EUROPEAN LOANS

European loans were critical to the patriotic cause of the American Revolution (1775–83). Had it not been for foreign aid, it is unlikely that the United States would have won the war of independence. When the fighting began at Lexington and Concord, Massachusetts, in April 1775, the colonies were hardly prepared to sustain war against the powerful British. But the nation's founding fathers rose to the occasion. Assembling in Philadelphia, Pennsylvania, in May 1775, the delegates to the Second Continental Congress quickly issued articles of war against Britain and named George Washington (1732–99) commander in chief of the Continental Army. After declaring independence from the mother country in 1776, the Congress turned its attention to financing a fight with Britain, which not only had the advantage of a highly trained military but also had tremendous material resources. To fund the war effort, Congress issued paper money, called Continentals, which it used to purchase supplies, ammunition, and pay its soldiers. But as the government issued more Continentals, the bills eventually became worthless.

The early days of fighting were grim: The mighty British navy readily claimed ports up and down the Atlantic seaboard; ground troops of the Continental Army were poorly supplied; and a financial crisis was evolving as the U.S. currency continued to devalue. The autumn of 1777 proved to be the turning point for the Americans. Victories at Trenton and Princeton, New Jersey, and at Saratoga, New York, encouraged France, which had been quietly and cautiously supporting the patriots' cause, to establish an open alliance with the United States. Other countries—also foes of Great Britain—soon committed their support as well. After suffering a brutal winter in 1777–78, when Washington's troops at Valley Forge, Pennsylvania, went hungry and were in rags, foreign aid began to stream into the United States in the spring of 1778. In addition to clothing, food, muskets, and gunpowder, the United States now received borrowed money and cash gifts from France, the Netherlands, and Spain. With this assistance the Americans were able to muster a decisive victory over the British at Yorktown, Virginia. Within months the British government expressed its willingness to make peace. After two years of negotiations and intermittent fighting, both countries signed the Treaty of Paris in 1783, officially ending the American Revolution.

See also: American Revolution, Continental Congress (Second), Continentals