The representatives at the Annapolis Convention decided that the Articles of Confederation needed to be replaced and that a constitutional convention should be held to reinvent the federal government. Many of the perceived shortcomings to be remedied involved the extremely limited financial power of the federal government.

The Articles of Articles of ConfederationConfederation were written in 1777 and ratified in 1781. This first attempt at creating a collective American union was famously ill executed. The power of the central government under the Articles of Confederation was extremely weak. There was no central judiciary or executive, only a legislature. This first legislature was funded by the individual states and composed of people appointed by state governments. Each state, no matter how large, had a single vote.Annapolis Convention

Although a noble starting point, this first attempt at colonial self-government resulted in a conundrum. The country, then called a confederation, lacked a national military or bureaucracy. The body of the nation existed without a head. In this primitive configuration, the states were more like independent member nations of a body resembling the modern-day European Union. The confederation was quite unlike the integrated body of fifty subnational governments it would become.

Business interests in the confederation were at the mercy of independently acting state governments with divergent economic profiles. Rhode Island, for example, was no longer ruled by prerevolutionary British royalists. This meant that power had shifted from wealthy landowners under the Articles of Confederation to small shop owners and farmers. Economic traditions such as sound inflation policy were cast aside in favor of legislation preferred by a less economically oriented group of citizens.

Domestic currency issues got out of control, as each state printed its own money without any necessary support by gold or silver. International trade represented an even greater problem for eighteenth century American business owners. John Adams was selected by Congress to negotiate a treaty of commerce with Great Britain. Britain declared, however, that it would not negotiate with one American government but with each state government individually. Adams had little recourse in the face of this pronouncement. Under the Articles of Confederation, then, foreign countries pitted each state against the others in tariff and trade policies.

In response to the manifest failure of the Confederation, George Washington and the Virginia legislators invited delegations from each state to meet at Mount Vernon, Washington’s home, to discuss the situation. Ultimately, only five states attended, and the group met in Maryland. The principal concern of the group–as expressed by Alexander Hamilton, who served as its secretary–was the “power of regulating trade.” No early economy could be built without more cohesive policy making and concentrated negotiating powers. Hamilton recorded the recommendation of the group “to meet at Philadelphia on the second Monday in May next, to take into consideration the situation of the United States.” The die had been cast, and the idea of the constitutional convention was conceived. Under the new Constitution, business would no longer be so subject to the disparate policies of each state.

• Beard, Charles A. An Economic Interpretation of the Constitution of the United States. New York: Free Press, 1913.
• Kammen, Michael. The Origins of the American Constitution: A Documentary History. New York: Penguin Books, 1986.
• Morris, Richard B. Alexander Hamilton and the Founding of the Nation. New York: The Dial Press, 1957.

Articles of Confederation

U.S. Constitution

Currency