What did the monetary system look like under the Articles of Confederation?
The monetary system under the Articles of Confederation was not a solid one economically. Under the Articles of Confederation, both the state governments and the federal government printed paper money. Thus, there were United States dollars and dollars from each of the state governments. This led to significant economic problems.
With no unified currency and no central control of it, states were free to print as much paper money as they wanted to print. This led to inflation, as too much money was available in the economy. People began to doubt the value of the paper money, and in some cases, they wouldn’t accept it as a form of payment. Instead, they demanded payment with gold or silver coins. This sometimes led to rebellions, such as Shays’ Rebellion, where farmers in western Massachusetts were upset because they were losing their farms when they couldn’t come up with the gold and silver to pay their mortgages.
These financial problems helped encourage our leaders to decide to write a new plan of government, which is the Constitution.