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

0:00 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

0:46 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

1:31 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.

2:19 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

3:04 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

3:50 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

4:36 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.

5:21 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.

6:08 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

6:53 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.

7:40 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

8:25 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:

9:10 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 ♫