Benjamin Franklin's Principles of Political Economy:
A Speculative Inquiry

Edward J. Dodson

[A paper presented at the Henry George School of Social Science, Philadelphia, Pennsylvania; 4 February, 2006, with an accompanying chronology of Franklin's life and association with the school of Physiocrats in France. This paper, slightly edited, appeared in the International Journal of Social Economics, Vol.36, No.4, 2009]

We know Franklin as a journalist, statesman, inventor and scientist. Franklin also wrote at some length on political economy. What is seldom discussed is the influence on Franklin's ideas by the small group of French political economists known as "the physiocrats." Who were these men whose doctrine so affected Franklin and what, if anything, did they have to say of value to us today?

One would not be exaggerating too much to say that to the people of British North America, or Britain itself, and even in France, the four decades beginning in 1750 became the Age of Franklin. Few men of his time were as well-known or well-respected as Benjamin Franklin. Few men played a greater part in the major events of the period.

Aristotle Proved Correct: Child Is Father to the Man

Born on the 17th of January, 1706, into a large and reasonably well-off family -- his father was a Boston candle merchant - Franklin received only a few years of formal schooling, "where he was taught Latin, arithmetic and other useful knowledge."[1] However, after just two years his father decided that Benjamin was better suited to become a merchant and wanted to apprentice him in the candle business. Fortunately for young Benjamin, his older brother James returned from London, where he had completed apprenticeship as a printer, and was determined to start a newspaper in Boston. James got his chance when controversy arose over the new practice of inoculation against small pox. Opponents of inoculation funded the start of the New England Courant to make their case, with James as manager. Benjamin came aboard as apprentice. He was twelve years of age.

Although the work was hard, Benjamin found diversion in reading. He had access to a small library of books kept at the offices of the newspaper, and one of the paper's supporters opened his personal library to him. Already, he thought writing would be key to his future accomplishments, and he worked diligently to improve his vocabulary and writing style. Recognizing as well his weakness in logic and reasoning, Franklin studied John Locke's Essay Concerning Human Understanding and other serious works. The emerging Franklin is well-described by biographer Bernard Fay:

"…Franklin, provided with a few books, had been able to create practicable and unforgettable formulas which he used to infinite profit during his whole life and in the midst of a century which pushed intellectual and sentimental refinement to such extremes."[2]

Troubled by the doctrines of conventional religion and what he found to be boring sermons delivered by his own Presbyterian ministers, Franklin was drawn to the writings of the leading Deists of his day. He stopped attending church services, preferring to spend the time reading and studying. And, within a short period he gathered up the courage to put his thoughts before the reading public. He began his writing career by creating an alter ego, Mrs. Silence Dogood, and anonymously submitting letters to his brother's newspaper by sliding them under the door of the printing shop at night. He was now sixteen.

James Franklin repeatedly found himself at odds with the authorities for publishing attacks on the government and the church. He had been imprisoned briefly for his radicalism, and as the year 1722 was ending James once more found himself at odds with government censors. He was ordered to submit all of his writing in advance to the authorities or shut down the newspaper altogether. Instead, he turned the newspaper over to his younger brother, who promised the authorities he would not publish criticisms of the government, the church or individual officials. After a brief period of calm, young Benjamin (pressed by James) drifted back into the negative - some would say radical - commentary for which his brother had gotten into so much trouble. Ambitious for personal success in the world and fearful of the consequences of continuing as he was, Benjamin decided to leave the newspaper and to leave Boston as well. In July of 1723, he simply packed up and left without word to anyone. As one might imagine, this caused a permanent break between Benjamin and his brother never to be reconciled.

Benjamin stopped briefly in New York City but was unable to find work in any of its printing houses, and he soon left for Philadelphia. There he quickly found employment in his chosen profession. Seemingly good fortune smiled on the young man. The governor of Pennsylvania happened to hear from another Bostonian of Benjamin's arrival in Philadelphia and decided to call on him at the printing office. After their relationship grew into something of a friendship, the Governor offered to direct the colony's printing business to the young Mr. Franklin, encouraging him to start his own printing house. However, this venture required financial resources the young man did not possess. So, the Governor urged Franklin to go to England, where he could complete his training in the printer's trade. Governor Keith promised to provide him with letters of introduction, but this turned out to be a hollow promise. The Governor was deep in debt on both sides of the Atlantic and had fallen into disfavor with the Penn family. When Franklin arrived in London, he found he was on his own.

A bit of intrigue followed, as Franklin had been entrusted with letters written by Governor Keith. Several of these letters detailed plans to undermine the interests of the Quakers in Pennsylvania. Angered at Keith's betrayal, Franklin put the letters into the hands of a London Quaker who expressed sincere gratitude. Franklin had made a friend. He was then fortunate to find employment with one of London's most successful printing houses at a good wage.

Settled in and gainfully employed, Benjamin Franklin felt he was ready to enter the public dialogue, to put his own beliefs into written form, testing his capacity to reason on an uncertain audience. He printed one hundred copies of his own essay, A Dissertation on Liberty and Necessity, Pleasure and Pain, giving copies out to those who expressed a willingness to read it and engage him in discussion on the questions raised. Out of this effort grew an important friendship with a Dr. Lyon, who brought Franklin - writes biographer Bernard Fay -- into "that curious intellectual society of brilliant, dissolute men who met in the shadowy taverns and who sometimes slipped into the salons of the great."[3] Another friendship developed with Sir Hans Sloane, president of the English Royal Society of Arts and Sciences, who took an interest in some of the unique natural materials Franklin brought from America.

Because of loans made to a financially and otherwise troubled friend, Franklin's financial circumstances were not improving. An argument ended the friendship, and Franklin accepted the fact he would not be repaid. On the positive side of the scale, he soon acquired a new position at an even more prestigious printing house and rededicated himself to his work. Then, in mid-1726, he was offered a position as clerk in the business of his new Quaker friend, who happened to be a Philadelphia merchant. By mid-October he was back in Philadelphia, his work both agreeable and valuable as an introduction to the world of commerce. Unfortunately, his new employer became victim of an epidemic that rushed thru the city. Franklin was also struck down, and when recovered found himself without employment or resources. He returned to the printer's trade, working once again for the printing house where he was first employed in Philadelphia. For both Franklin and his employer, this was a relationship neither desired. For the time being, they needed one another.

