He slashed Army and Navy expenditures, cut the budget, eliminated the tax on whiskey so unpopular in the West, yet reduced the national debt by a third. He also sent a naval squadron to fight the Barbary pirates, who were harassing American commerce in the Mediterranean. Further, although the Constitution made no provision for the acquisition of new land, Jefferson suppressed his qualms over constitutionality when he had the opportunity to acquire the Louisiana Territory from Napoleon in 1803. During Jefferson's second term, he was increasingly preoccupied with keeping the Nation from involvement in the Napoleonic wars, though both England and France interfered with the neutral rights of American merchantmen. Jefferson's attempted solution, an embargo upon American shipping, worked badly and was unpopular. Jefferson retired to Monticello to ponder such projects as his grand designs for the University of Virginia. A French nobleman observed that he had placed his house and his mind "on an elevated situation, from which he might contemplate the universe."

He died on July 4, 1826. .