Financial costs of the American Revolutionary War The American Revolutionary War inflicted great financial costs on all of the combatants , including the United States of America , France , Spain and Great Britain . France and Great Britain spent 1 . 3 billion " livres " and 250 million pounds respectively . The United States spent $ 400 million in wages for its troops . Spain increased its military spending from 454 million " reales " in 1778 to over 700 million " reales " in 1779 . Economic Warfare & Financing . Initial Boycotts . The economic warfare between Great Britain and the colonists began well before the colonies declared their independence in 1776 . During the years leading up to the war , the British government levied taxes on the colonists to help pay off the debt incurred from fighting the French and Indian War . These new regulations were met with fierce opposition from the colonists . After lobbies and petitions proved ineffective , the colonists turned to boycotting imported English goods . Boycotting proved to be successful in crippling British trade . After the first colonial boycott in 1765 , Parliament overturned the Sugar and Stamp Acts , and after a second boycott in 1768 Parliament overturned all of the Townshend duties except for the tax on tea . The colonists persisted , and the American boycott on tea ultimately culminated in the Boston Tea Party of 1773 . British Isolation Tactics . British efforts to weaken the colonies included isolating their economy from the rest of the world by cutting off trade . With a navy that was many times more powerful than its American counterpart , the English had virtual control over the American ports . The British took control of major port cities along the colonial east coast , and as a result British warships were able to drastically reduce the number of ships that could successfully travel from the colonies . Consequently , the U . S . saw a fall in exported goods due to the relentless British blockade . Furthermore , England ’ s naval strength was great enough to intimidate other nations and scare them away from exporting goods to the colonies , so smuggled and inexpensive imports became costly and rare . The American Response . The Continental Army under the direction of George Washington sought to engage in a war of attrition . Because the fight was on colonial soil , Washington aimed to take advantage of the lack of trade with Great Britain by cutting them off from necessary resources , hoping that eventually the redcoat army in North America would grow sick and tired . Under the Articles of Confederation , however , the Continental Congress did not have the power to impose taxes or regulate commerce in the colonies , and thus could not generate the sufficient funds for a war of attrition . To solve this problem , the Continental Congress sent diplomats including Benjamin Franklin to Europe in search of foreign support for the American cause . For the first two years of war , the colonists received secretive private and public loans from the French , who held a lingering resentment for the British after the Seven Years ' War . After the British defeat at Saratoga , however , foreign support for the Continental Army increased , and in 1778 the colonies signed a treaty with France , officially bringing them into the war with England . By the end of the war , the colonies had received loans from several different European nations , including significant contribution from France , Spain and the Netherlands . In addition , the colonies received much private funding , most notably from the Marquis de Lafayette and the Baron of Kalb , both Frenchmen . This funding ultimately enabled them to fight the war of attrition that General Washington hoped for . The French Effect on Great Britain . Because the French possessed a powerful navy , their entrance into the war weakened the British blockade on colonial ports and further cut off the British army from its Atlantic supply route . The British forces recognized that they would not last long without shipping in supplies , so in retaliation , the British redeployed some of their forces to the French Caribbean . Their hope was to capture French sugar islands and cut the French financial supply line . The new war in the Caribbean added to England ’ s already large financial costs , yet unlike the colonies , the British were not successful in their attempts to garner foreign loans or armaments . Without economic assistance from other nations , the financial strain on Parliament and British taxpayers became increasingly burdensome , and ultimately had a hand in wearing down the British forces and ending the war for independence . American Financing . As the war progressed , the Americans ’ deteriorating financial stability quickly became Britain ’ s greatest asset . Because it did not possess the power to tax the colonists , the Continental Congress printed money at a rapid rate to fund the army ’ s expenses and pay off its loans from foreign nations . As a result , the colonies experienced severe inflation and depreciation of the Continental dollar . The colonists also had great difficulty in financing a wartime effort against the British southern campaign , not effectively halting the British destruction until the battle of Yorktown in 1781 . When war ended in 1783 , American negotiations , monetary policies and government restructuring all contributed to paying off the American national debt . Belligerents . Great Britain . The American Revolutionary War took a heavy toll on Great Britain . The average cost for the war was £12 million a year . The British ended the war with a national debt of £250 million , which generated a yearly interest of over £9 . 