We have seen throughout the course of this history that the entire development of the colonization of the European settlers in America manifested the conflicts resulting from the contact of two widely divergent systems of social organization. On the one hand, there was in America, before the white invasion, the highly developed organization of the original American peoples, which, in the case of the New England nations, was substantially the type of society described in the preamble to the Declaration of Independence (which obviously fails as a description of anything that the white people have produced at any period), a completely democratic, federated organization, recognizing the rights and equality of all individuals, and without any property institutions. Going southward, this gradually changed character to the partly oligarchic but still largely democratic and non-property organization of the middle Atlantic coast, and to the despotic and slaveholding nations of the Maskoki in the South. On the other hand, from Europe the invaders imported a totally alien form of organization. This was the so-called feudal system, according to which all land was held by a chain of owners arranged one above the other, each being a slave to the one above him, the highest being the king (in Catholic countries, the Pope was an overlord to even the king), and the lowest being the serfs or peasants who worked the land, and whose work supported the entire series of overlords. Every tenant everywhere in the scale was part of the "real estate" of his lord, and was bought and sold as part of the land. Activities in the towns, where some production and distribution of miscellaneous articles took place, was organized on a similar basis, the activity being generally chartered by the king or some smaller lord to groups of their city serfs, called burghers or bourgeois, who made articles which they sold for money, part of which went to the lords. Even among these there were various ranks, slaves to one another; so that the entire system was one of universal slavery.

         It might well be expected that the economic systems of Europe and America would not harmonize, and both were so highly organized that neither could fully prevail when they came into contact, as happened during the course of the seventeenth century. The settlers from England and France attempted to transplant their feudal system of social and economic organization into a land where a totally different type of organization had already been developed. The actual result was the development of a sort of mixture of the two, of varying quality and as yet of several different degrees of consistency, but a mixture which had little resemblance to either of the original ingredients.

         In the South, where the white settlers already found a system of slavery and despotism in force, there was comparatively little difficulty, the feudal system as it was attempted to introduce it into that part of the country readily adapting itself to the institutions of slavery, but mostly importing the actual slaves from Africa, where also slavery was highly developed, and an aristocracy, based on slaveholding, and descended from the English aristocracy, became the ruling power in the South. The slaves raised on the "plantations" of Virginia had to be sold to support the increasing aristocracy, and the "indentured servants" (whites sold for a limited period into servitude), who were, during the colonial period, an important part of the slave system, had to have new land to accommodate them (of course under the aristocrats’ rule). So that maintenance of this relic of the feudal system resulted in a new form of the institution of slavery, which differed from feudalism itself, as well as from slavery in its African or Maskoki forms, in requiring constant expansion, especially in Virginia, which was constantly getting into trouble with its neighbors to fill its ever-expanding territorial needs. How the bladder would burst when the limit of expansion was reached, yet remained to be seen; and Southern participation in the American Revolution was consequently part of this expanding process, a fight for new land and more power for the aristocrats.

         In the North, a different situation prevailed. There were two kinds of settlement in the North, those of the refugees (such as Plymouth, Massachusetts, Rhode Island, and Connecticut) and those founded by lords on the Virginian model, where it was actually attempted to transplant the feudal system (such as Maine, New Hampshire, and New York). In no case did it prove possible either to establish a full-fledged feudal system in America, or to establish firmly slavery or indentured servitude in the North, where the systems already prevailing among the original peoples of that part of the continent were totally inconsistent with such institutions. As a result, a totally new system of organization was beginning to appear among the Pilgrims from their earliest settlement, based largely on Penacook institutions, but on which were engrafted many ideas brought over from Europe, such as money and private property, which themselves took on new forms in the new system of organization.

