Lincoln signed a law immediately freeing all enslaved people in Washington, DC, and paying compensation to former slaveholders, up to $300 each, while also funding voluntary emigration for freed people. It was the only instance of compensated emancipation in US history and a crucial precursor to the broader Emancipation Proclamation issued that September.
Washington, DC occupied a strange legal position in 1862: the seat of a Union fighting to preserve itself against a slaveholding rebellion, yet itself a place where slavery remained perfectly legal. Congress had debated abolishing slavery in the capital for decades, blocked repeatedly by Southern representatives who eventually seceded and, in doing so, removed the very obstacle to reform.
With the South unrepresented in Congress, abolitionist legislators moved quickly. The bill that reached Lincoln's desk on April 16, 1862, freed all enslaved people in the District immediately and appropriated up to a million dollars to compensate former owners, an average of about $300 per enslaved person, alongside $100,000 to assist freed people who wished to emigrate.
Lincoln, who had long favored gradual, compensated emancipation as more politically palatable than immediate abolition, signed it without hesitation. Roughly 3,100 people gained freedom overnight. The date is still celebrated annually in Washington, DC as Emancipation Day, complete with a citywide holiday, though it remains far less known nationally than the Emancipation Proclamation that followed it eight months later.