Thus were created two more American institutions, the territory and the state formed out of the public domain.  The ordinance was but a few months old when South Carolina ceded (1787) her little strip of country west of the mountains (see map on p. 157) with the express condition that it should be slave soil.  In 1789 North Carolina ceded what is now Tennessee on the same condition.  Congress accepted both and out of them made the “Territory southwest of the Ohio River.”  In that slavery was allowed.[1]

[Footnote 1:  The only remaining land-holding state, Georgia, ceded her claim in 1802 (p. 246).]

%169.  Defects of the Articles of Confederation.%—­While Congress at New York was framing the Ordinance of 1787, a convention of delegates from the states was framing the Constitution at Philadelphia.  A very little experience under the Articles of Confederation showed them to have serious defects.

No Taxing Power.—­In the first place, Congress could not lay a tax of any kind, and as it could not tax it could not get money with which to pay its expenses and the debt incurred during the Revolution.  Each of the states was in duty bound to pay its share.  But this duty was so disregarded that although Congress between 1782 and 1786 called on the states for $6,000,000, only $1,000.000 was paid.

No Power to regulate Trade.—­In the second place, Congress had no power to regulate trade with foreign nations, or between the states.  This proved a most serious evil.  The people of the United States at that time had few manufactures, because in colonial days Parliament would not allow them.  All the china, glass, hardware, cutlery, woolen goods, linen, muslin, and a thousand other things were imported from Great Britain.  Before the war the Americans had paid for these goods with dried fish, lumber, whale oil, flour, tobacco, rice, and indigo, and with money made by trading in the West Indies.  Now Great Britain forbade Americans to trade with her West Indies.  Spain would not make a trade treaty with us, so we had no trade with her islands, and what was worse, Great Britain taxed everything that came to her from the United States unless it came in British ships.  As a consequence, very little lumber, fish, rice, and other of our products went abroad to pay for the immense quantity of foreign-made goods that came to us.  These goods therefore had to be paid for in money, which about 1785 began to be boxed up and shipped to London.  When the people found that specie was being carried out of the country, they began to hoard it, so that by 1786 none was in circulation.