         The result was that the New England colonies started from the beginning to develop on totally new lines economically. Money and property had, it is true, been introduced from Europe; but it was attempted, together with these, to introduce the individual freedom and initiative found among the red men, though without the closely-knit tribal productive organization which would really make such a thing universally possible. As a result, production and distribution were undertaken not by the community acting through the individuals, as among the tribes, nor through the closely-knit feudal groups, which it became impossible to establish, but by individuals acting by and for themselves, and in direct opposition to other similar individuals, so that, instead of the individual co-operation that the red tribes had, was substituted an individual warfare which was due to the whites’ taking over part of the red institutions without taking over enough of the necessary conditions to be able to make them function as they were supposed to. Since, under these conditions, with the introduction of money and property, no individual could take charge of any economic functions without the necessary start in that direction, it became necessary, where more than one person had to work together, to introduce paid employees, who were paid a certain amount to produce a greater value of commodities or other services. This, as we shall see later, necessitated an expansion which differed from that of the slavery institution in the South in being a trade expansion instead of a territorial one. This economic system, depending for its functioning on the use of money as capital, and operated mainly by the holders of such capital, has for that reason become known as the capitalist system. The Puritan re-migration to England around 1640, and the subsequent Puritan revolt in England, introduced the seeds of this system’s organization into England, and from there the system spread into Europe, though at the time of the American Revolution it had not succeeded anywhere in the so-called "Old World" in taking on the degree of importance it had in America, where it originated.

         At the time of the American Revolution, these two systems, capitalism in the North and slavery in the South, were active in the revolt for opposite causes, and, for reasons having to do with the nature of their hybrid origin, both systems were trying to operate under a curious combination of legislative democratic forms taken from the red men of America and pseudo-feudal legalistic forms imposed originally from England, neither of which actually fitted either the Southern or the Northern systems. These two systems, however, in spite of the tribal democratic forms of government in which they were working, were both radically opposed to even these forms, and were trying to oppose them and replace them by some sort of oligarchy or aristocracy. To that extent, under the First Republic, both these forces were working together to overthrow the First Republic in favor of some more oligarchic type of administration that would serve as a better tool; this anti-government campaign was led by the secret conspiracy of the Society of the Cincinnati, headed by its President, George Washington, who was pretending to have retired from public life.

         The two systems above described, however, were not the only ones which had arisen and were functioning, or attempting to function, at the time of the American Revolution. We have seen that both of these hybrid systems, the capitalist system in the North, and the slavery system in the South, lacked the balanced adjustment that the parent systems had originally possessed, and therefore both had an uncontrollable tendency to unlimited expansion, a sort of economic elephantiasis which could not be cured in either system without the complete destruction of the system itself. But there were, on the other hand, systems arising which embodied the balancing elements that the parent organizations in both Europe and America had. Chief among these was the system of undercover factories that had originated subsequent to the great Ohio War in Massachusetts and Rhode Island as well as neighboring regions; this was an attempt, in reality, to adapt the democratic organization of the red people as far as possible to the needs of the new peoples that had invaded the country; and it was this system that was originally, as we have seen, the prime mover in initiating the Revolution, though the two aristocratic systems had managed at an early stage to push the workers’ factory system into the background. Still, it was to a great extent this system that impressed the democratic form and principles on the government of the First Republic―a fact which made it all the more urgent for the two aristocratic societal plans, if they were to survive and have the immense growing space they needed, to throw off as far as possible the democratic shackles that the new workers’ system was imposing on them. This workers’ system, however, remained largely loyal to New England, and the counter-revolution of 1780 in Massachusetts, establishing the "Commonwealth," bade fair to make it possible to suppress the "upstart" democratic organization.

        There was also an attempt, during the eighteenth century, to restore the feudal "guild system" of production in the part of Massachusetts formerly the Plymouth Colony, and have production and distribution organized by workers operating individually by and for themselves, but under strict mutual regulation by common agreements binding each trade. Prominent among these attempts was the organization of the making of shoes in the town of Brockton. This plan, however, lacking the regulating force from above that made it possible for it to live in its original home environment, did not thrive in America, and never became of great importance.

         The First Republic was, then, an arena of open conflict between these various economic systems attempting to gain control of America, chief among which were the capitalist and the slavery system, on the aristocratic side, and the workers’-factory and guild system, on the democratic side. The First Republic could remain as it was so long as none of the systems was able to take complete control of the country; but it must necessarily be doubtful how long this balance of power could be kept up.

