Effects of the Articles of Confederation

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By — McGraw-Hill Professional
Updated on Feb 4, 2012

The Northwest Ordinance

Congress immediately took steps to resolve the problem of the disputed land in the west. The Land Ordinance of 1785 marked off all the land east of the Mississippi into townships and put up 640-acre lots in the townships for sale, at the minimum price of $1 per acre. One section of each township was reserved for a public schoolhouse. The Land Ordinance of 1787, commonly called the North- west Ordinance, established the rules for governing the Northwest Territory.

US History Articles of Confederation Map 1787


This map shows the borders of the states as of 1787, including the western lands each state claimed. The Northwest Territory includes the present-day states of Wisconsin, Michigan, Illinois, Indiana, and Ohio.

Congress believed that the Northwest Territory would eventually be settled and that the settlers would want to join the United States. Therefore, it established a process by which this would happen. First, the territory should be divided into three to five smaller parcels of land. Second, Congress would appoint a governor, a secretary, and three judges for each territory. Third, when the population of a territory reached 5,000, voters would elect a legislature and send a nonvoting delegate to Congress. Fourth, a territory would become eligible for statehood when the population reached 60,000. The territory would draft a state constitution; upon congressional approval of the constitution by a Yea vote of nine or more states, the territory would become a state.

The Northwest Ordinance also guaranteed civil rights in the territories and banned slavery. Opposition to slavery had been growing among the northern delegates, who were uncomfortably aware of the irony of declaring their own independence while denying it to the African-American population. However, the southerners refused to give up the system of free labor that had brought them so much prosperity, and the Articles of Confederation gave Congress no power to do anything about it. The Northwest Ordinance stated that escaped slaves seeking sanctuary in the territories must be returned to their owners.

The Economy

It quickly became apparent that the Articles of Confederation were not a sufficiently strong basis for a national government. Because Congress had no power over the states, it could accomplish very little. Any new legislation it wanted to pass required the support of nine states, and delegates within a state often could not agree on how to cast their vote, let alone agreeing with delegates from other states.

Because Congress had given itself no power to tax the states or the people, it had great difficulty conducting the Revolutionary War. The troops often went without food, necessary supplies, and new boots and uniforms because there was no way for Congress to purchase these items. States frequently put off paying their share of these expenses into the national treasury, and Congress had no leverage to make them pay more or pay more promptly. George Washington and the other military commanders were probably more acutely aware than anyone of the weaknesses of the Articles of Confederation, since they saw the evidence of these weaknesses every day in their struggles on the battlefield.

During the war, the United States accumulated a substantial debt. After the war ended, Congress had no means of raising taxes to pay the debt. Congress printed and began to circulate paper money, but merchants refused to accept it, claiming that it had no value. Unemployment rose and business activity fell off, causing an economic depression in 1784. Britain had closed some of its markets to American imports, then flooded the United States with inexpensive goods. American merchants could not compete with British prices and quickly began to lose money. The desperate economic situation led to Shays’s Rebellion.

Daniel Shays was a farmer and a Revolutionary War captain. When Massachusetts began raising taxes on land to help the economy recover, and seized land for nonpayment of taxes, Shays and others rebelled. They shut down debtor courts and marched on Springfield, intending to seize an arsenal of weapons stored there. The governor of Massachusetts called out the militia to stop them. When the fighting began in late January 1787, four of Shays’s men were killed. By the end of February, the rebellion had been put down, and political leaders realized that the United States needed a stronger central government.

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