Following the Yellow Brick Road: the Franklin-Led Quaker Party Embarks on Regime Change, Ousting the Proprietary and Substituting a Crown-Appointed Royal Governor, and Summary/Integration of Pennsylvania’s Failed Policy System: Lessons Learned

 

In 1755, the crisis in the Pennsylvania west had combined with (1) the half-century struggle between Legislature and Proprietary, and (2) the decades-long inability to forge a consensual institutionalization of paper money as currency and debt instrument to finally drive the Legislature across the line to formally petition Privy Council/Crown to oust the Penn Proprietorship and replace it with a Crown-appointed governor. Benjamin Franklin, after a hesitancy, also crossed that line sometime during that summer. The Quaker Party, the Legislature’s dominant political force also went through a corresponding internal crisis, after Braddock’s defeat. Once again the Quaker pacifist-war, self-defense and Quaker pacifism into the spotlight on Pennsylvania’s 1755 policy agenda-linking Quakers, especially pious Quakers, to the overall Pennsylvania policy system civil war. Quaker beliefs yanked pious Quakers and dragged the Quaker Party to a point where either Quakers would have to redefine their pacifism or, as they eventually determined, to step out of Pennsylvania policy-making.

Off to the side, in London to be specific, the British Colonial Office on the threshold of an European world war, was not anxious to undergo another round with Quaker pacifism and Pennsylvania’s unwillingness to fight or finance wars, even to the point of refusing to defend itself against foreign attack. 1746 had been too close, and Franklin’s militia initiative, while dramatic and path-breaking for Pennsylvania, was by no-means the solution to Pennsylvania’s self-defense woes. By the end of 1755 summer, the issue was back on the table with Braddock’s defeat and the collapse of the western frontier areas. The Privy Council and the Board of Trade were also tired of the Proprietary-Legislature struggle, and having, perhaps unconsciously, decided during the 1740’s that they were wiser to avoid assuming a direct governance of the province through a Crown-appointed governor, they were in no mood to deal with the Legislature’s formal petition to remove Penn and appoint a royal governor. As Lincoln would later say in regards to another civil war it was wiser not change horses midstream. Accordingly, the petition went no where in London.

That left the happy campers in Philadelphia to steam in their own juices, while things to worse: the west was in flames, and paper money and self-defense debt issuance had been “papered over” with a compromised compelled by Scots-Irish insurgents on Philadelphia’s boundaries, Franklin’s second militia bill (1755), a one-time only mobilization of militia companies composed exclusively of volunteers (with Franklin himself a colonel) passed the Assembly with only four dissenting Quaker votes. This was Pennsylvania’s first official use of a public militia.  Despite this seeming violation of Quaker beliefs and long-standing Assembly priorities, the existing leadership of the Quaker Party (Pemberton and Norris, pious Quakers both) fought a rear guard action to restrain war-related legislation and initiatives, but the proverbial Quaker Party oligopoly was essentially shattered, and in the vacuum Franklin, willingly or by default, became so influential that the Legislature is often described as Franklin-led during this period.

Still the Quakers began their own peace initiative with resident tribes (see previous module). But with the frontier still in flames, pressure from frontier Scots Irish in particular did not abate, and in early 1756 Governor Morris and the Proprietary Council prepared a declaration of war against Native Americans and attached a bounty for each scalp. In the form of an executive order, the Proprietary, the executive branch, had broken formally with the Legislature. It had not even notified the Legislation of its intentions. The formal petition it sent to the Governor, opposing his actions, was ignored. Pemberton and four other pious Quakers resigned from office in early June (1756). Doubling down on his earlier initiative for Quaker-led Indian negotiations, he and others formed the “Friendly Association for Regaining and Preserving Peace with the Indians by Pacific Measures”. Actual Association-Indian negotiations commenced at Easton with the Delaware  (resident tribe) which by this time had torn asunder their tributary status with the Iroquois. Negotiations continued off an on for the next year, while Franklin and the Legislature watched with considerable skepticism.

By summer, however, Governor Morris was replaced by another Penn-hire, Governor Denny, a British military office (and political neutral), was appointed by Thomas Penn (who at the time was running Proprietary affairs from his house on Spring Garden Street in London), upon suggestion by the Duke Of Cumberland, a key military official in charge of the forthcoming war preparations. Of “an affable and pleasant disposition“, an authority on literature and ancient history, he “proved to be venal, lazy and inept” when placed in an autonomous and independent political position. Once again Penn’s excellent management skills (sarcasm) resulted in a choice of Deputy Governor who was temperamentally unsuited to the position. Amazingly on top of that, the stubborn, yet erratic Penn had once again retreated to his former position on the Legislature-Proprietary struggle:

I am certain [Pennsylvania] government cannot long subsist unless the several parts of the legislature act within their proper spheres, and do not confound the legislative with the executive part of government [99] Nicholas B. Wainwright, “Governor William Denny in Pennsylvania“, the Pennsylvania Magazine of History and Biography, Vol. 81, No. 2,published by University of Pennsylvania Press, (April, 1957), pp. 170-3

Still the relationships started well with Denny, at is inaugural reception, awarding Franklin the gold medal from the Royal Society for his electrical experimentation. But the writing was on the wall for a Quaker-led Assembly. With the new governor came official notice of the discussion in London regarding Pennsylvania. The Board of Trade applied considerable pressure on Pennsylvania’s Quaker public officials by transmitting a report to the Privy Council (March 1756) “picturing the Pennsylvania Assembly as a body controlled by pacifists from whom no effective military measures could be expected. “There is no reason to hope that proper or effectual measures will be taken while the Majority of the Assembly consists of persons who avow’d principles are against Military Service‘” [99] Theodore Thayer, Pennsylvania Politics and the Growth of Democracy, 1740-1776 (Pennsylvania Historical and Museum Commission, 1953, p. 54. The Pious Quakers who had remained in the legislature after the 1755 October elections, one-by-one, retired from the legislature; it was Franklin who recruited their replacements.

