In a series of complicated debates and compromises over the assumption of the states' Revolutionary War debts by the newly-created Federal Government, a diamond-shaped portion of land carved from the states of Maryland and Virginia became the District of Columbia. This site of the federal city of Washington stretched along the marshy shores of the Potomac River. Few people thought the site could ever become a great capital city. Abigail Adams, wife of John Adams, called it "the very dirtiest Hole," its streets a "quagmire after every rain." Senators and congressmen spent as little time as possible in Washington, often renting single rooms from one of the hotels or boarding houses near the Capitol building during the short terms of Congress. Those few government employees who worked year-round had little to do but collect tariffs, order the defense of the nation's borders, and deliver mail. Even they did not feel like settling in, because they believed it was highly possible that the capital might again be moved.

Conflicts abroad soon caused the government to grow. First, the country needed a navy to protects its trading interests against the Barbary Pirates of North Africa. Then the War of 1812 required additional growth of the navy and the army. With more governmental activity and responsibility, the city of Washington began to attract important and ambitious men. Among the new residents was Stephen Decatur, hero of the war with the Barbary Pirates and the War of 1812.

When the new government had purchased land for the president's mansion in 1792, it planned that the land on either side of President's Park, later renamed Lafayette Park, would be used as lots for private homes. For many years, the land lay vacant. When Decatur decided to build his home near the White House, however, others followed his lead, and the landscape of Lafayette Park began to take shape.

The conspicuous site chosen by Decatur was consistent with his military prominence and his public esteem. To design the house, he hired Benjamin Henry Latrobe, America's most prominent architect. This first private residence on President's Park was planned and built to be a place for sparkling entertainment in a city that was hungry for social occasions, and where social contacts played a central role in obtaining power and influence.