Division:   Nationalists  versus federalists, national power versus state power, 1776-1789:  T

here was a long division and competition between the states and the Congress over the power to finance the Revolution and at bottom, the power to tax.   In these 13 years, the shifts in the ability to raise money, to tax, and to spend money essentially determined whether the national government (Congress) or the states were supreme.  (What follows is too much detail, and should appear in a condensed form.)

1. first period (1775-1779). Congress had power to purchase, using paper currency mostly--ultimately $226 million of it. In turn, it was respected.  Depreciation ended that ability by 1779 when dollar was 62:1 and got worse. The inability of Congress to tax citizens of the U.S. and make the money valuable became obvious.  Respect for Congress declined. Concurrently, the states began to pick up more of the expenses/bills, and pay them. Creditors and soldiers look increasingly to states for payment.

2. second period (1779 or so to 1781). States obtain predominant and even exclusive power by taking over the various expenses of the war and paying them. Economic considerations have caused this shift on power in the nation.

3. third period (1781-1783). Due to impatience, disillusionment with the radical revolutionaries and states-power men, the Congress turned conservative and nationalist and ready to reinvigorate the national government.  Congress empowered Robert Morris to act: Bank of U.S., call for specie from states, denial of state contributions to army, impost amendment. For two years, the credit and payment by the Congress improved. But the victory ended the need for Congress to be able to pay for any war & army, and the Congress and Pennsylvania state legislature dismantled Morris' programs.

4. fourth period (1783-1789). The lack of need for national fiscal powers (esp to tax) caused a neglected, weak Congress. States once again become the sole source of anyone's expectations that debts from the war would ever be paid off--pensions, salaries, bonds, etc.

[5. last period--sequel--is the ratification of Constitution and all its empowerment of national government by having the power to tax, regulate trade, and more].