In fact, Franklin had recruited legislative candidates to replace the earlier Pemberton resignations. Anglicans mostly, they were moderate Franklinites–and were perceived as such. The most important of these new members was Joseph Galloway, a Quaker lawyer-activist, who was Franklin’s political protégé. During the spring and summer of 1756 Penn ostracized Franklin–expelling him from the board of the Academy and hospital, and isolating him in the City Council of the Philadelphia Municipal Council. Still Franklin and the Quaker Party agreed to a fusion ticket with Proprietary candidates for Philadelphia County. All Penn’s candidates lost, however, and the October 1756 election returned an overwhelming majority to the Quaker Party–minus, of course, its long-standing complement of pious Quakers. Isaac Norris and Franklin were the recognized leadership of a new Quaker Party.

Franklin in London (1757-62)

Formally, Franklin had assumed the position of Pennsylvania’s “lobby” department in London. The office had existed for more than two decades, and during that time had its ups and downs, but had managed to survive the incredible swings and sways associated with navigating through the Board of Trade/Privy Council, wars and pacifism, an aggressive legislature, and the positions and fortunes of the Penn Proprietary. While Franklin was known in England, the full effects of his scientific endeavors were just becoming recognized, and rather than celebrity status he had to contend with a body of English elite opinion that he was an advocate of provincial legislative autonomy and an opponent of British imperial-trade policy–which in fact is what he was. His first efforts in London, therefore, were to not only make the acquaintance of those influential in advancing the provincial royal governor initiative, but also defusing whatever political baggage he had acquired. While conscientious in his assigned task, Franklin from the start pursued his old Philadelphia practice of following many interests, and in general ingratiating himself with elites, and establishing his position within the English intellectual academy. He also traveled, joined coffee houses, and had a good time. As a de facto bachelor (he left his wife behind), although one who had acquired some age, he was not a monk. Whatever. In any event, the reader should note that in Franklin’s absence, his protégé and go-to man within the Assembly, Joseph Galloway, had played his position well, and during that period became his own man, and a key element of the transformed Quaker Party oligopoly. Galloway, despite his association with Franklin and Franklin’s royal governor initiative, was a conservative Quaker in his private life. His conservatism, it would turn out, was not inclined to separation from Great Britain, and although he was a delegated to the future 1774 Continental Congress, he was not sympathetic to its goals. During the war, he was a Loyalist. At this point, the reader should note that Franklin’s future relationship and reliance on Galloway did play a role of some note in the forthcoming “drift to Independence”.

In August 1758 he met personally with Thomas Penn in Penn’s office-home. The meeting was a disaster, on both parts. Penn did not concede an inch, and Franklin stiffened his spine as well. Other meetings followed and nothing of material substance resulted. In a few months, it was clear that any agreement with Penn directly was a dead end. Penn’s position had already been well-articulated; he disputed the pretensions of the Assembly to govern as an independent representative of the people, and he and his lawyer argued that the sovereignty implied by the Proprietary Grant, made him above its laws, in particular the ability of the Legislature to tax him or his Proprietary assets. Franklin wrote a pamphlet, “Heads of Complaints” and Penn replied with one of his own. Franklin responded with yet another publication, “An Historical Review of the Constitution of Pennsylvania” (which his son William probably penned), a real barn-burner in 1759. The publication, despite my sarcasm, did advance Pennsylvania’s position within the English elites. By this time Forbes had secured victory, and Lord Amherst was about to mount his successful attack on Quebec; this meant the issue of “changing horses in midstream” made an successful overture inopportune. Franklin, however, dallied in London, and elsewhere until late 1762 when he returned to Philadelphia. “When he returned to Pennsylvania in 1762, it is very possible that he had decided to launch a drive for a change in [Pennsylvania’s] government at the first opportunity. In any event, within a year after his return he had a full-scale movement under way for converting Pennsylvania into a Royal province” [99] Theodore Thayer, Pennsylvania Politics and the Growth of Democracy, 1740–1776, p. 90.

the War Years and Paper Money Debt Issuance

With its new-found strength, coherence and inspired leadership, the Legislature was in no mood to reverse or lessen its struggle with the Proprietor in 1756. Once again a new 100,000 pound war-related debt issuance was on the agenda, and once again the two now bitter foes duked it out, repeating the same old issues of land tax and who got to spend the income derived from the bond issuance. That the frontier was still being raided, the western settlers still in an uproar, and now Quaker opposition removed, Governor Denny still refused to sign, blocked the bill, until the commanding officer of a new British expeditionary force demanded he sign. Denny backed down. If it wasn’t paper money debt, it was the continual bother of having to negotiate with the resident Indian tribes, alongside not only the Legislature, but a delegation of pious Quakers, led by Pemberton. Throughout his tenure on office, Denny was constantly required to be in attendance in a series of meetings, and was constantly plagued with Pemberton’s adoption of the Native American cause. Once again it appeared Thomas Penn, good intentions to the contrary, had chosen a Governor ill-suited in temperament and personal goals to handle what was  an impossible task–to square the circle between Proprietary and Legislature.

To add to this  Denny also agreed to the army’s controversial request/demand for quartering its troops in private homes–that infuriated the Legislative which was not consulted on the matter. Franklin quarreled personally with Denny on quartering, but again the British commander intervened threatening to send troops to directly compel private homeowners. The Legislature made available the newly-constructed Philadelphia Hospital for a barracks instead. All this quarreling with the Legislature, the army, and the general populace was not to Denny’s liking, and what was worse, the Legislature did not honor its commitment to pay his salary, and Denny had to turn to the Proprietor Provincial Secretary (Peters) for loans. It became very clear to Governor Denny that he was not likely to attain the one goal he wanted most: to make his fortune in the position. Denny worsened his situation with the general population by treating his wife so miserably she tried to escape, unsuccessfully, but not subtly.

The 1757 Legislative election again confirmed the Quaker Party’s dominance of the Legislature. Penn’s Proprietary allies did oppose him and in the eastern core counties, they were simply crushed. Indeed, Anthony Wayne (Mad Anthony Wayne’s Dad) beat the pants off of one in Chester County. In the semi border Northampton County an interesting and pertinent matter deeply impacted the Proprietary campaign against the Quaker Party. The Quaker Party slate included a goodly number of “Moravians”, i.e. Germans, and the former made the campaign an anti-German jihad. Anticipating events described in the next module, the campaign magnified the already existing cleavage between the rapidly expanding German electorate, and the Penn Proprietary.  William Allen survived but he was almost solitary Penn supporter in the Legislature. Having addressed the pacifist concern of the Board of Trade/Privy Council, the Assembly determined it was time to press these bodies on Penn’s ouster, and the Proprietary’s replacement by a royal governor. Franklin secure in his leadership of the Quaker Party and a legislative majority, decided he was the best broker suitable to the task. He left for London in February 1757.

