The Articles of Confederation - Finding Finances - Extra History - Part 3

Summary

The script details the financial struggles of the Confederation Congress during the American Revolutionary War, highlighting the appointment of Robert Morris as Superintendent of Finance. Despite his efforts to stabilize the economy with a national bank and proposed tax on imports, Morris faced opposition, particularly from Rhode Island and Virginia, leading to his resignation. The narrative also touches on the discontent within the Continental Army over unpaid wages and the potential for a coup, emphasizing the challenges of a weak central government in the early United States.

Takeaways

• 🏛️ The Confederation Congress struggled financially during the American Revolutionary War, lacking the power to levy taxes and facing a destitute situation.
• 🎵 The Articles of Confederation established a weak central government with a figurehead President of Congress who had limited powers.
• 💼 Robert Morris, known as 'The Financier,' was appointed as the Superintendent of Finance to address the financial crisis, despite his initial reluctance.
• 🏦 Morris established the First National Bank to stabilize the currency and attempted to collect state debts, emphasizing their obligations under the Articles of Confederation.
• 🛃 He proposed a national tax on imported goods to fund the Congress, which was a controversial move considering the war's origins.
• 🗳️ Achieving unanimous consent for the tax from all 13 states was challenging, and ultimately failed due to Rhode Island's refusal and Virginia's withdrawal.
• 💡 Despite setbacks, Morris's National Bank thrived, but accusations arose that he used it for personal and investor enrichment.
• 💔 The Continental Army faced financial hardships, leading to a halt in payments and a promise of future compensation, which strained relations with the troops.
• 🗣️ Some officers, including Alexander Hamilton, sought political office, advocating for a stronger central government to unite the newly formed nation.
• 🛡️ The threat of an army insurrection due to unpaid wages highlighted the urgent need for financial stability and a functional government.
• 🕊️ George Washington's emotional appeal to the troops during a potential coup quelled the unrest and reaffirmed his leadership and loyalty to the Republic.

Q & A

Why did the Confederation Congress struggle to fund the national army during the American Revolutionary War?

The Confederation Congress struggled due to the lack of real leadership and power under the Articles of Confederation, which made it difficult to impose taxes and generate sufficient revenue for the war effort.

What was the role of the President of Congress under the Articles of Confederation?

The President of Congress could only supervise meetings, had no voting power, and could not suggest new laws, which was seen as a demotion by many.

Why was Robert Morris nominated as the Superintendent of Finance?

Robert Morris was nominated due to his success in business, his wealth, and his reputation as 'The Financier.' His experience in converting his merchant fleet into privateer ships and his connections made him an obvious choice to address the financial crisis.

What was Robert Morris's initial reaction to being nominated as the Superintendent of Finance?

Robert Morris was reluctant to accept the position because he knew it would involve implementing unpopular measures such as raising taxes, which was a sensitive issue for Americans.

How did Benjamin Franklin persuade Robert Morris to accept the position of Superintendent of Finance?

Benjamin Franklin appealed to Morris's sense of honor and duty, writing to him and emphasizing the importance of the role in the context of the ongoing war and their shared history of working together.

What significant financial institution did Robert Morris establish after becoming the Superintendent of Finance?

Robert Morris established the First National Bank, which helped create a new stable currency backed by gold and silver.

What was the purpose of the national tax on imported goods proposed by Robert Morris?

The national tax on imported goods was intended to generate revenue to fund the Confederation Congress and help alleviate the financial crisis.

Why did Rhode Island reject the proposed national tax on imported goods?

Rhode Island, being a small state reliant on foreign trade, feared that the tax would disproportionately affect them and harm their economy.

How did the failure of the tax proposal impact Robert Morris's influence and the financial situation of the Continental Army?

The failure of the tax proposal weakened Morris's influence and led to a worsening financial situation for the Continental Army, as they were left without a reliable source of income.

What was the Newburgh Conspiracy, and how did George Washington respond to it?

