The First Party System is a term of periodization used by political scientists and historians to describe the political party system existing in the United States between roughly 1792 and 1824. It featured two national parties competing for control of the presidency, Congress, and the states: the Federalist Party (created by Alexander Hamilton) and the Democratic-Republican Party (created by Thomas Jefferson and James Madison).
The First Party System ended during the Era of Good Feelings (1816-1824), as the Federalists shrank to a few isolated strongholds. In 1824-28, as the Second Party System emerged, the Democratic-Republican Party split into the Jacksonian faction, which became the modern Democratic Party in the 1830s, and the Henry Clay faction, which was absorbed by Clay's Whig Party.
Leading nationalists, led by George Washington, Alexander Hamilton and Benjamin Franklin (see Annapolis Convention), called the Constitutional Convention in 1787. It drew up a new constitution that was submitted to state ratification conventions for approval. (The old Congress of the Confederation approved the process.) James Madison was the most prominent figure; he is often referred to as "the father of the Constitution."
An intense debate on ratification pitted the "Federalists" against the "Anti-Federalists," with the former gaining the upper hand. The Anti-Federalists were deeply concerned about the theoretical danger of a strong central government (like that of Britain) that some day could usurp the rights of the states. Madison and Alexander Hamilton countered toward a strong central government, especially those promoted by Hamilton.
The term "Federalist Party" originated around 1792-93 and refers to a somewhat different coalition of supporters of the Constitution in 1787-88 as well as entirely new elements, and even some opponents of the Constitution (such as Patrick Henry). Madison largely wrote the Constitution and thus was a Federalist in 1787-88, but opposed the program of the Hamiltonians and their new "Federalist Party."
At first, there were no parties in the nation. Factions soon formed around dominant personalities such as Treasury Secretary Alexander Hamilton and Secretary of State Thomas Jefferson, who opposed Hamilton's broad vision of a powerful federal government. Jefferson especially objected to Hamilton's flexible view of the Constitution, which Hamilton stretched to include a national bank. Washington was re-elected without opposition in 1792.
Hamilton built a national network of supporters that emerged about 1792–93 as the Federalist Party. In response, Jefferson and James Madison built a network of supporters of the republic in Congress and in the states that emerged in 1792-93 as the Democratic-Republican Party. The elections of 1792 were the first to be contested on anything resembling a partisan basis. In most states, the congressional elections were recognized in some sense, as Jefferson strategist John Beckley put it, as a "struggle between the Treasury department and the republican interest." In New York, the race for governor was organized along these lines. The candidates were John Jay, who was a Hamiltonian, and incumbent George Clinton, who was allied with Jefferson and the Republicans.
In 1793, the first Democratic-Republican Societies were formed. They supported the French Revolution, which had just seen the execution of King Louis XVI, and generally supported the Jeffersonian cause. The word "democrat" was proposed by Citizen Genet for the societies, and the Federalists ridiculed Jefferson's friends as "democrats." After Washington denounced the societies as unrepublican, they mostly faded away.
In 1793, war broke out between England, France, and their European allies. The Jeffersonians favored France and pointed to the 1778 treaty that was still in effect. Washington and his unanimous cabinet (including Jefferson) decided the treaty did not bind the U.S. to enter the war; instead Washington proclaimed neutrality.
When war threatened with Britain in 1794, Washington sent John Jay to negotiate the Jay treaty with Britain; it was signed in late 1794, and ratified in 1795. It averted a possible war and settled many (but not all) the outstanding issues between the U.S. and Britain., the Jeffersonians vehemently denounced it, saying it threatened to undermine republicanism by giving the aristocratic British and their Federalist allies too much influence. The fierce debates over the Jay Treaty in 1794-96 according to William Nisbet Chanbers, nationalized politics and turned a faction in Congress into a nationwide party. To fight the treaty the Jeffersonians "established coordination in activity between leaders at the capital, and leaders, actives and popular followings in the states, counties and towns." 
In 1796 Jefferson challenged John Adams for the presidency and lost. The Electoral College made the decision, and it was largely chosen by the state legislatures, many of which were not chosen on a national party basis.
By 1796, both parties had a national network of newspapers, which attacked each other vehemently. The Federalist and Republican newspapers of the 1790s traded vicious barbs against their enemies. An example is this doggerel from a Democratic-Republican paper:
Historians have used statistical techniques to estimate the party breakdown in Congress. Many Congressmen were hard to classify in the first few years, but after 1796 there was less uncertainty. The first parties were anti-federalist and federalist.
