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This is a fictional story originating in Gore Vidal's 1973 novel, Burr. In that novel, Hamilton accuses Burr of having sexual relations with his daughter. Vidal has repeatedly admitted that this controversial detail has no basis in historical fact.
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I doubt the story is false. Hamilton, a Washington wit entertained everyone and spread jokes all over Washington about the relationship between Aaron burr and his daughter Theodosia. The Hamilton biography by also refers to the scandal. Of course it was not true, Burr remained a widower when his wife Theodosa died years before. His daughter Theodosia was married with children. Burr and Theodosia exchanged letters about their daily lives and politics. Burr even wrote to her when he was on a State visit to Paris.
I first learned of the story in 1958, when my elementary school teacher used the word "incest" to describe why the accusation caused Burr to insist on a duel when Hamilton refused to apologize for denigrating his daughter. Burr never discussed killing Hamilton, but said he never regretted it. Also, there was no real legal follow up, because most people in Washington knew there was reason enough for a duel and accepted the killing as family defence by Burr of his daughter. No one in Washington wanted to bring such a sordid joke to light, nor bear witness that they had listened to it. Hamilton was dead, it was over. Burr had his satisfaction.
Years later, Theodosia and her husband and three children all died at sea when the ship they were taking to New York sank.