         150. Currency Under the First Republic.  Although the Constitution of the First Republic gave Congress the power to coin money, minting was never actually commenced during the short period that the First Republic was in existence, and a confusion of foreign currencies, predominantly English, was in circulation in America during that period. Practically all coins used in this country during the War for Independence were badly clipped, since each user took his commission in the shape of a few scraps of metal scraped off the coin, and at one time the Congress had even ordered the same done with coins issued to be used for pay for to the soldiers. Since trade was mostly with the Spanish colonies during the war, the only new coins to come in were Spanish ones, while English money, which had remained in America all through the war, became so badly clipped that English currency was at a heavy discount. Although the Continental Congress, which was the leading authority of the First Republic, never actually coined money of its own, it issued notes, commonly known as Continentals, for payment to the army, and, due to the difficulty Congress had in financing itself (under the First Republic, it depended on contributions from the States), these "Continentals" became almost worthless, at one time dropping to a thousandth of their face value. During the war, many of the states also issued their own paper money; among these were Massachusetts (the "State," not the Commonwealth) and Pennsylvania. Although English currency remained the money of account, it was mostly Spanish money that was actually in circulation. The Spanish peso, worth a bit over four shillings before the war, and quoted in various parts of America after the war (due to the depreciation of English currency) at rates varying from five to ten shillings, became the actual unit of value in practice all over America. This coin had long been known in England and in New York by its Dutch name, dollar (originally from Joachimsthaler, named after a Bohemian silver mine), and it was in terms of "dollars" that the "Continental" notes were made out, though the various State paper moneys were issued generally in terms of pounds and shillings. The lowest currency unit, for small change, was the Spanish real, an eighth of a peso, known as pistareen ("little peso") in New England, and in some other states by abbreviated words denoting the prevailing rate of exchange, as "fip" (standing for fivepence) in New York, or "levy" (short for elevenpence) in New Jersey, while, whether it was a five-penny bit or an eleven-penny bit, the term "bit" for a Spanish real became quite general throughout the First Republic. So that, in reckoning amounts of money in America, there was the official State reckoning in pounds, shillings, and pence, which was a depreciated reckoning, while the people, as well as to some extent the Congress of the First Republic, used actually the dollar, which was eight bits, and the bit, which was an uncertain and varying number of pence, according to the exchange rate. Although the "bit" has ceased to exist as an actual unit of currency, the expressions, "two bits" for a quarter-dollar coin, and "four bits" for a half-dollar are still used in many parts of the United States.

         In addition to English and Spanish currency, money of many other nations was in common circulation in America as small change, making a confusion worse confounded out of the currency system. The first attempt to establish order here was on the initiative of the State of New York, which, although it could not restore to par either foreign coin or Continental paper, had to do something to enable its conquered port to function, the city of New York being practically entirely dependent on its merchants for its existence. The result was that New York State, shortly after the annexation of the city, worked out a system of "money of account"―not actual coinage―but intended to be fixed units in terms of which accounts could be kept and prices fixed, and in terms of which actual currency could be evaluated. This was done by taking the "dollar"―the Spanish peso―as the basic unit of value; and, by identifying the "fip" with the depreciated shilling, the table of values for New York State became: 12 pesos make one shilling, 8 shillings make one dollar. The dollar, and the "York shilling," represented Spanish coins in actual use in the United States, and the only new element was the introduction of an artificial unit, represented by no actual coin, for measuring small change―the "York penny," amounting to one ninety-sixth part of a dollar. As the use of "York pence" and "York shillings" as units of money measurement spread over the United States, and even Canada, it became quite natural to reckon the "York penny" in round numbers as 100 to a dollar.

