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The Articles of Confederation created a very weak central government, with its powers vested in a single elective body, the Continental Congress. The government lacked an independent executive (though there was an elected President of Congress) and did not have a national judiciary. Within this arrangement, described by the preamble to the Articles as a "firm league of friendship," the states retained their sovereignty, and Congress had virtually no coercive power over them. It lacked the power to tax, to regulate interstate commerce, or even, as it turned out, to raise an effective armed force in time of crisis. So the division of power between the states and the national government located ultimate power with the states.
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