America was beginning to develop during the 1790's. The country had broken away from Great Britain and now former British colonists had to uphold the country on there own. With George Washington leading the United States, with the constitution in hand, the country was on its way. However, also during this time, the French Revolution had exploded, and making its influence known in America. Many domestic affairs, such as, maintaining the economy and creating government, shaped American politics of the 1790's; foreign affairs, such as the French Revolution, influenced the politics, but to a small extent.
Different political parties did not have the same view on how to correct the American debt and thus widened the gap between them. America had just finished fighting the American Revolution, and had large war debts and very little credit. The country owed money to foreign allies as well Americans who contributed to the cause.
George Washington's secretary of treasury, and Federalist, Alexander Hamilton proposed several financial reforms, which many Republicans disagreed with (Garraty).
Hamilton's First Report on the Public Credit stated those people whom the government owed money to could exchange their bonds to with interest-bearing bonds. With this, the government could pay off its debt overtime and supply its loaners with some compensation thereafter. The report also stated that the Federal government should assume the debts of the states. However, James Madison and Thomas Jefferson argued that most farmers and soldiers who owned these bonds needed cash right away, and would have to sell their bonds for less than face value. Moreover, if the Federal government assumed all the debts, it would be unfair to the southern states, where most of the debt had been paid off. Hamilton's report was adopted, but caused controversy because it favored the rich and showed sectionalism,