The 1790's were a critical period in American history because they determined how the new Constitution would be interpreted and they set a precedent for future American governmental policies. The 1790s were also a turbulent period both at home and abroad, and the conflicts that emerged layed the foundation of the 2-party system in the U.S.

Domestically, great contreversey centered around the nationalistic, economic programs of Alexander Hamilton, Washington's Sec. of Treasury. Hamilton wanted to repay debts to the current holders (speculators) instead of to their original holders. Hamilton also wanted to create a National Bank of the U.S., and to set an excise tax on whiskey. His intention was to create a rich, business sector which would support the government in future years. Hamilton's programs passed but not without fiery opposition from Thomas Jefferson who envisioned an agricultural Republic of indepent yeoman farmers. The result was not only a split in the administration, but the emergence of political parties. "Federalists" supported Hamilton, "Republicans" supported Jefferson. During the administration of John Adams, Federalists passed the Alien and Sedition Acts as a assault on Republican party power. The provisions of these acts not only ran counter to the Constitution but caused Jefferson and Madison to pass the Virginia and Kentucky Resolutions, the first proposal of nullification (which would be embraced by John C. Calhoun in the 1830s) Controversial "Federalis" legislation, therefore, led to creation of a strong opposition party (despite Washington's warnings of political parties in his Farewell Address)

Foreign policy in the 1790s further fomented the emerging political parties. Federalists condemned the French Revolution while Republicans praised its democratic ideals. The Jay Treaty which did little to end British violations against U.S. merchant ships, caused Republicans to burn effigies of John Jay, the federalist who had done the negotiation. The XYZ Affair,...