The Compromise of 1790 was a compromise between Alexander Hamilton, Thomas Jefferson, and James Madison, where Hamilton won the decision for the national government to take over and pay the state debts, and Jefferson and Madison obtained the national capital, called the District of Columbia, for the South.

Based on Great Britain's national bank, Hamilton wanted the government to develop bank branches in major cities, a uniform currency, and a place for the federal government to deposit or borrow money when needed. Thomas Jefferson believed this national bank was unconstitutional.

Alexander Hamilton became a leading voice of the Federalists who believed that the federal government needed to be strong. On the other side, Thomas Jefferson, a Republican, argued that too much power in the hands of the federal government would lead to tyranny.

Hamilton countered Jefferson's attacks by establishing his own party, the Federalists. He denied plotting an American monarchy, saying that only a “madman” would attempt such a thing, and suggested to Washington that Jefferson was the one with designs—to be president and eradicate the current economic program.

Jefferson's and Hamilton's clashing viewpoints on issues like the success or failure of the Articles of Confederation and the proper foundations of a new government foreshadow the establishment of our two-party system.

Hamilton's great aim was more efficient organization, whereas Jefferson once said "I am not a friend to a very energetic government." Hamilton feared anarchy and thought in terms of order; Jefferson feared tyranny and thought in terms of freedom. The United States needed both influences.

Hamilton believed in a strong central government, a national bank, and an economy focused on manufacturing. Jefferson advocated for small government, agrarianism, and the rigorous interpretation of the Constitution.