By late 1789, New York had been the capital of the United States for five years. Throughout this period, the nation debated the problem of where to permanently situate the national capital; in the Continental Congress, at the Constitutional Convention, and in print. New York's chances looked increasingly grim, and the re-founding of the Society Library was a part of an effort to boost its standing, particularly against the other major urban contender, Philadelphia.

After their first meeting in late December 1788, the Trustees emphasized the Library’s role in helping to keep the federal government in the city: “Nor will it be thought a trifling motive to a speedy exertion, that a useful public library will add to the inducement which Congress have to remain with us, and that the want of one has actually been advanced as one among other reasons from removing the general government from this city”.\[3] Intervening in the ongoing debate, the Library moved quickly to become a stable presence in New York City and national political life. By February 1789, the Trustees had renewed their charter of incorporation through application to the New York Assembly. In April 1789 -- after gathering the scattered books of the collection together -- they applied to Congress to house the books in Federal Hall, bringing the collection into the same building as the national government..

These efforts did not go unnoticed or unremarked. In February, the re-founding of the Library became front and center of the larger argument about picking a national capital. Writing as the “Town of Philadelphia”, one American commented that, “... my citizens have not built a state-house, nor founded a library, nor paved their streets for the benefit of Congress... but their ancient and convenient state-house -- their ancient and well-chosen library -- their neat and well paved streets, \&c. are all at the service of Congress whenever they shall please to use them”. Philadelphia’s subscription library, the Library Company of Philadelphia, had come through the Revolutionary War almost completely intact and, even before the war, it had a much larger and more impressive collection than the Society Library. New York's civic improvements were framed merely as efforts to equal what was already available there. New Yorkers did not accept the argument. In a letter published a few days later, one anonymous writer, responding in the character of New York City, explained, “I am collecting together many thousand volumes of excellent books, and useful writings for \[Congress’s] entertainment and advantage, my old library having been destroyed by thine and mine enemies.” Philadelphia may trumpet its civic improvements, but it had not endured a seven year military occupation as New York had. For Philadelphia to claim preeminence in civic conveniences was to fail to recognize how much damage New York had suffered during the conflict for Independence. It was kicking a city while it was down, disrespecting its honest attempts to overcome the damage and debt it had assumed as a result of the war.

For the next year, the New York Society Library served informally as the first Library of the national government, with George Washington, Alexander Hamilton, and other members of the Congress becoming members through a special arrangement. Yet, the Library’s efforts to influence the government’s choice of capital proved unsuccessful. In a backroom negotiation, Hamilton agreed with James Madison and Thomas Jefferson that the capital should be moved to a site on the Potomac River in exchange for ensuring the national government would assume the states' war debts. In June 1790, the capital left New York for a ten-year sojourn in Philadelphia, from there moving to a new city, Washington, in 1800. However, this was not the end of the debate. In 1791, a final op-ed appeared, comparing the hospitality and generousness of New York City and Philadelphia as sites for the capital. The piece's sarcasm makes it worth quoting at length. Writing again as New York, the author reports, “During the residence of Congress in New York, the Library Society... voted that the President, Vice-President, Senators, and House of Representatives have free, and unpurchased use of the books in \[the] Library.” The Library Company of Philadelphia was not so welcoming. “\[I]n this self-boasted Athens of the world, where the Library is the pride of its proprietors, the President ..., the Senators and Representatives are informed, that by depositing a sum of money, double to the value of a set of books, they may have the use of one volume for a fortnight or three weeks, provided at the return of said book they will pay the Librarian one shilling for the use of it”. While New York had given when it had little and expanded its cultural infrastructure to meet the needs of the government, Philadelphia, and the Library Company in particular, could not be bothered. Having criticizing New York for doing its best, Philadelphia didn’t feel obliged to even match what New York had done.

Eventually, of course, the Library Company did allow access to the Congress. And by 1800, the federal government passed a law providing the initial funding for founding a permanent Library of Congress at Washington, D.C. Despite the departure of the government from New York, the Society Library also continued to thrive, moving into its own building in 1795.