The comprehensive measures of Hamilton for strengthening the Union gave a definite character and policy to the Federalist party. The foundations of this party had been laid by the struggle over the question whether the Constitution should be accepted by the states; but the measures of Hamilton were too strong for some of the friends of the Constitution, and many changes occurred in the temporary groupings of political leaders before a definite dividing line was established between the Federalism of Hamilton on the one side and the Democracy of Jefferson and Madison on the other. These two eminent Democratic leaders had, indeed, been among the most earnest supporters of the Constitution. Madison went farther than Jefferson in the direction of Federalism, and encountered the distrust of the states-rights element at home; but Jefferson, as has been already seen, made several reports in the Continental Congress in favor of declaring the United States a nation, and was the cordial promoter of those important steps towards union,—the transfer of the Western territory to Congress and the adoption of a common monetary system.

The plans of Hamilton in regard to the finances, however, and his resolute policy of neutrality between France and Great Britain, ran counter to the views of Jefferson. It is not surprising, therefore, that the latter found himself pitted against the great Federalist leader upon nearly every question of importance which came before the cabinet. The feeling that he had been duped in regard to the assumption of the state debts found vent in many complaints, which finally bore fruit in open attacks upon Hamilton, at first made indirectly through a clerk in the government service, and then directly in a long letter to Washington. Jefferson gave the post of translating clerk in the State Department to a Frenchman, Philip Freneau, who published a journal known as the "National Gazette." In this journal Freneau began a series of bitter and sometimes well-directed attacks upon the measures of the administration, and particularly those of Hamilton. A friend of Jefferson in Virginia, Colonel Mason, approached Washington in the summer of 1791, and made a long and severe criticism upon the Treasury measures and their effect upon the people.

Washington continued to stand above party, and sought to mitigate the friction between his cabinet officers. Where the judgments of Hamilton and Jefferson differed on constructive measures, however, Washington in nearly every case became convinced of the wisdom of the recommendations of Hamilton. He therefore had the appearance of leaning to his side, although he often mitigated the sharpness of the arguments of his vigorous young minister of finance and endeavored to temper his excess of zeal. After listening to Mason, Washington felt that the time had come to interpose in the growing hostility between his cabinet ministers. He submitted a brief summary to Hamilton of the criticisms which had been made upon his projects and asked him to submit a statement in reply. The charges were directed not only against the substance of the financial measures, but declared that they fostered speculation, corrupted Congress through the ownership of the public debt by members of that body, and that Hamilton was laboring secretly to introduce aristocracy and monarchy.

It was not difficult for Hamilton to brush away most of these criticisms. This he did in the cool, logical manner of which he was a master by numbering each objection to his policy and measures and showing that it was not founded upon solid reasoning or fact. Hamilton would have done well to have rested his case upon his letter to Washington, but he was now convinced that Jefferson was behind the attacks upon him, and he determined to strike back. He began a series of anonymous communications through the Federalist organ, "Fenno's Gazette," which showed all his usual vigor and force of reasoning, but which only intensified the bitterness in the cabinet. President Washington was deeply disturbed by this open outbreak of hostilities, and remonstrated by letter with both Hamilton and Jefferson. Hamilton suspended his attacks, while Jefferson confined his hostility to less open methods.

When Congress met at the close of 1791, Giles of Virginia, a loud-spoken, hot-headed member of the House, called for accounts of the various foreign loans made by the government. An attempt was made to prove corruption in the management of the Treasury. Hamilton could not have found a better opportunity for defending himself, if he had sought it. He was no longer shut up to the unsatisfactory methods of unsigned communications through newspapers, but was in a position to speak openly and boldly in exposition and defense of his measures. Report after report was sent to Congress, setting forth the operations of the Treasury with a lucidity and power which silenced the opposition and almost overwhelmed Madison, who had been forced as a party leader to accept the responsibility for the attacks. The reports, to any one who understood the subject, were absolutely convincing of the soundness and wisdom of Hamilton's measures.

Jefferson, perhaps, had some right to complain of the influence which Hamilton exerted over that department of the government which properly belonged under his exclusive jurisdiction. This was the management of foreign relations. Hamilton had such definite and well-considered views on foreign policy as well as finance that he could not forbear presenting them in the cabinet. His superiority in definiteness of aim and energy no doubt led him to believe that he was fitted for the functions of prime minister and that he was justified in exercising them as far as he could. The course of Washington encouraged him to the extent that the President often gave the preference to his views over those of Jefferson, but it was far from the purpose of the President to make any distinction in rank or in his confidence between his ministers. Hamilton, although an admirer of the British political system, permitted himself few prejudices in his theory of the foreign policy of the United States. Though often charged with British sympathies, he leaned much less towards Great Britain than Jefferson, through his admiration of the spirit of the French Revolution, leaned towards France.

