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Difficulty: HardThe Articles of Confederation and the Northwest Territory

"All charges of war, and all other expenses that shall be incurred for the common defense or general welfare, and allowed by the United States in Congress assembled, shall be defrayed out of a common treasury, which shall be supplied by the several States in proportion to the value of all land within each State... The taxes for paying that proportion shall be laid and levied by the authority and direction of the legislatures of the several States within the time agreed upon by the United States in Congress assembled."
—Articles of Confederation, Article VIII, 1777

Which of the following historical developments in the 1780s was a direct consequence of the financial system described in the excerpt?

  1. The national government's chronic budget deficits and inability to pay war veterans, contributing to domestic unrest.Answer
  2. B
    The federal government's unilateral decision to levy a national excise tax on whiskey to pay off state debts.
  3. C
    The immediate repeal of the Stamp Act and Townshend Acts by state legislatures to relieve local tax burdens.
  4. D
    The establishment of a national bank to regulate state currencies and manage land sale revenues.

Answer

The national government's chronic budget deficits and inability to pay war veterans, contributing to domestic unrest.
The correct answer is correct because the requisition system created by Article VIII meant the national government could not levy taxes directly and relied on states to voluntarily supply funds. As a result, the Confederation Congress suffered from constant deficits, could not pay foreign debts, and could not pay Revolutionary War veterans, which ultimately fueled Shays' Rebellion.

Step-by-Step Solution

1
Analyze the source text of Article VIII of the Articles of Confederation to determine how the national government raised revenue.
The text states that the common treasury would be supplied by the states, and taxes would be laid and levied by state legislatures, not the national government.
Understanding the source is the first step to evaluating its historical consequences.
2
Evaluate the historical consequences of the national government's lack of direct taxation power and reliance on state requisitions.
States frequently ignored requisitions, leaving the Confederation Congress with chronic deficits, unpaid foreign debts, and unpaid veterans.
Connecting structural design to practical outcomes is necessary to analyze the Articles' weaknesses.
3
Identify the resulting crisis that matches the options, eliminating distractors belonging to other eras or constitutional frameworks.
The national government's inability to pay veterans and service its debts contributed directly to domestic unrest (such as Shays' Rebellion), which aligns with the correct option.
Selecting the option that historically matches the Articles of Confederation era confirms the correct answer.

Key Concept

The structural and financial weaknesses of the Articles of Confederation, specifically the lack of national taxing authority.
Estimated Time:2m 0s
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Topics

The Articles of Confederation and the Northwest Territory

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