Final answer:
Thomas Jefferson and Alexander Hamilton struck a deal where Hamilton's economic plan would be supported by the Southern states in exchange for moving the nation's capital to the Potomac River, appeasing both Hamilton's financial goals and Southern interests.
Step-by-step explanation:
The bargain that Thomas Jefferson and Alexander Hamilton created to get southern support for Hamilton’s economic plan was a pivotal moment in early American politics. In order to gain acceptance of his financial system, which aimed to establish public credit and assume state debts, Hamilton agreed to a compromise that involved relocating the nation's capital to a more southern location. The compromise was struck during a famous dinner meeting at Jefferson's residence, where the two parties found mutual agreement on two key issues: the federal government would fully fund and assume the war debts of the states, and the nation's capital would move from New York City to a southern location along the Potomac River, eventually named the District of Columbia. This agreement represented a fusion of different interests – Hamilton's economic vision was served by securing support from the southern states, and the concerns of southern legislators like Jefferson and Madison were acknowledged by the decision to move the capital closer to the southern states.
James Madison and Jefferson had been strongly opposed to Hamilton’s plan, questioning its morality and the fairness towards the original holders of the debt. However, the executive and legislative branches were keen on promoting the economy, and thus resolutions that funded the war debt and established the Bank of the United States, alongside the decision on the capital, illustrated a successful compromise between the sides.
This solution not only satisfied Hamilton’s financial strategy to restore confidence in the U.S. economy, based on a model similar to Britain's, but also addressed the concerns of southern leaders who feared the concentration of power in northern hands. The arrangement helped spawn a period of economic growth and set a precedent for political negotiation and compromise in the nascent United States.