American Revolution

After the Glorious Revolution in England, the British adopted a policy of "salutary neglect," whereby the Thirteen Colonies were largely left to govern themselves. As a result of this new policy, as well as the ideals of liberty which had been borne out of the Glorious Revolution, there emerged new government systems (as exemplified by William Penn's Frame of Government of Pennsylvania and the Massachusetts Charter of 1691); religious institutions (as exemplified by the democratic nature of Congregational Protestantism in New England and the First Great Awakening across the colonies); and occasionally, attitudes towards slavery (as exemplified by Massachusetts and, at least initially, Georgia banning the practice), although the latter of these was less common. This British policy reverted significantly after the French and Indian War. The British political establishment, especially after taking massive swathes of land from the former territories of New France, pursued a policy of greater control over colonial affairs, prompting the Thirteen Colonies to seek restoration of greater autonomy from Britain. One Patriot, Capt. Levi Preston of Danvers, Massachusetts, was asked why the Americans rebelled against England, and he responded: "...we always had governed ourselves, and we always meant to. They didn't mean we should."

The Thirteen Colonies were established in the 17th century as part of the English Empire and became parts of the British Empire after the union of England and Scotland in 1707.

The development of a unique American identity can be traced to the English Civil War (1642–1651) and its aftermath. In that period the Puritan colonies of New England supported the Commonwealth government responsible for the execution of King Charles I. After the Stuart Restoration of 1660, Massachusetts did not recognize Charles II as the legitimate king for more than a year after his coronation. In King Philip's War (1675–1678), the New England colonies fought a coalition of a few Native American tribes without military assistance from England, thereby contributing to the development of a uniquely American identity separate from that of the British people.

In the 1680s, Charles and his brother, James II, attempted to bring New England under direct English control. The colonists fiercely opposed this, and the Crown nullified their colonial charters in response. In 1686, James finalized these efforts by consolidating the separate New England colonies along with New York and New Jersey into the Dominion of New England. Edmund Andros was appointed royal governor and tasked with governing the new Dominion under his direct rule. Colonial assemblies and town meetings were restricted, new local taxes were levied, and rights were abridged. Dominion rule triggered bitter resentment throughout New England. When James tried to rule without Parliament, the English aristocracy removed him from power in the Glorious Revolution of 1688. This was followed by the 1689 Boston revolt, which overthrew Dominion rule. Colonial governments reasserted their control after the revolt. The new monarchs, William and Mary, granted new charters to the individual New England colonies.

After the Glorious Revolution, the British Empire became a constitutional monarchy with sovereignty in the King-in-Parliament. Aristocrats inherited seats in the House of Lords, while the gentry and merchants controlled the elected House of Commons. The king ruled through cabinet ministers who depended on majority support in the Commons to govern effectively. British subjects on both sides of the Atlantic proudly claimed that the unwritten British constitution, with its guarantees of the rights of Englishmen, protected personal liberty better than any other government.

The British constitution served as the model for colonial governments. The Crown appointed a royal governor in each colony to exercise executive power, usually also appointing a Governor's Council largely to act as an unelected upper chamber of the legislature. Property owners elected a colonial assembly amongst themselves with powers to legislate and levy taxes, but the British government reserved the right to veto colonial legislation.

The British government lacked the resources and information necessary for close supervision of the colonies. Instead, British officials negotiated and compromised with colonial leaders to gain compliance with imperial policies. The colonies defended themselves with provincial troops and colonial militias of locals, and the British government rarely sent military forces to America before 1755. According to historian Robert Middlekauff, "Americans had become almost completely self-governing" before the American Revolution, a practice that was consistent with the British monarchy's practice of salutary neglect.

British colonial policy was based on mercantilist theory, which held that Britain's national security depended on building a self-sufficient empire and controlling key trade routes. The purpose of colonies was to produce raw materials for Britain's use, consume British manufactures, and support the growth of British shipping. In the 1600s, the English Parliament enacted a series of laws called the Navigation Acts to ensure that the colonies fulfilled these purposes.

The Navigation Acts restricted colonial trade with foreign countries. The Thirteen Colonies could trade with the rest of the empire but only ship certain commodities like tobacco to Britain. Any European imports bound for British America had to first pass through an English port and pay customs duties. Other laws regulated developing colonial industries to prevent competition with British industries, such as the Wool Act 1698, the Hat Act 1731, and the Iron Act 1750. With little industry except shipbuilding, the colonies exported agricultural products in return for manufactured goods. They also imported molasses, rum, and sugar from the British West Indies.

