After winning their independence in 1781, the Continental Congress established the Articles of Confederation. These articles stated that each colony was to act as an independent state, and that each state had the right to pass laws within their territories. These articles established a weak central government to oversee interactions between the states.
This central government had very little authority. It could not pass taxes, and it could not raise an army to defend the new nation. As a result, the nation amassed massive amounts of debt which it could not pay off.