Resources to fight the War for Independence from Great Britain (1775-1783) were to be provided to the U.S. Congress by the individual states based on each state's population share in the united colonies. Congressional spending, however, largely flowed to where the theater of war was located. Thus a geographic imbalance in revenue and spending arose. Because much of the spending was through issuing paper money, geographic variation in inflation as well as in general economic activity resulted. This in turn affected the relative strength of each state's attachment to the union with ramifications on maintaining political unity.
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number
14267.
Length: Date of creation: Aug 2008 Date of revision: Handle: RePEc:nbr:nberwo:14267
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Find related papers by JEL classification: E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy H60 - Public Economics - - National Budget, Deficit, and Debt - - - General H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism N11 - Economic History - - Macroeconomics and Monetary Economics; Growth and Fluctuations - - - U.S.; Canada: Pre-1913 N41 - Economic History - - Government, War, Law, and Regulation - - - U.S.; Canada: Pre-1913
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