At the beginning of Monroe's presidency, Americans were feeling generally optimistic. The nation had declared victory in the War of 1812 and the economy was booming, allowing Monroe to turn his attention toward domestic issues. The new President, moreover, was personable, extremely popular, and interested in reaching out to all the regions of the country.

National Tours

Prior to moving into the still damaged Executive Mansion, which was burned by the British during the War of 1812, President James Monroe revived the presidential tour of the country, which was first undertaken by George Washington. The stated reason for the tour was to inspect defense fortifications, but it also allowed Monroe to reach out to Americans throughout the nation and exhibit his relaxed and affable personality. In June 1817, Monroe began his first tour of the North, traveling up the coast to Portland, Maine. From there, he turned west to Detroit and then southeast back to Washington, D.C. The trip took fifteen weeks and allowed Monroe to come in contact with more people than any previous sitting President. Everywhere he went, he was praised and applauded. The Boston Columbian Centinel described his reception in Massachusetts as the beginning of an "Era of Good Feelings" for the nation—a phrase that is now often used to describe Monroe's presidency.

The first tour was such a success that Monroe embarked on two others—one of the Chesapeake Bay area in 1818 and one of the South and West in 1819. Although those trips did not match the enthusiasm of the first, they gave Monroe an opportunity to reach out to different regions of the country. All three tours helped familiarize the people with their President, and Monroe's endearing personality won many converts.

Monroe's Cabinet

One of Monroe's first acts as President was to put together his cabinet. Wanting to assemble a group of advisers from different regions of the country, he turned to New England native John Quincy Adams as his secretary of state. Adams had a long diplomatic career, and with their similar backgrounds in foreign affairs the two men established a good working relationship. Monroe then chose William H. Crawford from Georgia as secretary of treasury and sought out a westerner to serve as secretary of war. Unable to persuade his first choices, he picked to John C. Calhoun from South Carolina. Monroe turned to an old friend, William Wirt, to be his attorney general and decided to keep Benjamin Crowninshield as secretary of the navy. Monroe's cabinet has often been noted as an exceptionally strong one. The President assembled a group of intelligent and talented men who were very good administrators. He then gave them a lot of freedom to do their jobs. Although he encouraged debate and solicited advice from his cabinet, there was never any doubt that he was firmly in charge. He made the final decisions and expected his cabinet to support and implement them.

The Panic of 1819

Two years into his presidency, Monroe faced an economic crisis known as the Panic of 1819. It was the first major depression to hit the country since the 1780s. The panic stemmed from declining imports and exports, and sagging agricultural prices. A number of state banks suspended payment on their notes and declared bankruptcy, with the Second Bank of the United States shifting to more conservative policies. The result was high unemployment and an increase in bankruptcies and foreclosures.

Although some critics derided Monroe for not responding more forcefully to the economic downturn, he could do little to alleviate its short-term effects. The power to change economic policies rested with the states and the Bank of the United States. In addition, Monroe believed that depressions were natural features of a maturing economy and that the U.S. economy would soon rebound from the panic (and indeed it did—the depression ended by 1823). Monroe did support the policy proposed by Secretary of Treasury William Crawford to relax payment terms on mortgages for lands purchased from the federal government.

The Missouri Compromise

Early in 1819, settlers in the Missouri Territory applied for admission to the Union. Approximately 16 percent of the Missouri settlers were enslaved blacks, and most of the white settlers either owned slaves or hoped to become slave owners in the future. Congressional debate on Missouri exploded when Congressman James Tallmadge, Jr. of New York attached two amendments to the statehood bill. The first barred new slaves from entering the state; the second emancipated all Missouri slaves born after admission upon their 25th birthday. In other words, the Tallmadge amendments would admit Missouri only as a free state.

The North held a small majority in the House of Representatives in 1819, and the South controlled a bare majority in the Senate. Voting on the Tallmadge amendments was strictly sectional: the amendments passed in the House but lost in the Senate. The House refused to admit Missouri as a slave state and the Senate insisted upon it. Monroe, along with many congressional leaders, understood the volatile nature of the debate and the strong regional divide over slavery.

However, he thought it was unconstitutional to place special restrictions on the admission of one state, as the Tallmadge amendments did, and threatened to veto any bill including such restrictions. Monroe feared that the dispute would divide the Union and worked in support of a compromise package in Congress. However, he did not forcefully inject himself into the process because he did not want to be accused of meddling in congressional affairs. A new Congress convened in the winter of 1819, allowing legislators to reach an accord that settled the dispute. Massachusetts allowed its far northern counties to apply for admission to the Union as the free, or non-slave, state of Maine, thus offsetting fears that the South would gain votes in the Senate with the admission of Missouri. Additionally, it was agreed—after much behind-the-scenes deal-making—that Missouri would be admitted as a slave state in return for the South's willingness to outlaw slavery in western territories above the 36/30' north latitude line. That line would open present-day Arkansas and Oklahoma to slavery but would forbid it throughout the rest of the Louisiana Territory—land that would eventually be organized into nine states. Monroe signed the bill on March 6, 1820, after he was satisfied that the provisions were, indeed, constitutional.

The American System

As the United States continued to grow, many Americans advocated a system of internal improvements to help the country develop. Monroe thought this a good idea; he believed that the young nation needed an improved infrastructure, including a transportation network to grow and thrive economically. However, he did not think that the Constitution said anything about the authority to build, maintain, and operate a national transportation system. He therefore urged Congress to introduce a constitutional amendment granting it such power. Congress never acted on his suggestion because many legislators thought they already had the implied authority to enact such measures.

The issue came to a head when Congress passed a bill in 1822 to repair the Cumberland Road, or National Road, and equip it with a system of tolls. This great national road ran from Cumberland, Maryland, to the town of Wheeling in western Virginia. Monroe vetoed the bill, however; it was his contention that the states through which the road passed should undertake the setting up and collecting of tolls because Congress lacked the authority to do so. Yet after discussing the issue with many people, including some justices of the U.S. Supreme Court, the President changed his mind. In 1824, he signed an internal improvements bill that allocated money for surveys and estimates for the proposed roads. In 1825, he signed a bill that extended the Cumberland Road from Wheeling to Zanesville, Ohio.

Political Parties

After the War of 1812, the Federalists were mostly discredited because of their opposition to the conflict. Although the government had enacted much of their program, such as the national bank and a protective tariff, they could not mount a serious challenge to Monroe.

As President, Monroe encouraged the decline of the parties, believing that the government could operate without them. His tenure was not without partisanship, however; although Monroe talked about ridding American politics of party affiliation, he was unwilling to appoint any Federalists to his cabinet, believing the ideological differences were just too great. In some ways, the absence of a party system increased his difficulties as President. Without parties, he could not rely on a presumed loyalty to help accomplish his goals. With clear divides over issues and the existence of many different factions, Monroe had to create coalitions and build consensus to get his programs enacted.

Even without the existence of two clear parties, the evident partisanship in American politics reached new heights during the presidential election of 1824. In fact, during the last few years of his presidency, some of Monroe's policies were hampered by the political aspirations of congressmen and by even his own cabinet members. So instead of presiding over the decline of political parties, the Monroe presidency helped to foster a transition from the first party system of the Democratic-Republicans and the Federalists to the second party system of the Democrats and the Whigs.