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THOMAS JEFFERSON AND James Madison founded the Democratic-Republican Party in 1792. It was the dominant party during the United States's first party era, but splintered into factions during the 1820s; one of the factions became the Democratic Party. The party, named the Republican Party by Jefferson and Madison (to reflect their anti-monarchial views and sympathy with the French Revolution), developed from factions that were opposed to the Federalist Party, established by Secretary of the Treasury Alexander Hamilton. These factions had been known as the Anti-Administration Party or the Anti-Federalists. While the Federalists favored a strong central government, the Republicans supported states' rights. While the Federalists encouraged the expansion of manufacturing in the United States, the Republicans favored the maintenance of an agrarian economy. The party contended that many of Hamilton's policies, including the Bank of the United States, were unconstitutional.

Thomas Jefferson (above) cofounded the Democratic-Republican Party in 1792 with James Madison.

Party members objected to President Washington's neutrality proclamation of 1793, and opposed ratification of the Jay Treaty with Great Britain in 1795. They also rejected Federalist proposals for high tariffs, increased military spending, and the establishment of a navy. The party was identified by a number of names during its existence: Republicans, Jeffersonians, or Jef-fersonian Republicans. Their opponents often called them Democrats or Jacobins (a reference to the “Reign of Terror” during the French Revolution). The party began to identify itself as the Democratic-Republican Party after 1816.

While the Federalists and Republicans contested the 1794 congressional elections, the 1796 presidential election was the first that was contested on a partisan basis. John Adams, the Federalist, was elected president. Jefferson, who finished second, became the vice president. Rejecting Adams's invitation to become a part of the administration, Jefferson became its leading opponent. The adoption of the Alien and Sedition Acts by the Federalist-controlled Congress in 1798 was criticized by the Republicans as being unconstitutional because they infringed upon state powers. This became a major issue in the 1798 congressional elections and the 1800 presidential election. Jefferson and Madison drafted the Kentucky and Virginia Resolutions, which contended that the states could nullify federal laws they deemed to be unconstitutional. The resolutions also contained what became known as “the Principles of 1798,” where Jefferson and Madison articulated the party's positions: states' rights, opposition to a strong federal government, opposition to a navy, and rejection of the Bank of the United States.

The House of Representatives decided the election of 1800 because Jefferson and Aaron Burr each received the same number of electoral votes. The House elected Jefferson and the “Revolution of 1800,” as Jefferson would call it, resulted in a quarter century of dominance by the Republican Party. The Federalists, with the defeat of Adams in 1800, and Hamilton's death, began to decline as a national political party. In the years after the War of 1812, conflict developed within the party over its direction. Younger leaders in the party, including Henry Clay, John Quincy Adams, and John C. Calhoun, favored higher military expenditures to build a strong national defense, and supported the chartering of a second Bank of the United States in 1816. An “Old Republican” faction, led by John Randolph, continued to support the states' rights position and the principles first articulated by Jefferson and Madison in the 1790s.

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