As Monroe knew, the "Era of Good Feelings" could not last forever. It faltered by 1819 and by 1820 the crisis over Missouri had permanently removed any "good feelings" in the country. Over the course of his presidency, Monroe handled several major crises, both foreign and domestic.
Luckily for him, his first major crisis allowed him to settle an old score. Spain's claim to Florida had long been a thorn in his side, especially after his fruitless months in Madrid trying to convince the Spanish government that France had included much of the land in the Louisiana Purchase. In 1818, Andrew Jackson from Tennessee invaded Florida in pursuit of marauding Indians, touching off an international incident. He seized two Spanish forts in direct violation of international law and his orders from Washington. Monroe's cabinet split on whether to reprimand Jackson, Crawford and Calhoun wanted a reprimand but the expansionist-minded Adams pushed for a more ambitious move. Eventually, Monroe quietly returned the captured posts to the Spanish, but in doing so, he put the European country on notice that his forces could readily storm the territory when needed. He then began treaty negotiations with Spain and a year later with the threat of war hanging over Spain, the Adams-Onis Treaty set the new boundaries for Spanish territory in America. The Spanish, realizing they risked losing the land anyway without compensation, agreed to settle for up to five million dollars in claims on the land. The treaty also definitively set the border with Mexico.
That same year, 1819, Monroe faced his first major domestic crisis: the collapse of several banks, sketchily linked to the controversial Bank of the United States. The Panic of 1819 brought financial ruin not only to the banks but also to many small businesses around the country. The scope of the financial crisis awed many observers: In New York State, property values fell by twenty percent in two years, from $315 million in 1818 to $256 million by 1820. In Monroe's native capital of Richmond, property figures dropped by half. Thousands lost their jobs and many were forced into debtors' prisons. The causes of the panic were complex, but included an ill-timed contraction by the Bank and a collapse in the price of cotton. Many were angered by Monroe's lack of response to the problems caused by the Panic, but he had little control over the nation's financial system and the problems even stretched far beyond America's borders. Nevertheless, the Panic left a lasting impression on Monroe's image and on politics as a whole. The complex Bank would become a focal point of outrage and the Bank Wars of the 1820s would help define Jacksonian America.
As if the Florida crisis and the Panic were not enough for one year, the national debate over slavery erupted in the form of whether to admit Missouri as a state. The issue of slavery in the East was largely settled: those states south of the established Mason-Dixon line were slave, those above the line were free. However, the line technically ended at the Mississippi, and so the statehood application of Missouri–on the West side of the river–caused a conundrum of how to proceed. New York Rep. James Tallmadge began the crisis in February 1819 by introducing a proposal to restrict slavery as a condition of admission to the Union. Southerners worried that the admission of more free states would tip the balance in favor of free states–which would then move to abolish slavery altogether. In the north, abolitionist feelings were beginning to heat up and there was talk of civil war in Missouri if the issue was not settled quickly.
Monroe, distracted by the Panic, looked for a compromise to settle the growing crisis. A compromise was reached that admitted Missouri as a slave state but that also admitted the northern counties of Massachusetts as a free state called Maine. The bill also prohibited the establishment of any slave states north of the thirty-six degree thirty' parallel–a sort of ad hoc Mason-Dixon line for the West. Although far from a perfect solution, both sides supported the compromise as a way to avoid any bloodshed. Monroe had mixed feelings about slavery and thought long and hard about the issue before signing the bill into law.
Monroe and many others in his administration felt the Missouri issue had been cooked up by former Federalists who looked to forge a new political party by splitting the nation into slave and free–in some ways Monroe's thoughts were correct, although it would take another generation to see the idea to fruition.