The Newburgh Conspiracy was a rumored insurrection within the Continental Army, with soldiers demanding immediate payment for their service. George Washington intervened by condemning the conspiracy and reminding the soldiers of their duty and loyalty to the Republic.

What was the outcome of the efforts to pass the tax amendment again, and how did it affect Robert Morris?

The tax amendment failed again, leading to Robert Morris's resignation as he could no longer effectively manage the financial crisis without the necessary support from the states.

Outlines

00:00

🏛️ Struggles of the Confederation Congress and the Appointment of Robert Morris

The Confederation Congress faced immense challenges in funding the American Revolutionary War due to their lack of power to levy taxes or enforce laws. The Congress was essentially a powerless body, electing a President who could only supervise meetings without any legislative power. After the ratification of the Articles of Confederation, the first president of Congress sought to create new leadership roles, most notably appointing a Superintendent of Finance. Robert Morris, known as 'The Financier' and the richest man in America, was nominated for this role despite his initial reluctance. Morris was a successful businessman who had covertly supported the war effort through various means. Once appointed, he took bold steps to stabilize the nation's finances by establishing the First National Bank, demanding state debts be paid, and attempting to implement a national tax on imported goods. However, his efforts were thwarted when Rhode Island and later Virginia rejected the tax proposal, highlighting the limitations of the Articles of Confederation.

05:02

💼 The Financial Crisis and the Threat of a Military Coup

Following the victory at Yorktown, the financial situation of the new United States worsened. The Confederation Congress was unable to pay the troops, leading Robert Morris to stop payments and offer only promises of future compensation. This caused unrest among the soldiers of the Continental Army, who were already underpaid and now faced destitution. Officers began to enter politics, advocating for a stronger central government. Morris, along with Alexander Hamilton, pushed for a tax amendment to raise funds for the army. However, states proposed disbanding the army to avoid further debt. The soldiers, fearing insurrection and potential imprisonment for their debts, threatened rebellion if the army was disbanded. Washington, who had always served at the pleasure of Congress, faced the prospect of being replaced and a potential coup. Hamilton warned of the consequences of a weak Congress, and Washington addressed the brewing conspiracy, reminding the soldiers of their duty and loyalty, thus averting the immediate crisis. Yet, the underlying issues remained, with the tax amendment failing again and Morris resigning, foreshadowing the disintegration of the confederation.

Keywords

💡Confederation Congress

The Confederation Congress refers to the governing body under the Articles of Confederation, which was the first constitution of the United States. It was a weak central government that struggled with issues such as funding the national army during the American Revolutionary War. In the script, the Confederation Congress is depicted as ineffective and lacking real leadership, which led to financial troubles and the need for new leadership roles.

💡Articles of Confederation

The Articles of Confederation was the first constitution of the United States, adopted in 1781. It established a confederation of sovereign states with a very weak central government. The script mentions that under this system, Congress had no power to levy taxes, which was a significant factor in the financial struggles of the new nation and the impetus for the creation of the Superintendent of Finance role.

💡Superintendent of Finance

The Superintendent of Finance was a proposed new leadership role in the script, intended to address the financial crisis of the Confederation Congress. Robert Morris was nominated for this position due to his business acumen and success as 'The Financier.' His role was pivotal in trying to stabilize the nation's finances and establish a national bank.

💡Robert Morris

Robert Morris, known as 'The Financier,' was a prominent businessman and the richest man in America at the time. The script describes his nomination as the Superintendent of Finance and his efforts to solve the financial issues of the Confederation, including establishing the First National Bank and attempting to implement a national tax on imported goods.

💡First National Bank

The First National Bank, as mentioned in the script, was established by Robert Morris to create a stable currency backed by gold and silver. It was part of his strategy to address the financial challenges faced by the Confederation Congress and to ensure a reliable source of funding for the national army.