Franklin had now entered a crucial period in his life. He wondered what his future would be, what kind of person he would become. After some reflection, he determined to live his life according to four steadfast rules: economy, perseverance, goodwill and loyalty.

He pragmatically recognized the essential importance of establishing strong friendships and ties within the community. One could not achieve successes in life without a supportive network. After only a year in Philadelphia, he started a discussion group, The Junto, bringing together others who shared his thirst to expand their knowledge and "to give mutual aid and protection."

At his place of employment, Franklin was tasked with training the printer's staff on how to do their jobs; he was then given his walking papers. A friend came to his rescue, so to speak, by proposing they go into partnership and start a new printing shop. The friend's father would provide the financial resources. By the Spring of 1728 they were up and running and gave consideration to starting a newspaper, although the city already had two newspapers competing for market share. Instead, Franklin decided to join forces with one of the two existing papers - the American Mercury - to drive the second paper out of business. That accomplished, he purchased the second paper - The Pennsylvania Gazette - and made it his own.

One of the pressing issues for the colony in those days was the shortage of currency, which made business difficult and interest charged by creditors high. Franklin entered the debate with an essay expressing his views on the proper role of paper currency. He challenged the assertion that a nation's wealth is best measured by the quantity of gold and silver possessed. He argued, instead, that "the riches of a country are to be valued by the quantity of labour its inhabitants are able to purchase." To facilitate economic growth, he concluded that a significant issuance of currency would beneficially raise the value of land and wages." Today is not the time to explore whether Franklin is correct or incorrect in his argument. Rather, what strikes me as remarkable is Franklin's sense that he had something important to say on the subject, and his commitment to expressing his views in pursuit of the public good. From the associations he established with the scholarly-inclined in England, he brought back a deeper appreciation for the workings of the economic engine. Bernard Fay records that:

"Benjamin studied the question carefully and considered the various arguments in the light of what he had seen in England and what he had learned in the books of the greatest economist of the time, the head of the mercantile school, William Petty. …The essential theme of Franklin was that a new issue of banknotes would give prosperity to the needy classes as well as to the wealthy and the Government itself, as the State and capitalists drew direct profit from a condition of general well-being."[4]

Somewhat surprisingly, the Pennsylvania Assembly followed his advice; and, when the results he forecasted occurred, his reputation advanced. Franklin's name was soon put forward as printer for the colonial government. All was not exactly smooth sailing, but by mid-1730 Franklin was well on the road to having a stable and growing business. Still, he remained highly leveraged with creditors and had to watch his expenditures closely.

This brings us to one of Franklin's great ideas. He loved books, but his ability to purchase them was limited. In fact, few could afford to build a large personal library. Franklin improved his access to books by convincing his fellow Junto members to establish a private collective library. Problems arose with the operation of this library, and the experiment lasted but one year. Rather than giving up, Franklin in 1731 developed a plan for a subscription library, which was eventually established with over fifty dues paying members. Also in this same year, he enlarged his circle of acquaintances by becoming a Freemason (creating fuel for conspiracy theorists of the future), and opening doors for him when he later arrived in France. As biographer Carl Van Doren wrote: "In France it [Freemasonry] was freethinking and opposed to absolutism. …The Masons of the most eminent lodge in France became his informal colleagues in the service of the new republic."[5] He was now twenty-four.

Franklin's newspaper began to find a steady readership, attracted to Franklin's writing style and the unique information he presented, including news items regarding the generally secretive Freemasons. In 1732, Poor Richard made his appearance to the delight of readers. Just two years later, Franklin became Grand Master of the Philadelphia Freemasons. He received an appointment as clerk of the colonial Assembly, then postmaster of Philadelphia. His mother wrote with some concern over Franklin's involvement with the controversial Freemasons, to which he responded: "I assure you that they are in general a very harmless sort of people, and have no principles or practices that are inconsistent with religion and good manners."[6]

His business firmly established, his position in the community rising, Franklin seemed never to tire of new initiatives. Throughout 1743 he proposed to those he most respected throughout the colonies the formation of an American Philosophical Society. He saw the time as ripe, as "there are many in every province in circumstances that set them at ease and afford leisure to cultivate the finer arts and improve the common stock of knowledge."[7] He was fast coming to the point in his own affairs where he could devote more time to such endeavors.

Franklin now decided to become part of the landed gentry, but not in any sense an absentee landlord. In 1748 he purchased a 300-acre farm near Burlington, New Jersey, and threw himself into its improvement. He was determined to apply the most up-to-date scientific methods to agriculture and sought the advice of experts. Not unsurprisingly, he was disheartened that his example was not followed by other land owners in the area. That same year he was elected to the Pennsylvania Assembly, where his primary concerns became the status of the indigenous tribes, the issuance of paper currency, and the taxation of the Penn family's proprietary lands.

Somewhere in this period he also found the time to begin his experiments with electricity, and the following year he submitted his papers on electricity to the Royal Society in London. His writings on the subject were translated into French and published in France in 1752. French scientists successfully repeated his experiments, and soon Franklin's name was becoming known throughout Europe as a scientific innovator. Reflecting on his life to that point, Franklin wrote to his mother: "I enjoy, through mercy, a tolerable share of health. I read a great deal, ride a little, do a little business for myself, more for others, retire when I can, and go into company when I please; so the years roll round, and the last will come, when I would rather have it said 'He lived usefully' than 'He died rich'."[8]

Already at an age beyond the lifespan of men of his generation, the 1750s were incredibly productive years for Franklin. He wrote an essay on population that eventually came to the attention of Adam Smith in Scotland. One of his keen observations is that wages tend to be higher in a territory where there is an abundance of free land. Looking into the future, he also questioned the wisdom of permitting non Anglo-Saxons to settle in British North America. The long-term loyalty of the colonials required, he concluded, the presence of shared cultural and political values with the mother country.

Additional honors came his way. He arose to become leader of the Pennsylvania Assembly, was awarded honorary Master of Arts degrees from Harvard and William and Mary, received from The Royal Society the Sir Godfrey Copley gold medal "on account of his curious experiments and observations on electricity" and was elected a member of The Royal Society. He was also appointed a commissioner to meet with representatives of western tribes, and after becoming familiar with the organization of the Iroquois League he proposed a plan for colonial cooperation (the Albany Plan for Union).

