Thomas Jefferson wanted a federal economy that was "rigorously frugal and simple." He believed in states' rights and envisioned states being able to run their own economies with minimal interference from the federal government. He wished to maximize individual autonomy so that people could keep the profits they made. He also envisioned the United States as primarily an agricultural economy made up of small farmers who would thrive best with the least interference from a central authority.

Jefferson sharply opposed Alexander Hamilton's plans for the government to pay off the states' debts and to establish a national bank. The bank Hamilton envisioned would serve as a repository for federal taxes and provide a hard currency (gold) to back up paper money. Hamilton's plan was to make the new nation more secure by tying the states more closely to the federal government.

Jefferson disliked this big-government approach to the national economy. He objected to low-debt states like his own subsidizing New England's debts. He feared the individual states would lose economic flexibility if they were too closely tied to Washington.

Jefferson did not foresee that the United States would develop a primarily industrial economy over time that would benefit from a strong, centralized government. He lost most of his battles over the national economy, but his small government vision has remained an important force in politics.