1. The New Nation Faces Challenges
Chapter 5, Section 2
The New Nation Faces Challenges

2. Relations with Other Countries
Under the Articles of Confederation, Congress (the federal government) could not force any state to provide soldiers
Continental Army disbanded after the conclusion of the Revolutionary War
Without an army, the new American government found it difficult to protect its citizens

3. Trouble with Britain Difficult to enforce international treaties
British slow to turn over their forts on the American side of the Great Lakes
Americans needed control of the forts in order to protect their newly acquired land and gain access to the fur trade
Americans were warned by a British official not to seize the forts by force
Told that any attempt to do so would be met with a force of thousands of British soldiers who had settled in Canada after the Revolutionary War

4. Trade with Britain
After the Treaty of Paris, Great Britain closed many of its ports to American ships
Britain also placed high tariffs on imports/exports
Taxes on imports/exports
On rice, tobacco, tar, and oil that were mined in the United States
Merchants had to raise prices to cover the cost of the tariffs, causing consumers to pay higher prices for goods

5. Trade with Spain
1784: Spain closed the lower Mississippi River to United States shipping
Western farmers/merchants furious
Utilized the Mississippi to send goods to eastern and foreign markets
Negotiation attempts with Spain failed because the plan did not receive a majority vote in Congress
Spain grew tired of waiting and broke off negotiations
Many state leaders began to criticize the national government
Began to favor a stronger national government

6. Impact of Closed Markets
Closing of markets in the British West Indies seriously impacted the American Economy
American farmers could no longer export their goods to the British West Indies
Forced to hire British sailors
American exports dropped while British goods flowed freely into the United States

7. Impact of Closed Markets
Unequal trade caused serious economic problems for the new nation
Ability of the British to sell their goods in the United States at much lower prices than locally made goods hurt American businesses
Confederation Congress could not correct the problem because it did not have the authority either to pass tariffs or to order the states to pass tariffs
States could offer little help
If one state passed a tariff, Great Britain could simply sell their goods in another state

8. Impact of Closed Markets
States were uncooperative in trade matters
Acted only in their own interest rather to improve trade of the whole country
Trade issues led to American merchants seeking new markets for their goods
China, France, the Netherlands
Great Britain still remained America’s most important trading partner

9. Economic Problems: Trade Among States
Confederation Congress had no power to regulate interstate commerce
Trade between two or more states
States followed their own trade interests
Trade laws differed from state to state
Difficult for merchants to cross state lines in business

10. Economic Problems: Inflation
After the war, states found it difficult to pay off their war debts and struggled to collect overdue taxes
The printing of large amounts of paper money led to inflation
Occurs when there are increased prices for goods and services combined with the reduced value of money
Money had little to no real value because states did not have the gold or silver reserves to back it up

11. Economic Problems: Weak Economy
Rhode Island
Printed large amounts of paper money worth very little
Pleased debtors because they could pay back their debts with paper money worth much less than the amount in coinage they had borrowed
Upset creditors (people who loan money)
Hundreds fled from Rhode Island to avoid being paid back with worthless money
Loss of trade with Britain and inflation created a depression
Period of low economic activity combined with a rise in unemployment

12. Shays’s Rebellion Each state handled economic problems different
Massachusetts refused to print worthless money
Massachusetts tried to pay its war debts by collecting taxes on land

13. Shays’s Rebellion: Heavy Debt for Farmers
Massachusetts tax policy hit farmers hard
As landowners, they had to pay the new taxes
Had trouble paying their debts
Courts began forcing farmers to sell their property
Some farmers had to serve terms in debtors’ prison
Others had to sell labor

14. Shays’s Rebellion: Heavy Debt for Farmers
Many state governments did not care about poor farmers
In some cases, farmers actually owed leaders $

15. Shays’ Rebellion: Farmers Rebel
August 1786: Farmers in 3 western Massachusetts counties revolted
Angry citizens closed courts in western Massachusetts
Reasoning was simple: with courts shut down, no one’s property could be taken
Daniel Shays
Poor farmer and Revolutionary War Veteran
Led hundreds of men in a forced shut down of the Supreme Court of Massachusetts

16. Shays’s Rebellion: Farmers Rebel
State government ordered the farmers to stop the revolt under threat of capture and death
Only made followers more determined
Shays’s Rebellion
Uprising of farmers to protest high taxes and heavy debt

17. Shays’s Rebellion: Shays’s Defeat
Shays’s forces were defeated by state troops in January 1787
Many rebels in prison by February 1787
14 leaders sentenced to death
State freed most of the rebels including Shays’s
Knew many citizens agreed with the rebel cause

18. Calls for Change
Shays’s Rebellion showed the weakness of the Confederation government
When Massachusetts asked the national government to help put down Shays’s Rebellion, Congress could offer little help
More Americans began to call for a stronger central government
Need to leaders to be able to protect the people in times of crisis

19. Calls for Change
1786: Virginia called for a national convention regarding the economic crisis and ways to amend the Articles of Confederation
Annapolis, MD
Poor attendance
Due to poor attendance, leaders such as James Madison and Alexander Hamilton called on all 13 states to send delegates to a Constitutional Convention in Philadelphia set for May 1787
Revise the Articles of Confederation