In 1758, General Forbes second expedition conquered For Duquesne and renamed it Fort Pitt (after the British Prime Minister). His success opened up the Ohio Valley, relieved the Pennsylvania frontier, and made possible an intended 1759 invasion to follow up and seize territory in the Midwest. That was not to be, however, because a second expedition required new funds, and a new debt issuance–and once again the Legislature, Proprietor and Governor Denny locked horns–again mostly on the land tax on Penn. As the matter drifted into 1759, even the visit of General Amherst, the new commander-in-chief of the British North American army, could not broker a compromise between Norris (Franklin was in London) and Denny. Infuriated Amherst threatened to withdraw the Army from Pennsylvania, and that finally move Denny to sign the bill. But the bill included one other item: Denny’s salary. The law also included a land tax on the Proprietary. The Legislature, it appears, had found the way to Denny’s heart–not thru his stomach but through his pocketbook. From then on, the Legislature was able to secure Denny’s signature on key legislation through 1759. Denny, I might add, garnered about 5,000 pounds for signing his name in that period.

Provincial Secretary Peters, believing (as did the Legislature) that Denny had been “purchased”, wrote to Penn and by November Denny was sent packing–along with his wife, who once ashore in England again escaped him. Replacing Denny, was our old friend, former Governor James Hamilton who had been persuaded to once again hold the position. Hamilton had hard-balled Penn in his negotiations, and finally secured from Penn his permission to conclude a debt issuance that taxed his land. In 1760, a 100,000 pound issuance was signed “under protest” by Hamilton. By that time, it should be noted, the Pennsylvania frontier was secure–and the threat of Native Americans vastly reduced. Moreover, Pennsylvania militia was now posted, at the province’s expense (an additional 30,00 pounds ), in forts in the borderlands. Probably the key factor in this particular debt issuance compromise was the third rail of Pennsylvania politics (war and Quaker pacifism) had finally been de-electrified–thanks in large measure to Franklin who had held off the Proprietary and Privy Council in London. Border security and military defense was imperative, and in crisis a compromise was possible. With Forbes’ 1758 military victory, and James Hamilton’s fiscal success, the policy logjam that plagued Pennsylvania’s policy system for half a century opened up–and for the next two years . In 1763, the consensus broke down yet again.

 

FINALLY: Paper Money Compromise that Papered Over a Forty Plus Year Policy Chasm

The fragile consensus among the warring parties was sufficient in the bitter and desperate 1758-1760 war years to support passage/approval of new military-border defense– related debt, but it did not extend into reauthorizing previous debt issuances. Without reauthorization, not only would the volume (and velocity) of Pennsylvania’s currency diminish and the economic growth consequently slowed, but upon expiration the actual notes would be recalled/paid and physically destroyed. This caused internal governmental fiscal pressure as money on its “books” would simply disappear. This caused little discomfort to the Proprietary, but constrained Legislative policy-making, and forced reshuffling funds to pay ongoing expenses. The fiscal pressure grew worse with each year, and with war and standing armies sitting around expenditures and pressure for new initiatives increased.

The reader is reminded that a goodly portion of non-war/military debt issuances, flowed into the County Loan Office, and those funds supported a mortgage issuance program for homestead and new business loans. These mortgages and loans paid interest annually to the County Loan Office–this was “new found revenues to the Legislature and that in turn reduced legislative expenditures of paid for new initiatives. In 1760 so hard-pressed was the Legislature for funds that it defunded its Loan Office entirely. Backed by the (London) Privy Council which believed the war effort had flooded the domestic economy, the Legislature’s decades old debt issuance/currency/economic development program nexus dried up and by the early 1760’s went out of existence. The demise of the loan office and its mortgage loans hit the western settlement disproportionately as they required new loans to establish a new homestead; in the east existing homesteads could serve as collateral, and new homesteads were significantly fewer as the land was well-settled by that time. Conversely, conservative elements in Philadelphia’s merchant-lending community thought the considerable debt-issuances of the war years, military related or not, was inflationary. They welcomed or at least supported the termination of the mortgage program. In retrospect a tone of class conflict was opened up–a conflict that would sharpen over the next decade.

Moreover, tt soon became apparent that the prosperity and income provided by the Loan Office was arguably a core pillar of growth in Pennsylvania’s economy: “it was clear that paper money and the Loan Office were considered almost inseparable in Pennsylvania” [99] Theodore Thayer, p. 78. The economy slowed as the war tapered down after 1760, and with trade still hindered by war elsewhere, the average citizen and businessman suffered, and that augmented a natural desire among the citizenry to stimulate the economy. That general support for further debt issuance above and beyond war related issuances did not motivate Thomas Penn, and no domestic issuances resulted. and In 1764 Parliament passed legislation that prohibited use of all provincial paper money (derived from debt issuance) as legal tender, the matter in all colonies was taken out of their hands. The events of 1763-4 (Paxton Boys and Pontiac’s War being the most troublesome) only deepened the economic downturn, and piled on top of it considerable elite insecurity as pressure from the “Mob”, and the seeming drift of western counties away from Philadelphia’s political orbit, that the economy was desperately in need of paper money stimulus, and the initiation of western county mortgage lending by a refunded Legislative Loan Office would calm dispirited Scots Irish and Germans.

Accordingly as the 1760’s wore on, what started as a western problem spread across the entire Pennsylvania economy. The reduce role of unbacked paper money was much to the liking of creditors who now could require payment for debt, interest and even taxes on scare, if not totally unavailable, hard coin. Accordingly it pit the eastern commercial establishment against the general consumer–and as one might expect created considerable tensions with the Quaker Party and its constituents. The City pf Philadelphia Municipal Council took a lead in advocating the position of the commercial establishment, further isolating itself from its own citizens and residents. The period is marked by increasing chasm between Pennsylvania’s chief economic and political players.

