American History: Need to Know Part 2

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By David P Shirk

Chapter 2 – Aftermath

And so America was now her own. She entered this new time bloodied, broken, poor, and uncertain as to what would happen next.

March 1, 1781. The Articles of Confederation were signed into being as the first formal constitution of the new Nation as the Revolutionary War drew to a close. Not to say that it was not a long time in coming, quite the opposite actually- it just never had the freedom to do it. At this point, congress became the Congress of the Confederation. In these articles, each state had its own sovereignty, freedom, independence, power, jurisdiction, and rights independent of the central congress. It should also be noted that only 7 congressmen were aloud per state, and each state only counted as one vote. The articles of confederation covered a great deal more then that, but those are a few that lead into the next event – the drafting of the Constitution.
Before the signing of the constitution on June 21, 1788, many things happened. As the Revolutionary War ended, and other countries officially recognized the US as an independent nation, other problems began to arise. Promises to veterans were broken, congress did not meet on a regular basis, and land agreements and claims remained unsettled. At this time, less then ten percent of the national debt was owed to France. The rest of the debt was to the American people and to the states who had lent horses, houses, and given logistical support for the war. I said it once, and I will say it again – war is never good for the economy.
In many ways, the new country was beaten. Tobacco and sugar farms grew less in favor as cotton was proving to be more profitable. Each state was beginning to coin its own money to use as currency as no real standard had yet been adopted. This currency was rarely if at all accepted by the rest of the world as there was little ‘hard money’ to back it. Other nations had centuries of wealth accumulation, while America was still trying to establish herself.
These issues along with a myriad of others were the reason for drafting the Constitution.
The constitution is a very unique document in many ways, and is taken entirely too lightly in modern day ideology. I am not saying it was perfect. Our fore fathers knew it was not perfect which is why they made it Amendable. One thing they did not count on however, is the shifting of mindsets as the generations wore on.

Before you read on, please read the constitution. It is your right, and your responsibility to know what it contains and why. If you do not, then you have only yourself to blame when one day you wake up to the realization that your freedoms are gone.

The Constitution is the most important document in all of American history. When read with an understanding of the times, it refers to all the reasons why America is unique, why she became great, and the issues that needed changing.
Before the Revolution, Americans had to pay more then they could afford in taxes to pay for a war that they were placed smack dab in the middle of. When they protested, the taxes were increased, and in some cases they were killed. So the new rules on tax collection and other levies were defined, and were lenient compared to what they had been.
Before the revolution, American had only a small colonial army, leaving her untrained and unprepared to defend herself if attacked. So a provision was set in place on the maintenance of militias.
Before the Revolution, to oppose the King of Britain directly was certain death. The first and second Amendment of the constitution gave two defenses against this: Freedom of Speech and the Right to bear arms. This means that the Americans could voice their objections without worry of retaliation. And in the words of George Washington – ‘Guns are the people’s liberty teeth’.
And so on, and so on. Of course back then you had corrupt politicians as well. Had it not been for minds like Jefferson, Adams, Franklin, and the like, the constitution would probably not be the same.
However I am getting ahead of myself. Context is key here, so let me continue the timeline.

The Three-Fifths Compromise in 1787 was made to prevent civil war. Many in the North wanted to abolish slavery, and many in the south would not hear of such a thing. Being so soon after the Revolutionary War, the founders knew how delicate the Nation was, and was ready to make a deal that would just put off the inevitable.
In deciding how many delegates each state was aloud to have, the Northern representatives insisted on the number be in proportion to the states population so that everyone may receive fair representation. The South had a problem with this because a good percentage of their population was slaves, and not counted in the population. The south refused to give up slavery, and the north was pushed into a hard space, hence the ‘3/5th’s compromised’ which read as thus: ‘Representatives and direct Taxes shall be apportioned among the several States which may be included within this Union, according to their respective Numbers, which shall be determined by adding to the whole Number of free Persons, including those bound to Service for a Term of Years, and excluding Indians not taxed, three fifths of all other Persons’ . The ‘all other persons’ referred to were the slaves. So slavery was aloud to continue in exchange for the country to remain as a whole. The Constitution was adopted on September 17, 1787.
The following year, Georgia, Connecticut, Massachusetts, Maryland, South Carolina, and New York all officially become part of the Unites States. In 1788, the Great New Orleans fire kills 25% of its population, and destroys 856 buildings. At that time, that territory belonged to Spain until later being sold to the US as part of the Louisiana Purchase. Most of the town was ruined. It should also be noted that during this time, France is a boiling pot, ready to start its own revolution.
February 4th, 1789. George Washington becomes the first president of the United States. On July 27th, the Department of Foreign Affairs (now the Department of State) is established, soon followed by Department of Treasury, and the War Department.
The Department of Treasury is one of the most notable, and because it comes in very important later on, I will go more into depth. This entity is met to control the collection of all taxes, levies, etc. and with the permission of congress and the president, allocate the funds as needed. It is also responsible for securing funds from foreign investors and government. After the Revolutionary War was over, the US was left with a huge debt that was at the time solved by issuing more money. The common currency collapsed by 1781 trading entirely to low against hard (monies with real backing) currency, leading to the phrase ‘Not worth a Continental’. This simply means that more money was printed then can be backed with anything of solid value.
Alexander Hamilton was the first Secretary of Treasury and strictly clung to the one-for-one dollar value. He said ‘that is the price of liberty’. He based his ability to repay the nations debt off of the idea that the Nation would become much more Industrious, and therefore ship out more goods. He would then collect excise duties from shipments, and thus pay the debt. To put this in perspective, we currently use ‘fractional reserve banking’. This means that for every dollar lent to the government, the Federal Reserve Board (which I will cover later), will guarantee x amount to its main branches. For every dollar given to these banks, they will in turn grant the smaller banks that amount times 10 on loan. By the time it reaches your wallet, it’s real worth is less then 10 cents. Think about that for a minute.