        Under the Articles of Confederation, the Congress of the First Republic had the power to coin money, though this was more easily said than done. Amid the welter of foreign currencies, and with "Continental" paper money badly depreciated, the Congressional committees appointed each successive year to struggle with the problem were unable to reach a solution. But, in 1785, Thomas Jefferson, who was on Congress’s committee that year for the purpose, finally came in with a definite report, suggesting a system of currency of the United States. The prime basis of this was the fact that, in practice, the York penny had been undergoing a conversion in popular use to the hundredth instead of the ninety-sixth of a dollar, and it was this unit that Jefferson proposed to embody in his coinage system. The money standard was to be silver, with an auxiliary gold currency for large amounts (copied from the Spanish basis), and the dollar was to be the main unit, to be divided into tenths, hundredths, and thousandths, the two former subdivisions intended to correspond approximately to the York shillings and the York pennies, though by no means identical with any former units. For names for these decimal fractions of a dollar, names were selected which were supposed to indicate the numbers 10, 100, and 1,000, respectively, namely, "dime" for the tenth part of a dollar (from French "dime" meaning tithe or tenth); "cent" (meaning 100 in French) for the hundredth of a dollar, the popular version of the York penny; and "mill" (French "mille" meaning 1,000) for the thousandth part of a dollar. But, when the Cincinnati sympathizers in Congress disposed of Jefferson by making him ambassador to France, this proposition, like Jefferson’s plan for democratic government of the Northwest Territory, was permanently tabled, especially as the conspiracy to overthrow the First Republic would stand better chances of success if the Congress could be prevented from stabilizing American currency, so that the First Republic could be discredited. So Jefferson was left to propound to the French people his ideas on the advantages of a decimal system of currency, and (as he had suggested in his report to Congress) of weights and measures.

         151. Church Reorganization.  The American Revolution and the War for Independence had considerably weakened most of the religious organizations in America, and it was impossible for them ever to regain their former strength. The main citadel of religious domination and intolerance during the war in America was Virginia, where the Episcopal Church still ruled with a high hand, though the exigencies of war forced its disestablishment as an official church, at least until it could be reorganized so as to no longer owe allegiance to the British crown. The war once over, the Episcopalians in Virginia, and also in the rest of the United States, made haste to accomplish that reorganization. This was done separately in the North and in the South, parallelling the purposes for which the North and South had revolted. For, not only in Virginia but in most of the South, the leaders of the revolt were from the old English aristocracy and were good Episcopalians, and the South really was attempting to set up a semi-official Church of Virginia which would also have influence throughout the South. But in the North most of the followers of the Episcopal Church, except for the Southerners recently settled in the North, were the Tories, though many of them, especially in New York City and the Paumonok Islands, were now claiming rebel sympathy. There were now no bishops of this church in America, since these had left in the early stages of the revolution, being direct representatives of the king as head of the church, and the Church of England would not ordain anyone as bishop unless he would swear allegiance to the making of England as head of the church. As a result of this impasse remaining long after the end of the war, it became doubtful how long the Episcopalian Church could keep its own organization going under the new conditions, forcing Virginia to adopt an act of complete religious tolerance in 1785, totally foreign to the ideas of most of those sponsoring it, though it was actually drawn up by the Virginia liberal element, and particularly by Thomas Jefferson, who had long been working towards just such an end.

         In 1785 two Episcopal ministers managed to become bishops to the satisfaction of their congregations, at least until something better could be had. The difficulty consisted in getting a chain of ordinations which would, according to the church's beliefs, reach continuously back to St. Paul. To go to an Episcopal bishop in England would mean a demand for allegiance to the king, while to go to a Catholic bishop would similarly mean that allegiance would be sworn to the Pope, which would, of course, be still less acceptable. Among the Northern ministers of this church, who consisted mostly of Tories, and who constantly looked to England as their guide, the idea finally came that certain Episcopalian bishops in Scotland had never recognized the overthrow of King James II in 1698, and had never since then sworn allegiance to the king. So one of these ministers, a certain Samuel Seabury of Connecticut, went to Scotland and got himself ordained Bishop of Connecticut, though the diocese for the time being covered practically all of the northern states, and he later on operated from Long Island, where he had previously been during the war as a Tory.

