After the 13 colonies declared their independence from Great Britain in 1776, their leaders recognized the need for a national government to bind these new states together. The first attempt at creating such an entity was the Articles of Confederation, first proposed at the Second Constitutional Conventional in 1777 and ultimately ratified in 1781. The Articles reserved nearly all sovereignty to individual states – a solution that proved disastrous. The Articles were quickly abandoned and replaced by a federal system -- in which power is divided between the states and a stronger national government -- in 1787.

Why a Confederacy?

The founders' first stab at forming a national government took the form of a confederacy, a system in which states are granted sovereignty and the national government is granted very little power. For instance, under the Articles of Confederation, there was no national executive or judicial branch of government, and the legislative branch had very limited authority and every legislative action had to be approved by a supermajority of states. The founders devised such a system because they feared that a too-powerful national government would lead to tyranny, as they believed had happened in Britain. While the United States under the confederate government did manage some accomplishments -- such as fighting the Revolutionary War and signing the peace treaty that ended it, as well as passing the Northwest Ordinance -- the central government was hamstrung by its inability to perform basic essential functions. It did not take long for such a system to begin unraveling.

Money Trouble

One disadvantage of the confederate system was that the national legislature could not raise taxes to pay off the debts the country incurred in the Revolutionary War. Only the states had the ability to raise revenue. Congress was allowed to ask the states for money "in proportion to the value of all land within each State," but oftentimes states simply did not pay what they owed. This made it impossible for Congress to produce a budget or manage foreign affairs.

Chaos Abounds

Congress also had very little power to regulate trade, and could not enter into trade agreements with foreign countries. The states could forge such agreements, but they rarely coordinated with each other, which led to a chaotic system in which each state had different import and export policies. In addition, the Articles did not mandate a national currency -- meaning both the national government and the states could print their own money -- which made trade both between states and with foreign powers cumbersome and inefficient.

No Central Leadership

Because the Articles did not contain a national judiciary, each state had its own – and its judges could effectively nullify any national policies they didn't like. In addition, legislature could ignore national laws without fear of repercussion. The lack of leadership also led to problems in foreign affairs, as the young country had no real head of state. At one point, British diplomats complained that they had no one of any authority to talk to. More importantly, while Congress could declare war under the Articles of Confederation, it could not raise an army to fight that war, and instead had to rely on state militias. In the years after the Treaty of Paris, Great Britain took advantage of the United States' turgid military response capabilities by infringing on American fishing rights and conscripting American sailors into the Navy.

Shays' Rebellion

Perhaps no events embodies all of these disadvantages quite as well as Shays' Rebellion. In western Massachusetts, many new settlers were struggling with crushing debts they had incurred trying to start new farms in the midst of an economic depression. The Massachusetts government reacted by seizing the farms and throwing some of these farmers in prison for not paying their debts. in 1786 the farmers protested -- peacefully at first, but the protests eventually grew into a revolt under the leadership of Daniel Shays, a former captain in the Continental Army. The national government, meanwhile, had no means to raise the funds necessary to put down this rebellion. In the end, rich Massachusetts merchants footed the bill for a militia the effectively defeated the rebellion, but the national government's fecklessness was made plain for all to see.