In George Washington’s Farewell Address (1796), the retiring president warned that the creation of political factions, “sharpened by the spirit of revenge,” would most certainly lead to “formal and permanent despotism.” Despite Washington’s cautionary words, two of his closest advisors, Thomas Jefferson and Alexander Hamilton, helped to form the factions that led to the dual party system under which the U.S. operates today. Other men, most notably James Madison and John Adams, also contributed to the formation of political parties, but Hamilton and Jefferson came to represent the divisions that shaped the early national political landscape.

Although both men had been active in the Revolutionary effort and in the founding of the United States, Jefferson and Hamilton did not work together until Washington appointed Jefferson the first secretary of State and Hamilton the first secretary of the Treasury. From the beginning, the two men harbored opposing visions of the nation’s path. Jefferson believed that America’s success lay in its agrarian tradition. Hamilton’s economic plan hinged on the promotion of manufactures and commerce. While Hamilton distrusted popular will and believed that the federal government should wield considerable power in order steer a successful course, Jefferson placed his trust in the people as governors. Perhaps because of their differences of opinion, Washington made these men his closest advisors.

Hamilton’s economic plan for the nation included establishing a national bank like that in England to maintain public credit; consolidating the states’ debts under the federal government; and enacting protective tariffs and government subsidies to encourage American manufactures. All of these measures strengthened the federal government’s power at the expense of the states. Jefferson and his political allies opposed these reforms. Francophile Jefferson feared that the Bank of the United States represented too much English influence, and he argued that the Constitution did not give Congress the power to establish a bank. He did not believe that promoting manufactures was as important as supporting the already-established agrarian base. Jefferson deemed “those who labour in the earth” the “chosen people of God . . . whose breasts he has made his peculiar deposit for substantial and genuine virtue.” He advised his countrymen to “let our work-shops remain in Europe.”

When George Washington’s administration began, the two camps that formed during the Constitutional ratification debates – those groups known as the Federalists and Anti-Federalists – had not yet solidified into parties. But, disagreements over the nation’s direction were already eroding any hope of political unity. In May of 1792, Jefferson expressed his fear to Washington about Hamilton’s policies, calling Hamilton’s allies in Congress a “corrupt squadron.” He expressed fear that Hamilton wished to move away from the Constitution’s republican structure, toward a monarchy modeled after the English constitution. That same month, Hamilton confided to a friend that “Mr. Madison cooperating with Mr. Jefferson is at the head of a faction decidedly hostile to me and my administration, and . . . dangerous to the union, peace and happiness of the Country.”

By the time Jefferson and John Adams vied for the presidency in 1796, political factions had formed under the labels “Republicans” and “Federalists.” In fact, by 1804 the advent of political parties necessitated a constitutional amendment that changed the electoral process to allow president/vice president tickets on the ballot. The Federalists dominated the national government through the end of the 18th century. Despite President Washington’s efforts at unity, political differences proved to be too deep to promote consensus. The Republican Party emerged as organized opposition to Federalist policies, and despite Jefferson’s assurances in his first inaugural address that Americans were “all republicans” and “all federalists,” faction had solidified into party.

A review of the secondary literature on the Burr-Hamilton duel does indeed reveal some inconsistency on whether the duel was illegal. Perhaps the inconsistency is partly the result of conflicting personal and political judgments contemporary to the event: Burr and Hamilton were leaders of opposing political factions.

The duel was fought on the early morning of July 11, 1804. Burr and Hamilton, and their seconds, had rowed out separately from New York City across the Hudson River to a narrow spot just below the Palisades at Weehawken, New Jersey. It was a secluded grassy ledge, only about six feet wide and thirty feet long above the river, with no footpath or road leading to it. Cedar trees growing on the ledge partially obscured it from across the river.

It was a place where duelists from New York City could go to settle their affairs in secret as dueling per se was not illegal in New Jersey. Duels took place at the Weehawken spot from about 1799 to 1837, when the last determined pair of duelists were interrupted in their preparations by a police constable, who put them in jail to await the action of the grand jury.

Hamilton’s 18-year-old son Philip had been killed in a duel there on January 10, 1802, just two years previously. After that, Hamilton had successfully helped pass a New York law making it illegal to send or accept a challenge to a duel. Those convicted were liable to lose the right to vote and were barred from holding public office for 20 years, but no duelist had yet been prosecuted. Public sentiment supporting the duty to uphold one’s honor if it had been questioned was still strong and could not easily be ignored, even by those who questioned the practice of dueling.

The participants in a duel—including the principals and their seconds—also typically arranged things in order to make it difficult to convict them. For example, they ensured that none of the participants actually saw the guns as they were being transported to the dueling ground, they kept silent about their purpose, and they had the seconds turn their backs while the shots were exchanged. This would allow them to later deny having heard or seen specific things, decreasing the chance that they might be held as accessories to a crime.

