Following the American Revolution, the inhabitants of the United States found themselves in a bad situation. Although they had fought for and successfully achieved their freedom from Great Britain, they were not in a good position to protect their new found freedom or to grow as a nation. The founding fathers knew that in order to grow and flourish as a new independent nation, they must establish a strong central government that the people of the nation could rely on. .
In order for the people to be able to believe in the new government it had to provide them with defense from other nations and Native American inhabitants of the land. The new government would also need to deal with foreign affairs, institute a postal service and establish a national currency. The most important thing that the new government faced was the need to develop reliable military and naval forces. These responsibilities were formally defined in 1781, when the Articles of Confederation were adopted. All these new obligations would require substantial funding; funding that was not readily available.
While the Articles clearly established a government, they failed to empower the government with several necessary powers; powers such as right to tax its citizens directly, the right to regulate trade and the right to enforce any of its mandates through a national judicial system. The absence of such powers made it extremely difficult for the government to raise the money it needed to successfully carry out its duties to the people. .
Just as a rebellious teen, running away from home faces a rude awakening after fleeing the nest, the United States found itself struggling to stand on its own two feet. After the Revolution, the U.S. was in debt to the French government, Spanish government and Dutch Bankers. This debt was steadily growing as a result of the interest that the U.S. was unable to pay. This inability to pay led to more debt in the form of more loans.