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| | From the beginning, the young United States also had financial troubles. Congress borrowed money from foreign countries, printed paper currency, and sold undeveloped western lands. None of these tactics was effective in improving the economy. | | From the beginning, the young United States also had financial troubles. Congress borrowed money from foreign countries, printed paper currency, and sold undeveloped western lands. None of these tactics was effective in improving the economy. |
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| − | After the [[Revolutionary War]], the United States 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. | + | After the [[Revolutionary War]], the United States was more than 35 million dollars in debt, and that number 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. |
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| − | So Congress began to print paper money, and began to issue it in large amounts. Predictably, [[inflation]] increased to the point where the paper money became worthless. (Inflation is when prices keep going up and up as the dollar loses its value.) The paper money was then avoided. People began to prefer 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 began to print paper money, and began to issue it in large amounts. Predictably, [[inflation]] increased to the point where the paper money became worthless. (Inflation is when prices keep going up and up as the dollar loses its value.) The paper money was then avoided. People began to prefer 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 next, causing a depression. |
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| | Some states tried similar tactics, and Rhode Island even tried to force citizens to use its paper money, which people avoided because it was losing its value over time. | | Some states tried similar tactics, and Rhode Island even tried to force citizens to use its paper money, which people avoided because it was losing its value over time. |