Late in the decade, in 1757, Franklin returned to London, where much of his time was devoted to scientific and intellectual pursuits. In 1759 he was awarded an honorary Doctor of Laws degree by the University of St. Andrews in Scotland. While there, he met Adam Smith and dined with him at the Edinburgh house of William Robertson. What they discussed is not recorded; however, Franklin's interest in and knowledge of political economy was, as we have seen, already well developed. A year later, he wrote an essay on the relation between Britain and its colonies, in which he emphasized the principle of the division of labor and offered his explanation of why the introduction of manufacturing is difficult where agriculture remains a profitable activity. He also observed that the broad ownership of property brings political stability. "While the government is mild and just," writes Franklin, "while important civil and religious rights are secure, such subjects will be dutiful and obedient. The waves do not rise but when the winds blow."[9] Perhaps he sensed the winds were already gathering speed and wanted to sound an alarm to those who might share his concerns for the empire. This is the same year he is appointed as the agent of Pennsylvania in London, and his first challenge is to find a solution to the impasse in the sharing of power between the Pennsylvania Assembly and the Penn family.

In the meantime, Franklin also entered into an exchange of correspondence with David Hume, the great philosopher and political economist. They discussed the virtues of America and exchanged views on scientific matters.

Shortly before returning home, Franklin received yet another recognition of his accomplishments, an honorary Doctor of Civil Laws degree from Oxford. He was from that point on recognized throughout the Old World as "Doctor Franklin."

We now come to the early 1760s. The British government incurred a huge national debt as a result of the Seven Years' War - referred to in the colonies as the "French and Indian War" -- and is looking to the wealthy colonial landowners and merchants for revenue. Pennsylvania's Assembly called upon Franklin, hoping he could convince the British government that imposing taxes on the colonies would have serious repercussions. Despite Franklin's efforts, the Stamp Act was passed and so began the chain of events leading to the British occupation of Boston and, then, open rebellion.

In 1765, we find Franklin in France, for what he later wrote was one of the most sought after meetings of his life - with Francois Quesnay, the leader of the French school of political economists known as Physiocrats.

The Physiocrats Take Political Economy From Alchemy
Into the Realm of Science

Quesnay was born in 1694 in rural France. He received little formal education yet pursued the study of medicine and was appointed court physician to Louis XV. In mid-life, Quesnay became increasingly interested in finding solutions to many of the societal issues of his time. In 1750 he contributed several articles for Diderot's Encyclopedie and began to develop his views on the responsibilities of government, on the nature of property and on the promotion of trade and commerce. From his friend, Victor Riqueti, the Marquis de Mirabeau[10] , Quesnay received a copy of Richard Cantillon's Essay on the Nature of Commerce, first published in French twenty-one years after Cantillon's death. The two men met, and Quesnay convinced Riqueti that Cantillon had made a number of key mistakes in his analysis. Yet, Cantillon and Quesnay clearly shared many insights. "The Land," observed Cantillon, "is the source or Matter from whence all Wealth is produced. The Labour of man is the Form which produces it: and Wealth in itself is nothing but the Maintenance, Conveniences, and Superfluities of Life."[11] This thought is central as well to Quesnay's political economy. Cantillon also set the stage for much of the subsequent debate over the connection between population growth and worsening poverty. He asserted: "Men multiply like Mice in a barn if they have unlimited Means of Subsistence; and the English in the Colonies will become more numerous in proportion in three generations than they would be in thirty in England, because in the colonies they find for cultivation new tracts of land from which they drive the [inhabitants]." As we look at history, we find that our behavior turned out to be rather more complicated than Cantillon - or the good Rev. Malthus -- understood. The world's highest rates of increase in population often occur where landlessness is epidemic and poverty widespread.

Riqueti set out to bring others to the Physiocratic school and wrote his own book on population. Influenced by Quesnay, he condemned the holding of large estates by the wealthy, arguing that these lands should be made into productive farms. From Quesnay came the Physiocrats' most heralded contribution to political economy as a science - the publication of his Tableau Economique, in 1758. Quesnay was the first to inject a degree of quantitative analysis into political economy. His influence is appropriately gauged by the fact that in 1765 Adam Smith came to France specifically to visit and learn from him.

Another member of the new Physiocratic school was Pierre-Paul Mercier, appointed intendant of the colony of Martinque in 1759, where he incurred the anger of his superiors by removing restrictions against trade. He is joined by Pierre-Samuel DuPont de Nemours, whose writing on finance had come to Quesnay's attention. DuPont soon took over as editor of the Physiocratic Journal d'agricultures, du commerce at des finances.

The most important convert to the Physiocratic doctrines was Anne-Robert Jacques Turgot, who in 1761 was appointed Administrator of Limoges. In 1766, Turgot wrote a 100-page outline of political economy that was later published by DuPont. The story is that he wrote this for two Chinese students prior to their return to China.

What, then, did these men assert? What is the Physiocratic doctrine?

At the heart of Physiocratie is a belief in natural law, as revealed by the application of scientific methods of analysis and observation. Societies organized according to the true natural law would be both moral and prosperous. And, key to natural law was the correct relationship between people and the land they occupied. Quesnay wrote:

"Agriculture and commerce are constantly regarded as the two sources of our wealth. Commerce, like industry, is merely a branch of agriculture. These two states exist only by virtue of agriculture. It is agriculture which furnishes the material of industry and commerce and which pays both; but these two branches give back their gain to agriculture, which renews the wealth which is spent and consumed each year."[12]

Quesnay understood that only when a society's agricultural production is sufficient to provide for all without having to be produced by all will manufacturing and commerce become possible. He argued that agricultural surplus was, in this way, converted into other goods and services.

Key to a future in which all received enough to live decently was a system of law that distinguished between the productive and non-productive segments of society. Where the land was concerned, this required measures favorable to cultivators. It required an end to mercantilism and the introduction of free trade practices. Will and Ariel Durant write that "Quesnay's disciples looked up to him as the Socrates of economics."[13] So much so, in fact, that "they submitted their writings to him before going to print, and in many cases he contributed to their books."[14] To achieve their objectives of a society organized in harmony with natural law, these men called on the owners of land to absorb the full costs of government. The landed aristocracy of France and the landed interests in other countries could hardly be expected to permit this type of thinking to find its way into law.

