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==Financial Problems under the Articles of Confederation==

==Financial Problems under the Articles of Confederation==

From the beginning, the Confederation also had financial troubles, and its attempts to correct its deficiencies only made its problems worse.  Its attempts to gain money were uniformly unsound.  Congress borrowed money from foreign countries, printed paper currency, and sold undeveloped western lands.  None of these tactics were effective in improving the economy.

From the beginning, the Confederation also had financial troubles, and its attempts to correct its deficiencies only made its problems worse.  Its attempts to gain money were uniformly unsound.  Congress borrowed money from foreign countries, printed paper currency, and sold undeveloped western lands.  None of these tactics was effective in improving the economy.

After the [[Revolutionary War]], America had more that 35 million dollars in debt, and that number only continued to grow.  The money from the sale of western land was paltry.  It could have paid only one-fourth of the government's current expenses.  There were no national taxes, and requests for money from the states were ignored.  The state governments were having financial difficulties of their own.   

After the [[Revolutionary War]], America was more than 35 million dollars in debt, and that number only continued to grow.  The money from the sale of western land was paltry.  It could have paid only one-fourth of the government's expenses.  There were no national taxes, and requests for money from the states were ignored.  The state governments were having financial difficulties of their own.   

So Congress turned to paper money, and began to issue it in large amounts.  Sudden inflation gave a brief image of prosperity, but as quickly as the money had inflated, it became worthless and was abandoned.  People used European coins, made of gold or silver, as currency.  Since there was much less of this money than there had been of the printed money, rapid deflation occurred, causing a depression.

So Congress turned to paper money, and began to issue it in large amounts.  Sudden inflation gave a brief image of prosperity, but the inflation continued to the point where the paper money became worthless.  The paper money was then avoided.  People used European coins, made of gold or silver, as currency.  Since there was much less of this money than there had been of the printed money, rapid deflation occurred, causing a depression.

Some states tried similar tactics, and Rhode Island tried to force citizens to use its paper money.

Some states tried similar tactics, and Rhode Island tried to force citizens to use its paper money.

None of the paper money worked in the long run, but initially, it seemed like a success.  Massachusetts was the only state that did not follow the trend for printed money.  This sparked Shays' Rebellion, which is discussed further below.

None of the paper money worked in the long run, but initially it seemed like a success.  Massachusetts was the only state that did not follow the trend for printed money.  This sparked Shays' Rebellion, which is discussed further below.

Keep in mind that conflicts over money were as important throughout history as it is today in families and personal relations.  Whether or not money is the root of all evil, it is the root of many conflicts in history and shapes the course of human events.  For example, there has always been constant conflict between people who owe money (debtors) and people who save or lend money (creditors).  Farmers are often debtors and they have always had conflicts with banks, which lend them money.  In colonial America, people who could not pay their debts went to jail, and this was known as "debtor's prison."  The entire colony of Georgia was founded by people who had been in debtor's prison in England.  The [[Founding Father]] who paid for [[George Washington]]'s troops in the American Revolution, [[Robert Morris]], ended up in debtor's prison for four years and died a few years after his release.  Debtor's prison was not abolished in federal law until 1833 and by most of the states soon afterwards.<ref>http://myvesta.org/history/history_debtorprison.html</ref>  But even today one can be imprisoned for failure to make a payment that is ordered by a court.

Keep in mind that conflicts over money were as important throughout history as it is today in families.  Whether or not money is the root of all evil, it is the root of many conflicts in history and shapes the course of human events.  For example, there has always been constant conflict between people who owe money (debtors) and people who save or lend money (creditors).  Farmers are often debtors and they have always had conflicts with banks, which lend them money.  In colonial America, people who could not pay their debts went to jail, and this was known as "debtor's prison."  The entire colony of Georgia was founded by people who had been in debtor's prison in England.  The [[Founding Father]] who paid for [[George Washington]]'s troops in the American Revolution, [[Robert Morris]], ended up in debtor's prison for four years and died a few years after his release.  Debtor's prison was not abolished in federal law until 1833 and by most of the states soon afterwards.<ref>http://myvesta.org/history/history_debtorprison.html</ref>  But even today one can be imprisoned for failure to make a payment that is ordered by a court.