        The Episcopalians of Virginia, many of whom had actually participated in the revolution, disdained to go to Great Britain for any such purpose, as one of their ministers, named Mason Weems, and the minister of George Washington’s own parish, went abroad, presumably sent by the Cincinnati on this errand for the purpose of restoring the church organization to its pre-revolutionary powers. Weems found some Protestant bishops still functioning in Denmark, and he underwent at their hands an ordination ceremony in Latin, with the result that he came back as the Episcopalian bishop of Virginia. It was this bishop who, shortly after the overthrow of the First Republic, wrote a highly flattering but mendacious biography of George Washington, which was responsible for many of the myths which now cluster about Washington’s name, particularly the famous tale of the hatchet and the cherry-tree―and the highly incredible story that Washington could never tell a lie.

        So the Episcopalian church was reorganized in America, by this writer of historical mythology in the South, and by a returned Tory refugee in the North. But other offshoots of the Church of England, such as the Methodists and the Congregationalists, also needed reorganization, and, during the period of the First Republic, this was largely done, though none of the churches was ever able to get back any of the measure of power even among its own followers that it had had before the war. In spite of the fact that the American revolution never specifically had religious liberty as one of its purposes, and although the First Republic never made any official declarations on the subject, nevertheless a weakening of church power was a natural effect of the revolution, while the issue of religious tolerance throughout the United States worked itself out naturally under the equilibrium of conflicting forces that was so characteristic of the First Republic.

        The case of the Congregational Church in Massachusetts was anomalous in this respect, because in many ways it was strengthened rather than weakened by the revolution. This church, being a democratic organization, controlled from below rather than from above, and being largely identified with the same town meetings which had engineered the beginning of the revolution, there came a tendency to regard opposition to this church as opposition to rule by the people. In many towns, the town government and the local unit of the Congregational Church were one and the same thing, so that to a limited extent it became an established church in Massachusetts for a time, in spite of the fact that the "Commonwealth" coup, deriving its support from the Episcopalian Tories, and from other non-democratic elements, refused to recognize this. So that Massachusetts presented the highly anomalous situation during the First Republic of a group of would-be rulers fighting to disestablish the church, as against a people clinging to the church in the name of democracy. But even here, a parallel effect of the revolution was in decentralizing the church into a number of disconnected town units, bound by no particular tenets or central organization. After the "Commonwealth" took control of Massachusetts, it was through this peculiar democratic, decentralized church organization that the skeleton of the old "civil disobedience" association, though in highly disjointed form, was preserved, at a time when even the official town meetings were closed by the Commonwealth authorities to all but the propertied. This property qualification had existed all the time in the other States except Massachusetts, as it had been a natural growth in the South and had been imposed on New England by the British authorities; but in Massachusetts it was when the Commonwealth was established and the original State government overthrown, that property qualifications for voting were restored; and it was largely through the machinery of the Congregational Church that the framework of the original democracy of the revolution was preserved during the period of the First Republic.

         Other churches than the ones just considered, required no reorganization as a result of the revolution. The equality of religious sects, however, was not legally recognized as yet in most States, though it was under the First Republic that this issue was fought out. Catholics were much discriminated against except in Maryland; this was true even in the States where the laws provided for the widest religious tolerance, and this was probably largely because their centralized organization might be inimical to the sovereignty of the State governments themselves. The first Catholic church it was possible to establish in the states outside of Maryland, was started in Boston in 1789, during the closing months of the First Republic.

         152. Land and Trade under the First Republic.  The war had brought most trade of the United States almost to a standstill, and it was now attempted to reorganize it, with the old-time smuggling ring now in the position of respectable importers. There had been practically no shipbuilding during the war, since rebel shipping was treated by most nations as piracy; and it naturally took a long time to restore the set-back of the long war. Very little money circulated, as a result; and, even after the war, the attacks by the pirate ships of Algiers and Morocco, who not only attacked shipping at sea, but made slave raids on the American coast, blocked to a great extent efforts at restoring international trade in America. The longer this situation continued, the worse matters became, since the traders were able to employ few people, thereby lessening the amount of money in circulation. Both the Cincinnati and the supporters of the workers’ factory system took occasion to blame the government of the First Republic for the resulting economic depression, the former on the ground that the Republic was too inattentive to the rich, and the latter on the ground that the confederate administration was favoring the rich as against the poor. As usual, the one who tries to please everybody succeeds in pleasing nobody.

