The Two-Party System

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.












Payment of Debts


Supported a strong national bank where state debts are collected.


Opposed a national bank as they thought it benefited northern states which had higher debts than southern states.



French Revolution

Opposed American military support of the French Revolution due to limited resources and violent French rebellion. Supported American military support of the French Revolution as a repayment of debt to the assistance France gave America during its Revolution.


Federal Government


Favored a strong central government which had major powers over taxes, commerce, treaties, and war.


Favored the rights of state and local governments over a national government.


Jay Treaty

(1795, allowed for peaceful trade between America and England)


Supported the treaty, which was designed by Alexander Hamilton and negotiated by John Jay.


Opposed the treaty because they favored France over England. They also thought the treaty would strengthen the Federalist Party.



Tariffs (Taxes) on Imported Goods



Supported tariffs on imports in order to help pay debts.


Opposed most tariffs because they increased prices on products poor farmers needed.



U.S. Economy


Considered manufacturing jobs to be the most important to support.


Considered farming and agricultural jobs to be the most important to support.

Alien & Sedition Acts

(1798, allowed for imprisonment of non-citizens during wartime and criminalized criticism of the government)

Supported the Acts (ratified by John Adams) in order to punish Democratic-Republicans who they considered disloyal. Opposed the acts because only members of their party were targeted, and because they limited free speech.