Although political divisionsfirst emerged over domestic issues, they deepened during a series of crises over foreign policy that reopened the nagging issue of America's relationship with Great Britain. Domestic and foreign policy were, however, never entirely separate, since decisions in one area frequently carried implications for the other. Foreign and domestic policy (1789-1803) spans from the foreign affairs of Washington, to Jefferson's Louisiana Purchase.

Between these times is the Election of 1796, Adams's administration, concerning various perspectives of historical figures on financial policies and foreign countries, the XYZ Affair, and the Alien and Sedition Acts, all in relation to the restrictions and powers of the United States Constitution. Under the term of Washington, there were many affairs to deal with, mainly foreign. Hamilton saw much to admire in Britain. He modeled his financial policies in part on those of William Pitt the younger, a great British minister who took office in 1783, when Britain was so burdened with debt that it seemed on the verge of bankruptcy, and whose reforms restored his country's financial health. The success of Hamilton's financial program, moreover, depended on smooth relations with Britain: duties on imports provided a major source of federal revenue, and most American imports came from Britain. Hamilton did not advocate returning the Americans to British rule; he had, after all, fought for independence as an officer of the Continental army.

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Nor did he seek to establish a monarchy in the United States. But he thought an amicable relationship with the onetime mother country would best serve American interests. In contrast, Jefferson remained deeply hostile to Britain, and his Anglophobia played a central role in his growing opposition to Hamilton. The treasury secretary's method of finance, with a bank and large funded debt, seemed-as in part it was-base..