The American System Unleashed—Benjamin Franklin: the American Prometheus

As a consequence of both slander and incompetent historiography, Benjamin Franklin is viewed as almost a humorous curiosity today.  He flew a kite in a lightning storm;  he invented the character of the clownish Poor Richard; and he spent most of his time in London and Paris chasing young women. Or so the story goes.

This two part article aims to bring the genius of the true American Prometheus back to life. 

The theme of this current series of articles is “The American System Unleashed.” You can’t understand that subject without recognizing Franklin’s towering role in  shaping America’s future as a productive nation, grounded in scientific and technological progress.

We will focus on only a few of the most important of Franklin’s initiatives, including his overall vision of an upwardly progressive society, based on free labor and human inventiveness;  his connection to the expansion of manufacturing;  and his repeated interventions on the issue of Public Credit.

The American Philosophical Society

In 1743 Ben Franklin founded the American Philosophical Society.  The catalyst for the formation of the society was an essay which Franklin authored that same year, titled “A Proposal for Promoting Useful Knowledge among the British Plantations in America.”  In the opening paragraphs of that document, Franklin states:

“The first drudgery of settling new colonies, which confines the attention of people to mere necessaries, is now pretty well over.  And there are many in every province in circumstances that set them at ease, and afford leisure to cultivate the finer arts and improve the stock of knowledge.  To such as were of a philosophical turn of mind, curiosity and insight must from time to time produce discoveries to the advantage of some or all of the British plantations, or to the benefit of mankind in general.”

The American Philosophical Society was not intended as some “ivory tower” of academic philosophical speculation, but rather a vehicle for investigations into Useful Knowledge, which will benefit human society.  This is very explicit in the curriculum and areas of study which he proposes: 

“That the subjects of the correspondence be. . . new-discovered plants, herbs, trees, and roots, their virtues, uses, &c., methods of propagating them;  . . . new methods of curing or preventing disease;  new-discovered fossils in different countries, as mines, minerals, quarries, &c.;  new discoveries in chemistry, such as improvements in distillation, brewing, and assaying of ores;  new mechanical inventions for saving labor, as mills and carriages, and for raising and conveying of water, draining of meadows, &c., all new arts, trades, and manufactures, that may be proposed or thought of;  surveys, maps and charts of particular parts of the seacoast or inland countries, course and junction of rivers and great roads, situation of lakes and mountains, nature of the soil and productions;  new methods of improving the breed of useful animals;  new improvements in planting, gardening, and clearing land;  and all philosophical experiments that let light into the nature of things, tend to increase the power of man over matter. . .” [emphasis added]

The word “Useful,” as it was employed by Franklin, has a different meaning from how it is popularly understood today.  By “useful,” Franklin meant those valid scientific discoveries which revealed new universal principles that would lead to an increase in human power over nature, creating a more productive society for future generations.  The question Franklin continues to ask himself is:  Will it benefit Mankind?  Will it contribute to further Human Progress, to advancing Human Civilization?

During his lifetime Franklin investigated electrical phenomena, magnetism, botany, minerals, navigation, the gulf stream, heat, light, and many other physical processes,—always for the purpose of unlocking the principles and secrets governing these processes, and always with the intention of increasing the productive power of society.  For Franklin the subject of economics and finance was always subsumed within this intention for upward human development.

In 1751, Franklin authored another essay, “Observations Concerning the Increase of Mankind and the Peopling of Countries.”  This was written in direct response to the passage by Parliament of the Iron Act of 1750, which prohibited all new iron mills and steel furnaces in the colonies.  The “Observations” is both an argument in favor of rapid industrial and technological development, and simultaneously an argument against what would later be called “Malthusian” notions on limits to population.  Franklin demonstrates that industrial expansion and scientific progress go hand-in-hand with rapid increases in population, and he goes on to demonstrate that rather than this increase in population leading to widespread poverty, the increased “productive power” and upward development of the colonies would result in full employment, accompanied by high wages.

More human beings did not mean “more mouths to feed,” or the dividing up of the “economic pie” into smaller and smaller pieces;  rather, it meant more creative human minds, each with the potential to contribute new discoveries, new interventions which will increase the upward productivity of society.

This is the “secret” of what is called the American System of Economics.  It is not simply a recipe involving banking, money, tariffs and manufacturing.  It begins, as Franklin understood, with a recognition of the creative and agapic nature of the human individual.

Manufacturing

Benjamin Franklin was a printer by trade. He never built or owned a factory.  Yet, from his earliest days in Philadelphia, his life and his scientific work were intimately connected to colonial manufacturers.

