The Federalists who supported Hamilton who wanted a strong centralized government, high taxes, and a national bank to find financial stability in the country. The Republicans were supporters of Jefferson who wanted to limit federal power, not create a national bank because of which they had a narrow interpretation of the Constitution. Hamilton, the Federalist, tried to repay the debt the U. S. had owed. This caused tension between the North and South creating the two parties: Federalist and Republican. A domestic affair , the Whiskey Tax was promoted by Hamilton which the tax money was used to pay off debts the U. S. had owed.
The establishment of the First Bank of the United States was what helped create the thoughts of Federalists of creating a financially stable nation. Though opposed by Jefferson saying that it would only benefit merchants and investors and hurt the rest of the country, it was established anyway. The Alien and Sedition Acts were used by Federalists to get rid of whatever Republican enemies they had from France. The Acts made it harder for one to become a citizen, creating a stronger Federalist Party. It also allowed the President to deport anyone of suspicion of making false writings about the government.
This was later ruled as unconstitutional by Jefferson and repealed. The Federalist Party was shaped by domestic affairs into becoming a party that cared a lot about the countrys financial position. The foreign affairs for example the XYZ Affair, almost led to war between the United States and France. The United States had sent Federal diplomats to negotiate with the French, but was asked for compensation to make agreements. The U. S. didnt compensate any money and later came back to negotiate under serious conditions. This Federal victory had led to the Alien and Sedition Acts.
Jays Treaty was opposed by the Republicans because of the negotiations made with Great Britain for trading purposes. These commercial reasons were thought by the Republicans that there would be a ruling elite group of merchants and investors and a large group of the poor remaining population. More and more wanting of financial stability of the country Is what led to the Pickney treaty that allowed the U. S. to use the Mississippi River trading route granted by Spain. The Republican Party was weak in forming their party because of the power it had in compare to the Federalists.
The creation of the Federalists and Republicans were what Washington wished to avoid, but inevitably were created. The domestic and foreign affairs containing from the Whiskey Tax to the Pickney Treaty were used by Federalists to increase their partys strength and to fix the nations debt. The Republicans, though still unmanageable to receive any favors in the Federal government, still benefitted from events like the Alien and Sedition Acts which were to be later used against the Federalists as unconstitutional to help win Jeffersons presidency. The 1790s was an important time period in creating the first two opposing political parties.