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The Articles of Confederation: A Failed Experiment
Once the colonies had declared their independence, their first task was to create
a unified national government. John Dickinson, a congressman from
Pennsylvania, drafted the Articles of Confederation and brought them to
Congress on July 12, 1776. Congress adopted the Articles on November 17,
1777, and began the process of ratification, sending copies of the Articles for
review by state legislatures. The Articles of Confederation reserved to each
state "its sovereignty, freedom, and independence" within the national
structure. The central government consisted of the Congress alone, which was
elected by state legislatures. Congress could request funds from the states, but
had no power of taxation. Similarly, Congress lacked the power to regulate
interstate or international commerce. With no executive branch, Congressional
committees would be assigned to direct matters of finance, diplomacy, and the
military. The Articles did not provide for a judicial system.
The Articles of Confederation became law after Maryland, the last abstaining
state, finally ratified them on March 1, 1781. Almost immediately, a host of
challenges arose for the new government to cope with. The first challenge was to
put the nation on sound financial ground. The war cost the 600,000 taxpayers in
America a total of $160 million. To finance the war effort, the Continental
Congress borrowed from foreign nations and wealthy Americans, and printed up
its own paper money, called the Continental. Due to a lack of faith in the survival
of the American government both at home and abroad, the value of the
Continental fell 98 percent between 1776 and 1781, leading to rampant inflation.
In an attempt to rectify the situation, Congress made Robert Morris, a wealthy
merchant, the nation's superintendent of finance in 1781. He proposed an import
duty of five percent to finance the national budget and guarantee the payment of
war debts. However, under the Articles of Confederation taxation required the
agreement of every state in the Union, and Rhode Island, acting alone, rejected
Morris' proposal. After the Revolutionary War came to an end in 1783, Congress
proposed yet another tax to finance the budget, but this time New York stood in
the way of its passage. Furthermore, throughout the 1780s states continually
reduced the amount of financial support they granted to Congress. Additionally,
the US economy suffered from British restrictions on trade with the Empire,
including the British Isles and the West Indies, two important markets for US
merchants. British ports often only accepted American goods if they were carried
aboard British ships. Thus American trade declined, and was one of the leading
causes of the economic depression which struck in 1784.
Commentary
America's first national government under the Articles of Confederation
incorporated, more than anything else, the widespread fear and distrust of
centralized government. Having experienced the oppression of British
government, in which the central government had seemed to act without concern
for its constituents, early American political leaders advocated a governmental
system in which the primary power of the government was distributed to the
states, which could be more responsive to the specific needs of the people.
Under the Articles of Confederation, the States took primacy over the Union as a
whole to the extent that the national government was limited to only those actions
that the states saw fit to permit.
With the Confederation in place, the US had taken a crucial step in defining the
role of the national government. The Continental Congress had directed the war
effort without clearly defined powers. Rather, it had assumed specific powers on
an as-needed basis. Now, however, the new nation had a clearly organized
government. The only problem was that the national government had been given
so little power that it could not be truly effective. Subject to the veto power of any
single state, the national government found it nearly impossible to pass
measures even within the limited scope of its powers.
In no area was this more apparent than in regard to taxation and finance. While
the Congress could ask the states for financial contributions, there was no
guarantee that the states would comply, and taxes could only be levied at the
national level with the agreement of all states, a feat of near impossibility. Almost
every state raised taxes within their boundaries during and after the war, in order
to finance their own internal military operations, reconstruction, and war debt.
Pressured by these financial burdens, few states were likely to approve of new
national taxes, or import tariffs that would raise the prices of all goods. Faced
with the disapproval of the states, and declining voluntary contributions to the
national cause, the central government was left with no recourse.