The Articles of Confederation established a system of government without a central authority, in which ultimate sovereignty resided with the individual states. The Articles, and the concept of radical republicanism on which they were based, had proved remarkably successful at mobilizing American patriots from different states to fight and defeat the British.
Yet the Articles, and the system of government they established, proved incapable of dealing with the political and economic challenges of the new nation. The lack of centralized government institutions prevented the United States from developing as a nation and taking its rightful place among the international community.
The country had incurred substantial debt in order to pay for its war against the British. Yet without a central bank or any kind of federal authority, it was unable to pay for the war. The American economy, already reeling from the aftereffects of the war, was damaged further by the loose, decentralized structure of the Articles of Confederation.
Under the Articles of Confederation, territorial disputes with foreign powers could not be fully addressed or resolved. Although such disputes affected the security of the United States as a whole, they could only be dealt with at the local level by individual states. The lack of a central government made it impossible for the United States to adopt a firm, coherent policy when it came to dealing with foreign powers.
Issues of domestic law and order were inadequately dealt with under the terms of the Articles of Confederation. If there was a serious public order disturbance—such as Shay's Rebellion, for example—it could only be handled by the state authorities. Yet if the individual state concerned was unable or unwilling to deal with the relevant disorder, then there was no possibility of concerted action at a nationwide level.