Congress of New York's cession of Western land claims. By the first of these events the United States found itself for the first time a legally constituted government with its powers set down in black on white, its "perpetual union and league of friendship" witnessed by the hands of delegates from each of the thirteen states. By the second the United States was invested with the beginnings of a national domain, destined to extend to the Pacific, whose stewardship was to prove the greatest source of our national wealth and whose governance was to invite the chief enlargement of our federal power.

ANARCHY IMMINENT

In the same year that the Articles of Confederation were adopted, Josiah Tucker, Dean of Gloucester, an acrimonious but observant critic of American affairs, wrote to Louis XVI's famous finance minister Necker in the following terms: "As to the future Grandeur of America and its being a rising Empire under one head, whether Republican or Monarchical, it is one of the idlest and most visionary Notions that was ever conceived by the writers of Romance. For there is nothing in the Genius of the People, the Situation of their Country, or the nature of their different Climates which tends to countenance such a Supposition. On the contrary, every Prognostic that can be formed from a Contemplation of their mutual Antipathies and clashing Interests, their Difference of Governments, Habitudes, and Manners, plainly indicates that the Americans will have no Center of Union among them, and no common Interest to pursue, when the Power and Government of England are finally removed."

This dismal prophecy came dangerously near fulfillment in the six or seven years succeeding the surrender at Yorktown. Serious financial, economic, and diplomatic problems, some caused by the war and some by the cessation of the war, called for a firm government just at the time when the mutual jealousies and tenacious local attachments of the states prevented them from entering into a more effective union than that of the

"Treaty of the Confederation." It took the bitter experience of humiliation abroad and anarchy at home, of poverty, demoralization, and even threatened dissolution of the Confederation, to bring the states to a reluctant consent to the establishment of a real federal government. Some of the leaders were despondent in 1786-1787. John Marshall wrote, "They have truth on their side who say that mankind is incapable of governing himself." John Jay confided to Washington that he was more fearful of the American cause than at any time during the war. And Washington replied to Jay: "Your sentiment that our affairs are drawing rapidly to a crisis accords with my own. What the event will be is also beyond the reach of my foresight. We have errors to correct. We have probably had too good an opinion of human nature in forming our confederation. Experience has taught us that men will not adopt and carry into execution measures best calculated for their own good, without the intervention of a coercive power. I do not conceive that we can exist long as a nation without having lodged somewhere a power which will pervade the whole Union in as energetic a manner as the authority of the state governments extends over the several states."

So long as the war lasted the inadequacy of the loose league of the states was not wholly apparent. There was actually a firmer union during the hostilities, without the Articles, than there was with them after peace came. For several considerations urged the states to hold together and show some respect for their central steering committee of Congress. They were waging war as a confederation and not as single states; they needed to present a united front against Great Britain; they could expect aid from France and Holland only as a nation, and only as a nation could they secure the recognition of their independence. Moreover, each state, under the apprehension of invasion, found comfort in the possibility of an appeal to the continental army to supplement its militia. But when the war was over and independence won, it seemed to many that the union had accomplished its purpose. The "general government" might remain, to be sure, to carry out the will of the states in those matters on which it was desirable to act in

unison,-foreign war, diplomacy, interstate controversies, the disposition of national territory, and the like,-but in all these things it should still be the servant and agent of the states. It could not levy taxes or control commerce or compel a state to pay its quota for the general expenses, for it had no executive or judicial organs for enforcing its laws. It was, as Gouverneur Morris said, "a government by supplication." Being poor and subservient at home, it naturallly could not speak with authority abroad. When Rhode Island defied Congress, Great Britain could hardly be expected to respect that body.

Yet it would be hard to find a period in our history when a strong, efficient government was more needed than at the close of the Revolutionary War. Our debt, foreign and domestic, amounted to $43,000,000, of which nearly $8,000,000 had been borrowed in Europe.1 The interest on this debt could be paid only by a vigorous system of taxation. The people of the United States were, as Robert Morris wrote to Franklin, "undoubtedly able to pay." They were spending freely at the close of the war. "Extravagant luxury," "insatiable thirst for riches," "speculation and peculation," "an alarming spirit of venality," are some of the phrases which sober men like Washington, Franklin, and Adams used to characterize the age. Pelatiah Webster, a distinguished political essayist of the time, wrote, "Tho' the public treasury was so distressed, yet the states were really overrun with an abundance of cash: the French and English armies, our foreign loans, Havannah trade, etc. had filled the country with money." The control of this money, however, the states determined to keep in their own hands. By a false and foolish analogy they extended their hatred of general taxation to their own central government, declaring against the "tyranny" of "King Congress" as fervently as they had against that of King George. They had fought the war to escape taxation by any power except that of their own legislatures. Let Congress "ask" for the money, and the legislatures would grant it.