💡National Tax on Imported Goods

The national tax on imported goods was a proposed tax by Robert Morris to generate revenue for the Confederation Congress. The script highlights the difficulty of implementing such a tax under the Articles of Confederation, as it required unanimous agreement from all 13 states, which ultimately did not occur due to opposition from Rhode Island and Virginia.

💡Rhode Island

In the script, Rhode Island is depicted as the state that opposed the national tax on imported goods, fearing that it would disproportionately affect them due to their reliance on foreign trade. Their 'no' vote was a critical factor in the failure of Morris's tax proposal.

💡Continental Army

The Continental Army was the army of the United States during the American Revolutionary War. The script discusses the financial struggles of the army, including the lack of pay for soldiers and the challenges faced by Robert Morris in securing funds for them, which led to unrest and threats of insurrection within the ranks.

💡Insurrection

The term 'insurrection' in the script refers to the growing discontent and threats of rebellion within the Continental Army due to unpaid wages. The soldiers' loyalty to Congress and their trust in being compensated for their service were severely tested, leading to a potential crisis for the young nation.

💡Alexander Hamilton

Alexander Hamilton, a key figure in the script, was a young politician and ally of Robert Morris. He is known for his advocacy of a strong central government and national banking systems. Hamilton's efforts to pass the tax amendment and his correspondence with George Washington about the brewing conspiracy within the army highlight his commitment to the stability of the new nation.

💡George Washington

George Washington, as the commander of the Continental Army and a central figure in the script, is depicted as a symbol of unity and loyalty. His speech to the army, using a pair of reading glasses as a poignant reminder of his sacrifices, is a powerful moment that rekindles the soldiers' loyalty and averts the conspiracy against the Republic.

Highlights

The Confederation Congress struggled for five years to fund the American Revolutionary War, ending up financially broke.

Under the Articles of Confederation, the Congress lacked strong leadership and the ability to enact new laws effectively.

Robert Morris, known as 'The Financier,' was appointed as the Superintendent of Finance to address the financial crisis.

Morris had a background in business and had secretly supported the war effort through various means.

Benjamin Franklin persuaded Morris to accept the role of Superintendent of Finance despite his reluctance.

Morris established the First National Bank and created a stable currency backed by precious metals.

He attempted to collect state debts and enforce the Articles of Confederation's stipulation for payments.

Morris proposed a national tax on imported goods to fund the Confederation Congress, which was a highly unpopular idea.

The national tax proposal required unanimous agreement from all 13 states, which proved to be a difficult task.

Rhode Island and Virginia rejected the tax proposal, leading to its failure and a decline in Morris's influence.

Morris faced accusations of using the National Bank for personal gain, which strained relations with the states.

The Continental Army found itself without funds during a critical moment, leading Morris to pay for the campaign personally.

The victory at Yorktown forced the British to begin peace negotiations, but the financial situation remained dire.

Morris stopped paying the Continental Army, offering only promises of future payment after the war.

Discontent grew among the soldiers, leading to threats of an insurrection and a potential coup d'etat.

Washington quelled the unrest by reminding soldiers of their shared sacrifices and loyalty to the cause.

The failure of the tax amendment and the subsequent resignation of Robert Morris highlighted the weaknesses of the Confederation.

Transcripts

For five years, the Confederation Congress

had struggled to fund a national army

to fight the American Revolutionary War,

but the war kept going

and Congress had become dead broke

♫Intro Music ♫

Under the Articles of Confederation,

Congress had no real leadership.

they elected one of their own members

to be President of Congress,

but once elected he could only supervise meetings.

He couldn't vote or even suggest new laws.

Many saw it as a demotion

and a few who did get elected wound up trying to resign

only to find out that they were stuck there

because nobody wanted to replace them .

But now that the Articles of Confederation

had been ratified by all thirteen states

the first official president of Congress

leveraged the optimism of the moment

to convince Congress that they needed to create

new leadership roles; most importantly,

they needed to appoint a Superintendent of Finance

to fix their desperate money troubles.