The economic situation, however, became even more dire, the economy proceeded into a recession that deepened with each passing year thereafter. So dire was the recession, so devastating to its citizens, American legislatures, including Pennsylvania, still printed the paper money but did not call it “legal tender” or currency–leaving the general public and merchants with a currency without any legal backing whatsoever. During this period, logically, almost all colonial legislature demanded Parliament relent and restore their ability to issue paper money funded debt–and when not successful that triggered a reaction which weakened the bond between the Mother County and the colonies. The Drift to Independence began, but in Pennsylvania instead of autonomy from the Parliament, Pennsylvania, driven by the almost obsession of its chief Legislative leader, Benjamin Franklin, pressed once again for a royal governor and the ouster of the Proprietary. Once again, Franklin would set off, in November 1764 (after he and Galloway had lost their election to the Legislature) to London to negotiation the regime change. This will begin a new chapter in Legislative-Proprietary relations, and would also set Franklin off on several new paths while in London. We will discuss each in a later section.

In any event, the Quaker Party and the Legislature was once again at war with the Proprietary, and once again paper money debt issuance. So in December 1763 (previous to the Parliament’s prohibition of paper money debt issuance and while Pontiac’s War raged), the British commander, Henry Bouquet asked for funds and (Pennsylvania paid militia) to follow up his relief of Fort Pitt. At that point, with Franklin still in Philadelphia and in the Legislature, a new Deputy Governor, John Penn replaced James Hamilton. Franklin was more adamant than ever that Penn should pay his “fair” share in Pennsylvania’s defense, and replacing Hamilton with his more loyal nephew John Penn, was Thomas Penn’s counter to Franklin’s aggressiveness. Predictably, this time with visible support from the citizenry and even most of the merchant community, the Legislature advanced a new paper money bill. John Penn resisted, and Franklin retaliated with an even larger debt issuance (50,000 pounds) paid for with a land tax, and with no exemption for unsold land owned by the Proprietary. We were back to square one of a decade earlier. When the revamped bill reached the Governor in February, 1764, John Penn formally sent it back, in effect vetoing it for the failure to include a Proprietary land tax exemption. Three weeks of quarreling ensued, and in a fit of temper, the Legislature adjourned, and stopped negotiations with John Penn.

Despite all the infighting the Proprietary and Legislature had narrowed their dispute to the definition of how a land tax was to be applied. John Penn (and Thomas) had in essence conceded the Proprietary would pay a land tax, and the open question was on how much tax would be levied on land of varying quality (“good” land taxed more than undevelopable land). The final Legislative proposal on this matter seemed reasonable to most, and seemed fair to Penn–i.e. overwhelming popular support for the bill. So when the Legislature resumed in May (1764), it sent this over to John Penn. Thomas, sensing the volatile nature of the general populace, and the after effects of a population divided by its reaction to the Paxton Boys insurrection, allowed his nephew to go ahead and sign the debt issuance. Thomas Penn even tossed into his support a public statement that he felt the tax was fair, and just. OMG! The Thirty Years War was over!!!

Penn had conceded the land tax, paid by him as well as landowners, was legal, fair and justified, and the proceeds of that tax could be the “collateral” for the issuance of a large paper money debt.

Then Parliament made debt issuance paid for by paper money (however, paid for) illegal. Timing is everything! Thomas Penn’s willingness to compromise came at a critical time. The Paxton Boys uprising, and the Pennsylvania-wide favorable reaction to it, had isolated Quakers of any stripe, pious or not, and put the Quaker Party on a rare “back foot”. The Germans, also affected by Pontiac’s War, had joined forces with the Scots Irish in demanding a strong anti-Indian response, and a firm securing–and settlement– of Pennsylvania’s western counties. The political demands of the western counties also threatened the Quaker Party whose hold over the Legislature majority was based on its malapportioned majority from the eastern core counties. With Penn almost the “hero” in the paper money debt issuance compromise, and with the large western Scots Irish drift to supporting him in Legislative and local elections, the Quaker Party dominance in the October 1764 elections seemed eminent. A substantial number of the Pennsylvania elite not only feared, but were almost convinced, that a Scots Irish coup of western counties was likely to occur.

Into this breach stepped the old, ever-tireless former leader of Penn’s Proprietary allies, William Allen. Allen for the last thirty years had led the opposition to the Quaker Party and his control over the judicial appointments, including Pennsylvania’s Chief Justice and Proprietary bureaucracy (its Land Office, for example) was still very much in tact. His ability to issue/revoke tavern licenses also brought on board the support of tavern owners, the equivalent of the media today. Allen accused Franklin and the Quaker elites of secretly reached an agreement of first kicking Penn out, and then they, the Quaker elite, would seize on his unowned land, make it theirs, and make tons of money off of the western settlers. The charge almost certainly had no validity, but real or not, it did alert many that, whatever their intentions, a change of government opened up the possibility the elites would replace the Penns in land sales. Behind the scenes, however, a dark shadow of Franklin’s first draft of a twenty million acre land grant and charter to a new land development company was being “penned” by him and others. In May, 1764, at the same session that passed the paper money-land tax compromise, Franklin introduced a formal motion to petition London to replace Penn with a royal governor–Franklin’s petition included 3,500 citizen signatures. The Legislature approved it overwhelmingly.

Having alerted the reader to the Quaker Party electoral vulnerability. the Quaker Party itself, and Franklin in particular, was having none of it–they still wanted Penn out of Pennsylvania, and they certainly didn’t credit him as any hero in the May land tax compromise. In fact, the Legislature Quaker Majority was more determined than ever that Penn be replaced with a royal governor. What they unleashed by their May initiative to kick the Penns out was not to their liking, however. With the general population now not only mobilized, but polarized, with the fragility of the Quaker Party Provincial Government under serious attack from the western counties, and with the forces of the Penn Proprietary unified under the leadership of William Allen, and amazingly a reasonably competent Deputy Governor, the electoral fortunes of the Penn Proprietary were at their highest ebb, arguably ever. The October election was a very close affair. Franklin and his second in command Galloway were defeated, and the Proprietary elected its highest number of legislators ever–but not enough to take over the Legislature. Still after the election, for almost a year, the Quaker Party majority was chastened and flexible. During that year, what could be viewed as a populist insurgency dissipated. But like the abortive Russian 1905 Revolution, it was to foreshadow a more tumultous event. For that reason we shall return in a later module to discuss in detail the dynamics of that October 1764 election. Suffice it to say, despite its narrow victory, when the new Legislature reconvened, it authorized Franklin to return to London to press for change in Pennsylvania governance.