1 During the war France had lent us $6,500,000; Holland, $1,300,000; and Spain, $200,000. After the war the Dutch lent us $2,000,000 more. About one fifth of what we borrowed abroad was used to pay the interest on our domestic debt.

The way in which the states honored the request of Congress for money must have made persons whose memory reached back twenty years somewhat lenient in their judgment of Great Britain's refusal to rely on requisitions from the colonies instead of taxation. During the entire period of the Confederation, Congress got only $6,000,000 of the $16,000,000 assessed on the states. In the two years after the surrender at Yorktown, Congress asked for $10,000,000. By June, 1784, $1,486,511 had been paid in. New Hampshire paid $3000 of her quota of $450,000; Massachusetts, $247,000 of her $1,600,000; New York, $39,000 of her $465,000; Virginia, $115,000 of her $1,590,000; and so on down the line. Delaware, North Carolina, and Georgia paid absolutely nothing. No state except South Carolina paid more than 25 per cent of its assessment. The result was more borrowing and a piling up of the interest charges until they came to overbalance the total receipts. The arrears of interest on the domestic debt grew from $3,000,000 to $11,000,000 in the five years preceding Washington's inauguration. Robert Morris, the superintendent of the finances, resigned because it did not consist with his ideas of integrity "to increase our debts while the prospect of paying them diminished."

From this intolerable situation Congress sought relief in vain. In February, 1781, it asked for the power to levy an import duty of 5 per cent solely for the purpose of paying the interest and principal of debts contracted on the faith of the United States. But Rhode Island refused her consent, and Virginia, after granting it, withdrew it on the ground that her sovereignty would be impaired and her liberty endangered. Again, in April, 1783, Congress asked the right to levy a small import duty for a period of twenty-five years; but after a delay of three years, only nine states had been persuaded to a grudging consent. Governor Clinton of New York, when finally the consent of his state alone was needed to put the duty into effect, refused to call the legislature, on the ground that he had power to do so only on "extraordinary occasions." Apparently the impending bankruptcy of the United States was not an

extraordinary affair! Robert Morris declared that exhorting the states to tax their inhabitants for the support of the Union was like "preaching to the dead."

To add to the distress of the Treasury, there was dire confusion in the currency. When the war broke out, Congress, having no money and no source of income, had to resort to borrowing. The colonies, being largely agricultural communities, had little accumulated capital to lend, while the interruption of our commerce with the British ports deprived the farmers of the currency with which to pay their taxes. Foreign loans could be expected only when there was good promise of the success of the American cause. Congress, therefore, had to resort to forced loans in the shape of issues of paper money. Unsecured paper money is like a poison in the currency system of a state. If the dose is small and the financial health of the country is vigorous, the harm is not great-the poison is absorbed. But as the dose becomes larger and the health of the country weaker, disastrous results follow. The value of the paper falls with a rapidity proportional to the waning confidence of the people in the ability of the government to redeem it in gold and silver. The government then tries to recoup its loss by new issues of paper-or to cure the evil by increasing it. So, beginning with a modest issue of $2,000,000 in 1776, Congress had multiplied the continental paper currency a hundredfold by the autumn of 1779. Twenty dollars in paper were required to pay for merchandise which one dollar of silver would buy. A hat cost $40, a barrel of flour $150. A year later the paper had sunk to one fortieth of its nominal value in silver; and still another year and a half later, shortly after the adoption of the Articles of Confederation, the continental paper ceased to be used as currency, but was bought and sold by speculators at prices ranging all the way from a mill to a quarter of a cent on a dollar (May 30, 1781).

While the Continental Congress was learning the truth of Thomas Paine's remark that "money is money and paper is paper, and all the inventions of man cannot make it otherwise,"