Building the State (1781-1797): The Demise of the Articles of Confederation

Summary

As the evidence piled up to suggest that the Articles of Confederation were an ineffective framework of government, criticism poured in from all areas of the nation. The depression that struck in 1784 hit Massachusetts particularly hard. Despite financial hard times, the state legislature voted to pay off the state's war debts by 1789. This necessitated a huge tax hike, which further hindered the financial situation of the majority of Massachusetts' residents. Meanwhile, the continued inflation of paper money elicited private creditors to demand payment of all debts on a short-term basis, and in specie (gold and silver coinage). This was a drastic reversal of the common custom of small farmers and poor laborers, who traditionally repaid debts with goods and services, and were often given years to make good on their debts. For these people, the prospect of repaying debts with hard currency in these financially trying times was simply not possible.

Farmers began to hold public meetings to discuss what they termed "the suppressing of tyrannical government" in the state of Massachusetts. After months of discussion and passive resistance to the actions of the state, violence broke out in what became known as Shays' Rebellion. In August 1786, Daniel Shays led about 2,000 men in an attempt to close the courts in three western Massachusetts counties to prevent the legal proceedings that would lead to foreclosure on farm mortgages. Shays' men were beaten badly by state troops in a number of conflicts, most notably at Springfield on January 25, 1787, where Shays' men attempted to seize the federal arsenal. After the uprising was crushed, Shays was condemned to death and many of his men were arrested. Though Shays' Rebellion had no immediate effect on the policy of the state legislature, during 1787, a group of Shays sympathizers gained control of the legislature, cut taxes, and pardoned Shays and his men for their parts in the uprising.

Most of the nation was far more tranquil than western Massachusetts. The Mid-Atlantic and Southern states all experienced greater success emerging from the depression of the mid 1780s, and most small farmers throughout the nation lived in closed communities in relative isolation from the actions of the national government. Still, the vociferous critics of the Confederation were gaining strength during the mid 1780s. The political leaders of all of the states could not help but listen.

From September 11 to 14, 1786, shortly after the outbreak of Shays' Rebellion, delegates from Virginia, Delaware, Pennsylvania, New Jersey, and New York met at the Annapolis Convention. The originally proposed purpose of the meeting had been to establish and promote interstate commerce. However, in light of the mounting criticism of the Articles of Confederation, the delegates turned their focus to what could be done to alleviate the tension between the nation's citizens and their government. They ended up proposing a convention to consider the amendment of the Articles of Confederation. Congress agreed that the Articles were in need of review, and asked that the states appoint delegates to convene in Philadelphia in May 1787.

Commentary

That Massachusetts would have been the hardest hit by economic depression is not surprising considering the economic basis of the state in relation to the international economic position of the United States under the Articles of Confederation. Massachusetts' main source of income was through its ports. A high population of craftsmen and merchants created products to export to the world. Until the 1780s, Massachusetts' major trading partners were the British Isles and the British West Indies. However, in response to the insufficient powers granted to the central government by the Articles of Confederation, Britain had taken measures to restrict American trade with the British Isles, and had closed the ports of the West Indies entirely to American trade. This was one of the major causes of the economic depression of 1784, and while other states were able to find ways to climb out of the depression, Massachusetts had few options. Many merchants blamed the weakness of the national government for the failure to open the restricted ports or otherwise retaliate against British actions.

The demand for hard currency in specie (coined money), which arose in Massachusetts during the economic depression, sprung up from fears of devaluation of paper money in the state. Foreign creditors, who doubted the ability of the state to climb out of the depression, and feared the instability of the government, first started to demand payments in specie. They were followed by the state, which began to collect taxes in specie only. Due to these developments, the demand for payment in specie became universal. The combination of continued economic depression due to the inability of the government to break down barriers to trade, high taxes, and the demand for all payments in specie, caused many to speak out against the state and national governments and ultimately led to the outbreak of violence in Shays' Rebellion.

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