Paying for the war was a profound challenge for Congress. American society was cash poor. There were no banks or other financial institutions that could easily raise money or extend credit. Congress lacked the power to tax; the states reserved that sensitive function for themselves. American finances would be in a state of disorder throughout the war.

During the colonial period, Americans had often turned to paper money to compensate for the chronic shortage of hard currency. These notes had eased credit and facilitated commerce. Americans' generally positive experience with paper money led them to resent British restrictions on this currency.

With this background in mind, Congress turned to paper currency as a means of meeting its needs. For a time the system worked reasonably well, with Continental dollars holding their value as the economy expanded with the demands of the war. Unfortunately, no efficient system existed for retiring these bills. The states enforced little taxation early in the war, despite pleas from Congress to make taxes payable in Continental currency. Both Congress and the states aggravated the problem by printing new issues of currency. By 1779, Congress had issued $191,552,380 in paper. The states had printed $200,000,000 more. This, and the inevitable economic dislocations caused by the war, led to a disastrous inflation. American money dwindled in value. People began to describe useless things as being “not worth a Continental.”

Farmers and merchants found ways to deal with the inflation. Many prospered during the war. The government and those on its payroll, especially the soldiers, suffered the most. Congress was concerned about inflation. At various times it and state governments experimented with wage and price controls, with no success.

On September 3, 1779, Congress agreed to stop printing money once it had issued $200,000,000 in bills. In March 1780, Congress declared that forty of its paper dollars would be worth one dollar in coin. Following this revaluation of its debt, Congress turned to the states for economic support. The states were asked to retire the Continental currency through taxation. The Continental issue would be replaced by smaller issues of state currency that would hopefully retain their value longer.

Congress also authorized the states to supply the army in kind, turning over foodstuffs, clothing, and other goods to Continental officers, who would then disburse them to the army. This medieval system of supply did not work well. Support from the states continued to be inadequate and dilatory. The states faced the same problems the national government did in mobilizing credit and achieving efficient administration. State governors and legislatures had a difficult time implementing policy. Government was intentionally weak and bureaucratic expertise almost nonexistent. Eighteenth-century American society was not structured to facilitate the efficient management of a war.

Congress raised some money by selling bonds to wealthy investors. This source of revenue was limited by congressional credit. Infusions of money from France helped bolster the value of the bonds. Ultimately these bonds became another variation of the glut of paper currency in the country as the bonds became a means of exchange in business transactions.

In 1781, Robert Morris was appointed the first Superintendent of Finance. Morris was a Philadelphia merchant who had prospered greatly during the war, running ships past the British blockade, outfitting privateers, and selling supplies to the army. Morris had served in Congress, and through this experience fully understood the challenge of funding the American war effort.

Morris could not single-handedly solve the financial problems of the United States. He energetically addressed an enormous amount of business, ranging from compensating a farmer for livestock requisitioned by the army, to personally taking a hand in supplying the troops. By bringing a measure of order and central direction to American finances, Morris made a significant, if largely unrecognized contribution to American victory in the war.