Party divisions were deepened by differing ideological interpretations of the French Revolution which was raging on the other side of the Atlantic Ocean. Madison and Jefferson saw the French Revolution as similar to the American Revolution, a position that conflicted with that of John Adams, Alexander Hamilton, and President Washington. Despite Federalist opposition to the French revolutionary ideology, however, enthusiasm for the French Revolution spread around the country, and in 1792, the Madisonian and Jeffersonian Republicans scored major gains.
By the beginning of 1793, the French were at war with Great Britain, and the two American parties were split over which side they should favor–if any at all–in the fight. The following year, on April 22, President Washington issued the Proclamation of Neutrality, which prevented the Americans from taking sides in the Anglo-French conflict. Madison was incensed by the decision, since he felt that the policy gave an "anglified complexion" to the government. His confidence in Washington's leadership was shaken by this disappointment.
Over the next several years, Madison became more embittered by the Administration's foreign policy. In November 1794, his former ally from the Constitutional Convention, John Jay, signed a treaty with the British over trade questions. In this treaty, Britain was granted "most favored nation" status, even after the country had been breaking agreements in its heavy-handed treatment of American merchant ships on the high seas. The Senate approved the treaty in June 1795. After long months of waiting for President Washington to send it to the House, Congress gave its stamp of approval in March 1796. Madison had been a key figure in the Republican opposition.
The long fight over Jay's treaty split open partisan hostilities, and the atmosphere surrounding the fall presidential election was very strained. The Federalists chose John Adams as their candidate. Thomas Jefferson tried to persuade Madison to run as the Republican candidate, but Madison would not. Jefferson got the Republican nod, but was defeated by Adams in November.
Tired, and disgusted with politics, Madison left Congress in 1797. He returned home to Virginia, where represented his state's opposition to the Adams Administration. That administration eventually became the target of widespread Republican opposition with the passage of the Alien and Sedition Acts in 1798. These acts inspired Madison to draft the Virginia Resolutions, which denounced Adams's statutes as violations of the First Amendment of the Constitution, and which also claimed a right for the states "to interpose for arresting the progress of the evil" which he perceived in the national government's actions. These strong words which suggested a doctrine of states' rights would come back to haunt Madison during his retirement, when the nation was experiencing the first pangs of pre-Civil War sectionalism.