Historians once characterized the 1780s as the "critical period" in American history, when the new nation, saddled with an inadequate system of government, suffered crippling economic, political, and foreign policy problems that threatened its independence. Although it is possible to exaggerate the country's difficulties during the first years of independence, there can be no doubt that the country did face severe challenges.
One problem was the threat of government bankruptcy. The nation owed $160 million in war debts and the Congress had no power to tax and the states rarely sent in more than half of Congress's requisitions. The national currency was worthless. To help pay the government's debt, several members of Congress proposed the imposition of a five percent duty on imports. But because the Articles of Confederation required unanimous approval of legislation, a single state, Rhode Island, was able to block the measure.
The country also faced grave foreign policy problems. Spain closed the Mississippi River to American commerce in 1784 and secretly conspired with Westerners (including the famous frontiersman Daniel Boone) to acquire the area that would eventually become Kentucky and Tennessee. Britain retained military posts in the Northwest, in violation of the peace treaty ending the Revolution, and tried to persuade Vermont to become a Canadian province.
The economy also posed serious problems. The Revolution had a disruptive impact especially on the South's economy. Planters lost about 60,000 slaves (including about 25,000 slaves in South Carolina and 5,000 in Georgia). New British trade regulations--the Orders in Council of 1783--prohibited the sale of many American agricultural products in the British West Indians, one of the country's leading markets, and required commodities to be shipped on British vessels. Massachusetts shipbuilders, who had constructed about 125 ships a year before the war, built only 25 ships a year after the war. Merchants, who had purchased large quantities of British goods after the war, found it difficult to sell these commodities to hard-pressed Americans. States protected local interests by imposing tariffs on interstate commerce.
Yet for all these problems, it seems clear in retrospect that the 1780s marked a crucial period in the development of the American economy. Output by farmers increased sharply during the 1780s--a remarkable development given the absence of any new farm machinery. Farmers also significantly shifted their investment away from cattle and farm implements to more liquid forms of wealth, such as bonds and mortgages. Meanwhile, a growing number of farm households began to produce goods previously imported from Britain. At the same time, merchants, freed of British trade restrictions, had opened commerce with Asia. But to many Americans, the signs of economic recovery remained faint.
Economic conditions were particularly troubled in Massachusetts. The British Orders in Council of 1783 dealt a severe blow to the state's agricultural, shipping, and shipbuilding trades. Making matters worse, the state legislature had voted to pay off the state's revolutionary war debt in three years. Between 1783 and 1786, taxes on land rose more than 60 percent between.
Desperate farmers in western Massachusetts demanded cuts in property taxes and adoption of stay laws to postpone farm foreclosures. The lower house of the Massachusetts legislature passed relief measures in 1786, but eastern creditors persuaded the upper house to reject the package.
Local courts started to seize the property, farm implements, and even the furniture and clothing of farmers like Daniel Shays (1747-1825), a Revolutionary war veteran. In late August 1786, a thousand farmers in Northampton County shut down the country court. Frightened state leaders in Boston appealed for public support. Easterners raised 5000 pounds sterling to send an army led by the former Continental general Benjamin Lincoln to suppress the rebellion.
In January 1787, Shays and his followers attacked the federal arsenal at Springfield, but were driven off. In early February the army routed the rebels. These setbacks, along with tax relief from the assembly and amnesty for the rebellion's leaders, ended the uprising. Shays' Rebellion, however, held broader significance. It convinced national leaders that only a strong central government could save the republic from chaos.
Whereas information has been given to the Supreme Executive of this Commonwealth, that on Tuesday last, the 29th of August, being the day appointed by law for the sitting of the Court of Common Pleas and Court of General Sessions of the Peace, at Northampton...a large concourse of people, form several parts of that county, assembled at the Court-House...many of whom were armed with guns, swords, and other deadly weapons, and with drums beating and fifes playing, in contempt and open defiance of the authority of this Government, did, by their threats of violence and keeping possession of the Court-House until twelve o'clock on the night of the same day, prevent the sitting of the Court, and the orderly administration of justice in that county:
And whereas this high-handed offence is fraught with the most fatal and pernicious consequences, must tend to subvert all law and government; to dissolve our excellent Constitution, and introduce universal riot, anarchy, and confusion, which would probably terminate in absolute despotism, and consequently destroy the fairest prospects of political happiness, that any people was ever favoured with:
I have therefore thought fit, by and with the advice of the Council, to issue this Proclamation, calling upon all Judges, Justices, Sheriffs, Constables, and other officers, civil and military within this Commonwealth, to prevent and suppress all such violent and riotous proceedings....
And I do hereby, pursuant to the indispensable duty I owe to the good people of this Commonwealth, most solemnly call upon them, as they value the blessings of freedom and independence, which at the expense of so much blood and treasure they have purchased--as they regard their faith, which in the sight of God and the world, they pledged they would not disappoint the hopes, and thereby become contemptible in the eyes of other nations, in the view of whom they have risen to glory and empire--as they would not deprive themselves of the security derived from well-regulated Society, to their lives, liberties, and property; and as they would not devolve upon their children, instead of peace, freedom and safety, a state of anarchy, confusion and slavery.…