Question

The Confederation government could not pay off the states' war debts and ran a deficit budget every year. True or False?

Answer 1

The statement is false; the Confederation government faced significant financial challenges post-revolution without a dedicated revenue source, resulting in difficulties paying debts and running deficits.

Step-by-step explanation:

The Confederation government struggled financially after the Revolutionary War due to a lack of a dedicated source of revenue and ran into difficulties paying off state debts and maintaining a balanced budget. The Congress, under the Articles of Confederation, incurred a substantial national debt during the war, relying on borrowing and issuing paper currency which quickly devalued.

Attempts to rectify the situation such as proposing an import tax and establishing a national bank were unsuccessful. States were left to their own devices to manage their portions of the war debt, and many were unable to raise enough funds due to resistance from citizens to high taxes, causing financial distress. This lack of a stable financial foundation contributed to the push for a stronger federal government under a new constitution, eventually leading to Alexander Hamilton's plan for managing the nation's debt.

Answer 2

The Confederation government struggled with financial obligations after the Revolutionary War due to a lack of revenue sources, leading to consecutive deficit budgets.

Step-by-step explanation:

True, the Confederation government did indeed struggle to manage the financial obligations incurred during the Revolutionary War. Lacking a dedicated source of revenue, the government was unable to effectively address the large debts accumulated both domestically and abroad. With an inability to impose taxes and unsuccessful attempts to implement tariffs due to state vetoes, the central government ran deficit budgets consecutively.

The Confederation Congress borrowed significant sums to support the war effort – approximately $12 million from foreign governments and banks, and roughly $42 million from American citizens. To cover just the interest payments on this debt, the government had to borrow further, exacerbating the fiscal crisis. Additionally, the individual states had accrued their own debts worth $25 million. Without an independent revenue source and facing resistance to taxation, both the federal structure and individual states struggled to fulfill their debt obligations, resulting in deficit budgets throughout the years following the war.