You can make out the Capitol at the far end.  Given the foreground details, [this] is definitely taken from the south end of the Treasury Building, looking down Pennsylvania Avenue.  The marble railing the people in the foreground are leaning on is still there, and there is a similar (but different) iron fence still in place today.  All the other details (relative heights, angles, etc.) seem to correlate.  If you look at modern pictures, you can see the terrace above the steps which obviously was where the photo was taken from.  Near the left side, there is a 37-star U.S. flag, which was in use from 1867-1877.  The building at the end of the first block on the left was <a href="https://en.wikipedia.org/wiki/Willard_InterContinental_Washington#History" class="extiw" title="w:Willard InterContinental Washington">the early Willard Hotel</a>. <br><br><a rel="nofollow" class="external text" href="https://books.google.com/books?id=V2TENHr9D1oC&amp;pg=PA259">Records of the Columbia Historical Society, Washington, Volume 3, p.259–260</a> describes the carnival as occurring on February 20 and 21, and the reason was to celebrate the paving of Pennsylvania Avenue from 1st to 17th streets (apparently with wood blocks; they didn't last and had to be replaced later in the 1870s). <a rel="nofollow" class="external text" href="https://books.google.com/books?id=DTtp18af9scC&amp;pg=PA36">The human tradition in America: 1865 to the present, edited by Charles William Calhoun</a> says the event was organized by <a href="https://en.wikipedia.org/wiki/Alexander_Robey_Shepherd" class="extiw" title="w:Alexander Robey Shepherd">[Alexander Robey] Shepherd</a>. That and some other ones hint that the carnival started on the 21st. ...February 21, 1871 is [also] the day that President Grant signed a bill which changed the structure of the District of Columbia government, and that is considered the date the city officially incorporated.  While looking for more info in another book (<a href="//commons.wikimedia.org/wiki/Special:BookSources/978-1580930918" title="Special:BookSources/978-1580930918">ISBN 978-1580930918</a>), on page 100, I came across this exact photo (credited to the "Leroy O. King Collection").  The caption indeed does say it was taken from the terrace of the Treasury Building in 1871, and describes the event as a celebration of "the reopening of the avenue after it had been paved with wood blocks".  - (excerpted from remarks by <a href="//commons.wikimedia.org/wiki/User:Clindberg" class="mw-redirect" title="User:Clindberg">Carl Lindberg</a>, originally made at <a href="//commons.wikimedia.org/wiki/User_talk:Jmabel/Stereo_cards_of_Washington,_D.C." title="User talk:Jmabel/Stereo cards of Washington, D.C.">User talk:Jmabel/Stereo cards of Washington, D.C.</a>)
<div class="fn value">
E. &amp; H.T. Anthony (Firm) -- Publisher</div>
<p>Created: 1860-1880.
</p><p><br>
Coverage: 1860-1880.
Source Imprint: 1860?-1880?.
</p>
Digital item published 1-25-2006; updated 2-13-2009.
This image is available from the <a href="//commons.wikimedia.org/wiki/New_York_Public_Library" title="New York Public Library">New York Public Library</a>'s Digital Library under the digital ID G90F083_127F: <a rel="nofollow" class="external text" href="http://digitalgallery.nypl.org/nypldigital/id?G90F083_127F">digitalgallery.nypl.org</a> → <a rel="nofollow" class="external text" href="https://digitalcollections.nypl.org/search/index?keywords=G90F083_127F">digitalcollections.nypl.org</a>