The foreign relations of the country began to become acute with the outbreak of war between England and France in 1793. France had already abolished royalty, expelled the nobles, sent Louis XVI. to the scaffold, and was on the eve of the terrible massacres which did so much to revolt even her best friends outside the country. The news of war reached the United States early in April, 1793. News came also that a minister from the French Republic had landed at Charleston and would soon present his credentials at Philadelphia. Hamilton sent post haste for Washington, who was at Mount Vernon. The outbreak of war meant danger to American commerce on the ocean and the risk of trouble with both powers over the neutrality laws. The serious question confronting the American government was whether they should maintain strict neutrality between the belligerents or should side with France, to whom they were bound by the treaties made with her when she came to the rescue of the colonies. When Washington reached Philadelphia, he found both Jefferson and Hamilton ready with suggestions for meeting the crisis, but these suggestions differed widely. Jefferson, although not an advocate of war against England, believed that Congress should be called together in extra session to deal with the emergency.

A stronger programme was urged upon the President by Hamilton. He regarded the question of neutrality and the reception of the French envoy as one for the executive rather than for Congress. He believed also that these subjects would be safer in the hands of Washington than midst the passions of a legislative body. He drew up a statement, embodying a series of questions regarding the policy of the United States, which was laid by Washington before the cabinet. The first question was whether a declaration of neutrality should be issued. This was decided in the affirmative, and the proclamation was soon issued by Washington. It was decided that the French minister, Genet, should be received, but that early occasion should be taken to explain to him that the United States did not consider themselves bound by the treaties to plunge into war in behalf of France. While it was admitted by Hamilton that it would not be the province of the United States under ordinary circumstances to cavil over the character of the government in France, but would be their duty to accept the government which existed, nevertheless, the extraordinary events which had taken place at Paris justified a certain reserve towards the revolutionary powers.

Entirely apart from the changes in the character of the French government, it was felt by Hamilton that the time had come to give an interpretation to the early treaties in harmony with a more unchallenged independence for the United States, and a more complete separation from the intrigues of European politics. The radical character of the Revolution in France, and the action of the French government itself, gave an excuse for an interpretation of the treaties which otherwise might not have been found without blushing. The treaties provided for a defensive alliance with France, and it was promptly decided by the cabinet that the war of France against Great Britain was not defensive. Hamilton proposed not only to revise the treaties, but to resist by the utmost efforts of the federal government the enlistment of men and the fitting out of privateers in America in aid of the French. He did not propose, as some of the friends of France would have desired, that the proclamation of neutrality should be only a mask for underhanded aid to that country.

The situation was made as difficult as possible for the government by the hot temper and indiscretions of the new French minister. These qualities in him were encouraged by the reception which he received on the way from Charleston to Philadelphia. He was everywhere welcomed with such enthusiastic demonstrations of sympathy for France as tended to make him believe that he was something more than the diplomatic representative of a foreign country, and could safely interfere in the politics of the United States. As he approached Philadelphia (May 16, 1793) he found Captain Bompard of the French frigate L'Ambuscade ready to fire a salute of three guns, and men on swift horses posted along the road to give notice to the citizens of his coming.

Genet had no sooner landed at Charleston than he began to fit out privateers to prey upon British commerce. The Ambuscade herself, which brought Genet to Charleston, seized several English merchant vessels on her way to Philadelphia, and crowned her insolence to the United States by seizing an English vessel, the Grange, within the Delaware capes, in the jurisdiction of the United States. The Grange was restored to her owners, but her seizure was only one of many flagrant violations of international law which were systematically carried out by the French, and which were defended and often planned by Genet. When the Polly was stopped from leaving New York fitted out for a French privateer, Hauterive, the French consul, addressed a note to Governor Clinton, telling him it was not in a land where Frenchmen had spilled their blood that they were to be thus harassed. When the Little Sarah was fitted out as a privateer in Philadelphia, Hamilton and Knox urged that a battery be placed on one of the islands and that the vessel be fired upon if she attempted to leave the harbor. Jefferson was hoodwinked by assurances from Genet that the vessel would not sail, and himself indulged in some glittering talk against the United States joining in "the combination of kings against France." The vessel at once put to sea, and Washington was so indignant that Jefferson was almost driven to resignation.