'''Debate:  Is Debtor's Prison Wrong?'''

'''Debate:  Is Debtor's Prison Wrong?'''

The [[Land Ordinance of 1785]] provided for surveying and dividing territories west of the colonies into towns 6 miles square, and selling 640 acre chunks at public auctions for a minimum of $1 per acre.  Almost no one wanted to pay so much money in order to obtain much land, so these chunks were often bought and divided by investors, and then sold to farmers.

The [[Land Ordinance of 1785]] provided for surveying and dividing territories west of the colonies into towns 6 miles square, and selling 640 acre chunks at public auctions for a minimum of $1 per acre.  Almost no one wanted to pay so much money in order to obtain much land, so these chunks were often bought and divided by investors, and then sold to farmers.

 

The [[Northwest Ordinance of 1787]] was the most important achievement of the Confederation period.  Keep in mind that the "northwest" in 1787 consisted of the territory north of the Ohio River, east of the Mississippi River, and south of the [[Great Lakes]].  It is the land that is now Ohio, Indiana, Illinois, Michigan, Wisconsin and Minnesota (east of the Mississippi River), which was territory located northwest of the 13 colonies.  [[Image:Northwest Territory.jpg|right|thumb|imprecise map of the Northwest Territory from the late 1700s]]

The [[Northwest Ordinance of 1787]] was the most important achievement of the Confederation period.  Keep in mind that the "northwest" in 1787 consisted of the territory north of the Ohio River, east of the Mississippi River, and south of the [[Great Lakes]].  It is the land that is now Ohio, Indiana, Illinois, Michigan, Wisconsin and Minnesota (east of the Mississippi River), which was territory located northwest of the 13 colonies.  [[Image:Northwest Territory.jpg|right|thumb|imprecise map of the Northwest Territory from the late 1700s]]

The Northwest Ordinance established a way to create no less than three and no more than five new states.  It established a three-stage process based on population for new states to be created and join the Confederation of colonies.  It also specified what type of government the new territories and states must have, a requirement that would later become part of the [[U.S. Constitution]].

The Northwest Ordinance established a way to create no less than three and no more than five new states.  It established a three-stage process based on population for new states to be created and join the Confederation of colonies.  It also specified what type of government the new territories and states must have, a requirement that would later become part of the [[U.S. Constitution]].

When a new territory in the "northwest" had less than 5000 adult free (non-slave) males, it was to be ruled by a governor, a secretary, and three judges appointed by Congress.  When the population exceeded 5000, then they could elect a legislature (assembly) that could send a nonvoting person to Congress.  A territory was required to have at least 60,000 free men living in it before it could apply for statehood, and slavery was prohibited north of the Ohio River (which means it was prohibited virtually everywhere in the Northwest Territory).  A republican form of government was required in order for a territory to become a new state.

When a new territory in the "northwest" had less than 5000 adult free (non-slave) males, it was to be ruled by a governor, a secretary, and three judges appointed by Congress.  When the population exceeded 5000, then they could elect a legislature (assembly) that could send a nonvoting person to Congress.  A territory was required to have at least 60,000 free men living in it before it could apply for statehood.  A republican form of government was required in order for a territory to become a new state.  Slavery was prohibited north of the Ohio River (which means it was prohibited virtually everywhere in the Northwest Territory).   

 

The Northwest Ordinance was the first to protect territories against the taking of property by government without just compensation, which was later enacted as part of the Fifth Amendment.  The Northwest Ordinance protected other individual rights that would later become part of the [[Bill of Rights]]:  religious freedom, a right to a writ of habeas corpus (which enables anyone imprisoned to demand a hearing to challenge his imprisonment) and trial by jury (keep in mind that the [[U.S. Constitution]] did not exist yet).  In addition the ordinance encouraged public education, but public schools would not become widespread in their modern form until the 1900s.  

The Northwest Ordinance was the first to protect territories against the taking of property by government without just compensation, which was later enacted as part of the Fifth Amendment.  The Northwest Ordinance protected other individual rights that would later become part of the [[Bill of Rights]]:  religious freedom, a right to a writ of habeas corpus (which enables anyone imprisoned to demand a hearing to argue to be freed) and trial by jury (keep in mind that the [[U.S. Constitution]] did not exist yet.  In addition the ordinance encouraged public education, but today's public schools would not become widespread in their modern form until the 1900s.

