The members of this Congress hammered out the Declaration of Independence and signed it on July 4, 1776. But not until two years later were the Colonies joined together by a formal agreement, the Articles of Confederation and Perpetual Union Between the States. In these Articles the Colonies called themselves the United States of America, but they remained a union of independent states. Having gone to war to free themselves from a strong central government with an autocratic ruler, the Colonies distrusted centralized authority and each was jealous of its sovereignty.
The result was that the central government was reduced to the status of a pleader for money. It had no power to levy taxes directly. It could only appeal to the states to contribute to the expenses of the central government in proportion to the assessed value of their land. As a matter of fact, whenever the central government did ask the states for funds, as likely as not the states simply ignored the request.
In 1781, during the final months of the exhausting revolution and while the outcome still was in doubt, the central government was in need of $9 million for operating expenses. The Congress thought it possible to raise this amount by borrowing $4 million and then asking the states to contribute the additional $5 million. But the states responded to the urgent appeal with only $442,000. North and South Carolina, Georgia and Delaware contributed nothing. At times it seemed that if the British didn’t defeat the Revolution, an empty treasury would.
During and after the American Revolution, the tariff situation was an unholy mess. Each state had its own tariff laws, with the exception of New Jersey, which had none. The states often set up tariff barriers against each other, sometimes for protection and sometimes for reprisal. The dickering amongst them was continual and the maneuvering for advantage fierce.
On one occasion, New York, Connecticut and New Jersey plunged into a three-way fight that to later generations might seem little more than hilarious comedy—but there was nothing comic about it at the time for those involved. It began when the New York legislature reached the conclusion that the Connecticut Yankees and the New Jerseyites were taking too many dollars out of New York City, and giving too little in return.
It was true that Connecticut merchants supplied most of New York’s firewood, for a tidy profit. And the farmers of New Jersey were sending boatloads of chickens, eggs, vegetables and fruit across the river, selling them, and taking back dollars. The imports from Connecticut and New Jersey were running ahead of the exports to these two states by too great a margin—or so the gentlemen in the New York legislature figured. The legislature passed a tariff law which imposed a tax on every stick of Connecticut wood and each New Jersey egg, chicken, duck, goose and cabbage brought into the city. The chicken peddlers from New Jersey had to get clearance papers and pay taxes on each pullet or hen, each basket of eggs and each head of cabbage. Stovewood had to be measured and counted at the Customs House and taxes paid on the spot.
Naturally this state of affairs irked the New Jersey folk, whose legislature promptly looked around for a means of retaliation and, in so doing, spotted the City of New York’s lighthouse standing on Sandy Hook. It was solemnly agreed by a majority that this lighthouse should not stand out there flashing an untaxed warning to ships headed for the New York Harbor. And so the legislature voted to place an $1,800-a-year tax on the lighthouse.
In Connecticut, the merchants were no less aroused than the farmers of New Jersey. It was agreed that a boycott of New York products was justified. Whereupon the merchants formed themselves into an association dedicated to the proposition that no loyal Connecticut merchant would either buy or sell anything in the City of New York. Any member who violated the agreement was subject to a fine.
Again, the British in 1783 decided that only British vessels would be permitted to handle cargoes in the West Indian trade. This proclamation so enraged New Yorkers that they retaliated by laying a double duty on all cargoes arriving in British vessels. New Hampshire, Rhode Island and Massachusetts were equally incensed—and declared that no cargoes could leave their harbors if carried in a British ship.
But these tremors of righteous outrage did not stir the Connecticut Yankees. They saw the situation as holding the promise of fat profits. The ships of Great Britain were invited to use Connecticut ports, duty free. And then Connecticut further enraged its neighbors by imposing a tariff on goods coming into the state from Massachusetts.