Maryland and Virginia had agreed to meet in 1785 to discuss the controversy over the navigation of the Potomac and their joint boundary. The Commissioners who took part in this meeting did more than draw up a compact subsequently ratified by their respective States. From this meeting eventually came the call for the convention which resulted in the Constitution of the United States and the decision to set aside a tract of land ten miles square for the seat of the Federal Government.

The Maryland-Virginia compact on the Potomac was signed on March 28, 1785, and confirmed by the General Assembly of Virginia in 1786.[20] ] Although it was designed primarily to settle navigation and fishing rights, its seventh section provided: "The citizens of each State, respectively, shall have full property rights in the shores of Patowmack river adjoining their land...." This has been interpreted to mean property rights to low water mark. The dispute over this point became of significance in the 20th Century with the construction of the National Airport and the Pentagon Building.

Article I, Section 8, of the Constitution of the United States gives the Congress power to accept a territory not exceeding ten miles square to be set aside as the seat of the Federal Government. The story of the compromise which led to the selection of a site on the Potomac is told in all the history books.[21] ] These, however, rarely give the details of how the exact area which became the District of Columbia came to be chosen.

In 1789, the Virginia legislature adopted an Act[22] ] offering to cede "ten miles square, or any lesser Quantity of Territory within the State" to the United States for the permanent seat of the general government. Section I of this Act recited the motive: "Whereas the equal and common benefits resulting from the administration of the general government will be best diffused, and its operation become more prompt and certain, by establishing such a situation for the seat of the said government, as will be most central and convenient to the citizens of the United States at large, having regard as well to population, extent of territory, and a free navigation to the Atlantic Ocean, through the Chesapeake bay, as to the most direct and ready communication with our fellow citizens in the western frontier; and whereas it appears to this Assembly that a situation combining all considerations and advantages before recited, may be had on the banks of the river Patowmack, above tide water, in a country rich and fertile in soil, healthy and salubrious in climate, and abounding in all the necessaries and conveniences of life, where in a location of ten miles square, if the wisdom of Congress shall so direct, the States of Pennsylvania, Maryland, and Virginia may participate in such location."

It is clear from the inclusion of Pennsylvania as one of the participating States, and the reference to "above tide water" that the Virginia legislators of those days had in mind a tract somewhat higher up the river than that which was eventually chosen. Indeed, the first Act of Congress[23] ] dealing with this subject set the limits within which the Federal District was to be established "on the river Potomac, at some place between the mouths of the Eastern Branch and Connogochegue" (a tributary of the Potomac some 20 miles south of the Pennsylvania State line) and authorized the President to appoint three commissioners to survey and "by proper metes and bounds" define and limit the district to be accepted by the Congress.

By a proclamation of January 24, 1791,[24] ] President Washington directed that a survey should be made.

"… after duly examining and weighing the advantages and disadvantages of the several situations within the limits aforesaid, I do hereby declare and make known that the location of one part of the said district of 10 miles square shall be found by running four lines of experiment in the following manner, that is to say: Running from the court-house of Alexandria, in Virginia, due southwest half a mile, and thence a due southeast course till it shall strike Hunting Creek, to fix the beginning of the said four lines of experiment.

"Then beginning the first of the said four lines of experiment at the point on Hunting Creek where the said southeast course shall have struck the same, and running to the said first line due northwest 10 miles; thence the second line into Maryland due northeast 10 miles; thence the third line due southeast 10 miles, and thence the fourth line due southwest 10 miles to the beginning on Hunting Creek."

Since the tract thus specified did not lie within the limits set by the Act of July 1790, the Congress was asked to authorize the moving of the southern boundary point of the "ten miles square" farther south to include the Eastern Branch and the town of Alexandria. Accordingly, the Act of July 16, 1790, was amended by an Act approved March 3, 1791:

"… it shall be lawful for the President to make any part of the territory below the said limit [the confluence of the Eastern Branch with the Potomac] and above the mouth of Hunting Creek, a part of said district, so as to include a convenient part of the Eastern Branch, and of the lands lying on the lower side thereof and also the town of Alexandria...."