Economic issues: Inflation, depreciation of Continental currency

Between 1779 and 1781, the Continental dollar lost nearly all of its value as Congress continued issuing paper notes without a reliable tax base or specie reserve. Congress had begun printing Continental currency in 1775, but by 1779 the notes traded at roughly 40 to 1 against silver, and by 1781 some markets approached 1000 to 1. The collapse produced the phrase 'not worth a Continental' and crippled public confidence in Revolutionary finance.

The currency crisis exposed the central weakness of the Articles of Confederation in wartime: Congress could issue paper and request funds, but it could not tax directly or compel the states to meet financial requisitions. Inflation punished soldiers, suppliers, and ordinary civilians while rewarding speculation and undercutting trust in national promises. The crisis therefore became a constitutional argument as much as an economic one, because it showed that independence required a government capable of enforcing revenue policy.

Robert Morris tried to stabilize the situation in 1781 by founding the Bank of North America in Philadelphia, which received its charter in December 1781. The humiliation of Continental currency also strengthened nationalist arguments later advanced by Hamilton and Madison for a stronger federal government under the Constitution.