After the Presidential Election of 1824 the Democratic-Republican Party split into two different parties:
President John Quincy Adams and his supporters formed the National Republican Party.
Andrew Jackson & his supporters formed the Democratic Party.
The National Republicans believed in a strong federal government (just like the old Federalist Party!). This appealed to many wealthy merchants and bankers in the northeast, who had once been part of the Federalist Party. Influenced by Henry Clay, President John Quincy Adams followed an economic program called the "American System."
The American System consisted of three main actions by the federal government:
The creation of a new National Bank to simplify trade
The passing of a tariff to make foreign goods more expensive to buy than American made goods
The spending of government money to build roads and canals in order to improve transportation
Meanwhile, Andrew Jackson and his supporters formed the Democratic Party. Democrats believed in a small federal government with limited power over the states. The also believed strongly in the rights of the common man. These beliefs formed a political philosophy known as "Jacksonian Democracy." It appealed to many Americans, including factory workers and farmers.
Jacksonian Democracy became especially popular in the south. Many in the south opposed the American System because they believed it benefited northern states more than southern states. Some slave owners also began to support the Democratic Party because they were afraid the National Republicans and the Federal Government would try to end slavery.