Governing, 1801 to 1825: Power, Money, Expansion, and War

Historical setting

Opposition is simpler than government. In the 1790s, Republicans had argued against Hamilton's bank, against excise taxes, against a larger army, and for a stricter reading of federal power. From March 4, 1801, they held the presidency, and after the elections of 1800 they held the Senate majority as well senate.gov. Three Virginians, Thomas Jefferson, James Madison, and James Monroe, would serve as president for the next 24 years.

This chapter follows the main tensions in that record: how far federal power should reach, how the government should be financed, how the country should expand, and how it should deal with Britain and France while they were at war. It is organized by problem, not by administration, because the same questions kept returning.

Taxes, debt, and the size of government

The first years looked like the opposition program carried out. The Miller Center records that on March 16, 1802, Congress reduced the army to its 1796 size and, in the same legislation, established the U.S. Military Academy at West Point. On April 6, 1802, excise taxes, including the whiskey tax, were repealed. On April 14, 1802, Congress repealed the 1798 naturalization law and returned the residency requirement for citizenship from fourteen years to five millercenter.org.

Albert Gallatin ran the Treasury for nearly thirteen years, from 1801 to 1814, which the Treasury Department describes as the longest term of any secretary in its history. The department credits him with considerably reducing the federal debt by setting aside revenue for that purpose home.treasury.gov.

Even here the picture is mixed. The same Republican government that cut the army created a national military academy. And the low-tax program did not survive war: Gallatin later revived internal taxes to pay for the War of 1812, and the Treasury Department notes that they were not sufficient home.treasury.gov.

Expansion: the Louisiana Purchase

The largest decision of Jefferson's presidency was one his own constitutional theory did not obviously allow.

The Office of the Historian explains that Jefferson sent James Monroe to join Robert Livingston in France with instructions to buy New Orleans and West Florida for up to $10 million. Napoleon instead offered the whole of Louisiana for $15 million, which exceeded their instructions, and they accepted history.state.gov. The National Archives dates the treaty April 30, 1803, describes the territory as 828,000 square miles, and notes that the agreement consisted of the treaty of cession plus two conventions, one for 60 million francs ($11,250,000) and one for American claims against France totaling 20 million francs ($3,750,000) archives.gov. The Miller Center records that the Senate ratified it in October 1803 and that the U.S. flag was raised in New Orleans on December 20, 1803 millercenter.org.

Jefferson had insisted on strict construction, and the Constitution did not expressly authorize the purchase of territory. The Office of the Historian notes that he proceeded without a constitutional amendment and that the purchase helped establish the principle of implied powers history.state.gov. The same argument from implied powers had been Hamilton's case for the bank in 1791 loc.gov.

The purchase also raised a question the party could not settle: whether slavery would expand into the new lands. That question returned in 1819, and it is treated below and in the chapter on participation and exclusion. The purchase was made with France; the Native nations living on the land were not parties to it.

Foreign trade and the Embargo

Britain and France were at war, and each tried to stop neutral trade with the other. American ships and sailors were caught between them.

The Miller Center's chronology traces the escalation. On June 22, 1807, the British warship Leopard fired on the U.S. frigate Chesapeake after its commander refused to surrender alleged deserters. On November 11, 1807, Britain issued Orders in Council restricting neutral trade with France, and on December 17 Napoleon issued the Milan Decree restricting trade with Britain. On December 22, 1807, Jefferson signed the Embargo Act, halting American trade with all foreign countries millercenter.org.

The Embargo was an attempt to coerce Britain and France without war, at heavy cost to American commerce. On March 1, 1809, Congress repealed it, and Jefferson signed the Non-Intercourse Act the same day, closing American ports only to Britain and France millercenter.org. Under Madison, Macon's Bill Number 2 of May 1, 1810, reopened trade while promising to cut it off again with whichever power did not drop its restrictions millercenter.org.

The War of 1812

On June 1, 1812, Madison asked Congress for a declaration of war against Britain. The Miller Center records the votes: the House voted 79 to 49 on June 4 and the Senate 19 to 13 on June 17, and Madison signed the declaration on June 18. Britain had revoked its Orders in Council on June 16, but the news did not arrive in time millercenter.org.

The Office of the Historian lists the stated grievances: impressment of American sailors and restrictions on neutral trade, alongside western expansion, relations with American Indians, and the control of North American territory history.state.gov. The margins show that Congress was divided about the war.

