The new Congress immediately began printing paper currency to pay for the Revolutionary War. The money became the standard U.S. currency during the war, but when hard times hit and inflation skyrocketed, these Continental dollars became worthless. Many Americans, especially soldiers, small business owners, and farmers, were hit hard. Congress requested that the states increase taxes to help pay for a new national currency, but most states refused and instead printed their own paper money. This, too, succumbed to inflation, and by the end of the war, Americans had fistfuls of worthless money.
Congress had much more success dealing with U.S. territories west of the Appalachians. Prior to the Revolutionary War, many of the original thirteen colonial legislatures made territorial claims to these lands. Interstate disputes over these western areas were common and heated: Maryland (which had no western claims) even refused to ratify the Articles of Confederation until the other states had ceded their claims. The conflict was resolved in 1781 when Virginia ceded all western lands to Congress’s control so that all Americans could benefit from the land. Other states followed suit, and within a few years the national government was responsible for governing these territories.
Congress then passed the Land Ordinance of 1785 to establish order in the West. The ordinance stipulated that new western towns were to be thirty-six miles square, with one square mile set aside for schools. All public lands were to be auctioned off to the highest bidders, providing all Americans the chance to migrate and settle in the West.
Later, Congress passed the Northwest Ordinance of 1787to establish a process for admitting these territories to the Union as states. Each territory was to be governed by Congress until it contained 5,000 free, white males. Then settlers could vote whether to become a permanent state on equal footing as all the other states in the Union.
The Northwest Ordinance also abolished slavery in the territories and granted freedom of religion and the right to trial by jury. Although the ordinance promised decent treatment to Native Americans, it did not, in reality, extend these rights to them. In fact, the United States obtained much of this land by extortion and violence against Native Americans.
These land ordinances were the only major successes that Congress had under the Articles. The Northwest Ordinance proved incredibly successful and influential because it allowed the small country to grow without devolving into an undemocratic empire. Unlike European powers that exploited their territories as colonies to be mined, Congress declared that all American territories could become fully equal states with the same status and privileges as the original founding states. In later years many Americans would interpret this to mean that it was their duty to expand democracy as far west as they could.