Hamilton Vs. Jefferson

A cabinet feud reshaped a nation. We follow Hamilton and Jefferson from principled disagreement to hard-nosed dealmaking, showing how a debate over debt, a national bank, and the reach of implied powers birthed America’s first party system—and moved the capital to the Potomac. Hamilton’s reports on credit, currency, and tariffs aimed to harden the young republic into a credible economic power. Jefferson and Madison fought back, citing constitutional limits and warning against a financial engine that could smother the states. Caught between them, Washington refused party labels while embracing many Hamiltonian policies, a choice that deepened the rift and set the stage for a lasting realignment.

The turning point arrives with a bargain: accept federal debt assumption, and the capital shifts from New York to Philadelphia and then into a new federal district on the Potomac. That trade delivered Washington, D.C., and, in time, the institutional backbone Hamilton wanted. We then chart the volatile elections of 1796 and 1800, from the awkward Adams–Jefferson pairing under the original rules to the bitter tie between Jefferson and Burr. Hamilton’s intervention in the House, siding with a rival he deemed principled, paved the way for Jefferson’s victory and the 12th Amendment—aligning the Constitution with party reality.

The Federalists never reclaimed the presidency, yet their influence lingered. The Democratic-Republicans adopted pillars of national strength, including a revived bank after the War of 1812. Through Tocqueville’s lens, we compare a Federalist “liberty of institutions” with a Democratic-Republican push for institutional equality and state-centered power. Along the way, we surface the enduring questions: How far do implied powers reach? When should the executive lead policy? And how do rivals strike deals without breaking the constitutional frame? Subscribe for more deep dives into the ideas and inflection points that still shape American politics, and leave a review to tell us where you stand on the Hamilton–Jefferson divide.

Check Out the Civic Literacy Curriculum!

School of Civic and Economic Thought and Leadership

Center for American Civics

Chapters

• 1:33 Setting The Stage: Early Parties
• 2:12 Hamilton And Jefferson Emerge
• 3:56 Washington’s Stance And Cabinet Tensions
• 5:53 Hamilton’s Financial Plan Explained
• 9:17 Constitutional Clash Over The Bank
• 12:23 The Grand Bargain And The Capital
• 16:06 From New York To Philadelphia To D.C.
• 19:21 Party Leaders And 1796 Election

Transcript

SPEAKER_00: 0:47

Welcome back to Civic City Year. Today we're talking about key leaders of the first political parties. And again, if you haven't listened to the prior episode with Dr. Caries, and there's one prior to that with Dr. Beinberg, we're really just kind of digging into the history of these political parties, how they formed. And then we're going to get into after this kind of political parties throughout American history. So, Dr. Careese, thank you so much for coming back. I want to ask the question: who are the key leaders of the first political parties in the United States?

