1. Critical Period, 1780s Reaction to economic depression and social unrest

2. Conflicts with other Nations, 1783-1787 (External Trade Shock, Negative Supply shock)

3. 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.

4. 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.

5. 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.

6. 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.

7. Articles of Confederation distribution of government power PowersArticles of Confederation Imposing taxesCongress could request states to pay taxes National courtsNo system of national courts ExecutiveNo executive with power. President supervised congress Amendment13/13 needed to amend State RepresentationEach state received 1 vote regardless of size War powersCongress could not draft or maintain a national army Interstate commerceNo control of trade between states Interstate disagreementsComplicated process of negotiation SovereigntySovereignty resides in states Passing laws9/13 needed to approve new laws