After the duel, Burr and Hamilton were each transported back across the river by their seconds, Burr having mortally wounded Hamilton, who died at his physician’s home the following day.

In New York City, a coroner’s jury of inquest was called on the 13th of July, the day after Hamilton’s death. Although Hamilton was shot in New Jersey, he died in New York, and therefore, Burr (his enemies said) could be prosecuted in New York. The jury sat intermittently until August 2, and considered, among other evidence, the contents of the letters that Hamilton and Burr had exchanged before the duel. These letters suggested to some on the jury that Burr had in fact enticed or even forced Hamilton into the duel, pushing the affair over the line from one of settling honor to one of deliberate murder which was a capital offense.

The coroner’s jury returned a verdict that Burr had murdered Hamilton, and that Burr’s seconds were accessories to the murder. New York then indicted Burr not only for the misdemeanor of “challenging to a duel,” but also for the felony of murder.

In November, Burr was also indicted for murder—which is to say, not for dueling—by a grand jury in Bergen County, New Jersey, because the duel had taken place there.

After the duel, Burr was apparently surprised at the public outrage over the affair. Fearing imminent arrest, he fled to New Jersey, then to Philadelphia, and then to Georgia.

He wrote to his daughter Theodosia: "There is a contention of a singular nature between the two States of New York and New Jersey. The subject in dispute is, which shall have the honor of hanging the Vice-President. You shall have due notice of time and place. Whenever it may be, you may rely on a great concourse of company, much gayety, and many rare sights."

He was still the Vice President, however, and he determined to go back to Washington to act as President of the Senate during its upcoming session and preside over the debate and vote concerning the impeachment of Supreme Court justice Samuel Chase. The impeachment proceedings were part of a partisan struggle between Jeffersonian Republicans and Federalists, and Burr might be expected to influence the outcome if he were allowed to preside over the Senate. A large group of Congressmen signed a letter to New Jersey Governor Joseph Bloomfield describing the Hamilton-Burr affair as a fair duel and asking him to urge the Bergen County prosecutor to enter a nolle prosequi in the case of the indictment, in other words, to drop the case. This is what eventually happened.

The murder charge in New York was eventually dropped as well, but Burr was convicted of the misdemeanor dueling charge, which meant that he could neither vote, practice law, nor occupy a public office for 20 years.

All of the major economic events of the Jacksonian Era can be linked to Andrew Jackson's determination to pay off the national debt. Not only did he enforce the steady shrinking of the debt by paying it off and being strictly frugal with federal funds, but he also established policies to ensure that the government would not incur new debt. As a result, the U.S. actually did become debt free, for the first and only time, at the beginning of 1835 and stayed that way until 1837. It remains the only time that a major country was without debt.

Jackson and his followers believed that freedom from debt was the linchpin in establishing a free republic. It freed the country and its citizens from burdens and bondage to creditors. It freed the majority from dependence on a minority.

As Jefferson had thought of it, debt involved dependence on one's creditors, whoever they might be, domestic or foreign, and, as he famously wrote in Notes on the State of Virginia, "Dependence begets subservience and venality, suffocates the germ of virtue, and prepares fit tools for the designs of ambition." If the government involved itself in the creation and sustaining of credit and debt, it would naturally encourage "public and private profligacy," as Jackson put it in his first inaugural address, which meant that the government would overextend itself into the liberty of its citizens.

The government, then, should insert itself into the lives of its citizens as little as possible, and the government should strive for its own freedom from dependence on creditors. In some respects, this was simply a reading of indebtedness as enslavement and as incompatible with the status of liberty. The determination to abolish America's debt was also of one piece with the other "reform" movements of the early 19th century, the temperance movement, for example.

Alexander Hamilton's 1791 financial plan for the U.S. had included the implicit acceptance of a national debt, along with the establishment of a central bank, and the federal government's assumption of the debts of the individual states. Hamilton saw it as the federal government's duty to promote economic development, including an expansion of the money supply and credit in order to finance investment in economic growth, and even direct government subsidies of businesses.

Jeffersonians were skeptical of this. For them, debt freedom would vindicate the U.S. as an exception among countries, and would demonstrate that the new country was the golden example for the rest of the world to follow. The implication of this was, for Jackson (following Jefferson), that government should stay out of the economy as far as possible.

When Jackson came into office, the government's economic activities were being conducted along the lines of Whig Senator Henry Clay's "American System," that had two main components—high protective trade tariffs and the funding of domestic "internal improvements," mostly in the form of roads and canal projects.

High protective tariffs protected and promoted the growth of U.S. manufacturing against cheap imports. They also provided most of the federal government's revenue. The South, however, saw protective tariffs as a system of sucking money out of the region (by penalizing them with higher prices, domestic and foreign, for manufactured goods and by encouraging reciprocal tariffs levied by other countries against American agricultural products, such as tobacco and cotton) and funneling it to the North and West, as well as into the pockets of northern manufacturers.