SPEAKER_01: 1:24

Thank you, Liz. It boils down to really Hamilton versus Jefferson. And this is not, I'm not drawing only on the Lynn Manuel Miranda musical about Hamilton. This is sort of widely accepted. And there's actually a new book by the president of the National Constitution Center, Jeffrey Rosen, about the Hamiltonian versus Jeffersonian views and how they animate American politics. So this is a long-standing consensus view among historians and political people that the conflict between Hamilton and Jefferson is the source of the rise of political parties. And amazing enough for us to think about it today, it happens within George Washington's first cabinet. And then later Madison from the House ends up supporting Jefferson's view, in effect of supporting the establishment of the Democratic-Republican Party, this hyphen Democrat Democratic-hyphen-Republican Party. But I should pause to note Washington never really accepts the We we now think hundreds of years later, and this has been a view for a long time, that Washington's kind of a Federalist, the other party. Washington never accepted that label. He never baptized or really agreed with this existence, obvious in his second administration, that there were these two rival parties. And we talked about last in the last episode about his warnings, his counsel about parties in the farewell address. But it's a reality happening in his own cabinet and it's two cabinet members. Hamilton is Secretary of the Treasury, Jefferson as Secretary of State. Secretary of the Treasury was a much more important position than we now think of it as being, because Hamilton is the architect, in effect, of a national economic policy, a national policy of finances, and really of the of the stature and presence of the federal government in relation to the states and domestic affairs and in relation to foreign affairs. So the Secretary of Treasury position was very, very prominent. And part of the challenge of understanding all this is that while Washington does not consider himself a Federalist, as these official party labels are coming into presence in his second administration, Washington does, on the other hand, largely accept Hamilton's policy recommendations in the first administration and in the second administration. And so you could say what's really sparking the rise of the parties, I mentioned in the last term, in the last episode, sorry, that in the first term the French Revolution happens, 1789, and there's the legacy of the anti-federalist and federalist debates or the ratification. But it's really, in a more most pointed way, it's the plans that economic the plans that Hamilton puts forward for a national economic policy and for national finances and the debt and the bank that really spark Jefferson into kind of alarm. And then he eventually persuades Madison to oppose these. So Hamilton submits, at the request of Congress, he writes reports about what do we do with the national debt, the debt accumulated during the Revolutionary War. And then Hamilton kind of folds in the state debts as well, mostly accumulated during the Revolutionary War period. And in one of the reports, Hamilton proposes a national bank. And this is seen as controversial by Jefferson right away, and then also by Madison, because there's no clause in Article I of the Constitution about Congress having a power to establish a national bank. So it's an implicit power, Hamilton is arguing, among the various powers that the federal government has, implicit in them a necessary and proper means of implementing these other powers given to the federal government would be establishing a national bank. And of course it has to be passed by legislation. It's got to be House, Senate, President agreeing on it. But Jefferson and Madison see this first as a problem because it's not an explicit power, and they don't want to get started in this idea that there are implicit powers in Article I or in Article II, that the, especially the presidency can be advocating these new laws, new policies. And they also think it's going to make the federal government too dominant if there's a national bank. The federal government will be too dominant in setting the whole tone of the national economy for the new national republic under the Constitution. So for both of these reasons, it's really Hamilton's financial economic reports from 1790 that, again, he's asked by Congress to write reports on these questions. What do we do with the national debt? What do we do with our national finances? Then he also addresses kind of economic and manufacturing policy by proposing tariffs. Who cares about tariffs, right? That was a joke about the current Trump administration. Who cares about tariffs? Well, it was a heated topic in the first presidential administrations and on into the 19th century tariffs.

SPEAKER_00: 6:54

So when we talk about Hamilton and Jefferson, didn't, even though they're disagreeing about this economic plan and new financial powers, didn't they make a deal or a bargain about it?

SPEAKER_01: 7:07

Yes. And as I mentioned in the last episode, it would be good if we thought about Washington's counsel about parties. Yes, they're going to be a reality, but be really careful and moderate them, guide them, govern them by this idea of common commitment to the Constitution, common commitment to the Republic, to a civic culture that we share. That's more important than our party differences. And you can see that in the early period of the parties arising, Hamilton and Jefferson were able to do this. Later, they were not able to do it. But early on, they were. So in 1790, Jefferson, Jefferson's more worried about the national bank idea than he is about Hamilton's plan for the federal government to assume all the debts of the states, as well as to deal with the national debt accumulated really to foreign governments and foreign creditors because of the Revolutionary War. Jefferson's more worried about the bank than he is about the plan for the debts. Hamilton sees the two as necessary. You've got to have the national bank in order to organize a credit system and a currency and establish our a reputation for credit and debt. So that's why it's a package deal for Hamilton. Jefferson ends up accepting the national bank and accepting even the plan for the federal government to assume the debts of the states. And again, Jefferson is worried about this because it makes the federal government more important than the states. It makes the sort of states seem like they're junior agents, junior partners, right? But Jefferson is willing to accept it if he can get this important point, which is where will the national capital be? So he basically, through intermediaries and directly with Hamilton, proposes a grand bargain. Okay, I'll give you, Mr. Hamilton, Mr. Secretary of the Treasury, this deal, which I'm sort of worried will strengthen the federal government and strengthen the executive branch and et cetera, you know, you get the bank, you get the assumption of the state debts. If I get a national capital that's nearer to the South, whether it's right in the middle of the country. And so the plan proposed, which Hamilton then accepts, is that the national capital will move from New York. That's where George Washington is inaugurated. The first Congress is there in New York. It'll move to Philadelphia for a period of ten years. And the national capital had during the war, the revolutionary war had been in Philadelphia, right? And the Philadelphia is where the first and second Congress meet, and and so you know, Philadelphia, fine, right? Separation independence is from Philadelphia, etc. Constitutional Convention. But then, after ten years, there will be a new federal district established, in effect, a new city built. And that has to be on the banks of the Potomac River. And the Potomac River is between Maryland and Virginia. Of course, Virginia, Jefferson is Virginian. This clearly makes the new federal district right smack in the middle and really uh, you know, kind of you could say in the south. And Hamilton says deal, right? Because he gets what he thinks is the important principles about the Constitution and implicit powers in the Constitution and a stronger role for the federal government and building up a strong national economy and a national federal republic as an entity and an idea. Hamilton says, I'll take it, right? I'll accept that the that the new federal district will be in the South. So that's how we get the federal district. So this is constructive partisan disagreement and deal-making. And we'll we'll talk later about the larger and persistent and ultimately unmovable disagreements between the Hamiltonian and Jefferson views of the size and role of the federal government, of the role of the executive branch and proposing major policies. So that's for a later episode.

