debts of all the states who had fought in the Revolutionary war.
Thomas Jefferson was not well disposed towards Hamilton and had no intention of supporting his ideas for achieving financial stability but he also was even more against the idea of NYC being the capital and wanted it to be in the South which was the part of America where he held the most sway. And Jefferson had the numbers in Congress. He and his cronies ambushed Hamilton at a dinner party, threatening that they would only support his ideas for stabilizing the financial situation of the new Federal government by enacting new banking regulations if in exchange Hamilton supported shifting the captial to the South. Hamilton was firm on wanting the new banking regulations and was prepared to give up his push to have NYC the national capital in order to get what he wanted . So a deal was struck.
Under enabling legislation related to Washington’s powers to select where a antiaanl capital would be sited, Washington chose a 10 mile square spot on the Potomac River that included land from Maryland and land from Virginia and the designated area became Washington D.C. And that’s how NYC lost out on being Capital of the United States.