Did It Work? 

No.

I am tempted to stop with that, but I know the reader always prefers the long-winded and wordy story.  After his loud and contentious approval for the mission in the Legislature, Franklin got things in order, said good-bye to Debby, and packed his bags. His celebrity status in Philadelphia guaranteed he got a disruptive media treatment, with his opponents charging one scandal after another, and pamphlets and the like tossing out rumor and charge after another. Somethings never change. Anyway, Benjamin headed off to board the ship, followed by a fairly-large parade, waving flags and firing cannons, all of which touched the heartstrings of Franklin who supposedly said “God bless them all, and all Pennsylvania“[99] Theodore Thayer, Pennsylvania Politics and the Growth of Democracy, 1740–1776, p. 106

By the time he disembarked in London, his world, and the colonial world had turned upside down. The Stamp Act had been issued and published in America. While he did not know it upon disembarking, he was soon to discover that Pennsylvania politics had been turned on its historical head. The here-too-fore solely dominant Quaker Party was fighting for its life with a brand new–are you ready?– Proprietary and Presbyterian Party, and from 1765 on the politics which Franklin had known all his life, and had mastered, was gone forever. Pennsylvania, like many other colonies was drifting, some would say, surging toward autonomy or some form of limited independence from Great Britain. In Britain the surge had caught them by surprise, and given the partisan instability which characterized George III’s early reign, there was no lacking for controversy and bitter debate among alternatives, personalities, and parties. The petition for ousting Penn and his Proprietary which Franklin carried in his suitcase was essentially “dead on arrival”. Worse, it was out of date, irrelevant to the point of being moot.

Franklin soon found out that Thomas Penn had better connections in London, the Privy Council and Board of Trade–and for Franklin even worse, his earlier celebrity status had eroded, and his Pennsylvania politics had turned many influential insiders away. The impactful and well-connected lawyer, Samuel Johnson who served as Pennsylvania’s appointed lobbyist did not support the change of government, and had communicated such to William Allen back in Philly. His reasoning was reasonable given the London environment at the time: “The mischiefs and dangers to Pennsylvania in particular, and to all America in general are inconceivable to one who had not been in England a good part of last year“. The petition, he wrote, originated from “a malevolent heart” … and not from a right way of thinking” [99] Theodore Thayer, Pennsylvania Politics and the Growth of Democracy, 1740–1776, pp. 107-8. The problem was that a new British colonial policy, of which the Stamp Act was one of the first, was meant to introduce the colonies to a new governance relationship that was to accommodate the needs and interests of the newly-created British Empire. The reaction in the Americas to the Stamp Act horrified and electrified both elite, and to the extent it mattered, public opinion. Their actions “over there” were not those of a patriotic British citizen.

In that atmosphere Franklin did not even formally present his petition to any appropriate body for its consideration. He kept it in his desk drawer and instead made a series of individual meetings, with whomever he could to, present his ideas and those of the petition. This continued into 1766, when the Privy Council referred correspondence related to the petition and tabled them “for ever and for ever“. That didn’t seem promising. He then entered into private conversation with the Secretary of State for the Colonies, the big cheese who was in a position to act on the matter. Nothing resulted and Franklin eventually decided the Secretary of State was in reality setting him up to a disaster, and that he was privately allied with Thomas Penn. By then the American reaction to the Stamp Act had really stirred things up in London, and the entire Penn Proprietary governance issue was just out of step with the events of the day. By the end of 1768, the matter was for all purposes dead in London.

One can understand that Franklin, for whom this issue had become a crusade, did not abandon his efforts to toss out the Proprietary, but the Quaker Party, battered as it was back in Philly, did not either. Galloway, Franklin’s second in command continued the fight–but at that time the Proprietary and Presbyterian Party had the upper hand. Events in Pennsylvania had taken a wildly different turn since the Franklin parade to the ship. Worse, the stubbornness of Franklin and the Quaker Party on the issue was raising questions of why, given its irrelevance to the issues of the moment, were they sticking with this obsession? As late as 1768, the Quaker Party majority in the Legislature sent instructions to Franklin to continue to press the matter.

The fact that Franklin and his followers did not abandon the plan for a change in government after the Stamp Act controversy … left them open to the charge that they were motivated by self-interest. Many of the Quakers who had favored a Royal government, grew cool when the Stamp Act issue arose. By that time many people rightly considered it an out-dated question. [As early as} March 1766 James Pemberton noted a growing disposition among the people not to quarrel with the Governor [Thomas Penn] [99] Theodore Thayer, Pennsylvania Politics and the Growth of Democracy, 1740–1776, pp. 108-9.

Other historians, for example Verner Crane, assert that from some time around 1766 Franklin’s public position in support of the legislative petition differed considerably from his evolving private view of the direction they colonies and Pennsylvania were going:

Privately, the legal formulation in 1766 of the doctrine of Parliamentary sovereignty over the colonies had already led him to reconsider, radically, his whole view of the relations between the colonies and the mother country. He returned to the ground he had taken at the Albany Congress … Henceforth, he subordinated his quarrel with the Penns, and his party leadership in the province. In ensuing crisis of empire he became the spokesman in England of all the continental colonies, armed at all points with a mature theory of empire [99] Werner W. Crane, Benjamin Franklin and a Rising People (Library of American Biography, Edited by Oscar Handlin, Little, Brown & Company, 1954), p. 121.

This suspicion about private self-interest had some fire underneath the smoke. By this time the Vandalia Land Company proposal (discussed in our previous module) was being bandied about. But like a deer in the headlights of a car, Franklin, the Quaker Party, and the Legislature it still controlled, continued to stand behind its determination, its petition, to displace the Penn Proprietary and replace it with a Royal governor. Nothing would come of it, but events continued to gather momentum, and that momentum was outside of the Quaker Party. As Thayer observes that from the Stamp Act on “the movement for independence set in [and] the great majority of leaders in the revolutionary movement came from the Proprietary-Presbyterian party [99] Theodore Thayer, Pennsylvania Politics and the Growth of Democracy, 1740–1776, pp. 110.