SPEAKER_00: 11:27

I appreciate that you bring up Lynn Man Mel Miranda, because as we're talking about this, I'm singing the songs in my head of where we are. And it's it's kind of fun to, you know, know these songs and know this play, but then have a little bit more history and understanding behind it. So I have another question. What was the trajectory then of the party system? And we're talking about, you know, the Democratic-Republican Party and the Federalist Party. Who were the important leaders? Because I know that the Federalist Party doesn't last very long after this.

SPEAKER_01: 12:00

Yes. And in fact, before I answer, I should correct myself. The bank was not explicitly part of the deal between Hamilton and Jefferson. Uh it was mostly about assuming the state debts and that larger financial plan. Hamilton then had to make the further argument, of course, with Washington's support, to get the bank established. But for Hamilton, this big deal was a major step toward getting the bank, sort of set the train, headed down the tracks. So who were the important players and what's the trajectory? Thomas Jefferson and then James Madison, the obvious leaders of the Democratic-Republican Party, and then opposition, the Federalist Party rising, Hamilton, the clear leader, and eventually John Adams, vice president under two terms in Washington's two terms as president, and then sort of the obvious kind of error apparent, to use that language, for the election of 1796. And even though the parties were a reality, Federalist versus Democratic-Republican, Jefferson doesn't really quite run as the party candidate of the Democratic-Republican Party against Adams as the candidate of the Federalist Party in 1796. It's sort of happening, but not nearly to the degree it happens in the election of 1800. So Washington's kind of legacy and stature carries Adams to victory in the Electoral College in 1796, and it's under the rules of Article II, in which the term electoral college is not used explicitly, but that you're voting for a president and a in the States, you are voting for a president and a vice president, and the top winner is going to be the president, and the second place winner is going to be the vice president, and there's no idea of parties here. It's just a first place candidate, the best person to be the executive, and the second place winner. And this is what Jefferson Adams and Jefferson agreed to in 1796. Okay, these are the results of the election. First place winner, Adams, second place winner Jefferson. Jefferson becomes moves from being Secretary of State, then he leaves the government, then he comes back, and he's the vice president under John Adams. Now you can imagine this is not the closest of working relationships during Adams' reason.

SPEAKER_00: 14:18

It's very awkward.

