Yessyca Rivera

ECON 1740
Chapter 7

The War
The Revolutionary war officially began on April 19th, 1775, and lasted 6 years. Trade
was an important factor in the war for supply of arms and ammunition. During mid-1775, the
colonies had shortages in military essentials like powder, flints, muskets, knives, salt, shoes,
woolens, and linens. During the first 2 years of the war the British maintained an effective
blockade of American ports. Savannah was taken in late 1778 and in 1780 Charleston was taken
also. Most of the major ports in New England and the Middle colonies were tightly sealed until
1778. The colonies still engaged in international trade, with formal treaties like France in 1778,
and followed by Holland and Spain. Between the years of 1778 and 1782, France, Holland,
Spain, and their possessions all actively traded with the colonies. The goods in and out of the
colonies remained below prewar levels. Smuggling and legal trade overseas only partially offset
the drastic trade reductions with Britain. The colonial economy then started to become more self-
sufficient, that even women were employed to spin materials in their homes for the established
textile plants. In Philadelphia nearly 4,000 women were employed for the textile plant. There
was also an increase in production of alcoholic beverages like beer and whiskey.
Because of the war, the new nation suffered an economic hardship. Most goods were
becoming more difficult to obtain, because the cost of them were rising. Because of the rising
prices, investors were encouraged to turn from commerce to manufacturing.
All the 13 colonies had their own individual constitutions by 1780. Then they legally
became unified by the Articles of Confederation, written as a source of political agreement as
well to wage the war. Because the Americans refused to pay prewar British creditors, Britain
excluded the United States from valuable commercial privileges. And refused to withdraw
British troops from the American soil. France soon refused to extend their courtesies, Spain tried
to close lower Mississippi to American traffic. France refused to extend the courtesies, and Spain
tried to close the lower Mississippi to American traffic. The national government appeared too
weak to negotiate improvements for the economy and military.
 Between 1775 and 1781, the war was financed by paper money, making the biggest
problems financial. It was a lot of money that was used. Nearly $200 million in paper money,
$200 million continental money, and more than $150 million in commissary certificates of the
central government money was used to defray war expenses. Congress and many states failed to
make interest payments on their debts during the war and 1780s. The continental value decreased
because there was no taxation powers to back it.

The Constitution
In 1787 the convention met in Philadelphia to create a new government. George
Washington who was president of the convention, had sent the completed document to the states
for ratification. On June 21st, 1788, New Hampshire cast the crucial 9th vote in favor. It was
then taken in effect in beginning March 4th, 1789 by Congress.
The Constitution allowed slavery to continue but limited the importation of slaves. It was
only to 20 years, which then ended in 1808. There was a tax up to $10 per imported slave. Each
state was required to recognize and respect the laws of other states, meaning that a runaway slave
going to other states had to be returned. Treating and referring to them like stolen property. It
was a discussion of whether a slave was viewed a property or as a person, and the Constitution
viewed them in a sense as both. It viewed them as property and counted each as three-fifths of a
person. The reason behind them each being viewed as only three-fifths was for determining each
state’s membership in the House of Representatives because it was it was based on population.
With the Constitution the power to tax was delegated to the federal government,
empowered to pay a portion of debts. The central government had the right to mint coins and
regulate coinage because of the Constitution. States weren’t allowed to trade within themselves,
only Congress had that authority. The Constitution banned states and their legislatures from
issuing paper money, not allowing states to have many rights. But they were left to empower to
charter banks, that were private and can issue paper money. It authorized the federal government
to maintain an Army and Navy and establish roads and post offices. The tenth Amendment was
added to the Bill of Rights, that allowed states to create their own laws such as civil conduct,
licensing, taxes, businesses, and to use police power to enforce these laws. The Constitution laid
the foundation of today’s property rights.
Independence and Economic change
After the Constitution was created, the nation was outside the walls of the British empire
and the alliances with France and Spain began to crumble. Spain withdrew the wartime privilege
of direct U.S. trade with Cuba, Hispaniola and Puerto Rico, and permitted them to import goods
only from Spain. The United States wasn’t allowed to carry sugar from French Islands and only
in times of need did the French import American flour. New England suffered major losses in
trade because Americans were out from direct trade with the British fisheries. Britain made
American shipbuilders ineligible to trade within the Empire because it labeled all American-built
vessels as foreign. This made the ship production decline.

Trades
The importance of goods began to change as trade patterns changed. In the early 1790s
the most valuable export was bread and flour, not tobacco. There was an increase of food trade
such as salted meats, bread and flour, maize, and wheat. Because of these changes in patterns of
trade, some states improved their economic wellbeing.

Economic Resurgence and War

President Thomas Jefferson and Congress declared the Embargo Act of 1807, that
prohibited U.S. ships from trading with all foreign ports. It then backfired, which then led to the
Non-Importation Act of 1809 that partially opened up trade with prohibitions against Great
Britain, France, and their possessions. It then led to the second war with England within 30
years. In the war of 1812 the British seized more than 1,00 additional ships and blocked almost
the entire U.S. coast.
Export instability had strong leverage effects throughout the economy, because of the
importance of foreign trade. The external and internal forces came to bear on the economy
during the early 19th century.