Congress Financed The Revolution By

The Continental Congress, acting as the provisional government of the nascent United States, faced a monumental financial challenge in funding the American Revolution. Lacking the power to directly levy taxes on the populace, the Congress resorted to a multi-pronged approach, primarily relying on printing paper money, borrowing from foreign powers, and soliciting funds from the states and individual citizens. These strategies, while ultimately successful in securing victory, also created significant economic turmoil.

Early in the war, the most readily available solution was to print Continental currency. These bills of credit were issued in large quantities, rapidly increasing the money supply. While initially effective in paying for supplies and soldiers’ wages, the lack of specie (gold or silver) backing the currency, coupled with fears about the war’s outcome, quickly led to depreciation. As more Continentals flooded the market, their value plummeted, contributing to rampant inflation. The phrase “not worth a Continental” became a common expression to describe something of little value.

Recognizing the limitations of printing money, the Congress actively sought loans, both domestic and foreign. Domestically, they issued loan certificates, promising repayment with interest. These appeals to patriotic sentiment, while generating some funds, proved insufficient to meet the escalating costs of the war. Therefore, the Congress turned to international partners, particularly France, Spain, and the Netherlands. France, motivated by a desire to weaken its rival Great Britain, became the most significant benefactor, providing substantial loans and military assistance. These foreign loans were crucial for purchasing essential supplies, maintaining the army, and bolstering the credibility of the revolutionary cause.

Another source of revenue was requisitions from the individual states. Congress requested specific amounts of money or supplies from each state based on their perceived ability to contribute. However, the states, often preoccupied with their own needs and wary of relinquishing control over finances, frequently failed to meet their quotas. This inconsistency in state contributions created ongoing financial instability and hampered the Congress’s ability to effectively manage the war effort.

Finally, the Congress also appealed directly to citizens through lotteries and public subscriptions. While these initiatives generated some revenue, their impact was limited. The overall financial situation remained precarious throughout the war. The combination of excessive paper money, inconsistent state contributions, and the reliance on foreign loans resulted in high inflation, economic hardship, and a significant national debt. Nevertheless, these strategies, despite their inherent flaws, proved sufficient to sustain the revolution until victory was achieved, although the economic consequences would linger for years to come.