The fledgling government faced considerable difficulties and skepticism about its durability, especially since traditional political theory held that large-scale republics were bound to fail. But President Washington brought credibility to the new government, while his cabinet, led by Alexander Hamilton, strengthened its political and economic foundations.

The governments first achievements were the Bill of Rights and Hamiltons financial system. Through effective leadership, Hamilton carried out his program of funding the national debt, assuming state debts, imposing customs and excise taxes, and establishing a Bank of the United States.

The bank was the most controversial part of Hamiltons program because it raised basic constitutional issues. Opposition to the bank from Jefferson and his followers reflected more fundamental political disagreements about republicanism, economics, federal power, and foreign policy. As the French Revolution evolved from moderation to radicalism, it intensified the ideological divisions between the pro-French Jeffersonians and the pro-British Hamiltonians.

Washingtons Neutrality Proclamation angered Republicans, who wanted America to aid Revolutionary France. Washingtons policy was sorely tested by the British, who routinely violated American neutrality. In order to avoid war, Washington endorsed the conciliatory Jays Treaty, further outraging the Republicans and France.

After the humiliating XYZ affair, the United States came to the brink of war with France, but Adams sacrificed his political popularity and divided his party by negotiating peace.

These foreign-policy disagreements embittered domestic politics: Federalists passed the Alien and Sedition Acts, to which Jefferson and Madison responded with the Virginia and Kentucky resolutions.