The settlers who poured into the Southwest after the war somehow expected that they would be able to trade down the Mississippi River. The Mississippi, rather than the east-west trade across the almost impassable Appalachian Mountains, was the natural trading route for the western inhabitants. Yet, it should have been evident to them that Spain, in unchallenged possession of both sides of the lower Mississippi (even the aggressive United States did not dispute Spain’s possession of West Florida below the 31st parallel), had no particular reason to open the Mississippi to American trade.

Not all the diplomacy of the postwar period was such a failure as the negotiations with Spain and Great Britain. As soon as the peace treaty was signed, America, freed from the fetters of British mercantilism and eager to trade with all nations, instructed the peace commissioners (John Jay, John Adams, and Benjamin Franklin) to negotiate commercial treaties with all willing countries. While peace negotiations were still underway, Franklin had already signed a treaty with Sweden in April 1783.

Part of the drive for state paper money came from the public creditors as well as the states; for the federal creditors were anxious to get paid by some organ of government, and after the collapse of Robert Morris’ nationalist program they began to agitate for the states to assume their share of the federal debt. Hence, the nationalists came to see that public creditors could prove to be a troublesome two-edged sword.

A severe depression, bank contraction, a heavy burden of taxes to pay state debts, all this turned men’s thoughts to issuing paper money to finance government. Historians influenced by the Populist struggles of the late nineteenth century have always identified proponents of inflation with “farmer-debtors” and hard-money men as “merchant-creditors.” Actually, while it is true that debtors, especially during hard times, tend to favor inflation, merchants are even more likely than farmers to be heavily in debt since they have higher credit ratings and can borrow more.

Every depression generates a clamor among many groups for special privileges at the expense of the rest of society—and the American depression that struck in 1784–1785 was no exception. If excess imports were the culprit, then voluntary economizing could help matters, and the press was filled with silly fulminations against ladies wearing imported finery. Less foolish and more pernicious was a drive by the beleaguered and often sub-marginal artisans and manufacturers for the special privilege of protective tariffs.

A key to the politico-economic problems of the Confederation period, as well as one of the leading arguments for centralized power, was the swollen corpus of war-born public debt. The mass of federal and state debt could have depreciated and passed out of existence by the end of the war, but the process was stopped by Robert Morris. Morris and the nationalists moved to make the depreciated federal debt ultimately redeemable at par, and also agitated for federal assumption of the states’ debts.