 

Summary/Integration of Pennsylvania’s Failed Policy System: Lessons Learned

Policy System–We have spent a goodly number of modules describing and outlining the development, evolution, and collapse of the (Pennsylvania) Penn Proprietary Policy System, established in 1681 and disintegrating after 1765. It had a long run, but as any reader who endured my modules on this topic, it was a rather sorry affair and displaying a consistent inability or capacity to make normal governance decisions, even in crisis. The system was at war with itself throughout its entire existence. In this module we take a step back to present my observations as to why Pennsylvania’s failed provincial system was a “failed” policy system, and then we will turn to the legacy that its ninety years imparted to future governments, and a passing comment or two on how that legacy affected other states, for example Ohio. You will know we are reaching a conclusion when the discussion moves to an explanation of why a policy system, particularly a community/jurisdiction’s first policy system is so critical to our history, and to the future evolution of that policy system–which BTW suggests those characteristics/elements of the Penn Proprietary-Pennsylvania policy system can be found in the contemporary policy system. As the twig is bent, so grows the tree.

In the Pennsylvania chapter we have focused more on the policy system than we did on Virginia. Why? For understanding the making of any policy area, especially economic development for reasons to be elaborated, the policy system is the engine or machinery that produces the policy. The policy systems bends, folds, manipulates, designs and manufactures the policy–pure and simple. If you want to use, to change, or even to terminate a particular policy strategy, program or tool, one must do so through the policy system–not professional reform or expertise. Economic development policy is like our metaphor the “twig” precisely because  its tilt (purpose, constituency, and most critical, its definition and implementation are conducted within a policy system using its processes, structures and institutions.

All this is true for private policy systems (private individual or company, or industry association, chamber of commerce, quasi profit or a non profit) as well as for public policy emanating from a government entity. The policy system includes both private and public policy sub-systems just as it includes all levels such as system-wide, regional-occupational/policy specific, or local and even sub-local (neighborhood, for example). The academic will recognize systems analysis in all this, and for the general and professional reader the focus on policy systems and policy-making/implementation sensitizes them that there is much more to a policy, strategy, program or tool than its mere design and implementation. There is much more to driving a car than hands on the steering wheel.

To drive a car it is best to stay in your lane, crossing lanes only following actions such as signaling. The policy system defines the lanes and sets the rules for changing them, for turning on our lights, and the police (judicial branch ultimately) sets the penalties for breaking these rules; I won’t even mention car safety, and car mechanics. Without overplaying the car metaphor, we understand that operating a car puts us in the car eco-system. The  economic development eco-system is contained within the jurisdiction in which the EDO/CDO serves. In Pennsylvania, we have focused thus far on the province/colony-wide policy system whose subsystems include regional and local. Formally, the Penn Proprietary is the “sovereign” legal source of legitimacy and authority for the policy system, subject, of course to its sovereign, the King and Parliament. Its core problem around which much of our discussion has flowed, is the Legislature conceived “the people” to be the ultimate sovereign and it was the representative of the people. Herein lies the civil war between Proprietary and the Legislature. Their solution was for each sovereign to develop and use its own set of structures, institutions, and processes to design, approve and implement its particular economic development policies, strategies, programs and tools–and there was no mechanism or processes to coordinate or referee the two competing sovereigns.

That brings us to institutions (the creation of an institution being institutionization). An institution is a prime function of a policy system (in Pennsylvania, the currency/debt/credit/fiscal function) nexus. Bluntly one does not “do” economic development without money, paying the bills, and making sure people and businesses in your jurisdiction can do the same. No currency/debt/credit/fiscal function, no economy and no economic base. The first task of a new policy system is to install its core institutions, and guess what, it took 83 years for Pennsylvania to institutionize its currency, debt/credit/fiscal function–more precisely it could not create a public institution to handle the nexus, and by default the private sector created its own–hence one sees from the start that the paper money conflict empowered the private sector to do what the government could/would not. The problem was, of course, that the private version was vastly inferior to what the government could and should do it it could get its act together. The most serious symptom of the private currency, debt/credit was that it (1) had no fiscal system and exacerbated society and the operation of its economic base, creating an elite-mass chasm that grew worse and deeper each year. When a great number of masses and a very few elites moved into the western counties, we saw both the development of sub-regional conflict (geographical), and the potential for a populist rebellion/movement. Aha, you say: failure to institutionize creates very large problems for the polity or policy system. Someone should have told Hillary Clinton that.

Institutionization creates the foundations on which the policy system rests–institutions make economic development possible. Institutions create structures like EDOs, banks, Treasury depts, and Indian trading posts. They also connect themselves to the larger systems (roads, mail, ports), and each of these will evolve in their manner.  Pennsylvania never really institutionized–yet it became the capital of the First Republic (Articles of Confederation), and Philadelphia, its largest urban area, and chief port. It also attracted the largest flow of immigrants in North America. The private sector did all that, and its government, unable to effectively function, was content with that. But the failure to evolve an effective government had to be resolved; vital functions were neglected or not properly functioning. If the private sector was the workhorse of Pennsylvania ED, what did government lack?

What did Pennsylvania lack? The civil war between Proprietary and Legislation meant two sets of competing policies, and no coordination. It created two different structures (Loan Office) to carry out the institution’s function–however incomplete and imperfect that was. Each loan office had different goals, powers and constituencies–and processes. In our contemporary world, the different programs of the Proprietary Loan Office, for example land sales, fur trading, and settlement/town-building (including infrastructure)–and Indian policy. The revenues the Proprietary could access, however, including the currency of its transactions, was based on Britain’s hard–and very remote–mercantile currency and whatever it could draw from export and domestic land sales, minus cost of development. Once the land was sold, the Proprietary lost interest–except for tax payments. If the Proprietary were smarter, it would have realize alienating resident Native American tribes would hurt its business and threaten the viability of citizen residents; but it wasn’t. It was one guy with a monopoly of legal authority, in his home 3000 miles away opening his mail and looking for money that he could spend. The sovereign and his policy sub-system was at root an absentee landlord, with vacant properties to fill.