The Northwest Ordinance was a huge success, establishing how new states could be created in a peaceful and orderly manner.  It also put foreign countries, particularly England and France, on notice that the [[United States]] owned this land and would be settling it.   

The Northwest Ordinance was a huge success, establishing how new states could be created in a peaceful and orderly manner.  It also put foreign countries, particularly England and France, on notice that the [[United States]] owned this land and would be settling it.  This Ordinance was passed as the Constitutional Convention was going on and when the Articles of Confederation were replaced by the Constitution, the Ordinance was passed again under the new Constitution.

This Ordinance was passed as the Constitutional Convention was going on.  When the Articles of Confederation were replaced by the Constitution, the Ordinance was passed again under the new Constitution.

The following new territories became new states due to the success of the Northwest Ordinance (with their date of statehood in parentheses): Ohio (1803), Indiana (1816), Illinois (1818), Michigan (1837), Wisconsin (1848), and Minnesota (1858).

The following new territories became new states due to the success of the Northwest Ordinance (with their date of statehood in parentheses): Ohio (1803), Indiana (1816), Illinois (1818), Michigan (1837), Wisconsin (1848), and Minnesota (1858).

==Shays' Rebellion==

==Shays' Rebellion==

Shays' Rebellion was an armed revolt in Massachusetts that lasted from August 1786 until February 1787, demonstrating how weak and inadequate the national government was under the Articles of Confederation.  The cause of the revolt was money.  It was an armed uprising of farmers in Massachusetts who were burdened with high debt.  This was the first of many future clashes between Americans who owed money (debtors) and those who lent money (creditors).  The farmers were angry that they had to pay back their loans in "specie" (gold or silver) rather than cheaper paper money.  Every state other than Massachusetts had issued paper money, and the sudden inflation that had occurred in other states would have helped the farmers in Massachusetts by decreasing the value of their loans and increasing the prices of their agricultural products in the stores.  Little did the farmers know that the paper money in other states would soon become worthless and lead to a depression.

Shays' Rebellion was an armed revolt in Massachusetts that lasted from August 1786 until February 1787, demonstrating how weak and inadequate the national government was under the Articles of Confederation.  The cause of the revolt was money.  It was an armed uprising of farmers in Massachusetts who were burdened with high debt.  This was the first of many future clashes between Americans who owed money (debtors) and those who lent money (creditors).  The farmers were angry that they had to pay back their loans in "specie" (gold or silver) rather than cheaper paper money.  Every state other than Massachusetts had issued paper money, and the sudden inflation that had occurred in other states would have helped the farmers in Massachusetts by decreasing the burden of their loans and increasing the prices of their agricultural products in the stores.  Little did the farmers know that the paper money in other states would soon become worthless and lead to a depression.

The farmers lost their farms when they could not pay back their loans, and by losing their property they also lost their right to vote, because at the time only property owners could vote.  The farmers took to violence to help themselves.  Specifically, they violently took over the town courthouse to prevent any additional court-ordered seizures of their farms.  The Massachusetts governor sent in the militia but there were more farmers in the rebellion then there were in the militia sent by the governor.  Daniel Shays then led 1200 men to Springfield to capture the federal arsenal, but by then there were enough state militiamen to protect it and defeat Shays.  Shays fled to the Vermont area.  Everyone was panicked by this uprising, and a newly elected Massachusetts legislature subsequently enacted some debt relief for the farmers.

The farmers lost their farms when they could not pay back their loans, and by losing their property they also lost their right to vote, because at the time only property owners could vote.  The farmers took to violence to help themselves.  Specifically, they violently took over the town courthouse to prevent any additional court-ordered seizures of their farms.  The Massachusetts governor sent in the militia but there were more farmers in the rebellion then there were in the militia sent by the governor.  Daniel Shays then led 1200 men to Springfield to capture the federal arsenal, but by then there were enough state militiamen to protect it and defeat Shays.  Shays fled to the Vermont area.  Everyone was panicked by this uprising, and a newly elected Massachusetts legislature subsequently enacted some debt relief for the farmers.