The financial problems of the new United States were huge. The U. S. treasury, such as it was, was empty. The national government and many other states had huge debts, and in order to have some currency so that business might be conducted, the wartime practice of issuing paper money continued; the result was rampant inflation. American paper was practically worthless, and state paper money was worth even less, if that was possible. (In Rhode Island, legal tender paper was created, and it had so little value that people refused to accept it as payment for anything—going so far as to leave the state to avoid being paid, since Rhode Island paper was legal tender only within the state.)
With no power to tax, Congress could do little to ease the situation. Nationalists such as Alexander Hamilton and James Madison wanted Congress to have a taxing authority, but their efforts came to naught, as the states were jealous of federal power to tax, having just fought a war initiated in large part over unwanted taxation. In 1781 Robert Morris tried to set up a Bank of North America, thinking that that "the debt will bind us together." He was given near dictatorial powers, but he resigned in frustration in 1784, having been unable to stabilize the economy.
The situation even held potential danger for the government itself, as war veterans threatened to march on Congress. Before leaving Newburgh General George Washington had thwarted one such movement, but the seeds of discontent among the former soldiers and officers remained apparent. To make matters even more confusing, economic jealousy existed among the new states. Various tariffs were applied to goods that moved between the states, and state laws came into conflict with the treaty made with Great Britain in 1783.
During this time the national debt rose from $11 million to $28 million, which included foreign debt. Those debts were never brought under control during the Confederation period— it was not until Alexander Hamilton reformed American finances under the constitutional government that America's economic house began to be put in order.
All these events pointed up weaknesses in the American government and showed the need to revise the Articles of Confederation. Meanwhile, other reforms were emerging from the fire of rebellion, such as religious freedom—the separation of church and state. Most states abandoned tax support for churches, and Jefferson's Statute of Religious Freedom in Virginia set an important example. In the northern states of Massachusetts and New Hampshire, the Congregational Church still got some tax money. Despite their newly found liberalism, most Americans were nevertheless intolerant of views that were strongly antiChristian.
World History