Provided with an extended rationale by Jackson's own vice president, John C. Calhoun, South Carolina passed an ordinance that "nullified" federal tariffs, based on the argument that the federal government did not have the power to levy them. Jackson responded by threatening South Carolina with force. Both sides eventually compromised, with the passage of a reduced tariff in 1833.

Jackson believed that the federal government did have the power to levy and enforce tariffs and he recognized a need for the revenues that they generated, but for two reasons. The first was to stimulate production of military supplies for national defense, and the second, to raise money to pay off the national debt, resulting primarily from the War of 1812. The debt surpassed $100 million after the war (including carryover from the Revolutionary War), but by the time Jackson entered office in 1829, it had been reduced to $58 million. Jackson did not agree with northern manufacturers that a tariff did much to promote industry and he did not agree with southern planters that it did much to penalize agriculture.

Another part of Clay's "American System" was funding transportation projects, mostly in the north and west. The rationale was to fund development that had a national effect, not a purely local one, and would bind together the different regions of the country. The legislative process for funding these projects, however, often devolved into corrupt "log rolling," with politicians swapping votes and investors gaming the system to advance special privileges through subsidies. In addition, using federal funds in this way meant that fewer funds were available for paying off the debt and so postponed the day when the U.S. would be debt free.

Jackson, therefore, began vetoing these bills, deliberately minimizing the government's involvement in the economy. He believed that the government should not be a vehicle for privileged interests and that it should remain small.

Out of this belief, Jackson came to oppose the Bank of the United States because it entangled the government, which capitalized it, into protecting the interests of private stockholders. He shocked the bank's president, Nicholas Biddle, as well as many other people, when he vetoed the rechartering bill in 1832. In his veto message to Congress, Jackson summed up his sense of the proper, limited role of government: "If it would confine itself to equal protection, and, as Heaven does its rains, shower its favors alike on the high and the low, the rich and the poor, it would be an unqualified blessing."

Instead, the rechartering of the bank would have required heavy capitalization using public funds that would not simply keep the bank going, but make a profit. To Jackson, the bank's purpose had been only to establish a national currency and to meet interest and principal payments on the national debt. Because the debt was soon to be paid off, much of the bank's original purpose was about to disappear.

Jackson, in fact, believed that the bank was an "abominable institution—the monster, that has grown up out of circumstances, and has attempted to control the government." He had closely read accounts of the disastrous "South Sea Company Bubble" of 1720, which had implicated the English King and his ministers in a series of financial manipulations, aided by the government's executive power. When the speculative bubble burst, it caused widespread loss, debt, and poverty. The fear of such executive power had partially inspired mid- and late-18th century radicals to agitate for a more limited central government. It inspired American revolutionary thinking and informed the Founding Fathers' determination to set up a system of limited government wherein the executive's power would be checked.

From the time that Hamilton's plan was implemented at the very beginning of the republic, opponents—including Jefferson—feared that it would consolidate moneyed interests and threaten individual liberty. That fear came to be focused on the Bank of the United States. Biddle and the like-minded staff of the bank, however, believed that it was a good thing for the government to invest in private enterprises because it would promote industry and business, and would make a profit for the government.

Late 19th-century historian James Parton wrote that, "Financiers of the Biddle school, some of whom proclaimed the national debt a national blessing, regarded the solicitude of the President on this subject as primitive and puerile." As part of his battle against the Bank of the United States, Jackson had the government remove its deposits with the Bank and place them in a number of regional banks, chartered by the various states. Unfortunately for Jackson, however, this only stimulated financial speculation, rather than dampening it, because the state-chartered banks, as a rule, operated under looser lending procedures than the national bank did. The combined debt of individual states, through state-issued bonds meant to finance "internal improvements," had climbed to nearly twice the total of the national debt.

As a result, a speculative balloon grew, based on the relatively unconstrained lending by these newly rich banks to people who were speculating in the sales of the government's western lands. In fact, for the "mercantilists" like Henry Clay and Nicholas Biddle, it was to the government's advantage to keep land prices high in order to generate more government revenue from their sale.

To try to restrain the growth of this balloon, Jackson issued an executive order, known as the "Specie Circular," in 1836, requiring that payment for western lands be accepted only in the form of gold coin. He also attempted to replace as much paper money as he could with gold coins—eagles ($10), half-eagles ($5), and quarter-eagles ($2.50). In this, he was counseled and supported by his long-time associate, Senator Thomas Hart Benton. Benton gained the nickname "Old Bullion," for this, and the gold coins came to be called "Jackson Yellow Jackets," "Yellow Boys," or "Benton Mint Drops."

The requirement to use gold to buy federal lands suddenly deflated the speculative balloon, resulting in the Panic of 1837, just as Jackson was leaving office. The sudden contraction of credit that was a consequence of Jackson's "tight money" policies continued under his successor, Martin Van Buren, even though the panic made it necessary for the government to begin borrowing money again, and since that time, the United States has never again been without a national debt.