Adopted in 1781 as America's first constitution, the Articles of Confederation soon proved inadequate for governing the young nation. By 1787, the United States was in crisis. The states, officially united in a loose association of state governments, had ever worsening relations with each other. Each state issued its own currency, and then all the states bickered about the value of their currency within other states. States taxed each other on goods brought across their borders from other states. Attempting to gain economic advantages over their neighbors, states independently made trade arrangements with foreign countries.

The Continental Congress, which served as the national government under the Articles, was powerless to control trade difficulties between the states or to resolve issues over the value of thirteen different currencies. Neither was it empowered to control trade with foreign nations. Causing more serious difficulties, the...