The war went badly in places. On August 24, 1814, British forces took Washington and burned the White House, the Capitol, and other federal buildings millercenter.org. American forces won notable victories on the water and at Baltimore history.state.gov. The Treaty of Ghent, signed December 24, 1814, restored the prewar boundaries; the National Archives notes that the American delegation included John Quincy Adams, Henry Clay, and Albert Gallatin archives.gov. Andrew Jackson's victory at New Orleans came on January 8, 1815, after the treaty had been signed but before the news reached America millercenter.orgarchives.gov.

New England Federalists had opposed the war. On December 15, 1814, delegates meeting at Hartford, Connecticut, issued a report condemning the federal government's failure to defend New England and proposing constitutional amendments millercenter.org. The Miller Center's assessment is that after the war, the Federalists were mostly discredited because of their opposition to it millercenter.org.

Money again: the Second Bank

The clearest reversal concerned the bank. Madison had opposed the First Bank of the United States in 1791 federalreservehistory.org. Its charter lapsed in 1811 after Congress declined to renew it home.treasury.gov. The war then exposed how hard it was to finance a national government without a national bank. The Federal Reserve's history notes that by January 1815 the country had been without a national bank for almost four years federalreservehistory.org.

Madison vetoed one bank bill on January 30, 1815 millercenter.org. On April 10, 1816, he signed a bill chartering the Second Bank of the United States millercenter.org. It opened in Philadelphia in January 1817 with capital of $35 million, compared with $10 million for the first bank federalreservehistory.org.

The constitutional question that Hamilton and Jefferson had argued in 1791 reached the Supreme Court in 1819. In McCulloch v. Maryland, decided March 6, 1819, the Court held that Congress could charter a national bank under the Necessary and Proper Clause and that Maryland could not tax it archives.gov.

Madison did not accept every expansion of federal activity. On March 3, 1817, his last day in office, he vetoed the Bonus Bill, which would have funded internal improvements such as roads and canals millercenter.org. Monroe vetoed a Cumberland Road bill on constitutional grounds on May 4, 1822, then signed the General Survey Bill supporting federal internal improvements on April 30, 1824 millercenter.org.

Religion and government

On January 1, 1802, Jefferson answered the Danbury Baptist Association of Connecticut, endorsing the First Amendment as "building a wall of separation between Church & State" founders.archives.gov. Two days later he began attending Sunday services held in the House of Representatives, and the Library of Congress records that he cut from the letter a passage explaining why he would not proclaim fast days, to avoid offending "our republican friends in the eastern states" loc.gov. Madison vetoed a bill incorporating an Episcopal church in Alexandria on February 21, 1811, as "a religious establishment by law," and on February 28, 1811, a bill reserving federal land for a Baptist church in the Mississippi Territory founders.archives.govfounders.archives.gov. On July 9, 1812, at Congress's request, he recommended a national "day of public Humiliation and Prayer" for the war founders.archives.gov. The chapter on religion and the parties covers these records in full.

Evidence

The electoral record shows the Federalist collapse in numbers. James Monroe won 183 electoral votes to 34 for the Federalist Rufus King in 1816 archives.gov. In 1820, Monroe received 231 electoral votes and John Quincy Adams 1 archives.gov.

The phrase usually attached to these years comes from a newspaper. The Miller Center explains that during Monroe's tour of 1817, the Boston Columbian Centinel described his reception in Massachusetts as the beginning of an "Era of Good Feelings" millercenter.org.

The record of the same years shows how limited that description was:

• Economic crisis. The Miller Center dates the Panic of 1819 from January 1, 1819, describes falling property values and credit contraction, and calls it the first major depression to hit the country since the 1780s; the crisis lasted until about 1823 millercenter.orgmillercenter.org.
• Sectional crisis over slavery. In February 1819, Representative James Tallmadge Jr. proposed banning further slavery in Missouri. The Miller Center notes that the votes on his amendments were strictly sectional: they passed the House and failed in the Senate millercenter.orgmillercenter.org.
• The compromise. The act approved March 6, 1820, admitted Missouri as a slave state and Maine as a free state, and prohibited slavery north of 36 degrees 30 minutes latitude in the rest of the Louisiana Territory. The National Archives notes that this provision lasted 34 years, until the Kansas-Nebraska Act of 1854 repealed it archives.gov.

Monroe's best-known statement of foreign policy came in his annual message of December 2, 1823. The National Archives summarizes its principles: the American continents were no longer to be considered subjects for future European colonization, and European attempts to extend their political system to the hemisphere would be considered dangerous to American peace and safety archives.gov.

