Whatever the achievements of the Confederation government, in the eyes of many influential Americans they were outweighed by its failings. Both the national government and the country at large faced worsening economic problems. To finance the War of Independence, Congress had borrowed large sums of money by selling interest-bearing bonds and paying soldiers and suppliers in notes to be redeemed in the future. Lacking a secure source of revenue, it found itself unable to pay either interest or the debts themselves. With the United States now outside the British empire, American ships were barred from trading with the West Indies. Imported goods, however, flooded the market, undercutting the business of many craftsmen, driving down wages, and draining money out of the country.
A Bankruptcy Scene. Creditors repossess the belongings of a family unable to pay its debts, while a woman weeps in the background. Popular fears of bankruptcy led several states during the 1780s to pass laws postponing the collection of debts.
With Congress unable to act, the states adopted their own economic policies. Several imposed tariff duties on goods imported from abroad. Indebted farmers, threatened with the loss of land because of failure to meet tax or mortgage payments, pressed state governments for relief, as did urban craftsmen who owed money to local merchants. In order to increase the amount of currency in circulation and make it easier for individuals to pay their debts, several states printed large sums of paper money. Others enacted laws postponing debt collection. Creditors considered such measures attacks on their property rights. In a number of states, legislative elections produced boisterous campaigns in which candidates for office denounced creditors for oppressing the poor and importers of luxury goods for undermining republican virtue.