Did the Articles of Confederation Give Congress the Power to Issue Currency?
The Articles of Confederation were drafted in 1777 at the height of the Revolutionary War. The document was ratified in 1781. The main issue the Continental Congress hoped to address by adopting the Articles of Confederation was the establishment of unity between states in dealing with foreign governments. The power to issue and regulate currency was addressed in a pair of sub-points of Article IX in the Articles of Confederation.
1 Article IX
Under the Articles of Confederation, the individual states retained all powers and rights not specifically given to the U.S. Congress. Article IX enumerated congressional powers. One of the rights it reserved for the U.S. Congress was "the sole and exclusive right and power of regulating the alloy and value of coin struck by their own authority, or by that of the respective States." Article IX further stipulated that any regulations concerning the coining of money – and most other legislation involving money – required a super-majority of nine states to become law.
2 Lack of Uniformity
Although the Articles of Confederation authorized Congress to mint and issue currency, it did not prevent or discourage the individual states from issuing their own currencies. Some states issued large amounts of paper money to pay their veterans and other obligations, while other states put tight controls on their currency. This led to widely different values of currency from state to state. Because of this, some states charged duties on imports from other states.
3 Not Worth the Paper It's Printed On
James Madison, who would later be instrumental in writing the U.S. Constitution, expressed his concern that the majority of the young nation's political problems stemmed from economic chaos. He attributed the economic problems to a combination of the issuance of worthless paper money by the states and the Articles' inability to keep states from entering into separate trade deals with foreign countries.
4 Paving the Way for the Constitution
In Massachusetts, strict control of currency led to economic hardship for the state's veterans of the Revolutionary War. This eventually led to armed rebellion in 1786 and 1787. These problems caused by a lack of unity in the nation's currency were among the problems the framers of the Constitution addressed. When the U.S. Constitution was ratified in 1789, it superseded the Articles of Confederation and forbid states from printing or minting money, granting the U.S. Congress sole authority to generate U.S. currency.