         The economic crisis which commenced at the close of the war was purely one of post-war reconstruction, and was not one of the great world-wide depressions which, in the later history of the capitalist system, were to shake the world’s entire economic organization. The main difficulty was to get some sort of manufacturing started; and the workers’ factories, which were rapidly being confiscated, were the only organizations in America with facilities and organizational equipment for this. The rising system of the capitalists was trying to accomplish the same end, but as yet it lacked the proper forms of organization in America to develop manufacturing. It was therefore attempted, as the workers had done before the revolution, to organize "associations" for promoting different sorts of manufacture―only in these new associations, not labor but capital voted: one share of capital, one vote; and these "associations" were, one by one, granted charters by the state legislature similar to those that the colonies had formerly received from the English Parliament, thus beginning the modern type of organization, the commercial corporation.

        Both during the War for Independence and after it, both the workers’ factory system and the capitalist attempt to start manufacture had been trying hard to introduce new inventions, the former plan introducing them mostly by cooperative effort so that no definite individual could be marked out as the inventor, while the latter system worked exclusively on individual inventions. Thus, the concealed workers’ factory on the Neponset River between Dorchester and Milton, in its attempt to provide transportation for its food products before the revolution with being noticed, had provided a road made for two plank tracks, leading to the river some distance below the factory (since, before the revolution, leading the road directly to the factory would have guided the authorities there); and, after the revolution, these planks were reinforced with grooved stone tracks―one of the first railroads in existence, though it was a horse-car line. After the succession of the "Commonwealth" to power in Massachusetts, this road was taken over by the state authorities and operated as a regular highway―but there the new invention was. Again, individual inventions were tried out during the First Republic, though the Second Republic largely suppressed all inventions for a time. A good example was the invention of Fitch, of Hartford, Connecticut, who constructed a boat operated by steam-engine, which ran regularly, transporting freight and passengers, between Hartford and New Haven during the last years of the War for Independence, and, after the peace, operated for several years―in fact ran the rest of the duration of the First Republic―between Hartford and New York.

        As the northern sates were now controlled by the rising capitalist class, the last outstanding exception, Massachusetts, being removed by the advent of the Commonwealth regime, it was natural that the authorities in these states should try to promote inventions by individual capitalists, while what was left unconfiscated of the workers’ factory system was still introducing its own manufacturing improvements―in fact, forced to do so, in its last fight for existence. States such as Massachusetts, Connecticut, and Pennsylvania began, as England had done before, issuing to inventors patents giving them a monopoly right to their invention in the State; since, in England, where manufacture had already arisen on an individual ownership basis, this was a means of assuring that the individuals would continue to own, and in these American states it could very well serve the purpose of putting down the attempt to organize manufacture on the basis of group ownership by workers.

        What the capitalists particularly desired to do in order to get their own manufacturing system started, was to import some invention into the United States in which manufacture had already been organized on a definitively private-capital basis; and the most outstanding such invention was the English spinning-jenny. "Associations" were organized in various states for this purpose, but, since England would not allow plans of the machinery to be taken out of the country, it was necessary to find some way to smuggle the plans out of England. Tench Coxe of Baltimore was the chief person engaged in this attempt, but it was not until 1786 that he managed to smuggle into the United States actual plans for the spinning jenny. In the meantime, an "association" promoted by the Commonwealth regime in Massachusetts had succeeded in securing the services of a Scotchman who had worked on the machinery in the cotton mills in England, and who knew enough about the workings of the machinery to reconstruct--with variations of his own--similar machinery in Massachusetts. It was not until 1787 that any efforts were under way, however, for actual construction work, and then two rival spinning-jenny plants were being built, one by Tench Coxe and his "association," at Pawtucket in Rhode Island; and the other by the Massachusetts "association" at New Bedford in Massachusetts. The old-time hide-out workers’ factory which had been established before the revolution, manufacturing textile goods at the old tribal weir in the abandoned Okamakammesset town of Wamesset, was confiscated under the Commonwealth regime by the Lowell family, who proceeded to remodel the factory after the plan of the New Bedford mill, starting the textile factory settlement which grew into the city of Lowell.