They immediately nominated Robert Morris,

the richest man in America.

His knack for business had helped him build his

merchant shipping company into a global powerhouse,

and earned him the nickname "The Financier."

Ever since the war began,

he had worked behind the scenes:

converting his merchant fleet into privateer ships

that attacked the British Navy;

making secret deals with the French

to supply weapons to American soldiers;

and turning his extensive trade connections

into a spy network.

He was the obvious choice,

but boy, did he NOT want to do it.

Americans hated taxes so much

that they had literally gone to war

with the greatest military power in the world

to pay less of them,

and now Congress had nominated him

to be the guy who got to step in and say 'hey,

you know that war we started with Britain over the taxes?

Uh, well, we're going to need you to pay more taxes

so we can keep doing that.'

This would require one heck of a pitch.

When rumors of this nomination reached Paris,

Benjamin Franklin took a break from his hobby

of negotiating crucial foreign alliances to write

his old friend Morris and persuade him to take the job.

The two of them had worked together to establish

connections with the French at the start of the war,

and Franklin knew just how to appeal

to Morris's sense of honor and duty.

After four months, Morris yielded to the pressure

and became America's new financier.

Once he did he threw himself into it.

He established the First National Bank

and used it to create a new stable currency

backed by actual gold and silver.

He tallied up the debts owed by each of the states

and reminded them that, no, paying those debts

to Congress was not optional.

They had all signed the Articles of Confederation

and the Articles of Confederation said 'pay up.'

But his most ambitious project

was to create a national tax on imported goods.

If it passed, any shipment from a foreign country

would have to pay a small fee that would

help fund the Confederation Congress.

This same idea, when suggested

by British Parliament nearly a decade ago,

had helped to set off the chain of protests

that led to the Revolutionary War.

And since the Articles of Confederation

didn't give Congress any power to issue taxes

Morris would actually need to amend the Constitution to do it.

Under the Articles, that meant that he needed

all 13 states to agree, unanimously,

on this very unpopular tax;

and he came so very, very close.

Morris convinced 12 of the 13 states to accept the tax,

but, in the final hour, little old Rhode Island decided to vote 'no.'

As a small state that relied heavily

on foreign trade through it's crucial harbors,

Rhode Island feared that the tax would

hit them harder than anybody else.

Before Morris could even put together

an argument to convince them,

Virginia decided to back out of their agreement

and the tax proposal fell apart

bringing Morris's influence down with it.

His National Bank continued to thrive,

but accusations mounted that he had used it

to enrich himself and his wealthy investor buddies

The states began to ignore his letters,

insisting that they paid their debts to Congress,

and with no income from the states,

plus no income from the new tax that Morris had relied upon,

the Continental Army found itself, once again, out of money;

right when George Washington saw a golden

opportunity to strike down the British at Yorktown.

Morris wound up writing personal checks

to pay for the campaign out of his own deep pockets.

With his help, plus the support of their French allies,

the Continental Army trapped the

main British fighting force inside a siege,

and forced them to surrender over 8,000 soldiers

as prisoners of war.

Yorktown was a monumental victory

The loss of so many soldiers

forced the British to begin the peace negotiations

that would one day into the war.

But George Washington continued

to train his soldiers rigorously,

expecting at least one more final decisive battle

with the British forces

They made camp outside British-occupied New York City

expecting a fight,

and wound up just kind of sitting there

waiting awkwardly for the next two years

as peace negotiations stretched out.

The threat of another looming battle

didn't seem to worry the states.

As bad as they always had been

about giving money to Congress,

they got even worse now that there was no huge

British Army marching around to remind them

why paying for a National Army might be a good idea.

Not their problem anymore.

But it WAS Robert Morris's problem.

Congress had no money to pay the troops,

and he couldn't afford to keep paying them himself.