The Legislature on the other hand was the Great Pretender. It thought itself sovereign, but in fact it wasn’t. There was plenty of opportunities over the years for the ultimate sovereign, the King and Parliament, to address the issue and rectify the problem, but, with a short exception, it didn’t. So the Legislature, beginning around the 1690’s began incrementally to construct its own policy system, first building around the edges of the Proprietary and then directly concentrating on institutionizing debt/credit and fiscal functions–and that gave us the paper money problem. If the ultimate sovereign and the legal Proprietary sovereign preferred hard money, the Legislature inevitably representing the people, wanted soft (paper) money. In periods of economic strain or when war threatened the Legislature got its way and paper money flowed–and the Legislature set up its own bureaucratic EDO, its Loan Office, with its own strategies, goals, constituencies and processes–and then used its proceeds to pay their own bills, denying the Proprietary any direct access to these revenues. Institutionization became the battlefield in that great civil war. While I didn’t draw it out thus far in the module, there is a hint in all this that institutionization if a polarizing, disruptive and divisive task–and if money is what makes the world go around, financial institutionization is especially disruptive and difficult to implement (plus it takes a long time, generations, to properly institutionize–foundational cement takes its own time to harden).

That meant the Legislature’s Loan office was a revenue-raiser, a multi-function bank (in an economy without banks), and through cheap money currency, hopefully an economic growth stimulator. It was also a source of autonomy from the Proprietor. The Proprietary Loan Office was believe it or not, the Judiciary for the Province, and otherwise was a real estate developer that settled communities and then moved on to settle new ones, much like a dog and a street full of fire hydrants. Then along came war, a vibrant urban economic base called Philadelphia that kept on increasing its population from abroad, and a bunch of new settlers with their own ideas (culture), expectations, and needs. Since they had to make choices with their limited revenues, they spent the money they had on improving where most of the people lived (and votes were), and neglected the expensive and needy new settlements ever more deep into their wilderness and mountain hinterland. A series or wars, starting around 1740 and ending in 1766 or so (Pontiac’s War) really complicated all this, simply overwhelmed the Legislature, and with the Proprietor providing no help, simply proved unequal to the task of governance, which by default fell to the private sector and the Cincinnatus that saved them from invasion. Again failure to institutionize led to privatization, and BTW contributed to the growing elite-mass chasm. So the Pretender sovereign decided it had enuf, and led by its Cincinnatus decided to fire the real sovereign, and failed–and here we are in the module.

 

First and foremost, the Penn Proprietary policy system collapsed because it tore itself apart over a full thirty years trying to resolve and reach consensus on a basic institution of provincial governance: currency, fiscal and budgetary institutionalization, and debt issuance. The cause and the final result of this failed policy making-institutionization was the Penn Proprietary policy system from its start in 1681 rested on separate and independent branches of government; (the executive which included the judicial appointments), and the single-housed Assembly Legislature.  Sovereignty was placed in the Executive, which was accountable to the Crown and Parliament. Yet the sovereignty of the Legislature was based on its being the representative of “the people”, its inhabitants and citizens.

In an effort to square that circle, the Legislature unsuccessfully attempted to replace the Penn Proprietary with a Crown-appointed governor. When it was clear that was not going to happen (1766-8), the Proprietary policy system broke up and gradually drifted to autonomy-independence, and then an actual civil war/Revolution in 1776. That drift was a chaotic affair, arguably more so than most other colonies/provinces, and as we shall see led to the new American state’s first policy system (Pennsylvania’s second, of course) in the Articles of Confederation. To complete that vision, remember Pennsylvania housed the capital of the Articles of Confederation (mostly) and most of a decade in the Early Republic. Both Continental Congresses and the Constitutional Convention were held in Philadelphia. The goings on in Pennsylvania and Philadelphia were quite observable, and Pennsylvania’s contribution to the Founding Father group was considerable, albeit driven into secondary status by the only Founding Father that matters in today’s popular and intellectual culture: Alexander Hamilton. Hamilton, it might be mentioned learned his banking craft from Pennsylvania’s Robert Morris, who in fact founded a combination Pennsylvania-U.S. National Bank a full ten years before his protégé. Morris also learned his lessons on how hard it is to institutionalize in Pennsylvania–again this will be discussed in a few modules later in this chapter. Maybe all this fuss I drawn the reader through paper money institutionalization will become more helpful at that point?

The Executive and Legislative Branches were at war with each other constantly over its lifetime, but the core, ever-present chasm was over how to finance its government, how that government could issue debt to pay for its expenses and programs, and since our analysis focuses on economic development, how each branch adopted its own particular focus/strategy on how to develop and grow the economy. The question of “paper money” overlapped all these disputes, and tossed in the third rail of the Quaker political culture, pacifism-war-self defense for an added bonus. If that were not sufficient discord, after the 1740’s the inability to settle/town-build, defend, conduct effective negotiations with resident Native American tribes, and pay for the settlement of its spectacularly growing western hinterland counties just simply overwhelmed the capacity of the Penn Proprietary policy system to the point that by 1765 a genuine insurrection of its western counties was potentially, if not actually, in the offing. That potential insurrection greatly affected the formation of the first American state policy system in 1776, and by reaction, the first Early Republic policy system (Pennsylvania’s third) in 1789.

The effect all this twig-bending had on the development and evolution of Pennsylvania’s economic base, however, is startling; because government was so twisted, and curtailed, the private economic base developed largely on its own entrepreneurism, and leadership, which on occasion filled the government policy vacuum with its own actions and programs (privatization), and on occasion sent its own over to government “to fix up the liberty bell” and resolve or paper over its various policy crises. As we shall see, the weakness of the Pennsylvania policy system led to an decentralized local level government, fragmented into at least two, if not three, sets of policy-making institutions. This structural and policy fragmentation allowed innovation, stasis, and economic/population growth simultaneously despite is fiscal and policy-making inefficiency. One might add this governmental fragmentation permitted a good deal of citizen input and participation, and gives insight as to why Pennsylvania government was thought to be the most “democratic” of all the colonies-states, and why to many it was thought to be the most radical form of democracy in that it constantly challenged entrenched elites. That radicalism, as we shall discover was the result of spices tossed into the constitution-making cauldron by Sam & John Adams, Thomas Paine, and, the only Pennsylvania native Benjamin Franklin–that story, of course lies just a bit ahead.

