The Two-Party System:
Federalists vs. Democratic-Republicans
The plan for a strong centralized government with a national bank, proposed and enacted by Secretary of the Treasury Alexander Hamilton during the early 1790s, led to a major rift in government that created the two-party political system. President George Washington warned against the creation of opposing political parties because he felt they “are likely in the course of time and things, to become potent engines, by which cunning, ambitious, and unprincipled men will be enabled to subvert the power of the people and to usurp for themselves the reins of government, destroying afterwards the very engines which have lifted them to unjust dominion.” Despite this warning, the Federalist and Democratic-Republican Parties emerged during his tenure as president. While there are now many smaller groups known as third parties, the two-party system is still prevalent in U.S. politics today.
Alexander Hamilton, John Jay, and John Adams became early leaders of the Federalist Party. Thomas Jefferson and James Madison began the Democratic-Republican Party, which Aaron Burr eventually joined. The Federalist Party was more popular in northeastern states, while the southern states generally preferred the Democratic-Republican Party. Below are some of the key differences and disagreements between the two parties.