Colonial reactions to these policies were mixed. The Molasses Act 1733, for example, placed a duty of six pence per gallon upon foreign molasses imported into the colonies. This act was particularly egregious to the New England colonists, who protested it as unconstitutional taxation without representation in the British parliament. The act increased the smuggling of foreign molasses, and the British government ceased enforcement efforts after the 1740s.

On the other hand, certain merchants and local industries benefited from the restrictions on foreign competition. The limits on foreign-built ships greatly benefited the colonial shipbuilding industry, particularly in New England. Some argue that the economic impact was minimal on the colonists, but the political friction that the acts triggered was more serious, as the merchants most directly affected were also the most politically active.

During the French and Indian War (1754–1763), the British government fielded 45,000 soldiers, half British Regulars and half colonial volunteers. The colonies also contributed funds and materiel to the war effort; though, two-fifths of this spending was reimbursed by the British government. Great Britain defeated France and acquired that nation's territory east of the Mississippi River.

In order to allow approximately 1,500 politically well-connected British Army officers to remain on active duty in America with full pay after the war, the Bute ministry decided in early 1763 to permanently garrison 10,000 soldiers in North America. Due to long-established English resistance to a standing army, stationing these officers in Great Britain during peacetime was a politically unacceptable alternative. The excuse made for a standing army in America was defense against French troops stationed in the West Indies, and foreign populations in newly acquired territories (the French in Canada and the Spanish in Florida). In addition, British soldiers were supposed to help collect customs duties and prevent colonists from instigating conflict with Native Americans.

Instead, increased British migration beyond the Appalachian Mountains and Native American anger over the policies of General Jeffery Amherst caused Pontiac's War (1763–1766). In response, the Grenville ministry issued the Royal Proclamation of 1763, designating the territory between the Appalachian Mountains and the Mississippi River an Indian Reserve closed to colonial settlement. The Proclamation angered settlers, fur traders, and land speculators; however, it failed to stop westward migration.

According to historian Middlekauff, "the need for money played a part in every important decision made by Prime Minister George Grenville regarding the colonies—and for that matter by the ministries that followed up to 1776." The national debt had grown to £133 million with annual debt payments of £5 million (out of an £8 million annual budget). Stationing troops in North America permanently would cost another £360,000 a year. On a per capita basis, Grenville claimed Americans paid 1 shilling in taxes directly to the empire (not including local taxes) compared to 26 shillings paid by the English. The enslaved, a near majority of the population in some colonies, did not pay any taxes and therefore skewed this comparison.

On March 9, 1764, Grenville proposed the Sugar Act, which Parliament enacted in April. It lowered the duty on foreign molasses from 6 pence to 3 pence per gallon. The Treasury believed it would generate £78,000. To ensure this money could be collected, the act strengthened efforts against smuggling. Customs officials could choose whether to prosecute violators in colonial courts or vice admiralty courts. Unlike colonial courts, where there was a presumption of innocence and local juries often acquitted accused smugglers, vice admiralty courts operated on a presumption of guilt, and Crown-appointed judges decided cases.

Most resistance to the Sugar Act came from colonial merchants and legislators, whose primary argument was its negative economic impact on both the colonies and Great Britain. The New England and middle colonies imported molasses from the French West Indies and turned it into rum that was then exchanged for enslaved Africans sold to the southern colonies and the West Indies. This trade generated credit and bills of exchange that the colonists used to pay for British manufactured goods. By the winter of 1764, nine colonial legislatures had petitioned the British government to repeal the Sugar Act.

Grenville decided to levy a stamp duty on the colonies as well. In February 1765, a group of colonial agents, including Benjamin Franklin, met with Grenville to dissuade him. They argued that if Parliament taxed them, governors would never need to convene colonial assemblies again, thereby destroying representative government in America, but Grenville dismissed these concerns. The colonists had allies in the House of Commons, such as Colonel Isaac Barré, who gave an impassioned speech during the debate. Still, Parliament passed the Stamp Act easily, and it received royal assent in March. The act imposed direct taxes on the colonies for the first time. All official documents, newspapers, almanacs, and pamphlets were required to have the stamps—even decks of playing cards.

