The document discusses the emergence of the two-party system in the early United States. It begins by noting that while the founders hoped to avoid political factions, disagreements over Hamilton's financial plan led to the development of the Federalist and Democratic-Republican parties. The key disagreement was over whether the "necessary and proper" clause of the Constitution allowed for implied powers like Hamilton's national bank. The Federalists supported a strong national government and loose interpretation while the Democratic-Republicans favored state power and strict interpretation. This partisan divide was cemented by opposing views on domestic economic policy and foreign affairs.

1. The Early Republic, 1789–1800
• Expecting consensus within new government,
Americans are shocked by disagreement
• Disagreements over domestic (especially
economic) policy and foreign policy cause
factions (not yet parties) to develop
• All see factions as negative
• Key era of defining Constitution: how much
central authority does Republic need to
survive

2. Building a Workable Government
• Almost all members of US Government are
Federalists, and again Madison (House) is key
• Revenue Act (1789): tariff on some imports
• Bill of Rights (1791)
• Organize executive branch w/ War, State,
Treasury, etc. (Cabinet); allow president to fire
appointees
• Judiciary Act (1789) allows appeal of some
state cases to new federal courts

3. Washington’s First Steps
• Presidency created w/ Washington in mind
• Aware of creating precedents, Washington
acts cautiously (forms cabinet, wary of veto)
• Tours nation in elaborate, nationalistic
rituals
• Hamilton (Treasury Secretary) is brilliant
and ambitious; not tied to any state; assumes
people driven by self-interest

4. EMERGENCE OF THE TWO
PARTY SYSTEM

5. Emergence of the Two Party System
Today the two party system of government
seems natural- We are used to having two
major parties compete for the presidency.
Constitution says nothing about political
parties.
Most founders hoped we would never have
any.

6. Original Ideas on Factions
The framers did not like
parties, which they called
factions.
• They wanted people to act
in their self interest. People
would form groups, but
change groups with
different issues.
• This is called pluralism.

7. Early divisions about government:
The National Bank
Splits within the Washington Administration
emerged almost immediately over the issue
of a national bank.
• Hamilton: Wanted a bank to put the
Administration on sound financial footing.
• Jefferson: Thought a bank unconstitutional.

8. Hamilton’s Financial Plan
Hamilton wanted to pay off the substantial
national debt from the Revolution. Some
was owed to other nations, some to
soldiers. He believed this necessary to
restore domestic and foreign confidence in
the U.S. Paying off the debt at face value
could restore confidence.
A national bank was proposed by Hamilton
as a key to his plan. It would keep tax
receipts, print money, loan money, etc..

9. First Bank of the United States (1791)
• Hamilton pushes charter of a private/public
bank to solve shortage of exchange
• Will release bank notes as nation’s currency
• Madison and Jefferson assert no authorization
in Constitution (strict construction)
• Hamilton counters w/ broad construction: if
end (goal) is constitutional, and means not
banned, then can do it (Washington agrees)

10. Report on Manufactures (1791)
• Assumption of state debts and national
bank contributes to economic stability
and growth
• Hamilton asserts need to foster domestic
manufacturing w/ protective tariffs; will
reduce dependence on European imports
• Opponents argue mainstay of republic is
small farmers; US future is agrarian, not
industrial; defeat Hamilton’s tariffs

11. Whiskey Rebellion (1791–1794)
• To fund state debt assumption, Hamilton gets
Congress (1791) to tax whiskey production
• Affects farmers on frontier, and they protest
• When protests turn violent (1794); President
sends in militia (fear Shay’s Rebellion)
• Demonstrates protest should come through
political system, not allow extralegal acts of
1760s and 1770s

12. Opposition to Hamilton’s Plan
• Many opposed Hamilton’s plan because it
favored the rich. Speculators had bought the
debt owed soldiers, so soldiers would get
nothing. Soldiers had sold bonds to
speculators at less that face value because they
doubted the government would pay them.
• Southern states disliked the plan because they
had already paid their debts.
• Jefferson and others argued that the bank plan
was unconstitutional.

13. Development of Partisan Politics (1792-94)
• Hamilton’s opponents begin to coalesce; call
themselves Democratic-Republicans
• Fear Hamilton’s support of commerce will
create a corrupt, aristocratic government
• Hamilton and allies then form Federalists
• Each accuse other of being an illicit faction
out to destroy republican ideals and USA
• Each claim they are seeking the public good

14. Key Issue:
The Necessary and Proper Clause
• The Constitution says the
Congress has the power
to make all laws
“necessary and proper” to
execute the powers given
it.
• This clause is also called
the “elastic clause.”

15. Dispute over the Elastic Clause
Hamilton
• Emphasized “proper”.
• Commerce, taxing,
printing money, etc..,
all powers given to
Congress, therefore, it
was proper to establish
a bank.
• Read between the lines
of the Constitution.
“Loose construction.”
Jefferson
• Emphasized
“necessary.”
• A bank was not
necessary for the
Congress to do its job,
so it was not
constitutional.
• Follow the
Constitution exactly.
“Strict construction.”

16. Federalist
Democratic-
Republicans
Leader
Appealed
to
Alexander Hamilton
John Adams
Thomas Jefferson
James Madison
-Manufacturers,
merchants, wealthy and
educated….
-Favored seaboard cities
-Farmers and Planters
common man
-Favored the South and
West
Ideas of
Govt.
•Strong government
over states
•Loose Construction
Implied powers
•Wealthy and educated
involved
•Limit freedoms of
speech & press
•More ‘elite’ rule
•State’s rights over
National Govt. Strict
construction
Expressed/Enumerated
powers
•Common man but
educated
•Bill of Rights is sacred
•Less govt. is best.
political

17. Federalist Democratic-Republicans
Domestic
Policy
Supported National
Bank—BUS
Supported excise tax/
Tariffs
National debt good for
country
National govt. assume
state debts
•Against BUS
•Against excise tax
•Against National debt
•States pay their own
debts
•Tariffs should be low
Foreign
Policy
•Opposed French
Revolution
•Favored the British
over French
•Supported French
Revolution
•Favored the French
over British.
political