The Physiocratic Influence on Franklin
and Franklin's Influence on the Emerging American System

In 1767, Charles Townshend, Britain's chancellor of the exchequer, promised the nation's landed minority he would find revenue in America sufficient to pay for the defense of the colonies, so that the land tax at home could be reduced. Franklin warned his friend Lord Kames that Britain needed to think of the long term. "As to America," wrote Franklin, "the advantages of such a union to her are not so apparent. She may suffer at present under arbitrary power of this country; she may suffer awhile in a separation from it; but these are temporary evils that she will outgrow."[15] Franklin was learning very quickly that there was little appreciation for the volatility of the situation within the halls of government in Britain.

In the midst of the escalating political tensions, Franklin's attraction to Physiocratic principles - influenced by the experience of life in America -- emerged in a new essay, published in 1767, with the title, On the Price of Corn and Management of the Poor. "The best way to do good is not making them [the poor] easy in poverty," observed Franklin, "but leading or driving them out of it." From the writings of Quesnay and his colleagues, Franklin now understood how this could be accomplished. Franklin's essay appeared in the Physciocratic journal, Ephemerides, prior to his arrival in France and his discussions with Quesnay. Confirming his conversion to Physiocratie, Franklin writes in a letter, "After all, [England] is fond of manufactures beyond their real value, for the true source of riches is husbandry." Bernard Fay adds:

"He adopted the principle that only agriculture is productive, believed that trade should be free for all, and that indirect taxation was absurd. The discussion with England had already turned his mind practically in this direction, and the Physiocrats furnished him with a doctrine, which he made use of in his writings of these stormy years."[16]

Fay also notes that over a period of several years his correspondence with French colleagues and officials was ongoing, "and more than two thirds of it was devoted to the Physiocratic group."[17] His new Physiocratic views were captured in a 1768 pamphlet, Positions To Be Examined Concerning National Wealth, in which he wrote: "All food or substance for mankind arises from the earth or waters." And, to DuPont de Nemours he declared his full adherence to their shared principles:

"There is such a freedom from local and national Prejudice and Partialities, so much Benevolence to Mankind in general, so much Goodness mixt with the Wisdom, in the principles of your new Philosophy, that I am perfectly charmed with them and wish I could have studied at your School, that I might by conversing with its Founders have made myself quite a Master of that Philosophy. …It is from your philosophy only that the maxims of a contrary and more happy conduct are to be drawn, which I therefore sincerely wish may grow and increase till it becomes the governing philosophy of the human species, as it must be of superior beings in better worlds."

What could Franklin do, armed with this enlightened set of economic principles? His learned French teachers were opposed at every turn by entrenched interests in their own society. He was away from home, and the matters demanding his attention were of a crucial nature. What he could do was to continue to write, hoping his established reputation as a scientist would carry over into the realm of political economy. He also began to look at the conditions existing in England, Scotland and Ireland with new insight. He had reached a point in his understanding, writes Carl Van Doren, where "the poverty and misery of the Irish people were an example of what might come to America if the old colonial system of exploitation were kept up. America must defend itself from such a future. America and Ireland had a common cause against England." Of Ireland and Scotland, Franklin wrote the following in 1771:

"In those countries a small part of society are landlords, great noblemen, and gentlemen, extremely opulent, living in the highest affluence and magnificence; the bulk of the people tenants, living in the most sordid wretchedness in dirty hovels of mud and straw and clothed only in rags. …I thought often of the happiness of New England, where every man is a freeholder, has a vote in public affairs, lives in a tidy, warm house, has plenty of good food and fuel, with whole clothes from head to foot, the manufacture perhaps of his own family. …if my countrymen should ever wish for the honour of having among them a gentry enormously wealthy, let them sell their farms and pay racked rents; the scale of the landlords will rise as that of the tenants is depressed, who will soon become poor, tattered, dirty, and abject in spirit."[19]

These experiences had to have had a deep impact on Franklin, increasing his fears for the future of an America subjected to the oppressiveness of Old World socio-political arrangements and institutions. He and his countrymen had been lulled into a false sense of security by long decades of salutary neglect now coming to a crashing end. Here is when Franklin likely acquired a copy of Thomas Paine's pamphlet in support of the cause of the excise-men and put to Paine the thought of going to America, perhaps to bring a first-hand warning of the true political conditions in Britain. And, as we know, Paine soon departed from England in November of 1774. Knowing their correspondence might be intercepted and read by British authorities, Paine may have been communicating a more important message than he words conveyed, when he wrote to Franklin from Philadelphia: "Your countenancing me has obtained for me many friends and much reputation, for which please accept my since thanks." And later: "For my own part, I thought it very hard to have the country set on fire about my ears almost the moment I got into it."

Physiocratie was dealt a severe blow in 1774 with the death of Quesnay. Turgot's efforts to introduce Physiocratic reforms brought on his downfall, as he is dismissed by the King in May of 1776. The landed aristocracy and the bureaucracy of the state would have none of it, too blind to see the rising discontent that would in less than a quarter century spread violence across the land. The popular uprising against the Monarchy and Aristocracy was inevitable, to be sure. What ironically hastened the process was French support of the American colonies against Britain. Turgot was a voice in the wilderness warning the French treasury would be bankrupt. Franklin biographer Carl Van Doren writes that Turgot expressed his objections on the "ground that the American colonies of all the European powers were sure to become independent in time; and that England, instead of losing her strength with her colonies, would be better off when trading with them as independent states than now while exercising her colonial monopoly."[20] Thus, in a strange twist of fate, Franklin would have reason to be relieved that in the years to come Turgot would be out of government and without influence.