The colonists did not object that the taxes were high; they were actually low. They objected to their lack of representation in the Parliament, which gave them no voice concerning legislation that affected them, such as the tax, thereby violating the unwritten English constitution. This grievance was overly simplified with the slogan "No taxation without representation". Shortly following adoption of the Stamp Act, factions of the Sons of Liberty formed in each colony, and began using public demonstrations, boycotts, and threats of violence to ensure that the offending British policies became unenforceable.

King George III declared Massachusetts to be in a state of rebellion in February 1775 and the British garrison received orders to seize the rebels' weapons and arrest their leaders, resulting in the Battles of Lexington and Concord on April 19, 1775. The Patriots assembled a militia 15,000 strong and laid siege to Boston, occupied by 6500 British soldiers. The Second Continental Congress convened in Philadelphia on June 14, 1775. The congress was divided on the best course of action. They authorized formation of the Continental Army, appointing George Washington as its commander-in-chief, while producing the Olive Branch Petition in which they attempted to come to an accord with King George. The king, however, would issue a Proclamation of Rebellion in August which declared that all the states were "in rebellion" and the members of Congress were traitors. Meanwhile, the Battle of Bunker Hill on June 17, 1775 was a British victory—but at a great cost: about 1,000 British casualties from a garrison of about 6,000, as compared to 500 American casualties from a much larger force.

As Benjamin Franklin wrote to Joseph Priestley in October 1775: Britain, at the expense of three millions, has killed 150 Yankees this campaign, which is £20,000 a head ... During the same time, 60,000 children have been born in America. From these data his mathematical head will easily calculate the time and expense necessary to kill us all.

In the winter of 1775, in the hopes of gaining the support of French-speaking colonists recently conquered by the British, the Americans invaded northeastern Quebec under generals Benedict Arnold and Richard Montgomery. The attack was a failure; many Americans were killed, captured, or died of smallpox.

Following the Battle of Bunker Hill in June 1775, the Patriots had control of Massachusetts outside Boston's city limits, and the Loyalists suddenly found themselves on the defensive without the protection of the British army. In each of the Thirteen Colonies, American patriots overthrew their existing governments, closed courts, and drove out British colonial officials. They held elected conventions and established their own legislatures, which existed outside any legal parameters established by the British. The Americans drafted new constitutions to supersede royal charters, proclaiming that they were now states, no longer colonies.

On January 5, 1776, New Hampshire ratified the first state constitution. In May 1776, Congress voted to suppress all forms of Crown authority, to be replaced by locally created authority. New Jersey, South Carolina, and Virginia created their constitutions before July 4. Rhode Island and Connecticut simply took their existing royal charters and deleted all references to the Crown. The new states were all committed to republicanism, with no inherited offices. On May 26, 1776, John Adams wrote James Sullivan from Philadelphia, warning against extending the franchise too far:

Depend upon it, sir, it is dangerous to open so fruitful a source of controversy and altercation, as would be opened by attempting to alter the qualifications of voters. There will be no end of it. New claims will arise. Women will demand a vote. Lads from twelve to twenty one will think their rights not enough attended to, and every man, who has not a farthing, will demand an equal voice with any other in all acts of state. It tends to confound and destroy all distinctions, and prostrate all ranks, to one common level[.]

The resulting constitutions in states, including those of Delaware, Maryland, Massachusetts, New York, and Virginia featured:

Property qualifications for voting and even more substantial requirements for elected positions (though New York and Maryland lowered property qualifications)

Bicameral legislatures, with the upper house as a check on the lower

Strong governors with veto power over the legislature and substantial appointment authority

Few or no restraints on individuals holding multiple positions in government

The continuation of state-established religion

In Pennsylvania, New Jersey, and New Hampshire, the resulting constitutions embodied:

universal manhood suffrage, or minimal property requirements for voting or holding office (New Jersey enfranchised some property-owning widows, a step that it retracted 25 years later)

strong, unicameral legislatures

relatively weak governors without veto powers, and with little appointing authority

prohibition against individuals holding multiple government posts

The radical provisions of Pennsylvania's constitution lasted 14 years. In 1790, conservatives gained power in the state legislature, called a new constitutional convention, and rewrote the constitution. The new constitution substantially reduced universal male suffrage, gave the governor veto power and patronage appointment authority, and added an upper house with substantial wealth qualifications to the unicameral legislature. Thomas Paine called it a constitution unworthy of America.

In March 1776, aided by the fortification of Dorchester Heights with cannons recently captured at Fort Ticonderoga, the Continental Army led by George Washington forced the British to evacuate Boston. The revolutionaries now fully controlled all thirteen states and ready to declare joint independence. There still were many Loyalists, but they were no longer in control anywhere by July 1776, and all of the royal officials had fled.