In this local policy system everybody got a bit of what they wanted, and a good deal of what they didn’t want as well. That turned out to be ok as we shall discover the dominant Pennsylvania policy system, through much of its history, wanted limited government, more importantly government that would leave them alone to manage their own affairs, live with their families and, find their own path to prosperity. To be sure the dominance of this Midlands political culture has gotten more complicated since the 21st Century, but certainly through most of the 20th Century in functioned, as all Pennsylvania-level policy systems have functioned–haphazardly, with a strong role played by the private sector, and much autonomy left to local governments (and there are a lot of them). Given that the Legislature emerged victorious over the Proprietary in 1776, it is understandable that to this day, Pennsylvania’s political structures tilt toward the Legislature, away from the Governor; and, the units of local government and its service-delivery districts tilt toward the voter (people), and away from the state-wide policy system. Per capita in 2020, Pennsylvania leads the nation in service delivery districts. The reader, perhaps, is beginning to see how the Pennsylvania twig was bent in/by the colonial Penn Proprietary system.

Economic Development–Our focus on economic development draws us into several aspects of history that are sometimes neglected, or too greatly simplified. Paper (or “soft” currency) money brings together many elements, debt issuance, how one pays back that debt, and the need for a currency with which people, government, and businesses can not only pay back the debt, but use as currency for other transactions. Colonial America, of course, had no true modern banks; what banks or lending companies that existed then were lodged in England, and the hard currency was the gold British coin–scarce, in colonial America. Coin or hard currency favors lenders and soft or paper money favors creditors. That meant our paper money institutionalization included a backdrop of elites and masses, and the nearly fifty years it was fought over in the Legislature, the streets of Philly, and the farms in the hinterland disguised an elite-mass struggle, and not surprisingly, we can see that expressed in different strategies and EDOs found in Penn Proprietary ED.

As I write, the Federal Reserve System has moved to near zero interest rates (cheap money), with little return to the Federal Reserve on money it lent out. They do it because cheap money helps the general public (non-elites) spend and prosper, an excellent catalyst for economic growth. That the banking institutions suffer is expressed in their current stock prices and lack of profitability. Paper money is from this perspective a conscious economic development strategy, but it is more than that, it is a fundamental pillar of other economic development activities that flow from its economic base. It builds communities. The paper money policy nexus is “an institution” that requires EDOs to implement its programs and strategies, and use what tools it is granted.

Penn’s Executive Branch drew its revenue from land sales, annual quitrents on the land, and whatever economic activities it conducted (fur trapping with Native Americans, for example). Penn held, if not a monopoly close to it, on Pennsylvania’s initial land sales, and to his Proprietary Loan Office went the powers to incorporate towns and issue charters–settlement or town-building. This is the “landlord function which Franklin hated and based his opposition on. The Proprietary then had its own set of economic development strategies based on land sales, town-building and trade with Native Americans. The Legislature, with no funds of its own except hated taxes that few paid, needed revenue to pay its bills and operate its government programs. That’s what paper money debt issuance helped them do. They created their own Loan Office and lent money to startups and homesteader farm mortgages. They charged an interest sufficient to retire the debt and pocketed the excess which was transferred to the Legislature. Each branch of government created its own separate EDOs, and pursued its own set of ED strategies and programs. The failures of one branch in these strategies and programs were not, however, generally addressed by the other branch–and that’s where men in white horses and privatization come in as when Franklin privately paid for a militia to defend Philadelphia. If you have a system that encourages private money to fund armies, that’s not good–too Roman for my tastes. But militia and self-defense is also an institution nexus, and economic developers cannot ignore the military and war nexus. Its effect on state and local ED is enormous, as we have discovered in this module.

If you wanted money for a business start up in Philly, or a farm just outside of Harrisburg you went to the Legislative loan office and got a loan from them (no banks remember). If you wanted to buy a homestead from Penn’s Proprietary you could get a loan for that. In effect, the Legislature had partially filled the vacuum of bank lending and was living off the money it made from that. This is in public hands and therefore is a public economic development strategy of business and agricultural lending. The effects of the conflict between Penn and the Legislature, for a half century, pulled and pushed different economic development strategies and programs–at times frustrating both. While business investment had other sources, agricultural investment much less so–meaning hinterland economic development was hugely impacted by these competing branches of government, and that was a major reason why most of Pennsylvania’s immigrants moved on down south to settle.

Another factor that caused Pennsylvania to exports its immigrant population was the policy system’s unwillingness to fund forts and militia or build roads into the interior. The malapportioned legislature would build roads in the eastern core–linking its counties to Philadelphia, but the British Army during war built the only roads into the hinterland. The western counties got the “short stick”, and the Penn Proprietary was unwilling to pay its share in infrastructure, although it was more willing to fund military, the Quaker legislature would not fund the militia–except when forced to by the British Army or Board of Trade. That the Penn Proprietary through its greed and simple insensitivity to resident Indian tribes acquired land to sell, it disrupted the peace and good relations of these tribes to European settlement is a good example of how the Proprietary economic development destabilized the western borders, while forcing easterners and the Legislature to pay taxes for infrastructure (forts, trading posts, and roads). The settlement of Pennsylvania’s hinterland produced an almost zero-sum set of economic development strategies and programs between east and western counties. That this will prove to a decisive and first order sub-regional tension is dwarfed only by the consequence of that sub-regional tensions on the future development of its policy systems. All this will erupt in 1775-76.

Western settlement, bluntly, was at best a moderate success, and some could persuasively argue it was botched. Not only could Virginia compete with Pennsylvania for Pittsburgh and the southern Ohio Valley, but a generation later the first official Ohio settlement was by Yankees from Ipswich Massachusetts (Marietta). Looking ahead into future modules, Pennsylvania could not beat the Baltimore and Ohio railroad race to open up Ohio, testifying to the continuity of Pennsylvania ineffectiveness, and its abject reluctance to fund infrastructure in its hinterland. If James Carville allegedly could outrageously say “Pennsylvania is Philadelphia and Pittsburgh, with Alabama in between“; over exaggerated to be sure, and unfair to both states, but there’s a reason the statement got traction. Conversely, it could be said William Penn’s Indian land sales policy was not only a moral alternative to stealing or seizing land, but proved to be reasonable effective in settling eastern three counties of Pennsylvania–the core. His descendants, however, were as Franklin described them, “landlords”, not only absentee but incompetent, and stubborn. Land sales did not make the Penn family rich, but it kept them in contention. In any event Pennsylvania sub-regionalism and small-town urbanization was firmly entrenched as a consequence of Proprietary western settlement.