With the end of Britain’s long war with France in 1763, however, the financially hard-pressed mother country imposed higher rates of taxation on the colonies and made greater efforts to collect them. At the same time, the collapse of French power in North America raised anew the issue of westward expansion and reduced the importance to the Americans of British military support. Efforts by the British to increase revenues from the colonies were countered by colonial measures to resist payment of taxes, to reduce imports from Britain, and to obstruct the activities of British administrators in the colonies. When negotiations failed to resolve the various issues between the two parties, an ill-organized series of skirmishes broke out and there ensued a long period of intermittent warfare between Britain, by then the greatest military power in the world, and an unimpressive colonial force comprising an "army" of never more than about 20,000 men and a navy consisting of mainly pirate vessels ("privateers").
The ability of the revolutionary forces to resist the might of British military power was unexpected. Economically, the several colonies appeared to have access to little in the way of resources to draw upon for purposes of war. Tax revenues were minuscule. The Revolutionary War was ultimately financed, however, as are most wars, through inflation. The political organization formed to wage the war, the Continental Congress, printed paper money so rapidly that its currency became almost worthless. It also borrowed heavily.
The American Revolution was led by a relatively small, radical group and there is little indication that it initially attracted widespread public support. An important part of the colonial population having strong ties to Britain (wealthy landowners, the Anglican clergy, British civil servants, and the military forces) more or less openly opposed the movement. When it became evident that the revolution would nevertheless succeed, many of these "Loyalists" found it expedient to pack up and move to Britain or north to what remained of British North America. There were some 45,000 of the latter. The largest number of them went to what was then Nova Scotia, spurring the creation of a new colony, New Brunswick, in 1784. Others settled in the Niagara Peninsula and along the north shore of Lake Ontario between the Bay of Quinte and Kingston. Desirous of having their own familiar British institutions rather than those prevailing in Quebec, these immigrants provided much of the population base and the political impetus for the creation of another new colony, Upper Canada, established in 1791. Smaller numbers of Loyalists settled further east in Lower Canada, mainly in the vicinity of Sorel (in what we now know as the "Eastern Townships") and in the Gaspé.
Perhaps even more surprising than the military success the Americans finally achieved when the British campaigns fizzled out in 1783 was their success in forming a political union among 13 dissimilar entities which had shown little ability to co-operate with one another prior to the conflict. As the war began to ebb in 1781, the Continental Congress was replaced by a new Confederation of States which left the states very much sovereign powers. The ability of the central organization to function proved to be very limited, especially when it came to raising money for public purposes. In 1789 the new constitution created a more powerful central government, although it was not until the bloody civil war in the early 1860s that the issue of state and federal authority was to be successfully resolved.
By 1790 the population of the United States was about 3.9 million, of which some 700,000 were slaves. Geographically the population was about equally divided between the northern and southern states with some 200,000 people living west of the Appalachian mountains in Kentucky, the Ohio Valley, western Virginia and western Massachusetts. Agriculture was the predominant industry and most people lived in rural settings. As many as 9 out of 10 Americans earned at least part of their living from farming. There was no city with a population greater than 50,000.
Economically, the prospects in 1800 did not appear to favour rapid growth.
Trade with Britain had been curtailed as had trade with British possessions
in the West Indies and Canada. The new nation was burdened with heavy public
debt, much of it foreign held. Despite a very high birth rate (estimated
to have been 55 per 1000 in 1800) the small absolute size the population
meant that unless there was a high rate of immigration from abroad, the
domestic market would grow only slowly. Nevertheless, the foundations for
growth and development had been laid. The political system was becoming
stable, the restrictions imposed by the French and then the British on
expansion into the central interior had been removed, and the beginnings
of industrialization in the North-east were already becoming evident. Over
the course of the next 50 years, the economy would grow at a rate of 4.2
per cent annually in real GNP. Per capita real GNP would grow at an annual
rate of 1.1 per cent.