The Senate Historical Office traces where these disagreements led. Beginning in the 1820s, Democratic Republicans in Congress divided over the powers of the federal government. Those who favored a national bank and federal funding for internal improvements became known as National Republicans, while "Old Republicans" continued to support states' rights and a smaller federal government senate.gov.

What the evidence does not show

It does not show that the party abandoned its principles in a single moment, or that it consistently held them. Leaders made different decisions under different pressures: a purchase too large to refuse, a war they judged necessary, a financial system that failed without a bank.

It does not show that one-party dominance meant agreement. The "Era of Good Feelings" was a newspaper's description of a presidential tour. The same years included a depression, a sectional crisis over slavery, and the beginnings of the division that broke the coalition apart in 1824.

It does not show that the Federalist decline was caused by any single event. The Hartford Convention, the end of the war, and long-term regional weakness all appear in the sources; their relative weight is a matter of interpretation.

It does not support a modern left-right reading. Arguments over a national bank, internal improvements, and strict construction cut across the coalitions of the time, and the same leaders took different positions on them across their careers.

Sources

1. Miller Center, University of Virginia, "Thomas Jefferson: Key Events." millercenter.org (locator: entries for 1802, 1803, 1807, 1809). Accessed 2026-10-28.
2. Office of the Historian, U.S. Department of State, "Louisiana Purchase, 1803." history.state.gov (locator: full page). Accessed 2026-10-28.
3. National Archives, "Louisiana Purchase Treaty (1803)," Milestone Documents. archives.gov (locator: summary and citation). Accessed 2026-10-28.
4. U.S. Department of the Treasury, "Albert Gallatin (1801 to 1814)," prior secretaries. home.treasury.gov (locator: full page). Accessed 2026-10-28.
5. Miller Center, University of Virginia, "James Madison: Key Events." millercenter.org (locator: entries for 1810, 1812, 1814, 1815, 1816, 1817). Accessed 2026-10-28.
6. Office of the Historian, U.S. Department of State, "The War of 1812, 1812 to 1815." history.state.gov (locator: full page). Accessed 2026-10-28.
7. National Archives, "Treaty of Ghent (1814)," Milestone Documents. archives.gov (locator: summary and citation). Accessed 2026-10-28.
8. Andrew T. Hill, "The Second Bank of the United States," Federal Reserve History. federalreservehistory.org (locator: opening sections). Accessed 2026-10-28.
9. National Archives, "McCulloch v. Maryland (1819)," Milestone Documents. archives.gov (locator: summary). Accessed 2026-10-28.
10. Miller Center, University of Virginia, "James Monroe: Key Events." millercenter.org (locator: entries for 1819, 1820, 1822, 1824). Accessed 2026-10-28.
11. Miller Center, University of Virginia, "James Monroe: Domestic Affairs." millercenter.org (locator: sections on the Era of Good Feelings, the Panic of 1819, and Missouri). Accessed 2026-10-28.
12. National Archives, "Missouri Compromise (1820)," Milestone Documents. archives.gov (locator: summary). Accessed 2026-10-28.
13. National Archives, "Monroe Doctrine (1823)," Milestone Documents. archives.gov (locator: summary). Accessed 2026-10-28.
14. U.S. Senate, "Parties and Leadership: Overview." senate.gov (locator: sections on 1800 and the 1820s). Accessed 2026-10-28.
15. National Archives, Electoral College results, 1816 and 1820. archives.gov and archives.gov (locator: results tables). Accessed 2026-10-28.
16. Library of Congress, "Formation of Political Parties," Creating the United States exhibition. loc.gov (locator: exhibit text on the national bank). Accessed 2026-10-28.
17. "Thomas Jefferson to the Danbury Baptist Association, 1 January 1802," Founders Online, National Archives; original source: The Papers of Thomas Jefferson, vol. 36, p. 258. founders.archives.gov (locator: second paragraph). Accessed 2026-10-30.
18. Library of Congress, "Religion and the Federal Government, Part 2," Religion and the Founding of the American Republic exhibition. loc.gov (locator: items 163a and 163b). Accessed 2026-10-30.
19. "James Madison to the House of Representatives, 21 February 1811," Founders Online, National Archives. founders.archives.gov (locator: veto message). Accessed 2026-10-30.
20. "James Madison to the House of Representatives, 28 February 1811," Founders Online, National Archives. founders.archives.gov (locator: veto message). Accessed 2026-10-30.
21. James Madison, "Presidential Proclamation, [9 July] 1812," Founders Online, National Archives. founders.archives.gov (locator: proclamation text). Accessed 2026-10-30.

Last checked against its sources on October 30, 2026. Report a correction.