The Development of the Two Party System

One of the most important developments in American history is the formation of the two party system. Since Jefferson and Hamilton fought for the support of the nation, American politics has been characterized by the battle between two ideologies. The split between Americans began with the Federalist and Democratic-Republican parties. The Federalists, led by Hamilton, believed in a national bank, high tariffs, good relations with Britain, and were strong proponents of northern business. The Democratic-Republicans, led by Jefferson and Madison, were against a national bank, favored relations with the French revolutionaries, desired an economy based on southern agriculture, and championed states rights. The differences between the two parties in economic and foreign policy would be instrumental in the development of the two party system and would play an important role in forming the policies that shaped our nation. The American Revolution and The Critical Period in the United States saw an amassing debt around the country. The problem was serious as the United States had over a 54 million dollar debt . The debate over how to resolve this crisis became heated and caused much strife around the nation. Alexander Hamilton, the Secretary of the Treasury, proposed a three step-plan that would strengthen the new federal government and fix the economy. In his “Reports on the Public Credit” Hamilton put forth the first part of his plan. He proposed that the Federal government take the burden of paying off the states debts. He insisted that congress create a fund to pay off the states debts “at par”, meaning with interest, so that the United States would be seen as responsible in the international community . While many agreed with Hamilton (The Northern States) many did not (The Southern States). The south had already settled the majority of their debt and felt that they would be carrying an unfair burden. Thomas Jefferson, the Secretary of State, was an outspoken opponent