Soon after the victory of Yorktown,

he stopped paying the Continental Army entirely

All he could offer was a promise that,

after the war, they would receive their money.

He hoped.

The soldiers were not happy, but they stuck together.

For now.

With nothing better to do,

some officers of the Continental Army left

and began to run for political office in their home states.

Many of them had been through the starving winter at Valley Forge

and shared Washington's complaints that Congress had no power

and the states had become too self-involved to get anything done.

Unlike the older revolutionaries,

who hated anything that reminded them of British Parliament,

this new generation wanted a strong central Congress

to hold together the country that they had literally fought to create.

Robert Morris found new allies in this crop of young politicians.

Chief among them was Alexander Hamilton,

the famous hero of Yorktown

and George Washington's right-hand man,

who joined the Confederation Congress in 1782.

Morris and Hamilton bonded

over their shared love of national banking systems

(because everybody's got to have a hobby),

and they soon united to bring back

the tax amendment once again.

They believed it was the only way for Congress

to raise enough money to pay the Continental Army.

But now that peace looked more and more likely

the states had a different idea:

how about, NOT paying the Continental Army?

several states proposed the army should be disbanded entirely,

letting the local state militias

take care of any remaining British resistance.

If Congress wanted to complain that it

couldn't maintain a national army

then it only made sense to disband that army

rather than let it continue to rack up debt

while everybody waited for word on the peace talks.

The soldiers did not see it that way.

They had been underpaid from the beginning,

and they spent the last few months with no pay at all.

Many of them literally couldn't afford to go home;

they had fallen deeply in debt fighting without pay

and they knew that, the second they left the army,

they would be thrown into prison for those debts.

Their trust, that Congress would take care of them, evaporated.

Murmurs began to circulate through the army camp;

threats of an insurrection.

They demanded their pay from Congress immediately,

and warned that, if anybody tried to disband the army,

they would rebel.

Since George Washington had always made it clear

that he served at the pleasure of Congress,

they were even prepared to replace him with a new General.

The United States had barely been born

and already it faced a coup d'etat

and a potential civil war.

Receiving word of this brewing conspiracy

from his old friends in the Army,

Hamilton can't help but be frustrated.

This is exactly why he's been warning

everybody about the consequences

of a powerless Confederation Congress.

He writes a letter to Washington, his old commander,

to warn him about the conspiracy,

then he doubles down on his efforts

to pass the amendment tax,

hoping that the threat of an army uprising

will finally convince these states

to work with him on raising money.

Back in camp Washington receives

Hamilton's warning with grim composure.

He is aware of the Army's unrest,

and he sympathizes with his soldiers,

but he wanted to believe that their patriotism

would prevent them from committing

treason against the Republic.

Now he has to get involved.

He schedules a meeting with his army on March 15th,

the famous Ides of March,

the day Julius Caesar was assassinated

by his former friends in Rome.

He wants to make it very clear

that he considers these threats a betrayal.

Stepping up to speak to his army on that fateful day,

Washington launches into a prepared speech

condemning the conspiracy.

Then he pulls out a letter from Congress.

He says he'll read it to them,

but instead he pauses.

He squints at the small letters on the page.

At last, he pulls out a pair of reading glasses

and begs the soldiers to forgive him,

for "I have grown not only gray

but almost blind in the service of my country"

The soldiers do more than forgive him.

They remember the days spent on campaign:

the brutal winters and the deadly battles

that Washington had led them through.

They can see how much it has cost him,

and they're reminded why they loved him in the first place.

Nobody even cares about the letter anymore.

By the time he's finished reading it,

they rise to pledge their faith in Him

and their loyalty to Congress.

The conspiracy has shattered.

With this major disaster averted,

everybody realizes the importance of banding together

as a unified country to support the army

and give Congress the resources it needed

I am of course kidding:

the tax amendment failed again

and Robert Morris resign.

Join us next time as the confederation

falls apart.

♫ Music ♫