Articles of Confederation

             The Articles of Confederation were established so that state governments had supreme power in some matters, but the national government had supreme power in other matters. The articles greatest governing power was in governing of the western lands. Many problems arose in foreign relations and economic conditions.
             In governing the nation's economic conditions, the Articles of Confederation showed signs of weakness. Congress's biggest economic was due to the war. During the war, the U.S. borrowed money from foreign countries. The U.S. even printed its own money called Continental Currency. Of course after the war, this money became worthless and it created inflation. The war ended up costing the nation $160 million. The Articles also prevented the Congress from enacting and collecting taxes, and an individual article could be amended only if it was approved by all the states. An idea that Congress brought forward to pay back foreign loans was to impose a tariff. Rhode Island was the only state that rejected the Congress's idea, so the tariff wasn't adopted, and foreign loans weren't paid back. A problem caused by this great debt was a struggle between creditors and debtors. The wealthy people that had lent out their money (creditors) favored high taxes, so they would receive the money back that they had lent to the U.S. The downside to high taxes, was that high taxation put many small farmers into debt, and creditors often sued farmers for the inability to pay the taxes. If the creditor won the case, then the farmers land and animals were seized and sold by the government. The printing of the Continental Currency also brought about more struggles between the debtors and creditors. Debtors wanted more of a supply of money to lessen the value, and to pay off their debt with its cheap value. On the other hand, creditors wanted supply of money to keep its worth. These struggles, and the huge debt of the U.