Final answer:
Congress struggled to pay its debts, including compensating Revolutionary War soldiers, due to a massive public debt, inflation, and lack of specie. Many soldiers were promised land grants as payment, but bureaucratic issues and speculators often disrupted these agreements. The dire economic state and resistance to taxation led Congress to use land - a resource they had in abundance - as a means of payment.
Step-by-step explanation:
Why Congress Paid Soldiers With Land
After the Revolutionary War ended in 1783, Congress faced the significant challenge of a massive public debt amounting to approximately $43 million. With currency devaluation and a lack of specie, Congress struggled to pay its obligations, including compensating the soldiers who fought in the war. Many of these veterans were initially promised grants of land instead of cash payment. Unfortunately, due to mismanagement, speculator's schemes, and cumbersome regulations, many veterans lost these grants or had difficulties obtaining their promised lands.
The financial instability extended to the general populace as well, as inflation soared due to the internal devaluation of both state-issued paper money and the Continental dollar. Soldiers, who had missed out on learning peacetime trades while at war, found themselves desperately seeking employment in a bleak economy, further necessitating alternative forms of compensation like land grants.
Moreover, Congress had financed the war through various means, including printing large sums of money which led to currency devaluation, and borrowing from other nations and citizens. They resisted levying taxes to fund the war efforts due to ideological principles stemming from their initial grievances with British taxation. The resultant financial strain prompted Congress to look for solutions in which they had resources, such as using land to pay debts, including compensating soldiers.