The First Republic

The Early, Early Republic

The first de facto central government of the United States was the Continental Congress, whose origins stem from the colonial response to the Coercive Acts crisis of 1774. While this body behaved as a national government – by (1) printing money; (2) establishing a post office; (3) negotiating treaties; and (4) creating a Continental Army – its explicit powers were limited and uncertain. The Revolutionary whigs wanted to establish a new country based on "the rule of law" and a core belief for many was the importance of written constitutions (whether they be at the state or the central government level).

In 1777, congress put to the states a formal frame of government known as the "Articles of Confederation." This constitution reserved very little power to the United States' government, thereby reflecting the revolutionary generation's suspicion of strong central authority. In other words, the prevailing wisdom of the day was that a strong national government was the greatest threat to individual liberty. This ideology was based on the post 1763 colonial struggle with Parliament, which had attempted to assert its power over the local assemblies.

The Articles of Confederation specified that the central government could make treaties and declare war, but could not regulate trade or collect taxes. Individual states jealously guarded their sovereignty and refused to give power to the central Confederation Congress. In general, most were contended with how the Articles of Confederation proposed a weak central government, yet it was not ratified until 1781 by all the states (unanimous approval was required). The delay stemmed from Maryland's refusal to endorse the document because of a somewhat unrelated dispute over lands West of the Appalachian Mountains (Maryland used its effective veto of the document to force states that held land western lands to cede them to the central government). Any future modification or amendment to this framework for government required unanimous support of all the state legislatures. (see text book for enumeration of the central government's powers under the Articles of Confederation).

Problems with finance

Because the Continental and the Confederation Congress did not have the explicit power to tax, the national government had difficulty raising funds for the war effort. In order to pay troops and suppliers, the central government (1) borrowed money by selling bonds to US Citizens; (2) borrowed from the French government; and (3) printed the continental dollar (specie = paper money not backed by bullion). This last option for "raising funds" deflated the value of the dollar (caused price inflation). Some politicians ("Nationalists") believed that the solution to monetary stability was to modify the Articles of Confederation the power to impose taxes. In 1781 they proposed the "Impost Plan," which was a duty imposed on imports into the United States.

To some, the Nationalists' agenda was a clear threat to individual liberties and to the radical/whig hope for the new country. By giving the central government the right to tax, power would be concentrated into the hands of the few. These fears, in part, motivated the Rhode Island Assembly to withhold its assent to the modifying the Articles of Confederation. Because the framework for government required every state's approval before modifying the central government's power, Rhode Island had effectively vetoes the proposed duty. The Nationalists would have to wait until the end of the decade before they would win a much more important victory: the scrapping of the Articles of Confederation and the adoption of the Constitution

Crisis in the 1780s

After the Treaty of Paris formally ended the Revolution, the United states experienced a post-war depression that was particularly punishing to small farmers in the Northeast. With the English Navigation Acts excluding American ships from entering colonial ports in the British West Indies, the price of American-produced plantation provisions fell. Compounding this problem was a decline in output, as poor weather reduced crop yields. Massachusetts' farmers were particularly squeezed, because the state government pursued a tight money supply program (in order to prevent the deflation of the value of the Massachusetts dollar). In other words, the Massachusetts government kept its financial books balanced by taxing and keeping its expenditures low. This policy was welcomed by creditors, but for many poor farmers, the combination of depressed crop output, lower real prices for their produce, and the enforcement of property tax payment was economically untenable. With the Massachusetts courts insisting that tax (& debt) obligation be paid in full, many lost their farms due to courtordered foreclosure. This economic bind led to social disturbance and the outbreak of Shays' Rebellion.

The followers of Daniel Shays felt that they were justified in their actions by the same whig/Lockean ideology that motivated the American Revolutionaries. Elites and Creditors, on the other hand, were shocked by what they considered an illegitimate use of force by the mob. The result is that politicians and many Americans lost a degree of faith in decentralized power and confidence in the public's civic virtue. Nationalists who were frustrated with the confederation system would use this opportunity to push forward an agenda that would allocate more powers to the central government, including the power to tax and regulate trade. After meeting in Philadelphia in the summer of 1787, the Nationalists (now calling themselves the Federalists) would put to the people (convening in special state conventions) a new framework of government, the Constitution.

Key Terms

First Republic, Nationalist, republicanism, Impost plan, Northwest Ordinance, Trade to the West Indies, economic depression, inflation/deflation, fiscal crisis, Shays' Rebellion, Constitutional convention, 3/5 clause, NJ Plan, federalist v antifederalists, Federalist Papers, Jay, Hamilton, Madison, Articles of Confederation v Constitution

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