Federalist and Democratic-Republican Strength in Congress by Election Year
Source: Kenneth C. Martis, The Historical Atlas of Political Parties in the United States Congress, 1789-1989 (1989); the numbers are estimates by historians.
The Jeffersonians invented many of campaign techniques that were later adopted by the Federalists and became standard American practice, such as the first national nominating convention. They were especially effective in building a network of newspapers in major cities to broadcast their statements and editorialize in their favor. But the Federalists, with a strong base among merchants, controlled more newspapers. In 1796 the Federalist papers outnumbered the Republicans by 4-1. Every year more papers began publishing; in 1800 the Federalists still had a 2-1 numerical advantage. Most papers, on each side, were weeklies with a circulation of 300 to 1000. Jefferson systematically subsidized the editors. Fisher Ames, a leading Federalist, who used the term "Jacobin" to link Jefferson's followers to the terrorists of the French Revolution, blamed the newspapers for electing Jefferson. They were, he wrote, "an overmatch for any Government.... The Jacobins owe their triumph to the unceasing use of this engine; not so much to skill in use of it as by repetition."  Historians echo Ames' assessment. As one explains, "It was the good fortune of the Republicans to have within their ranks a number of highly gifted political manipulators and propagandists. Some of them had the ability... to not only see and analyze the problem at hand but to present it in a succinct fashion; in short, to fabricate the apt phrase, to coin the compelling slogan and appeal to the electorate on any given issue in language it could understand." Outstanding phrasemakers included editor William Duane and party leaders Albert Gallatin, Thomas Cooper and of course Jefferson himself. Meanwhile John J. Beckley of Pennsylvania, an ardent partisan, invented new campaign techniques (such as mass distribution of pamphlets and handwritten ballots) that generated the grass-roots support and unprecedented levels of voter turnout for the Jeffersonians.
With the world thrown into global warfare after 1793, the small nation on the fringe of the European system could barely remain neutral. The Jeffersonians called for strong measures against Britain, even another war. The Federalists tried to avert war by the Jay Treaty (1795) with England. The treaty became highly controversial when the Jeffersonians denounced it as a sell-out to Britain, even as the Federalists said it avoided war, reduced the Indian threat, created good trade relations with the world's foremost economic power, and ended lingering disputes from the Revolutionary War. When Jefferson came to power in 1801 he honored the treaty, but new disputes with England led to the War of 1812.
In 1798 the disputes with France led to a Quasi-War, an undeclared naval war involving the navies and merchant ships of both countries. Democratic-Republicans said France really wanted peace, but the XYZ Affair undercut their position. Warning that full-scale war with France was imminent, Hamilton and his "High Federalist" allies forced the issue by getting Congressional approval to raise a large new army (which Hamilton controlled), replete with officers' commissions (which he bestowed on his partisans). The Alien and Sedition Acts (1798) clamped down on dissenters, including pro-Jefferson editors, and Vermont Congressman Matthew Lyon, who won re-election while in jail in 1798. In the Kentucky and Virginia Resolutions (1798), secretly drafted by Madison and Jefferson, the legislatures of the two states challenged the power of the federal government.
Madison worked diligently to form party lines inside the Congress and build coalitions with sympathetic political factions in each state. In 1800, a critical election galvanized the electorate, sweeping the Federalists out of power, and electing Jefferson and his Democratic-Republican Party. Adams made a few last minute, "midnight appointments", notably Federalist John Marshall as Chief Justice, who held the post for three decades and used it to federalize the Constitution, much to Jefferson's dismay.
As president, Jefferson worked to cleanse the government of Adam's "midnight appointments", withholding the commissions of 25 of 42 appointed judges and removing army officers. The sense that the nation needed two rival parties to balance each other had not been fully accepted by either party; Hamilton had viewed Jefferson's election as the failure of the Federalist experiment. The rhetoric of the day was cataclysmic — election of the opposition meant the enemy would ruin the nation. Jefferson's foreign policy was not exactly pro-Napoleon, but it applied pressure on Britain to stop impressment of American sailors and other hostile acts. By engineering an embargo of trade against Britain, Jefferson and Madison plunged the nation into economic depression, ruined much of the business of Federalist New England, and finally precipitated the War of 1812 with a much larger and more powerful foe.
