We are now forming a republican government. Real liberty is neither found in despotism or the extremes of democracy, but in moderate governments.

The quotation expresses a core Hamiltonian theme: liberty is best secured not by unchecked popular rule or by autocracy, but by a balanced constitutional order that restrains power through structure. “Republican government” here implies representative institutions rather than direct democracy, and “moderate governments” suggests mixed, tempered arrangements—separation of powers, checks and balances, and durable executive and judicial authority. The underlying claim is that extremes are unstable: despotism crushes rights outright, while unmoderated democracy can devolve into factionalism or majority tyranny. The significance lies in its articulation of a middle path that became central to Federalist constitutional thought.