5 million . This debt piled on to the already outstanding debt from the Seven Years ' War . Taxes on the British population increased over the years and duties on some items such as glass and lead were also added , the average tax for the British public being four shillings in every pound . Furthermore , the Royal Navy was not able to ' rule the waves ' as it had done in the Seven Years ' War . Great Britain ' s trade with the thirteen American colonies fell apart once the American Revolution started , causing British businessmen , especially from the tobacco industry , to suffer . Income from the sale of woolen and metal products dropped sharply and export markets dried up . British merchant sailors also felt the pinch : it is estimated that 3 , 386 British merchant ships were seized by enemy forces during the war . However , Royal Navy warships did make up these losses somewhat , due to their own privateer ing efforts on enemy shipping , particularly Spanish and French merchant ships . France . During the war , France shouldered a financial burden similar to that of Great Britain , as debt from the American Revolutionary War was piled upon already existing debts from the Seven Years ' War . The French spent 1 . 3 billion " livres " on war costs . When the war ended , France had accumulated a debt of 3 , 315 . 1 million " livres " , a fortune at the time . The debt caused major economic and political problems for France , and , as the country struggled to pay its debts , eventually led to the Financial Crisis of 1786 and the French Revolution in 1789 . Spain . Spain ' s economic losses were not as great as those of the other belligerents in the American Revolutionary War . This was because Spain paid off her debts quickly and efficiently . However , Spain had nearly doubled her military spending during the war , from 454 million " reales " in 1778 to over 700 million " reales " in 1779 . Spain ' s revenue loss was similar to Britain ' s , since she lost a lot of income from her American colonies due the war . To make up for the shortfall , Spanish governors introduced higher tax rates in the South American colonies , with little success . Spain ' s next move was to issue royal bonds to her colonies , also with limited success . Finally , in 1782 the first national bank of Spain – the Banco San Carlo – was created to improve and centralize the economic situation . United States of America . " For more details on the impact on the United States , see Economic history of the US " . The thirteen American states flourished economically at the beginning of the war . The colonies could trade freely with the West Indies and other European nations , instead of just Britain . Due to the abolition of the British Navigation Acts , American merchants could now transport their goods in European and American ships rather than only British ships . British taxes on expensive wares such as tea , glass , lead and paper were forfeit , and other taxes became cheaper . Plus , American privateering raids on British merchant ships provided more wealth for the Continental Army . As the war went on however , America ' s economic prosperity began to fall . British warships began to prey on American shipping , and the increasing upkeep costs of the Continental Army meant that wealth from merchant ships decreased . As cashflow declined , the United States of America had to rely on European loans to maintain the war effort ; France , Spain and the Netherlands lent the United States over $ 10 million during the war , causing major debt problems for the fledgling nation . Coin circulation had also begun to wane . Because of this , the United States began to print paper money and bills of credit to raise income . This proved unsuccessful , inflation skyrocketed , and the new paper money ' s value diminished . A popular saying circulated the colonies because of this : anything of little value became " not worth a continental . " By 1780 , the United States Congress had issued over $ 400 million in paper money to troops . Eventually , Congress tried to stop the inflation by imposing economic reforms . These failed , and only further devalued the American currency . Late in the war , Congress asked individual colonies to equip their own troops , and pay upkeep for their own soldiers in the Continental Army . When the war ended , the United States had spent $ 37 million at the national level and $ 114 million at the state level . The United States finally solved its debt problems in the 1790s when Alexander Hamilton founded the establishment of the First Bank of the United States .