The surrender of Cornwallis terminated the struggle.  The peace treaty was signed in 1783.  The financial situation was very deplorable.  One of the greatest difficulties that confronted the colonists, was the limited power of Congress.  The states could regulate commerce and exercise nearly all authority.  But disputes regarding their boundaries prevented their development as a united nation.

Congress issued an ordinance in 1784 under which territories might organise governments, send delegates to Congress, and obtain admission as states.  This was made use of in 1787 by the Northwest Territory, the region lying between the Ohio and the Mississippi and the Great Lakes.  The states made a compact in which it was agreed that there should be no slavery in this territory.

The critical period lasted until 1789.  In the absence of strong authority, economic and political troubles arose.  Finally, a commission appointed by Maryland and Virginia to settle questions relating to navigation on the Potomac resulted in a convention to adjust the navigation and commerce of the whole of the United States, called the Annapolis Convention from the place where it met, May 1, 1787.  Rhode Island was the only state that failed to send delegates.  Instead of taking up the interstate commerce questions the convention formulated the present Constitution.  A President, with power to carry out the will of the people, was provided, and also, a Supreme Court.

Washington was elected first President, his term beginning March 4, 1789.  A census was taken in 1790.  The largest city was Philadelphia, with a population of 42,000—­the others were New York, 33,000, and Boston, 18,000.  The total population of the United States was 4,000,000.  The slaves numbered 700,000; free negroes, 60,000, and the Indians, 80,000.

The Federalists, who believed in centralised government, were the most influential men in Congress.  Washington appointed Thomas Jefferson Secretary of State, Knox Secretary of War, Hamilton Secretary of the Treasury, Osgood Postmaster General, and Jay Chief Justice of the Supreme Court.

The first tariff act was passed with a view of providing revenue and protection, in 1789.  The national debt amounted to $52,000,000.00—­a quarter of which was due abroad.  The states had incurred an expense of $25,000,000.00 more, in supporting the Revolution.  The country suffered from inflated currency.  The genius of Hamilton saved the situation.  He persuaded Congress to assume the whole obligation of the national government and of the states.  Washington selected the site of the capitol on the banks of the Potomac.  But the government convened at Philadelphia for ten years.  Vermont and Kentucky were admitted as states by the first Congress.

In Washington’s administration, a number of American ships were captured by British war vessels.  England was at war with France and claimed the right of stopping American vessels to look for possible deserters.  War was avoided by the Jay Treaty, November 19, 1794.