Monroe returned to the United States almost three years to the day after he left. After a summer of politicking, he settled back in Virginia, playing host for a while to the Madison family. He wanted badly to begin work on a new mansion at his plantation in Albemarle. Monroe had bought the thirty-five hundred acre plantation next to Jefferson's Monticello just before he left for France, and in 1799 he constructed a six-room house. Intended to be a only a temporary house while the larger house was constructed, Monroe and his family ended up living there for two decades–his life never again settled down enough to allow construction to proceed. At various points, the estate was known as "lower plantation," in honor of Monticello, later "Highlands," and finally as "Ashlawn."
Monroe still suffered from financial troubles. He had been paid a salary of nine thousand dollars, but that amount had proved grossly inadequate to support himself and his family in France and meanwhile maintain payments on his holdings in America. He had to mortgage his home in Albemarle to pay the cost of shipping his belongings back from France, and when the government demanded that he reimburse it for 350 dollars, Monroe had to borrow money from family members to pay up.
He still struggled as well with the legacy of his work in France. To clear his name, he published a 407-page book outlining everything he had done and including all correspondence between himself and the government. With such openness, the Federalists could not accuse him of underhanded tricks in dealing with the French.
Thomas Jefferson, Monroe, and James Madison spent most of the next two years carefully stage-managing Virginia politics and the anti- federalist party, now known as the Republicans. Due to illness, Monroe missed one key moment, the drafting of the Virginia and Kentucky Resolutions. Yearning for public office again, Monroe waited for the opportunity to run again. Madison and Jefferson urged Monroe to run for the House, but Monroe held out to be governor. In 1799, Monroe was elected governor by a strict party vote of the legislature: 116 to 66.
Monroe felt rejuvenated by the win. His party had affirmed their support for him; the trials of France were behind him. He charged ahead with an ambitious reform platform, and won almost universal acclaim for his deft handling of state government. He began updating the state legislature annually with an address similar to the annual address the president gave to Congress. He worked to update the state militia. Most of all, though, he used his post to constantly expound on the glories of democracy and republicanism. He worked tirelessly to expand the powers of the executive as far as the state constitution would allow, even regaining some of the powers the post had lost during the colonial era.
In the summer of 1800, yellow fever broke out in Norfolk and the governor spent many longs days designing a program to defeat the disease; he even closed all Virginia ports to Norfolk shipping unless the ships passed a quarantine. And so it was, that on August 30, 1800, Monroe was at the capital in Richmond instead of home with his sick son and wife. A planter came to inform him that a slave rebellion was in the works for that evening and that the city must act quickly or else risk widespread unrest. Monroe activated the newly reformed militia to guard the city and luckily a summer thunderstorm flooded some of the approaches to the city, temporarily disrupting the insurrection. By September 2, more than a score of slaves had been arrested and huge caches of home-made weapons had been uncovered. Patrols scoured the countryside for the leader of the rebellion, a slave named Gabriel. Because of the quick response, Monroe prevented bloodshed. His strong hand and uncompromising execution of the governor's powers helped arrest any further trouble–and earned him even more praise from the legislature.
His response, though, showed a nuanced view of slavery. While he disliked the institution, he thought that outright abolition would be a disaster and so worked to keep slavery in place until another system could replace it.
In the winter of 1801, Monroe saw his mentor Jefferson elected president–further vindicating the Republican party. Thus, when Monroe got word that Jefferson might try to make peace with the federalists, he strongly argued against any such move.
As his term wound down in 1802, Monroe needed to return to private life–his debts continued to mount, much higher than he could afford on a public salary–and he leased a house in Richmond. However, as had happened so many times before, his private life (and finances) became co-opted in the name of his country. Thomas Jefferson needed him to return to Europe.