Franklin's position, his very safety, was now seriously at risk in Britain. Wisely, early in 1775 he departed for home, arriving in Philadelphia on the 5th of May. He was immediately chosen by the Pennsylvania Assembly as a deputy to the Second Continental Congress. He was seventy years old and the oldest deputy in the Congress. Franklin now submits his proposal for "Articles of Confederation and Perpetual Union for consideration and debate. He included a provision for the Congress to have power to regulate "general commerce," the objective of which was to assure consistency between the states. Later in the year, Paine showed Franklin his draft of Common Sense, and, when later printed, Paine had the first copy delivered to the good Doctor Franklin. Clearly, Paine is guided in his actions by his sincere admiration for Franklin mutual adherence to the principles by which Franklin is guided. At this stage in his life, what more can Franklin hope for than by his actions to provide hope for a bright future for the newly-established United States of America.

With the outbreak of war, Franklin did his best to focus attention on how the expenses of the war should be paid. He warned of the dangers of a depreciating paper currency and advanced several measures, all rejected as impractical. The colonies had little specie in reserve. Now, the interruption in trade drove up the price of necessary goods. There was little else that could be done other than to issue paper currency into circulation. Thus, despite the ensuing problems that arose, Franklin came to change his views by 1779:

"The effect of paper currency is not understood on this side of the water. And indeed the whole is a mystery even to the politicians: how we have been able to continue a war four years without money; and how we could pay with paper that had no previously fixed fund appropriated specifically to redeem it. This currency, as we manage it, is a wonderful machine. It performs its office when we issue it; it pays and clothes troops and provides victuals and ammunition; and when we are obliged to issue a quantity excessive, it pays itself off by depreciation."

The Congress had no choice, really. Its powers did not include the ability to impose taxes on individuals or enforce the requisitions of material from the states. Taxation remained the province of the state legislatures. Hard currency provided by the French was quickly hoarded out of circulation, as one would expect under circumstances that permitted payment of debts using depreciating paper currency. Thus, it might be best to interpret Franklin's statement above as recognition that one could have reasonably expected the ramifications to have been worse than they turned out to be.

The nation was now fully committed to a long war against British occupation, and winning the war took priority over planning for the peace or maintaining stable prices. The only means to slowing the pace of currency depreciation was to acquire hard currency from France and other Old World powers eager to see Britain's empire weakened. Franklin accepted the call of his nation, returning to France to secure support from Vergennes for the American cause. In his absence, there was no one else in the Congress to argue the case to incorporate Physiocratic principles into the laws of the land.

Serving the nation in France, Franklin's health was failing him. In 1781 he turned seventy-five and could not be expected to continue on for very much longer. He wanted to be relieved of his duties and return home. Reflecting on the long years of conflict, he wrote to Edmund Burke in Britain:

"Since the foolish part of mankind will make wars from time to time with each other, not having sense enough otherwise to settle their differences, it certainly becomes the wiser part, who cannot prevent those wars, to alleviate as much as possible the calamities attending them."

Even so, Franklin still had the energy and will to think about the future. In 1783, he prepared a pamphlet, Information to Those Who Would Remove to America. The great advantage of America was its vast emptiness, but Franklin realized this happy circumstance would not last forever.

"The Truth is, that tho' there are in that Country few People so miserable as the Poor of Europe, there are also very few that in Europe would be called rich: it is rather a general happy Mediocrity that prevails. There are few great Proprietors of the Soil, and few Tenants; most People cultivate their own Lands, or follow some Handicraft or Merchandise; very few rich enough to live idly upon their Rents or Incomes; or to pay the high Prices given in Europe, for Paintings, Statues, Architecture and the other Works of Art that are more curious than useful."

He advised his readers that not until "the lands are taken up and cultivated, and the excess of people … cannot get land" would those coming from the Old World have difficulty finding employment. Only in the distant future and the disappearance of the frontier would poverty become a problem in America. During this period he provided Robert Morris with his thoughts on the nature of property and managed to continue to carry on a lively correspondence and meet with countless visitors at his residence outside of Paris. Finally, in May of 1785, concluded his work in France and made plans to return to Philadelphia.

Franklin wrote that he was uncertain of the reception awaiting him on his return because of the many controversies attached to the long negotiation of peace with Britain. A week after his arrival, he wrote to John Jay, "The affectionate welcome I met with from my fellow-citizens was far beyond my expectation."[21]

Although Turgot had died in 1781, I have not found any record that Franklin commented on the loss of this great statesman with whom he shared his key principles. My review of Franklin's letters has been far from exhaustive, so it is entirely possible he and Turgot met on occasion to reflect on the future to come. I cannot but think that Franklin understood and respected Turgot's opposition to French financial assistance to the fledgling United States. Early in 1782, Franklin wrote from his residence in Passy:

The friendly disposition of this court towards us continues. We have sometimes pressed a little too hard, expecting and demanding, perhaps, more than we ought, and have used improper arguments, which may have occasioned a little dissatisfaction, but it has not been lasting. In my opinion, the surest way to obtain liberal aid from others is vigorously to help ourselves. People fear assisting the negligent, the indolent, and the careless, lest the aids they afford should be lost. I know we have done a great deal; but it is said, we are apt to be supine after a little success, and too backward in furnishing our contingents. This is really a generous nation, fond of glory, and particularly that of protecting the oppressed.[22]

Perhaps Franklin appreciated, as did Turgot, that the French economy was weak and vulnerable to collapse under the combined pressures of destructive domestic policies and almost continuous warfare. The Physiocrats were enlightened thinkers attempting to achieve incremental change in a society dominated by entrenched privilege. Life in the American states was so different; yet, Franklin also seemed to understand that to secure the future for his own nation, enlightened thinking was going to be needed. In 1787 he wrote to Alexander Small:

"I have not lost any of the principles of political economy you once knew me possessed of, but to get the bad customs of the country changed, and new ones, though better, introduced, it is necessary first to remove the prejudices of the people, enlighten their ignorance, and convince them their interests will be promoted by the proposed change; and this is not the work of a day. Our legislators are all landholders; and they are not yet persuaded that all taxes are finally paid by the land. …therefore we have been forced into the mode of indirect taxes, i.e., duties on importation of goods."

When Franklin returned to Philadelphia, he found that despite the war, the prolonged interruption of normal commerce and depreciation of paper currency, his own lands had increased in value considerably during his long absence. In fact, his "estate … more than tripled in value since the Revolution."[23] Additionally, the State of Georgia had awarded him 3,000 acres of land for his services as agent. He held the deed to a large tract of land in the Ohio territory as well. He owned a house and lot in Boston and a number of properties in Philadelphia. Still, there was little time for Franklin to tend to his personal affairs. He was drafted to participate in the Constitutional Convention in 1787, but he spoke little. His statements were read for him by James Wilson. And, as the Convention was drawing to a close, he urged approval of the Constitution, even though he was not fully satisfied with the document.

