Government Debt Under The Articles of Confederation
During the American Revolution, the Continental Congress, under the Articles, amassed huge war debts, but lacked the power to service these obligations through taxation or duties on imports. As an expedient, the revolutionary government resorted to printing money and bills of credit, but this currency rapidly underwent depreciation. To avoid bankruptcy, the Continental Congress eliminated $195 million of its $200 million debt by fiat. In post-war years, Continental currency - "Continentals" - would be deemed worthless.
With its finances in disarray, the legislature abdicated its fiscal responsibilities, shifting them to the thirteen states. When the state legislatures failed to meet quotas for war materiel through local taxation, the patriot armies turned to confiscating supplies from farmers and tradesmen, compensating them with IOU’s of uncertain value. By the end of the war, over $90 million in state debt was outstanding. . Much of the state and national fiscal disorder, exacerbated by an economic crisis in urban commercial centers, remained unresolved at the time the Report was issued.
Read more about this topic: First Report On The Public Credit
Famous quotes containing the words government, debt and/or articles:
“Chile consents to do all we can reasonably demand. My regret is that our Government blustered and bullied. President [Benjamin] Harrison argued in his message like a prosecutor—made the most of the case against our weak sister. Forbearance, charity, friendship, arbitration should have been in our words and thoughts.”
—Rutherford Birchard Hayes (1822–1893)
“However patriarchal the world, at home the child knows that his mother is the source of all power. The hand that rocks the cradle rules his world. . . . The son never forgets that he owes his life to his mother, not just the creation of it but the maintenance of it, and that he owes her a debt he cannot conceivably repay, but which she may call in at any time.”
—Frank Pittman (20th century)
“There are several natural phenomena which I shall have to have explained to me before I can keep on going as a resident member of the human race. One is the metamorphosis which hats and suits undergo exactly one week after their purchase, whereby they are changed from smart, intensely becoming articles of apparel into something children use when they want to “dress up like daddy.””
—Robert Benchley (1889–1945)