Critical Period, 1780s
Reaction to economic depression and
social unrest
Conflicts with other Nations, 1783-1787
(External Trade Shock, Negative Supply shock)
Internal economic problems
plagued the new nation.
• The Confederation Congress had no power to regulate interstate
commerce, making trade difficult across state lines.
• Inflation was a problem in many states, which struggled to pay off war
debts by printing money (devaluation of money = unavailability of credit).
– Money was not backed by gold or silver, so it was worth less.
• Loss of trade with Britain combined with inflation caused an economic
depression.
– Depression is a period of low economic activity combined with a rise in
unemployment.
Basic recession/depression graph
• A general slowdown in
economic activity
• Occur when there is a
widespread drop in
spending
• Caused by: financial
crisis/economic bubble,
external trade shock,
negative supply shock
• Depression: 10% + drop
in GNP or recession
lasting two + years.
Many Americans called for changes
in the national government.
• Shays’s Rebellion showed the weaknesses of the Confederation government,
which could not respond to Massachusetts’s call for help (see chart in next slide)
– People called for a stronger central government that could protect the nation
in times of crisis.
• Virginia called for a national conference to change the Articles of Confederation.
• Annapolis Convention, September 1786: failed to act.
• Constitutional Convention was called in May 1787 in Philadelphia to revise the
Articles of Confederation.
The Constitutional Convention met to improve the government
of the United States.
• Constitutional Convention held in Philadelphia in 1787
• Convention leaders included James Madison, Benjamin Franklin, and
George Washington.
• Given authority to improve and amend the Articles of Confederation.
– Delegates decided to create a new U.S. Constitution.
Articles of Confederation distribution
of government power
Powers
Articles of Confederation
Imposing taxes
Congress could request states to pay taxes
National courts
No system of national courts
Executive
No executive with power. President
supervised congress
Amendment
13/13 needed to amend
State Representation
Each state received 1 vote regardless of
size
War powers
Congress could not draft or maintain a
national army
Interstate commerce
No control of trade between states
Interstate disagreements
Complicated process of negotiation
Sovereignty
Sovereignty resides in states
Passing laws
9/13 needed to approve new laws