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23 October, 17:19

What was a cause of the economic problems of the United States in the 1780s

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  1. 23 October, 17:59
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    Well, if you remember a decade before this, the US was fighting a war for freedom against the British. When the war ended, the US was going into debt since the nation was unable to pay the money it borrowed from its citizens (in the form of bonds) and other nations (such as France). The Continental dollar was also worthless since the nation has nothing to back it up and the 13 colonies each has it's own currency.

    The newly formed Continental Congress has the power to wage war and make treaties, but have no powers to collect taxes or execute its policies. To get money, the Continental Congress have to ask the states for it. The problem with this is that the states do not need to comply with the federal government since it was relatively weak. So, in the very end, even if Congress ask nicely, they are not guaranteed money from the states. No money means no way to repay back debt.

    Trade was also bad during this time. To conduct trade in the US, the participating nation/state must make a trading treaty/agreement with each of the colonies and federal government. This means making 14 different individual trading agreements for one nation. No nation wants to do this since it is a painful process to make money and trade. They rather deal with one agreement than 14 different ones.

    The states (then colonies) are also fighting each other in the border.

    With the economy going bad and rebellions rising up like Shay's Rebellion, the Continental Congress and the colonies decide to send people/delegates to a convention to fix the Articles of Confederation. The first one didn't do that well, but once the second convention occurs, the 55 delegates decide to scrap the Articles and create a new Charter for the nation, The Constitution, which solves every problem in the nation at that time - including the economy since the federal government now has power to collect taxes and unified trading policies for all 13 colonies/states.
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