An Agrarian Nation Adopts a Constitution

Franklin had returned to a nation united by victory but divided by sectional interests, by an adherence to state sovereignty, by cultural norms and by experience. Life under the Articles of Confederation generated increased tensions and anxieties. The number of unresolved conflicts between the states generated fear among the most nationalist of statesmen that the confederation would be short-lived. The structure for governing the new nation supported by most state leaders and the men they sent in 1780 to serve in the Congress was overwhelmingly decentralist. The means required to successfully conduct war against the world's strongest military power were legitimately feared by people who considered themselves citizens of sovereign states. They reluctantly yielded authority to the Congress and sought to recover their sovereignty when the conflict concluded.

Both James Madison and Alexander Hamilton expressed their dismay that the Congress had such little authority. Hamilton wrote that the "confederation … is neither fit for war, nor peace." Madison called for powers vested in the Congress to exercise "coercive powers" to force the states into compliance with Congressional mandates. The most serious issue facing the Confederation was repayment of the war debt and how it should be apportioned between the states. Even here, nothing significant could be achieved. The states pursued their own interests; and, absent any threat of renewed attack by Britain, Americans worked to rebuild what had been destroyed and move on.

In addition to Franklin and Paine, Thomas Jefferson had also come under the influence of Physiocratic principles during his years in France. Jefferson, in turn, patiently brought Madison along. Madison's biographer, Ralph Ketcham, writes:

"Thus Madison shared the ideals and high hopes of Jefferson's enlightened, philosophe circle in Paris, but his political tasks in the United States gave him a turn of mind inclined to dampen or amend Jefferson's speculations. Madison thought the unfortunate yet relentless way overpopulation caused human misery meant laws though helpful in parts of the United States, would never be able to abolish poverty. Likewise, the noble principle that the earth belonged to the living generation, drawn from the doctrine of consent, needed to be restrained and amended, lest it upset vital and useful aids to order and stability."[24]

Here, we have a strong indication that Madison, when pressed, would vote to compromise principle to achieve consensus. He feared the consequences of factions and parties more than that of wrong-headed policies.

A major challenge remained. What could the new nation do about the shortage of money (i.e., of gold and silver coinage). Franklin, as described above, reached the conclusion that paper currency served the war-time government well enough. We have Turgot's fears, later realized, that without adoption of many reforms France's financial situation would be destroyed by another war with Britain. Now, Americans needed currency but feared inflation - and its companion, the reduced purchasing power of currency used in the repayment of debt. Six states were issuing paper currency, and each suffered a greater or lesser degree of steady loss in purchasing power. The English economist Gresham would not have been surprised: bad (i.e., unbacked paper) money was driving out good (i.e., gold and silver coinage). As Madison explained:

"The intrinsic defect of the paper [was that] this fictitious money will rather feed than cure the spirit of extravagance which sends away the coin to pay the unfavorable balance [in foreign trade] and will therefore soon be carried to market to buy up coin for that purpose. From that moment depreciation is inevitable."[25]

Madison remained steadfastly a proponent of a currency that held its purchasing power. Thomas Paine weighed in with a letter to President Reed dated 4 June, 1780:

"Every care ought now to be taken to keep goods from rising. The rising of goods will have a most ruinous ill effect in every light in which it can be viewed."[26]

Then, near the end of 1785 Paine came back to the currency issue in his pamphlet, Dissertations on Government, the Affairs of the Bank, and Paper Money. Upon completion of the manuscript, he sent a copy to Franklin asking for "any difficulties or doubtfulness that may occur to you." Paine argued the case for a strong bank, privately subscribed, favored by the responsibility for taking in revenue on behalf of the government and with a strong backing of specie. The lessons of history were clear to Paine:

"It is the interest of the bank that people should keep their cash there, and all commercial countries find the exceeding great convenience of having a general depository for their cash. But so far from banishing it, there are no two classes of people in America who are so much interested in preserving hard money in the country as the bank and the merchant. Neither of them can carry on their business without it. Their opposition to the paper money of the late Assembly was because it has a direct effect, as far as it is able, to banish the specie, and that without providing any means for bringing more in. …The only proper use for paper, in the room of money, is to write promissory notes and obligations of payment in specie upon."

Though this may have been sound economic advice, the politics were rather more complicated. This was Paine's last real opportunity to affect the course of events to come, as he was soon to depart for England where he would spent a good deal of time attempting to gain approval for his design of a single-arch iron bridge, while becoming increasingly immersed in the Old World's coming period of political turmoil.

Madison in the meantime received from Jefferson a large selection of books on history and government. After an intense period of study, he produced Of Ancient and Modern Confederacies, a detailed analysis of the reasons nations faltered throughout history. What would doom the republican experiment in America was, he concluded, a weak central authority and all of the jealousies possessed by "each province of its sovereignty." He saw nothing but parallels to conditions evolving under the Articles: "[N]o money comes into the public treasury, trade is on a wretched footing, and the states are running mad after paper money."[27]

After arriving in Philadelphia early in May of 1787, Madison called on Benjamin Franklin. Doctor Franklin was now eighty-one years of age. His body was failing him, but Franklin's mind remained keen, and he often entertained groups of the delegates to discuss informally the lessons learned from his years of statesmanship. Franklin quietly made his own case for a stronger central government. The first substantive vote by the delegates affirmed a proposal made by Hamilton that "a national Government ought to be established consisting of a supreme Legislature, Executive and Judiciary."[28] They also supported Franklin's proposal that states be prohibited from enacting laws conflicting with the terms of treaties entered into by the national government.

Not until well into the Convention, did the debates focus on the heart of conflict between democracy and hereditary power based on control of property, which had an important influence on the decision of how revenue was to be raised by government. We do not know whether Franklin sang the song of the Physiocrats in favor of direct taxation of the landed, or decided he had no choice but to compromise his principles in the interest of forming the new government.

