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:
“The legitimate powers of government extend to such acts only as are injurious to others. But it does me no injury for my neighbour to say there are twenty gods, or no god. It neither picks my pocket nor breaks my leg.”
—Thomas Jefferson (1743–1826)
“Man’s pity for himself, or for his son,
Always premising that said son at college
Has not contracted much more debt than knowledge.”
—George Gordon Noel Byron (1788–1824)
“It was not sufficient for the disquiet of our minds that we disputed at the end of seventeen hundred years upon the articles of our own religion, but we must likewise introduce into our quarrels those of the Chinese. This dispute, however, was not productive of any great disturbances, but it served more than any other to characterize that busy, contentious, and jarring spirit which prevails in our climates.”
—Voltaire [François Marie Arouet] (1694–1778)