         In the country, confiscation of farmers’ land was going on with equal rapidity, so that much of the land that the farmers had acquired as a result of the revolution, especially in the Middlesex uprising in Massachusetts which began the revolution, was now rapidly coming into the hands of the large merchants who, as the pre-revolutionary smuggling ring, had financed the war and, on that heading, claimed mortgages on the land acquired by that means. On the other hand, American conditions necessitated a more fluid condition of land ownership, to ease the territorial expansion pressure from which the colonies, especially Virginia, had suffered. To this end, it had been attempted, even long before the revolution, to modify the inheritance laws, but England, interested in creating large estates for her own lords, had declared all those attempts void, and enforced in America the English rule of primogeniture (inheritance by the eldest son only). This legal procedure was duly modified after the war in all the States, so that all children inherited equally.

         153. The Soldiers’ Demands.  It is not to be supposed that, during the process of confiscation of farm lands and of workers’ factories, no opposition was shown. The reaction resulting from the growing power the Cincinnati were acquiring, brought about opposition to both state and federal governments from two directions; one from the workers and farmers, who were fighting to avoid confiscation, the other from the ex-soldiers, who were seeking payment for their services during the war, and were consequently urging heavier taxation and more confiscation in order to pay them. In the spring of 1785 a group of ex-soldiers appeared before the State House in Philadelphia, to demand their pay from both Congress and the State Legislature, both of which were in session in that building at the time. In this case, Congress contrived to leave the building secretly and, since they had proved mobile during the war, having little to hold them to one spot, they promptly reassembled forty miles away, at Princeton in New Jersey. Later on, to avoid recurrence of this attack by the veterans, it was decided to take the Congress to New York, where most of the war veterans had fought on the British side, and could therefore have no claim on Congress--where also the growing Cincinnati element in Congress, with its pro-aristocratic tendencies, could feel more at home than in Philadelphia, which had been the capital during the greater part of the Revolution. It is not, of course, to be supposed that the Congress of the First Republic made no efforts to raise enough funds to pay off its army; but the decentralized form of that government made that difficult, and in fact put the bulk of the burden on the individual States, some of which had been imposing heavy taxes to raise the funds, resulting in further confiscations of farms and of all appurtenances of the guild and co-operative organizations, thereby further breaking down the more democratic parts of the First Republic, as well as arousing a greater spirit of revolt in the farmers and workers—the latter particularly in New England, where the workers’ factory plan had been most highly developed.

         The effort to raise federal funds was handicapped largely by the fact that practically the only way Congress could raise its own expenses was by voluntary contributions from the States, which were charged what might be called membership dues for nesting delegates to the confederation organization. There was, it is true, little difficulty in collecting these State dues, though in 1788 Virginia defaulted, and consequently had no representation in Congress that year. Also it was attempted to raise loans abroad, though the First Republic, on account of its loosely federate organization, could give little security; and European nations, insisting on reduction of the diplomatic standing to terms they had been used to, kept repeating in vain their query as to whether the United States was one nation or thirteen. Nevertheless loans were actually raised in France and Holland, leaving the equally difficult problem of repayment of the loans. In addition, a series of constitutional amendments―the only ones ever submitted to the States under the First Republic―proposed by Congress, giving the Congress power to impose import duties, under certain limitations. Two of these amendments failed to get more than a small number of ratifications (under the First Republic, unanimous ratification by the States was required for a constitutional amendment), but a third was proposed which specifically described the taxable commodities, limiting the duties to 5%, and this amendment was ratified by twelve States, but was rejected by New York, whose seaport wanted ocean trade, but no land trade; and was therefore much more ready to attempt breaking up the federation by importing customs barriers against United States trade, as indeed New York State actually did in 1787. So that in this field Cincinnati influence had been successful in blocking all attempts of Congress to obtain funds, and Congress was almost forced to turn its attention once more to its own property―the Northwest Territory―as a possible source of revenue.