This began early, through his long association with James Logan.  Logan was the owner of the Durham Ironworks, located about 40 miles north of Philadelphia, which was the largest and most productive ironworks in Pennsylvania.  Earlier, the founder of Pennsylvania, William Penn, had actively encouraged manufacturing in the colony, and the first iron forge had been built by a blacksmith named Thomas Rutter in 1716.  A second forge was opened in 1718 by a Quaker named Samuel Nutt.  Logan's Durham works surpassed all of these earlier efforts, with a state-of-the art forge and blast furnace.  It became the premier iron foundry of its day. 

Franklin’s scientific work, as well as his various inventions, required a very close collaboration with Logan and other manufacturers.  For example, when he developed the Franklin Stove in 1744, this was done with input from the iron manufacturer Robert Grace, a member of Franklin’s Junto and a co-founder of the Library Company of Philadelphia.  The first stoves were produced, according to Franklin’s specifications, by a man named William Branson who operated an ironworks in Reading.  As sales of the stoves increased, production was then shifted to Logan’s Durham works.

This symbiotic relationship between Franklin and the iron manufacturers extended to many other products that flowed from Franklin’s mind, with the invention and production of Franklin’s lightning rods being perhaps the prime example.

This was the birth of advanced engineering in the colonies, and with engineering there came science.  In a number of locations, like the valley of the Schuylkill River, small clusters of technology arose, and Franklin led the way in an explosion of scientific research.  By the middle of the 18th century, Pennsylvania, together with neighboring Maryland, possessed the greatest productive power in the American colonies.  By 1750 there were three notable American inventions that were produced in sizable numbers:—the Franklin Stove, the Conestoga wagon and the Pennsylvania long rifle, all built with iron and steel from the foundries and blast furnaces in Pennsylvania and Maryland.

Franklin also became a major sponsor for the building of what would have been the first navigable canal in North America.  In 1731 a proposal was put forth to build a canal from Durham Creek to the Delaware River, which would have allowed for large scale exports of both Durham iron and finished goods.  Benjamin Franklin, then the owner of the Pennsylvania Gazette, became a vocal champion of this project.  Although the proposal eventually came to naught, the scheme was a visionary foretaste, looking forward to the age of the Erie Canal, almost a century later.

Ben Franklin, the Economist

Franklin is not known today as an economist, and even in his own time, he would probably not have claimed expertise in that field.  Yet, the underlying principle of what became known in the 19th century as the “American System” of economics is already the paramount approach that is to be found in Benjamin Franklin’s writings on this subject.  The uniquely “American” understanding about economics is all there, and it is very clear.

For Franklin, economic policy must obey his axiomatic command “To Do Good.”  Banking, monetary policy, trade and tariffs must all have as their unshakable goal the advancement of the conditions of life and opportunities of the people.  Productive growth, be it manufacturing, agriculture or infrastructure, is the priority.

For Franklin the issue was always about development.  The sole purpose of a banking and financial system is to foster just such productive economic growth.  Banks, financial institutions and monetary emissions exist only to serve those ends and have no other legitimate independent purpose.

Franklin never wrote a major treatise on economics, but over the course of his lifetime, he authored numerous shorter pieces, covering a multitude of economic subjects.  These writings include:

• A Modest Inquiry into the Nature and Necessity of a Paper-Currency (1729)
• A Proposal for Promoting Useful Knowledge among the British Plantations in America       (1743)
• Observations concerning the Increase of Mankind and the Peopling of Countries (1751)
• Remarks and Facts relative to the American Paper-money (1764)
• The Legal Tender of Paper Money in America (1767)
• On the Laboring Poor (1768)
• Positions to be Examined Concerning National Wealth (1769)
• Great Britain and the United States compared as regards a Basis of Credit (1777)
• Paper Money of the United States (1781)
• Information to Those Who Would Remove to America (1782)
• The Reflections on the Augmentation of Wages which will be occasioned in Europe by   the  American Revolution (1783)
• The Internal State of America (1786) 

None of these writings are merely “theoretical.”  Each one was published as an intervention at a specific moment of crisis, to address critical decisions that must be made.  Over the span of almost six decades, there are refinements and re-thinking of certain specifics, but on principles Franklin’s outlook never wavers:—anti-empire;  pro-development;  pro-science;  a commitment to Public Credit and opposition to useless financial speculation;  the proclamation that all human progress flows from human creative intervention;  and a determination to lift the poor out of their miserable condition and provide opportunities for a better future.

To be continued...