Hamilton had a more direct interest officially in the demands of Genet for money which was owed to France. Genet not only asked for the anticipation of payments soon to mature, but insisted that he should receive the whole amount of the debt. He threw a bait to American sentiment by the suggestion that the money would be spent in the United States for provisions and supplies. Hamilton treated his rude demands just as he would those of any other creditor. He was willing to anticipate certain payments when the Treasury resources justified it, but absolutely refused to do more. Genet then threatened to pay for what he bought with drafts upon the Treasury. Hamilton coolly retorted that the drafts would not be honored. The Frenchman was compelled to consume his wrath, not exactly in silence, but without result upon the government.

Genet, encouraged by some of the enemies of the administration, succeeded in working up a strong pro-French sentiment in various parts of the country. At a dinner in Philadelphia, following his arrival, songs were sung to France and America, and the red cap of liberty, which had been forced upon the reluctant head of Louis XVI. in the great demonstration of the preceding August at the Tuileries, was passed around the table and successively worn by each of the American guests. Hamilton, who never had much confidence in pure democracy, went close to the other extreme in his alarm over these signs of public opinion. He felt compelled in the summer of 1793 to publish a series of essays signed "Pacificus," defending the policy of the administration. These papers, in the language of Mr. Lodge, "served their purpose of awakening the better part of the community to the gravity of the situation, and began the work of rallying the friends of the government to its active support." Genet addressed such offensive letters to the Department of State, and his conduct became so intolerable, that the cabinet agreed to send the correspondence to Paris and ask for his recall. Genet himself published a letter which revealed his insolence to the public, and caused a revulsion of sentiment which brought the more sober men of all parties to the side of Washington. Genet's course was run, and in February, 1794, his successor came out from France.

Hamilton soon had opportunities for proving that his policy of neutrality was directed as much against English as against French aggression. When Great Britain issued the first Orders in Council, directing the seizure of all vessels loaded with French produce, Hamilton declared the British order an outrage, and urged the fortification of the seaports and the raising of troops. He exerted himself, however, to restrain popular passion and preserve peace. He suggested to Washington that a special mission be sent to London to treat with the British government. The idea was cordially accepted by Washington. He desired to send Hamilton, but the Virginia party, headed by Madison and Monroe, strongly opposed the appointment. They were embittered by recent party conflicts, and regarded Hamilton as too friendly to British interests. Chief Justice John Jay of New York was then recommended by Hamilton for the mission. Opposition was made even to Jay, but the nomination was confirmed (April 19, 1794), and Hamilton himself drew the outline of the instructions with which Jay sailed from New York.

The conflict over the treaty which Jay brought back in the following winter was one of the most bitter ever waged in American politics. The contracting parties to the treaty—the United States and Great Britain—looked at the situation from widely different points of view. Jay secured the promise of the withdrawal of the British troops from the frontier posts and an agreement to compensate Americans for losses through British privateering. The last was an important concession, because it covertly admitted the British position in regard to privateering to be in conflict with international law. Some important commercial concessions were also made by Great Britain, which were regarded at London as purely gratuitous. But the treaty failed to secure any compensation for the claims of American citizens for negroes and other property carried away by the British troops, and American vessels were forbidden carrying to Europe from English ports or even from the United States coffee and the other chief colonial products. Among the latter was named cotton, which was then just becoming a large element in the production of the South.

Hamilton himself is said to have characterized the treaty as "an old woman's treaty," when he first read it, but it soon became evident that it must be accepted substantially as presented, if war was to be avoided. Washington called the Senate in extra session in June, 1795, and after two weeks' debate in secret session the treaty was ratified by exactly the necessary two thirds vote,—twenty to ten. It was not until the adjournment of the Senate that the contents of the document reached the public through Senator Mason of Virginia. The news was followed by town meetings all over the country demanding that President Washington refuse to exchange ratifications. So intense was the feeling that a vessel suspected of being a British privateer was seized and burned at Boston, a great meeting in Faneuil Hall ordered a committee to take a protest to Philadelphia, and Hamilton himself was stoned and refused a hearing at a meeting in New York. But Washington remained calm. Hamilton, as the responsible leader of the party, took up the cudgels for ratification. He submitted an elaborate argument to the cabinet (July 9, 1795), and with an amendment which the Senate recommended and Great Britain accepted, the treaty went into operation.