In April 1776, the North Carolina Provincial Congress issued the Halifax Resolves explicitly authorizing its delegates to vote for independence. By June, nine state legislatures supported independence from Britain, and Pennsylvania, Delaware, Maryland, and New York followed. Richard Henry Lee was instructed by the Virginia legislature to propose independence, and he did so on June 7, 1776.

Gathered at Pennsylvania State House in Philadelphia, later renamed Independence Hall, 56 of the nation's Founding Fathers representing the United Colonies adopted and issued to King George III the Declaration of Independence. It had been drafted largely by Thomas Jefferson, and was edited and presented by the Committee of Five which was charged with authoring it. The Congress struck several provisions of the Committee's draft, and then adopted it unanimously on July 4. The Declaration embodied universal rights expressed through the political philosophies of liberalism and republicanism, rejected monarchy and aristocracy, and famously proclaimed that "all men are created equal". What had begun as a rebellion demanding the rights of Englishmen had now evolved into a revolution to overthrow and replace the political and social order in America based on universal rights.

With the new state constitutions and the issuance of the Declaration of Independence, each former colony began operating as an independent and sovereign state. The next step was to form a union to facilitate international relations and alliances.

On November 5, 1777, the Congress approved the Articles of Confederation and Perpetual Union and sent it to each state for ratification. The Congress immediately began operating under the Articles' terms, providing a structure of shared sovereignty during prosecution of the Revolutionary War. The Articles were fully ratified on March 1, 1781. At that point, the Continental Congress was dissolved and a new government of the United States in Congress Assembled took its place the following day, with Samuel Huntington leading the Congress as presiding officer. It remained a unicameral body, where each state retained one vote.

According to British historian Jeremy Black, the British had significant advantages, including a highly trained army, the world's largest navy, and an efficient system of public finance that could easily fund the war. However, they seriously misunderstood the depth of support for the American Patriot position, misinterpreting the situation as merely a large-scale riot. The British government believed that they could overawe the Americans by sending a large military and naval force:

“Convinced that the Revolution was the work of a full few miscreants who had rallied an armed rabble to their cause, they expected that the revolutionaries would be intimidated .... Then the vast majority of Americans, who were loyal but cowed by the terroristic tactics ... would rise up, kick out the rebels, and restore loyal government in each colony.”

In the Siege of Boston, Washington forced the British out of the city in the spring of 1776, and neither the British nor the Loyalists controlled any significant areas. The British, however, were amassing forces at their naval base at Halifax, Nova Scotia. They returned in force in July 1776, landing in New York and defeating Washington's Continental Army toe-to-toe in August at the Battle of Brooklyn, the largest battle of the war. Following that victory, and poised to take New York City, they requested a meeting with representatives from Congress to negotiate an end to hostilities.

A delegation including John Adams and Benjamin Franklin met British admiral Richard Howe on Staten Island in New York Harbor on September 11 in what became known as the Staten Island Peace Conference. Howe demanded that the Americans retract the Declaration of Independence, which they refused to do, and negotiations ended. The British then seized New York City and nearly captured Washington's army. They made the city their main political and military base of operations, holding the strategic harbor and port until November 1783. The city became the destination for Loyalist refugees and a focal point of Washington's intelligence network.

The British also took New Jersey, pushing the Continental Army into Pennsylvania. Washington crossed the Delaware River back into New Jersey in a surprise attack in late December 1776 and defeated the Hessian and British garrisons at Trenton and Princeton, thereby regaining control of most of New Jersey. The victories gave an important boost to Patriots at a time when morale was flagging and enlistments were ending, and they have become iconic events of the war.

In 1777, the British sent Burgoyne's invasion force from Canada south through New York with the aim of isolating New England to the east, which the British perceived as the primary source of agitation. In anticipation of a coordinated British attack on the de facto revolutionary capital of Philadelphia, the Continental Congress was forced to temporarily depart Philadelphia in September for Baltimore, where they continued deliberations. Rather than move north to support Burgoyne, the British army in New York City in fact went to Philadelphia in a major case of mis-coordination, capturing it from Washington. The invasion army from Canada was much too slow and became trapped in northern New York state. It surrendered to the Americans after the Battles of Saratoga in October 1777. From early October 1777 until November 15, a siege distracted British troops at Fort Mifflin, Pennsylvania and allowed Washington time to preserve the Continental Army by safely leading his troops to harsh winter quarters at Valley Forge, some 35 miles from Philadelphia.