In August, the delegates reconvened and began to revisit their progress to date. Gouverneur Morris pressed the interests of the nation's landed by moving to restrict the vote for representatives to freeholders, suggesting the poor would sell their votes to the wealthy. Madison and others argued against this British practice and for broad suffrage (at least among adult, white males). Only then would government truly reflect the consent of the governed. Later in the month, the debates moved to the question of revenue. Here, Madison urged giving the Congress broad powers to raise revenue, including the taxation of imports.

Following the publication of Charles Beard's book[29] examining the background and interests of each of the delegates to the Constitutional Convention, historians attacked or defended Beard. Ralph Ketcham argues that, "although many of the delegates had a personal financial interest in the decisions of the convention, the most thorough comparison of these interests with votes in the convention indicates almost no significant correlation along lines of economic self-interest."[30]

Regardless of their underlying motivation, once the delegates signed the draft constitution it was up to the nation to decide whether this small group of men offered enough democracy, the preservation of enough sovereignty, and the prospect for republican government sufficiently strong to discourage further foreign designs on American territory. The drafted document was now to be debated in the state legislatures, and this proposed new form of government had determined opponents. Virginians Patrick Henry and Richard Henry Lee, for example, were outraged. In New York, Governor Clinton took charge of the anti-Federalist campaign. Recognizing the need to sell the American leaders on what he believed to be the sound logic contained in the Constitution, Alexander Hamilton determined to present the case in writing. He recruited James Madison and John Jay for the undertaking. Thus, beginning in the Fall of 1787 their essays on government appeared in sympathetic New York newspapers. In these pages, the Federalist principles as they understood them were explained at length.

Madison, in the tenth essay, elaborated on his historical findings. The "source of factions has been the various and unequal distribution of wealth." So, how could Americans avoid this outcome?

"The regulation of these various and interfering interests forms the principal task of modern legislation, and involves the spirit of party and faction in the necessary and ordinary operations of the government."

His objective is the reliance on reason and logic in the making of laws, and the prevention of government-sanctioned privilege. And, the decisions over how government is to raise needed revenue "seems to require the most exact impartiality," he observes. At the same time, Madison knows "there is, perhaps, no legislative act in which greater opportunity and temptation are given to a predominant party to trample on the rules of justice." The wealthy are bound to leverage their wealth into whatever degree of political power -- and corruption -- is required to ensure their position is maintained. Madison naively believes the Constitution, as drafted, "promises the cure for which we are seeking."

Hamilton is no Physiocrat. In the twelfth Federalist paper, he begins by stating, as fact, that "[t]he prosperity of commerce is now perceived and acknowledged by all enlightened statesmen to be the most useful as well as the most productive source of national wealth, and has accordingly become a primary object of their political cares." Commerce means that population density is much greater than in an agrarian society; and "as commerce has flourished [in other countries], land has risen in value." Thus, since land is as yet plentiful in America and land values are expected to remain low for a long time to come, "it is evident that we must a long time depend for the means of revenue chiefly … from taxes of the indirect kind, from imposts, and from excises." Taxing the "houses and lands" of farmers would yield, he argues, "too precarious and invisible a fund to be laid hold of …" He suspects, however, that where the "populous cities" are concerned, "the defect of other resources must throw the principal weight of public burdens on the possessors of land," out of which nothing good will result.

In the twenty-first Federalist paper, Hamilton argues on practical grounds against apportioning taxation based on land values. "In every country it is a Herculean task to obtain a valuation of the land," he declares -- adding, that "in a country imperfectly settled and progressive in improvement, the difficulties are increased almost to impracticality." Later on, in the thirtieth Federalist, Hamilton argues the case for giving the government "a general power of taxation" to meet any needs that might arise. And, in the next Federalist paper, he reminds the nation why this is so important:

"As theory and practice conspire to prove that the power of procuring revenue is unavailing when exercised over the States in their collective capacities, the federal government must of necessity be invested with an unqualified power of taxation in the ordinary modes."

One is hard-pressed to argue with Hamilton when he states in the thirty-fifth Federalist: "There is no part of the administration of government that requires extensive information and a thorough knowledge of the principles of political economy, so much as the business of taxation." However, one is left wondering to whom Hamilton is looking as the authority on the subject. He continues:

"It might be demonstrated that the most productive system of finance will always be the least burdensome. There can be no doubt that in order to a judicious exercise of the power of taxation, it is necessary that the person in whose hands it is should be acquainted with the general genius, habits, and modes of thinking of the people at large, and with the resources of the country. And this is all that can be reasonably meant by a knowledge of the interests and feelings of the people. In any other sense the proposition has either no meaning, or an absurd one."

Hamilton ends there. He does not, unfortunately, tell us what he means by "the resources of the country." And, in fact, earlier in this paper he reveals his fundamental ignorance of true political economy, or, conversely, his great understanding of human nature:

"[With regard to] the landed interest … particularly in relation to taxes, I take to be perfectly united, from the wealthiest landlord down to the poorest tenant. No tax can be laid on land which will not affect the proprietor of millions of acres as well as the proprietor of a single acre. Every landholder will therefore have a common interest to keep the taxes on land as low as possible; and common interest may always be reckoned upon as the surest bond of sympathy."

Hamilton is not philosophically opposed to the landed being required to contribute their fair share to the support of government per se. He is sympathetic to the view that the taxation of "real property or … houses and lands" ought to be reserved as "previously appropriated to the use of a particular State." In the thirty-sixth Federalist paper he briefly discussed the mechanics and -- in the last sentence -- called for national uniform standards:

"Land-taxes are commonly laid in one of two modes, either by actual valuations, permanent or periodical, or by occasional assessments, at the discretion, or according to the best judgment, of certain officers whose duty it is to make them. In either case, the EXECUTION of the business, which alone requires the knowledge of local details, must be devolved upon discreet persons in the character of commissioners or assessors, elected by the people or appointed by the government for the purpose. All that the law can do must be to name the persons or to prescribe the manner of their election or appointment, to fix their numbers and qualifications and to draw the general outlines of their powers and duties. And what is there in all this that cannot as well be performed by the national legislature as by a State legislature? The attention of either can only reach to general principles; local details, as already observed, must be referred to those who are to execute the plan."

