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 308 Cessions of western lands. [i 780-7 British Minister replied that they were held because of the failure of the American government to secure from the States the restitution of confiscated property of the Loyalists. The States on their part justified their refusal by the assertion that Sir Guy Carleton had carried off thousands of negroes in violation of the seventh article of the peace. No argument could move either side; and for thirteen years the posts remained under the flag of Great Britain, and the fur-trade of which they were the centre was lost to the merchants of the United States. The inability of Congress to levy taxes, duties, imposts, and excises, deprived it of a revenue sufficient to pay its debts, and brought the Confederation to the verge of bankruptcy. The debts of the Confedera- tion were of two kinds, those due at home and those due abroad. The domestic debt consisted of paper money, issued in great quantity by the Continental Congress, and so depreciated that it had become worthless ; of loan-office certificates, interest indents, and an immense amount of paper obligations issued by various departments. Towards the payment of this domestic debt Congress proposed that States claiming land between the Great Lakes, the mountains, and the Mississippi should cede their lands west of the mountains. It was promised that the territory so obtained should be divided into States, which in time should be admitted into the Union on the same footing as the original States ; and that the proceeds of all land sold to settlers should be used to pay the domestic debt of the Confederation. Six States Massa- chusetts, Connecticut, Virginia, North Carolina, South Carolina, and Georgia claimed such territory by virtue of the " sea to sea " charters granted by James I, Charles I, Charles II, and George II. New York also held Indian rights acquired by treaty. The appeal was successful ; and between 1780 and 1787 cessions were made and deeds delivered to Congress by New York, Virginia, Massa- chusetts, and Connecticut. In July, 1787, Congress passed an ordinance providing for the government of the territory thus ceded between the Great Lakes and the Ohio, the western boundary of Pennsylvania and the Mississippi. These lands became known as the North- West Territory, and were subsequently divided into States. The money derived from the sale of land was scrupulously applied to pay the domestic debt. North and South Carolina and Georgia also made cessions; and the lands ceded by them were used for the same good purpose. Towards the payment of the money due to France, Spain, and Holland, Congress could obtain no provision, nor did it ever secure a revenue sufficient to meet its current expenses. The cost of government and the expenses of the war were, according to the Articles of Con- federation, to be paid by assessments on the States, the quota of each to be in proportion to the value of its surveyed and occupied lands. But, when calls were made, the States could not, or would not, respond. Driven to desperation, Congress, in 1781, proposed an amendment to the