[Sidenote: It was not fully endowed with sovereignty.] The Continental Congress was therefore not in the full sense a sovereign body. A government is not really a government until it can impose taxes and thus command the money needful for keeping it in existence. Nevertheless the Congress exercised some of the most indisputable functions of sovereignty. "It declared the independence of the United States; it contracted an offensive and defensive alliance with France; it raised and organized a Continental army; it borrowed large sums of money, and pledged what the lenders understood to be the national credit for their repayment; it issued an inconvertible paper currency, granted letters of marque, and built a navy." [6] Finally it ratified a treaty of peace with Great Britain. So that the Congress was really, in many respects, and in the eyes of the world at large, a sovereign body. Time soon showed that the continued exercise of such powers was not compatible with the absence of the power to tax the people. In truth the situation of the Continental Congress was an illogical situation. In the effort of throwing off the sovereignty of Great Britain, the people of these states were constructing a federal union faster than they realized. Their theory of the situation did not keep pace with the facts, and their first attempt to embody their theory, in the Articles of Confederation, was not unnaturally a failure. [Footnote 6: _Critical Period_, p. 93.] [Sidenote: Decline of the Continental Congress.] At first the powers of the Congress were vague. They were what are called "implied war powers;" that is to say, the Congress had a war with Great Britain on its hands, and must be supposed to have power to do whatever was necessary to bring the war to a successful conclusion. At first, too, when it had only begun to issue paper money, there was a momentary feeling of prosperity. Military success added to its appearance of strength, and the reputation of the Congress reached its high water mark early in 1778, after the capture of Burgoyne's army and the making of the alliance with France. After that time, with the weary prolonging of the war, the increase of the public debt, and the collapse of the paper currency, its reputation steadily declined. There was also much work to be done in reorganizing the state governments, and this kept at home in the state legislatures many of the ablest men who would otherwise have been sent to the Congress. Thus in point of intellectual capacity the latter body was distinctly inferior in 1783 to what it had been when first assembled nine years earlier.