The Federalists vigorously criticized the government, and gained strength in the industrial Northeast. However, they committed a major blunder in 1814. That year the semi-secret "Hartford Convention" passed resolutions that verged on secession; their publication ruined the Federalist party. It had been limping along for years, with strength in New England and scattered eastern states but practically no strength in the West. While Federalists helped invent or develop numerous campaign techniques (such as the first national nominating conventions in 1808), their elitist bias alienated the middle class, thus allowing the Jeffersonians to claim they represented the true spirit of "republicanism."
Because of the importance of foreign policy (decided by the national government), of the sale of national lands, and the patronage controlled by the President, the factions in each state realigned themselves in parallel with the Federalists and Republicans. Some newspaper editors became powerful politicians, such as Thomas Ritchie, whose "Richmond Junto" controlled Virginia state politics from 1808 into the 1840s.
New England was always the stronghold of the Federalist party. One historian explains how well organized it was in Connecticut:
Given the power of the Federalists, the Republicans had to work harder to win. In 1806, the state leadership sent town leaders instructions for the forthcoming elections. Every town manager was told by state leaders "to appoint a district manager in each district or section of his town, obtaining from each an assurance that he will faithfully do his duty." Then the town manager was instructed to compile lists and total up the number of taxpayers, the number of eligible voters, how many were "decided republicans," "decided federalists," or "doubtful," and finally to count the number of supporters who were not currently eligible to vote but who might qualify (by age or taxes) at the next election. The returns eventually went to the state manager, who issues directions to laggard town to get all the eligibles to the town meetings, help the young men qualify to vote, to nominate a full ticket for local elections, and to print and distribute the party ticket. (The secret ballot did not appear for a century. )  This highly coordinated "get-out-the-vote" drive would be familiar to modern political campaigners, but was the first of its kind in world history.
Religious tensions polarized Connecticut, as the established Congregational Church, in alliance with the Federalists, tried to maintain its grip on power. Dissenting groups moved toward the Jeffersonians. The failure of the Hartford Convention in 1814 wounded the Federalists, who were finally upended by the Democratic-Republicans in 1817.
The First Party System was built around foreign policy issues that vanished with the defeat of Napoleon and the compromise settlement of the War of 1812. Furthermore, the fears that Federalists were plotting to reintroduce aristocracy dissipated. Thus an "Era of Good Feelings" under James Monroe replaced the high-tension politics of the First Party System about 1816. Personal politics and factional disputes could occasionally still get nasty, but Americans no longer thought of themselves in terms of political parties.
Historians have debated the exact ending of the system. Most concluded it petered out by 1820. The little state of Delaware, largely isolated from the larger political forces controlling the nation, saw the First Party System continue well into the 1820s, with the Federalists occasionally winning some offices. For the rest of the nation, the contributions of the founding fathers of political parties had been completed — and thus it seems symbolic that Adams and Jefferson died on the same day (4 July 1826), even on their deathbeds acknowledging the other's remarkable contributions.
Alexander Hamilton felt that only by mobilizing its supporters on a daily basis in every state on many issues could support for the government be sustained through thick and thin. Newspapers were needed to communicate inside the party; patronage helped the party's leaders and made new friends.
Hamilton, and especially Washington, distrusted the idea of an opposition party, as shown in George Washington's Farewell Address of 1796. They thought opposition parties would only weaken the nation. By contrast Jefferson was the main force behind the creation and continuity of an opposition party. He deeply felt the Federalists represented aristocratic forces hostile to true republicanism and the true will of the people, as he explained in a letter to Henry Lee in 1824:
|“||Men by their constitutions are naturally divided into two parties: 1. Those who fear and distrust the people, and wish to draw all powers from them into the hands of the higher classes. 2. Those who identify themselves with the people, have confidence in them, cherish and consider them as the most honest and safe, although not the most wise depositary of the public interests. In every country these two parties exist, and in every one where they are free to think, speak, and write, they will declare themselves. Call them, therefore, liberals and serviles, Jacobins and Ultras, whigs and tories, republicans and federalists, aristocrats and democrats, or by whatever name you please, they are the same parties still and pursue the same object. The last appellation of aristocrats and democrats is the true one expressing the essence of all."||”|
Hofstadter (1970) shows it took many years for the idea to take hold that having two parties is better than having one, or none. That transition was made possible by the successful passing of power in 1801 from one party to the other. Although Jefferson systematically identified Federalist army officers and officeholders, he was blocked from removing all of them by protests from republicans. The Quids complained he did not go far enough.