IN THE DECADE AFTER Paine’s death, the United States experienced an internal improvement boom. The country built dozens of bridges and hundreds of miles of roads and canals. Pennsylvania did more to improve itself than any other state with the exception of New York. But contrary to Thomas Paine’s expectation, far from bringing the state closer together, all this construction left it more divided. There are many explanations for Pennsylvania’s persistent sectionalism, too many to survey here.
But one is worth considering. Corporations, chartered by governments, were legal entities that Paine knew well from his days battling for the Bank of North America, and he had clear views about this vestige of royal patents and charters. When used improperly, the law of incorporation could harm the governed; when used according to the dictates of republican government, it could serve the public good. The former, for Paine, was most clearly embodied in the municipal corporation. In conferring control of cities and towns on small, nepotistic governing boards, these legal agreements extended the privilege of the few at the expense of the many. For this reason Pennsylvanians abolished the Municipal Corporation of Philadelphia in the early days of the Revolution. In England, Paine believed, “the generality of corporation towns,” which included the city of London, “are in a state of solitary decay.” The most industrious Britons chose to live elsewhere, in flourishing new cities such as Manchester, Birmingham, and Sheffield, where government was unconstrained by ancient charters.1
But corporations could be beneficial, even when they yielded profits for private interests. Unlike municipal corporations, banks and bridge companies, as Paine understood them, denied no one rights to self-government. The idea that government—as some would now say—picked winners and losers never much bothered Paine, so long as the winners served some clear public need. What Paine never accepted was the idea that even while serving public needs, corporations could become rivals to democratic government. For many Pennsylvanians, the ends simply could not justify the means. The choice between democracy and internal improvement was no choice at all.
In 1786, Paine had dismissed similar attitudes about the Bank of North America. Western Pennsylvanians, he was convinced, attacked the bank not because it was undemocratic but because it challenged the supremacy of their Baltimore trading partners. Whether Paine was correct is difficult to say. But what is certain is that suspicion of corporate power only grew in eighteenth and early-nineteenth-century Pennsylvania, a state that joined the nation as a whole in its delight in conferring charters and their associated privileges—to pool capital, issue stock, raise funds through lotteries and other devices, and gain monopolistic control of moneymaking enterprises. By 1780, the former American colonies had granted a mere 7 charters to private businesses. In the 1790s, they granted some 295. The trend continued into the nineteenth century. By 1800, the state of Pennsylvania had chartered 19 corporations. From 1801 to 1815, it chartered 192. The vast bulk of those charters—130—were for private concerns undertaking public improvements: canals, turnpikes, bridges, and waterworks.2
This charter boom had familiar origins. As the American states struggled to balance commercial aspiration with fiscal reality, they faced the same kinds of problems Congress and imperial Britain had faced decades earlier. Americans were, on the whole, no more receptive to taxation by their own governments than they had been to taxation by the British government. For Philadelphia, this fact created a political dilemma. The city faced continued competition from Baltimore, whose economic fortunes would soar with the completion of the first leg of the new National Road in 1818. At the same time, New York was itself booming. Beginning in 1807, Robert Fulton’s steamboats transformed the Hudson River into the nation’s busiest inland waterway. With the 1825 completion of the 363-mile Erie Canal, New York City’s commercial status would, once and for all, eclipse Philadelphia’s.
The idea that Pennsylvania could somehow tax long aggrieved western farmers, even to pay for the kinds of improvements that might improve the economic circumstances of the whole, was pure political fantasy. If they ever needed a reminder of this stark truth, Pennsylvania’s political leaders could recall their state’s reaction to a federal excise tax on distilled spirits. The Whiskey Rebellion erupted in western Pennsylvania in the summer of 1794, and at one point drew seven thousand Pennsylvanians together in an antitax assault on the small town of Pittsburgh. The ordeal of the regional excise supervisor John Neville would have resonated among any of those who remembered the trials of Philadelphia’s Stamp Tax collectors thirty years earlier. For advocates of internal improvement, the revolt, which President Washington put down with federal troops, was an acute reminder of just how unlikely it was that state governments would be able to rely on tax revenue to fund improvements.
With little chance for direct state financing, the best hope for Pennsylvania’s economic future lay in the public–private marriage made possible by the law of incorporation. Only by allowing private companies to build and manage their state’s bridges, to dredge and control its rivers, to build and maintain its roads, could Pennsylvania’s eastern businessmen hope to compete with their neighbors in Baltimore and New York. But since the businessmen most likely to benefit from these improvements were also the Philadelphia financiers most likely to finance them, internal improvement remained divisive.
The problem was evident in 1790, as the state drafted a new constitution. Two western representatives to the convention, James McLene of Franklin County and Andrew Henderson of Huntingdon County, argued for a clear constitutional statement that “perpetuities and monopolies are contrary to the nature of a republican government, and ought not to exist.” Not only did corporate charters grant exclusive moneymaking privileges, they also became a species of property, handed down from one generation to the next. This was contrary to the spirit of the American republic.
In the vote on McLene and Henderson’s proposal, which did not carry, Pennsylvania’s sectional divide was clear: ten of twelve supporters hailed from counties west of the Susquehanna. Of the forty-four delegates opposed, thirty hailed from eastern counties. If this constitutional argument is any indication, the legal dispensation that would allow government to finance a more unified Pennsylvania was dividing Pennsylvanians along old sectional lines.3
This sectional division is one reason it took Philadelphia more than a half a century to address its Baltimore problem. The Chesapeake and Delaware Canal, a fourteen-mile waterway linking the two bays, was finally completed in 1829. But the canal was an exception that proved the rule: it was built and financed not by Pennsylvanians, but by the federal government. And it was finished too late to save Philadelphia. By 1830, the city’s population had fallen behind both New York’s and Baltimore’s. Philadelphia would begin to regain its mid-Atlantic primacy in the 1840s, when a new public–private partnership created Pennsylvania’s railroads. But the city would never regain the dominance it enjoyed when Thomas Paine arrived there in the fall of 1774.