Hamilton believed in a strong national government requiring a national bank and foreign loans to function, while Jefferson believed the states and the farm element should primarily direct the government; he also resented the idea of banks and foreign loans. To Washington's dismay, the two men persistently entered into disputes and infighting.[301] Hamilton demanded that Jefferson resign if he could not support Washington, and Jefferson told Washington that Hamilton's fiscal system would lead to the overthrow of the republic.[302] Washington urged them to call a truce for the nation's sake, but they ignored him.[303]
Washington reversed his decision to retire after his first term to minimize party strife, but the feud continued after his re-election.[302] Jefferson's political actions, his support of Freneau's National Gazette,[304] and his attempt to undermine Hamilton nearly led Washington to dismiss him from the cabinet; Jefferson ultimately resigned his position in December 1793, and Washington forsook him from that time on.[305]
The feud led to the well-defined Federalist and Republican parties, and party affiliation became necessary for election to Congress by 1794.[306] Washington remained aloof from congressional attacks on Hamilton, but he did not publicly protect him, either. 