Final answer:
The Department of the Navy was created following the XYZ Affair to bolster American naval capabilities during the Quasi-War with France.
Step-by-step explanation:
After the XYZ Affair, the Department of the Navy was created as a response to the challenges the United States faced at sea. Because of the affair and subsequent public outrage, Congress supported President John Adams's policy, which included measures for a limited, undeclared war with France known as the Quasi-War.
As part of the military preparations, Congress approved the establishment of a Navy department, which was crucial for expanding and equipping the fleet to protect American shipping interests and combat French naval forces. The creation of the Navy department signified a significant strengthening of the American naval force.