EMERGENCE OF USA
THE AMERICAN REVOLUTIONARY WAR AND ITS IMPACT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Congress did not have the power to raise money through taxes.
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the States were against the war.
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no foreign countries would help the Patriots pay for the war.
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The British closed all Colonial banks at the start of the war.
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Detailed explanation-1: -How did Congress finance the war effort and what problems did this cause? Congress borrowed money by selling bonds to American Investors and foreign governments, especially France. They also printed paper money called Continentals. This caused inflation.
Detailed explanation-2: -To raise money for the war effort, the United States government used taxes and bonds. Liberty Bonds were loans to the government, paid by Americans and paid back with interest. From April 1917 to April 1919, Congress authorized five bond drives.
Detailed explanation-3: -Paying for the American Revolutionary War (1775-1783) was the start of the country’s debt. Some of the founding fathers formed a group and borrowed money from France and the Netherlands to pay for the war. To manage the new country’s money, the Department of Finance was created in 1781.
Detailed explanation-4: -In order to pay for its significant expenditures during the Revolution, Congress had two options: print more money or obtain loans to meet the budget deficit. In practice it did both, but relied more on the printing of money, which led to hyperinflation.