On August 23, 1775, George III declared Americans to be traitors to the Crown if they took up arms against royal authority. There were thousands of British and Hessian soldiers in American hands following their surrender at the Battles of Saratoga. Lord Germain took a hard line, but the British generals on American soil never held treason trials, and instead treated captured American soldiers as prisoners of war. The dilemma was that tens of thousands of Loyalists were under American control and American retaliation would have been easy. The British built much of their strategy around using these Loyalists. The British maltreated the prisoners whom they held, resulting in more American deaths in the prisons than all the American battlefield mortalities, combined. At the end of the war, both sides released their surviving prisoners.

The capture of a British army at Saratoga encouraged the French to formally enter the war in support of Congress, and Benjamin Franklin negotiated a permanent military alliance in early 1778; France thus became the first foreign nation to officially recognize the Declaration of Independence. On February 6, 1778, the United States and France signed the Treaty of Amity and Commerce and the Treaty of Alliance. William Pitt spoke out in Parliament urging Britain to make peace with the Americans and to unite against France, while British politicians who had sympathized with colonial grievances now turned against the Americans for allying with Britain's rival and enemy.

The Spanish and the Dutch became allies of the French in 1779 and 1780 respectively, forcing the British to fight a global war without major allies, and requiring it to slip through a combined blockade of the Atlantic. The Dutch Republic, also at war with Britain, was the next country after France to sign a treaty with the United States, on October 8, 1782. On April 3, 1783, Ambassador Extraordinary Gustaf Philip Creutz, representing King Gustav III of Sweden, and Benjamin Franklin, signed a Treaty of Amity and Commerce with the U.S.

Britain began to view the American Revolutionary War as merely one front in a wider war, and the British chose to withdraw troops from America to reinforce the British colonies in the Caribbean, which were under threat of Spanish or French invasion. British commander Sir Henry Clinton evacuated Philadelphia and returned to New York City. Washington intercepted him in the Battle of Monmouth Court House, the last major battle fought in the north. After an inconclusive engagement, the British retreated to New York City. The northern war subsequently became a stalemate, as the focus of attention shifted to the smaller southern theater.

The British Royal Navy blockaded ports and held New York City for the duration of the war, and other cities for brief periods, but failed in their effort to destroy Washington's forces. The British strategy now concentrated on a campaign in the southern states. Due to a lack of regular troops at their disposal compared to the Americans, the British commanders saw the "southern strategy" as a more viable plan. They perceived the Southern Colonies as strongly Loyalist, with a large population of recent British immigrants, and large numbers of slaves who might be tempted to run away from their Patriot masters to join the British and gain their freedom.

Beginning in late December 1778, the British captured Savannah and controlled the Georgia coastline. In 1780, they launched a fresh invasion and took Charleston. A significant victory at the Battle of Camden meant that royal forces soon controlled most of Georgia and South Carolina. The British set up a network of forts inland, hoping that the Loyalists would rally to the flag. Not enough Loyalists turned out, however, and the British had to fight their way north into North Carolina and Virginia with a severely weakened army. Behind them, much of the territory that they had already captured dissolved into a chaotic guerrilla war, fought predominantly between bands of Loyalists and American militia, which negated many of the gains that the British had previously made.

The British army under Cornwallis marched to Yorktown, Virginia, where they expected to be rescued by a British fleet. The fleet did arrive, but so did a larger French fleet. The French were victorious in the Battle of the Chesapeake, and the British fleet returned to New York for reinforcements, leaving Cornwallis trapped. In October 1781, the British surrendered their second invading army of the war under a siege by the combined French and Continental armies commanded by Washington.

Washington did not know if or when the British might reopen hostilities after Yorktown. They still had 26,000 troops occupying New York City, Charleston, and Savannah, together with a powerful fleet. The French army and navy departed, so the Americans were on their own in 1782–83. The American treasury was empty, and the unpaid soldiers were growing restive, almost to the point of mutiny or possible coup d'etat. Washington dispelled the unrest among officers of the Newburgh Conspiracy in 1783, and Congress subsequently created the promise of a five years bonus for all officers.

