ECON 4130 Lecture Notes - Lecture 4: Homestead Acts, Voting Age, Commercial Paper
23 Apr 2018
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Early national policy: financing the national government: the weakness of the articles of confederation and in ation. Confederation (rati ed in 1781) was the original organization of the states into a national union. It provided at least a structure for national government (although the ties between states were relatively weak). The primary weakness of the articles of confederation is that they did not give the federal government power to levy taxes. It left taxing power solely with the states. The army required a great deal of resources. The continental congress had a dif cult time supporting it because the individual colonies did not want to contribute and congress did not have the authority to tax. Congress had to deal with a free-rider problem. A state could share in the bene ts of having an army even if it did not contribute. So, the congress turned to 2 ancient methods of war. The new governments"s ability to borrow was limited.