SPEAKER_01: 14:19

Yes, it is awkward, but they they this persists, and those are the terms of the deal. Then partisan conflict openly breaks out because of the quasi-war with France under, and effectively under Napoleon. And it's a very nasty, heated election in 1800. We think things are nasty on social media and the internet today. There are some really nasty charges fired against Adams by the Democratic-Republican side, fired against Jefferson by the Federalist side. And when it all washes out, the Jefferson Party clearly wins the election of 1800. Adams clearly finishes in in you know third place, so to speak, but the then we could do a whole separate episode on this. Jefferson and his clear vice presidential candidate, Aaron Burr, are tied because no one's explicitly figured out a party system. So eventually we we amend the constitution to have a constitutional amendment about election of the president and the vice president to sort this out, to make it clear you're electing a president, and then there's clearly a guy or gal who's the second place person that's going to be the vice president. So you don't end up with this kind of tie idea. And that that uh amendment, in effect, the 12th amendment, in effect, ratifies the party system. It was not, and the word party is not used in the 12th amendment, but but there it is, right? So after the drama of the election of 1800, in which the further drama is that it's really Hamilton who plays a crucial role. As the Federalist, as sort of the losing side, he says to Federalists in the House so under the Constitution, when there's a tie in the Electoral College, the House decides by state delegations who will be selected as the president. And the election of 1800 is not the only time this happens. A crucial time happens in the election of 1824. But Hamilton plays a role in 1800 to say to the Federalists, you know what? I don't like either of these candidates, Jefferson or Burr, but at least Jefferson has some principles. Burr has none. And so you should vote for Jefferson, and that basically decides that Jefferson is elected as as president. But the other part of the drama is that this is really the swan song of the Federalist Party. The Federist Party never wins an electoral college victory again. They never win the presidency again. And they slowly fade. They become a kind of regional party in New England. And then by you know, after the War of 1812, they really are faded and are gone. So you have this, it's called the, you know, the there's there's a there's a basically a one-party system uh that that develops. It's the Democratic-Republican Party. And then later episodes we'll talk about this, then factions begin to develop within the Democratic-Republican Party, and eventually the Whig Party develops. So, you know, Adams, the election of 1800, big drama, but it's really the swan song of the Federalists. Adams is basically out of national politics as of 1800. He never comes back to challenge Jefferson, the presidency, or to, you know, to run for the Senate or do anything like that. And Alexander Alexander Hamilton is dead in a duel by 1804.

SPEAKER_00: 17:47

With Aaron Burr.

SPEAKER_01: 17:49

So the larger retrospective view, and I'll talk about this in a in the next episode we do, what are the big differences between Hamilton and and Jefferson about parties? I'll here just briefly plant the seed about Alexis to Tocqueville. When Tocqueville visits in 1830 and then writes Democracy in America, this wonderful book about our whole constitutional order and our political spirit, our political culture as well as our political institutions. He has uh remarks about the Federalist Party and the party system, in which he says that basically the Federalists were the party of liberty and the Democratic Republic Republic the Democratic Republicans were the party of equality. This is a little bit paradoxical to us because Madison and Jefferson were slaveholders from the South. But Tocqueville's point is that the party of liberty was really the party of the constitutional order in the Federalist sense of accepting the hierarchy that's in our constitutional order. That you will have a single executive, and you will have a Senate, and you will have strong policies coming from the federal government, as we just discussed, about domestic policy, an economic plan, finances, assuming the debt, a national bank, and the executive as sort of a policy engine for the federal government, accepting that versus the Democratic-Republican view, which wants power to stay mostly with the states and mostly with the Congress, if there's party, if there's power in the federal government. So equality meant, you know, the House of Representatives and yes, also the Senate. That's the engine of federal government power. And the president is more of a clerk, right? That's why the Democratic-Republican Party is in Tocqueville's view the party of equality. And again, more party more political power stays with the states. And that is more democratic, small d democratic. So that's why for Tocqueville, this Democratic-Republican Party is the party of equality. But Tocqueville says it was a very fortunate thing for America, the American Republic, that there was the Federalist Party because it was the party of the Constitution. That you got this complicated Constitution written, proposed, ratified, establishing the complicated federalism system with a real government in the center, the complicated separation of power system in the federal government. And that survives. The Federalist Party doesn't survive the election of 1800, but Jefferson governs and the Democratic Republican Party govern, they govern under the constitutional order. And in effect, and especially after the War of 1812, they accept that there's gonna this is gonna be a strong federal government, and you need the Bank, the bank comes back after the disaster of the War of 1812. They accept some of the Washington-Hamiltonian Federalist principles, the Democratic-Republican Party does after the War of 1812. And so Washington, and again, he's not a Federalist, but Hamilton and the and Adams and the Federalist Party spirit doesn't completely disappear from the architecture and the spirit of our politics, even if the Federalist Party explicitly literally disappears.

SPEAKER_00: 21:18

And like you said, we are going to get into kind of a more nuanced disagreements between Jefferson and Hamilton in our next episode with you, Dr. Caris. Thank you so much again for your expertise.

SPEAKER_01: 21:32

Thanks, Liz.