What did the monetary system look like under the Articles of Confederation?  

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In short, it was a mess. The Articles of Confederation allowed each state to print and issue its own money. Article IX of the document gave the national government the authority to regulate the country's money and the power to issue a national currency. However, it also allowed each state to issue its own money. This made trade between different states and with other countries exceedingly complicated and inefficient. Also, the national government's ability to actually regulate the monetary systems in the country was very weak and ineffective.

With no strong central monetary oversight, many states issued currency at high rates without consideration for the inflation that it caused. Many people had little faith in the value of their currency. Furthermore, the national government was unable to levy its own taxes and had to rely on the dubious currency given to it by the individual states in order to operate.

It is no surprise that when the Articles of Confederation was replaced by the United States Constitution, a central, uniform monetary system replaced the previous one.

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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.

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