Historians continue to debate whether the odds were long or short for American victory. John E. Ferling says that the odds were so long that the American victory was "almost a miracle". On the other hand, Joseph Ellis says that the odds favored the Americans, and asks whether there ever was any realistic chance for the British to win. He argues that this opportunity came only once, in the summer of 1776, where Admiral Howe and his brother General Howe "missed several opportunities to destroy the Continental Army .... Chance, luck, and even the vagaries of the weather played crucial roles." Ellis's point is that the strategic and tactical decisions of the Howes were fatally flawed because they underestimated the challenges posed by the Patriots. Ellis concludes that, once the Howe brothers failed, the opportunity "would never come again" for a British victory.

Public support for the conflict had never been strong in Britain, where many sympathized with the Americans, but now it reached a new low. King George wanted to fight on, but his supporters lost control of Parliament and the British launched no further offensives in America on the eastern seaboard.

During negotiations in Paris, the American delegation discovered that France supported American independence but no territorial gains, hoping to confine the new nation to the area east of the Appalachian Mountains. The Americans opened direct secret negotiations with London, cutting out the French. British Prime Minister Lord Shelburne was in charge of the British negotiations, and he saw a chance to make the United States a valuable economic partner, facilitating trade and investment opportunities. The US obtained all the land east of the Mississippi River, including southern Canada below the Great Lakes, but Spain took control of Florida from the British. It gained fishing rights off Canadian coasts, and agreed to allow British merchants and Loyalists to recover their property. Prime Minister Shelburne foresaw highly profitable two-way trade between Britain and the rapidly growing United States, which did come to pass. The blockade was lifted and American merchants were free to trade with any nation anywhere in the world.

The British largely abandoned their Indigenous allies, who were not a party to this treaty and did not recognize it until they were defeated militarily by the United States. However, the British did sell them munitions and maintained forts in American territory until the Jay Treaty of 1795.

Britain's war against the Americans, the French, and the Spanish cost about £100 million. The Treasury borrowed 40 percent of the money that it needed. Britain had a sophisticated financial system based on the wealth of thousands of landowners who supported the government, together with banks and financiers in London. In London the British had relatively little difficulty financing their war, keeping their suppliers and soldiers paid, and hiring tens of thousands of German soldiers.

In sharp contrast, Congress and the American states had no end of difficulty financing the war. In 1775, there was at most 12 million dollars in gold in the colonies, not nearly enough to cover current transactions, let alone finance a major war. The British made the situation much worse by imposing a tight blockade on every American port, which cut off almost all trade. One partial solution was to rely on volunteer support from militiamen and donations from patriotic citizens. Another was to delay actual payments, pay soldiers and suppliers in depreciated currency, and promise that it would be made good after the war. Indeed, the soldiers and officers were given land grants in 1783 to cover the wages that they had earned but had not been paid during the war.

Starting in 1776, the Congress sought to raise money by loans from wealthy individuals, promising to redeem the bonds after the war. The bonds were redeemed in 1791 at face value, but the scheme raised little money because Americans had little specie, and many of the richest merchants were supporters of the Crown. Beginning in 1777, Congress repeatedly asked the states to provide money, but it had no system of taxation to require funds, and the states were of little help. By 1780, Congress was making requisitions for specific supplies of corn, beef, pork, and other necessities, an inefficient system which barely kept the army alive.

Congress used four main methods to cover the cost of the war, which cost about 66 million dollars in specie (gold and silver). Significantly, the French secretly supplied the Americans with money, gunpowder, and munitions to weaken Great Britain; the subsidies continued when France entered the war in 1778, and the French government and Paris bankers lent about 18 million livres to the American war effort. Congress also made issues of paper money, known colloquially as "Continental Dollars", in 1775–1780 and in 1780–1781. The first issue amounted to 242 million dollars. This paper money would supposedly be redeemed for state taxes, but the holders were eventually paid off in 1791 at the rate of one cent on the dollar. By 1780, the paper money was so devalued that the phrase "not worth a Continental" became synonymous with valueless. The skyrocketing inflation was a hardship on the few people who had fixed incomes, but 90 percent of the people were farmers and were not directly affected by it. Debtors benefited by paying off their debts with depreciated paper. The greatest burden was borne by the soldiers of the Continental Army whose wages were usually paid late and depreciated in value every month, weakening their morale and adding to the hardships of their families.

The national government did not have a strong leader in financial matters until 1781, when Robert Morris was named Superintendent of Finance of the United States. Morris used a French loan in 1782 to set up the private Bank of North America to finance the war. He reduced the civil list, saved money by using competitive bidding for contracts, tightened accounting procedures, and demanded the national government's full share of money and supplies from the individual states.