Final answer:
Jefferson's statement 'We are all Republicans, we are all Federalists,' expressed a desire for national unity and balance between the Republican belief in limited government and the Federalist vision of a strong central government.
Step-by-step explanation:
When Thomas Jefferson declared, "We are all Republicans, we are all Federalists," in his first inaugural address, he intended to convey a message of unity and reconciliation after a strongly contested election between the Republican and Federalist parties. Jefferson recognized the deep partisan divide that had developed in the early years of the United States and sought to reassure the nation that the principles of both political philosophies would be respected under his administration. Jefferson's presidency indeed was characterized by efforts to strike a balance between the Republican ideals of a limited federal government and the empowerment of states and the people, with the Federalist perspective that a strong central government was necessary for the nation’s survival and prosperity. The complexities of the Napoleonic Wars and domestic challenges such as the rebellion against the whiskey tax illustrated the need for a capable federal government while still recognizing the importance of individual rights and state powers, as envisioned by the Republican ethos.