The War Department created then was done so with the French and Indian War, and the Revolutionary War still to recent a memory. Realizing their vulnerability to the rest of the world, this is one of those necessities that was met to be strictly used to maintain US defense. It should be kept in mind that the mindset our forefathers was not ‘to spread democracy to the rest of the world, and to ensure their freedom’. As a matter of fact, it was nothing like that at all. Such quotes come to mind as ‘be friends to all nations, be allies to none’, and ‘If Tyranny and Oppression come to this land, it will be in the guise of fighting a foreign enemy’. Franklin and Madison.

Then in 1791, the Bank of the Unites States was brought into being. After the Revolutionary War, the US still had debts to pay, and owed a lot of money to a lot of soldiers- mostly those in the northern states. Alexander Hamilton who was the Secretary of the Treasury was made responsible for this, and needed a solution. Being that Americans were so set against taxes, Hamilton tried to encourage the States to pay for the soldiers back pay. This did not happen so Hamilton found himself in a bit of a crunch. At the time, the country had over fifty different currencies in circulation. These monies were not universally accepted and made commerce a pain. Earlier I referred to the phrase ‘not worth a Continental’. The continental was fiat currency used as a standard up to that point in time, and had no other backing then ‘faith and credit’ of the US government.
However instead of choosing one form of currency and backing it with gold in an amount agreed up by congress, allowing regular banks to deal with it, it was turned over to Bank of the United States. The south had protested against it. As did Madison and Jefferson, saying it would be unconstitutional and create many other problems as well. Well Hamilton must have been a great talker, because he somehow got the bill through. The two main things about this bill I would like to point out that even Hamilton knew to do, would prevent this new monster from getting out of control. 1- It was forbidden to buy government bonds (today the Federal Reserve buys ours all the time), and 2- It could be audited by the Secretary of Treasury at least once a week. However to fund its initiation, Hamilton made the mistake of taxing liqueor etc., which caused the Whiskey rebellion (and just think, we don’t say a word today where we have over 50 kinds of taxes). Either way, a new precedent was set, and would lead to an ever increasing issue of credit – something we take for granted today, and rely too much on.
In 1794 Eli Whitney patented the cotton gin. This invention made cotton cheaper in price as it increased the amount available through faster processing. As such, more and more land was cleared to make cotton plantations that created more the perceived need for more labor. At the time, the cheapest source of labor was slavery. While many of the Northern States spoke out against slavery, it would not be until during the Civil War when they were officially set free on paper.

And that is about it in a nut shell for the 1700’s, and the founding of our country. Stage one of this experiment was how would this nation stay unified with such a wide array of beliefs. The answer was compromise. This was all because just like we are today, America was stubborn back then as well. Stage two was finding out how far the compromise would be aloud to go. In this case, the price was consolidating all of the states under ‘one roof’, creating a central bank, and by allowing slavery to continue. Stage three was to find out what direction the country would go in with its new laws. With a questionable new monetary system in place, a department to help defend the new nation, and a foreign department to aid in relations and trade, we were off to a fairly rocky start. It is unfortunate that the darker nature of people is what it is.
Slavery remained in play. Power struggles began to take hold in politics. For all the good it had accomplished, the new America is about to learn what happens when a wrong is not righted, and it is ignored as time and events progress.

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