Sunday, October 30, 2011

Taking Back The Articles of Confederation - Part 2

Introduction    Part 1

The Articles Tested

    The Articles of Confederation responded to the practical necessities of the time, which at first centered on maintaining an army in the field to fight the British.  In this, the states shared one great purpose, to secure the independence they had declared together in the Declaration.  In spite of the difficulties the Continental Congress had in funding the war, the united states outlasted the British, and with the help of the French, defeated the chief world power of the day.  The confederated states passed one of the most difficult tests of any new government, winning independence.  This essential fact has been often overlooked in judging the Articles.

    The problems that the successful war left behind, however, severely tested the new confederation.  The chief problem was the debt.  The debt, incurred in order to pay for the war, threatened the ability of the new country to borrow further oversees.  Domestically, the inability to fully meet commitments to the army almost led to a military coup against the new government. 

   Perhaps the chief result of the debt was the controversy over paper money.  A severe post-war depression had ensued as the ex-colonies suffered a cut-off of their traditional source of finished goods in Britain.  The lack of specie held back domestic industry from taking quick advantage of the new home market.  It also became the focal point of a nascent class struggle between debtors - who favored cheap paper money to pay their loans - and creditors - who wanted a strong currency that would preserve the value of the debts owed them.  In state after state, the paper money question -- and the related issue of imposts (taxes) -- became the main political conflict.  The conflict over paper money contributed considerably to the premature abandonment of the confederation.

    In theory, the Articles empowered the Congress to requisition funds from the states to pay the debt represented by its paper securities.  The states, however, often fell in arrears.  Congress lacked its own taxing authority or the power to enforce its requests on the states.  This complicated efforts to retire the debt as quickly as its holders wished.  The conflict between debtors and creditors, exacerbated by the post-war recession, erupted in bitter state politicking and rioting.  To some, the violence (especially Shay’s Rebellion) appeared to threaten the ability of Congress to adequately preserve domestic peace and stability.  Thus the debt problem highlighted an apparent twin flaw in the Articles, Congress’ lack of taxing and enforcement authority.

    The United States faced apparent danger on the international front as well.  The overseas representatives of Congress felt that foreign governments were not according the new nation sufficient weight.  Spain threatened to close outlets for western trade and seemed poised to cut off any of the western territories of the states that became disaffected.  England still held on to several western forts in lieu of payment of money owed English businessmen. These factors contributed to the fear on the part of some that the confederation might prove too weak to protect itself from foreign aggression and intrigue.

    In spite of the confederation’s apparent shortcomings, often exaggerated by its opponents, it did not in fact perform all that poorly.  Given what we now know of the difficulties of developing nations and their foreign debt, the Congress and the states retired the war debt rather quickly.  The treasury received an average of $600,000 a year from the states.  Although the debt incurred during the war totaled about $200 million, by 1783 total domestic debt fell to about $34 to $42 million.  By 1787, the debt was essentially liquidated.  Throughout the 1780’s, the states and the Congress paid off their debts in whatever way proved acceptable given the shifts in relative political strength between debtors and creditors.  Without doubt, the general economic recovery during the decade contributed to the progress in dealing with the debt.  By mid-decade, domestic industry had expanded to fill the gap left by the British.  Foreign trade also increased greatly, surpassing pre-War levels. If the confederation could not take full credit for this recovery, neither did it deter it.

    In the field of international relations, in spite of the various threats, the confederation delivered the United States intact to the government of 1789.  The fear of intrigue and war remained a factor even after 1789, witness Aaron Burr and his “western empire” and the sacking of Washington during the War of 1812.  Indeed, the confederation achieved its greatest success in regard to settling the western lands.  To settle the question of western cession by the eastern states, Congress passed the Northwest Ordinances (during 1784-87).  These acts provided for an orderly process of admitting new and equally sovereign states into the confederation and became, in fact, the basis upon which future states were added to the union.

    Undeniably, there were flaws in the Articles.  Chief were the inability of Congress to assure itself of a reliable income and to regulate foreign trade.  Congress and the states recognized these problems and attempted before 1787 to address them.  These attempts failed because of a third problem in the Articles, the need for unanimous approval of the states to amend them.  But it is far from proven that these problems could not have been dealt with within the confederal framework.  That ultimately forces conspired to move outside the Articles of Confederation should not deter us from examining what the amended Articles might have looked like. 

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