Peace Treaty With France
The United States signed the Convention of Paris with France. Under this treaty, France accepted US neutrality rights at sea. The French also discharged the US from its obligations established under the alliance formed by the two nations during the American Revolution. In return, the United States granted France "most favored trading status."
The Articles of Confederation had established a weak central government, made up of a Congress with no real executive. While the Congress appointing individuals to handle some executive duties, such as John Jay (Secretary of State) and Robert Morris (Secretary of Treasury); there was no central executive mechanism. To make matters worse, any decision required the approval of all the states. Thus, any one state could veto any proposal. This was particularly problematic when it came to raising revenue, which the Confederation had no means of doing other then requesting money from the states. All attempts to give the Confederation the power to raise money by levying a customs duty came to nothing.
The weakness of the central government also limited the ability of the Confederation to reach satisfactory agreements with foreign governments. American diplomats made trade agreements with a number of European countries, such as France, Sweden and Prussia. Nevertheless, the Confederation was unable to reach any agreements with Great Britain and Spain, two nations with which the US have serious border disagreements. The one major success during the period was the passage of the Northwest Ordinance (1787), which ended the competing state claims for western territory and provided a framework for settling the territory.
Powers of the Confederation
1) Declaring War
2) Raising an Army and Navy
3) Making Treaties
4) Borrowing Money
5) Establishing a Postal System
6)Conducting Business with Native Americans and other powers
Powers that the Confederation Did Not Have
No authority of individual citizens
No means of enforcing laws
No court system
No ability to tax
Dependent on States to send money
With the war over and no strong central government in place the United States suffered from a strong economic downturn. Their were a number of causes of the downturn. The first: A lack of a strong central currency. The Continental Congress had printed paper money to pay for the war. With no gold behind the money and little money being given by the states the paper money became valueless. Individual states began printing money, however it was almost impossible to compare the value of paper money from one state to the other. Finally some states started taxing goods coming into the state from another state. All of this made trade nearly impossible and caused the economy to nearly collapse