I have read and re-read these pages written by Hamilton without understanding whether he is, in fact, arguing for or against a sharing of revenue raised from "land-taxes." He seems to be recommending that revenue from land-taxes be collected by the States as a primary source of meeting their commitment to retire the national debt, after which "[a] small land-tax will answer the purpose of the States, and will be their most simple and most fit resource." In its final form, the language of the Constitution allowed for differing interpretations of what property might be taxed directly by the Federal government. A decision by the United States Supreme Court in 1796 affirmed the distinction between direct and indirect taxation, but defined a tax on the income from land as an indirect form of taxation, permitted under the Constitution and not reserved to the States.[31]

And, yet, overlaying the entire debate regarding the taxation of property is the powerful draw of acquiring land that was (and is) key to the American dream of finding -- rather than earning -- riches. As Charles Beard observed of the times:

"Speculation in western lands was one of the leading activities of capitalists in those days. As is well known, the soldiers were paid in part in land scrip and this scrip was bought up at low prices by dealers, often with political connections. Furthermore, large areas had been bought outright for a few cents an acre and were being held for a rise in value. The chief obstacle in the way of the rapid appreciation of these lands was the weakness of the national government which prevented the complete subjugation of the Indians, the destruction of old Indian claims, and the orderly settlement of the frontier. Every leading capitalist of the time thoroughly understood the relation of a new constitution to the rise in land values beyond the Alleghanies."[32]

Whether or not Benjamin Franklin, as he entertained his fellow delegates at his comfortable home in Philadelphia sought to bring them to his enlightened understanding of political economy is not recorded in any of the source materials I have relied upon for this admittedly narrow survey. Perhaps an examination of their journals, their correspondence, or their own subsequent writings would bring us closer to a more complete appreciation for Franklin's influence on these particular individuals.

When I began to write this story, I had some familiarity with Franklin's remarkable life, as I suspect is the case for most who are here, listening to this presentation. His adoption of Physiocratic principles was likely for him quite similar to the experience many us have had upon exposure to the principles contained in the writings of Henry George. All of a sudden, the world somehow makes sense. We know in our hearts what must be done.

Epilogue

The story is told that "as the delegates of the Constitutional Convention trudged out of Independence Hall on September 17, 1787, an anxious woman in the crowd waiting at the entrance inquired of Benjamin Franklin, 'Well, Doctor, what have got, a republic or a monarchy?' To which Franklin replied, 'A republic, if you can keep it.'"[33] Keeping the republic, securing and protecting "the Democracy" has proven to be an enormous struggle. The cost in lives has been incalculable. We should not forget these words left to us by Franklin as he neared the end of his journey:

"Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes."[34]

NOTES AND REFERENCES

1. Bernard Fay. Franklin The Apostle of Modern Times (Boston: Little, Brown, and Co., 1929), p.11.
2. Ibid., pp.41-42.
3. Ibid., p.95.
4. Ibid., pp.131-132.
5. Carl Van Doren. Benjamin Franklin (New York: The Viking Press, 1938), p.656.
6. Ibid., p.136.
7. Ibid., p.139.
8. Ibid., p.177.
9. Ibid., p.289.
10. This is the elder "Marquis de Mirabeau," who Franklin first meets in the Fall of 1767 in Paris.
11. Quoted in: Lionel Robbins. A History of Economic Thought: The London School of Economics Lectures (Princeton, NJ: Princeton University Press), p.81.
12. Francois Quesnay. Fermes and Grains.
13. Will and Ariel Durant. The Story of Civilization: Part X, Rousseau and Revolution (New York: Simon and Schuster, 1967), p.74.
14. Ibid.
15. Carl Van Doren. Benjamin Franklin, p.363.
16. Bernard Fay. Franklin, The Apostle of Modern Times, p.344.
17. Ibid.
18. Carl Van Doren. Benjamin Franklin, p.391.
19. A letter to Joshua Babcok, 13 January, 1771. Excerpts included in: Ibid., pp.392-393.
20. Carl Van Doren. Benjamin Franklin, p.567.
21. Carl Van Doren. Benjamin Franklin, p.731.
22. Letter from Franklin to Robert Livingston, 4 March, 1782.
23. Carl Van Doren. Benjamin Franklin, p.739.
24. Ralph Ketcham. James Madison, A Biography (New York: The Macmillan Company, 1971), p.154.
25. Ibid., p.175.
26. Letter from Thomas Paine to President Reed of the Continental Congress, 4 June, 1790. Reprinted in: Moncure Daniel Conway. The Life of Thomas Paine (New York: Benjamin Blom edition, 1969. Originally published 1892), p.65.
27. Quoted in: Ralph Ketcham. James Madison, A Biography, p.185.
28. Ibid., p.196.
29. Charles A. Beard. An Economic Interpretation of the Constitution of the United States (New York: The Macmillan Company, 1913 and 1935). In the introduction to the 1935 edition of Beard's work, he distanced himself from those who referred to his work to support their assertion that vested interest was at the forefront of the Constitutional design. As Beard wrote in 1935: "Perhaps no other book on the subject has been used to justify opinions and projects so utterly beyond its necessary implications. …Indeed an economic analysis may be coldly neutral, and in the pages of this volume no words of condemnation are pronounced upon the men enlisted upon either side of the great controversy which accompanied the formation and adoption of the Constitution."
30. Ralph Ketcham. James Madison, A Biography, p.229.
31. See: Alfred H. Kelly and Winfred A. Harbison. The American Constitution, Its Origins and Development (New York: W.W. Norton & Company, 5th edition, 1976), p.535-536. "In the Constitutional Convention, … Rufus King had 'asked what was the precise meaning of direct taxation. No one answered'. …Evidence of this kind proved merely that in 1787 there was no general agreement as to what direct taxes were. Some men in 1787 apparently thought direct taxes included only capitation and realty taxes; others held that they included income; while still others defined direct taxes according to their status in theoretical economics."
32. Charles A. Beard. An Economic Interpretation of the Constitution of the United States, p.23.
33. From the notes of Dr. James McHenry, a delegate to the Convention and signer of the draft of the Constitution. Reprinted from the introductory page: Earl Warren. A Republic, If You Can Keep It (New York: Quadrangle Books, 1972).
34. Letter to Jean Baptiste Le Roy, 13 November, 1789.