Problems at Home and Abroad Because of its weakness, the Confederation government had trouble with financial issues. Continentals, paper bills the Continental Congress printed during the war, did not...

Extracted text: Problems at Home and Abroad Because of its weakness, the Confederation government had trouble with financial issues. Continentals, paper bills the Continental Congress printed during the war, did not hold their value. By 1781, the currency had depreciated (dih • PREE• shee • ayt • ed), or fallen in value, so far that it was worth almost nothing. As more continentals appeared, people realized that Congress could not exchange or trade in the bills for gold or silver. The public began to doubt the money was worth anything. In 1779 it took 40 continentals to buy a singlo Spanish silver dollar. By 1781, a person needed 146 continentals to buy that Spanish coin. "Not worth a continental" became a common saying. At the same time, the price of food and other goods soared. In Boston and some other areas, high prices led to food riots. In the 1780s, the Continental Congress faced a large debt. During the Revolutionary War, Congress had borrowed money from American citizens and foreign governments. It still owed Revolutionary soldiers pay for their military service. Without the power to tax, the Confederation could not easily raise money to pay its debts The Continental Congress asked the states for money, but it could not force the states to pay. In fact, the states provided less than half of the money the federal government asked them to contribute. Depreciate: 14. What happened to the money the Continental Congress printed? 15. What power did the Confederation lack? How did the Congress raise money to pay its debts? Plan for Import Tax Congress faced a collapse of the country's finances. In 1781 it created a department of finance led by Philadelphia merchant Robert Morris. While serving in Congress, Morris had proposed a 5 percent tax on imported goods to help pay the national debt. The plan required a change to the Articles of Confederation. Twelve states approved the plan, but Rhode Island opposed it. Under the Articles, the single "no" vote was enough to block the plan. A second effort in 1783 also failed to win approval by all the states. The financial crisis grew worse. 16. Why did the plan for a 5 percent tax on imported goods fail?