Encyclopedia of Greater Philadelphia

Jordan AP Fansler

Hinterlands

[caption id="attachment_24294" align="aligncenter" width="575"]A map depicting the Philadelphia region during the American Revolutionary War. This map, charted by a British cartographer during the American War for Independence, illustrates the extent of the economic region Philadelphia commanded. By the middle of the nineteenth century, Philadelphia served as a commercial hub for a region that spanned parts of Pennsylvania, Delaware, and New Jersey. (Library of Congress)[/caption]

Since its founding, Philadelphia has acted as a commercial hub for the surrounding region, its hinterlands. Although New Jersey and Delaware had European settlers before Philadelphia's establishment in 1682, Pennsylvania and its founding city quickly became the focus of economic activity in the region extending both east and west of the Delaware River. With an advantageous location, Philadelphia acted as the region’s principal port, allowing goods from Great Britain, the West Indies, and elsewhere to flow in and serving as a gathering point for produce to be exported. From the late seventeenth through the eighteenth century, Philadelphia's hinterlands grew in size and diversification of products, but as the region developed, other commercial hubs developed to support and rival Philadelphia.

[caption id="attachment_24171" align="alignright" width="300"]A color image of a map, showing a southern section of the state of New Jersey. Small houses on the map show the locations of various Lenape tribes. This 1673 map of lower West New Jersey displays the locations of Lenape and other Native American settlements. (Library of Congress)[/caption]

The Delaware River Valley was originally populated by the Lenape, or Delaware, people, who shaped the region’s initial economic activity. Throughout the seventeenth century, the Lenapes retained a strong presence in the river valley, and the various native and European groups generally worked with each other through trade and negotiated rights and privileges. Native American trails became the earliest paths for the colonists, aiding travel, communication, and commerce into the densely forested hinterland. During this early period, Europeans tapped into the preexisting fur trade before developing their own settlements inland. The territory that later became the state of Delaware was first colonized in 1638 by the Swedish, who adopted a plantation pattern in an attempt to emulate Virginia's success with tobacco. However, these settlements were underpopulated, of limited profitability, and experienced conflicts with the local Lenape groups. From 1676 through 1702, New Jersey was divided by a line running from the northwest to the southeast, creating the distinct provinces of East and West New Jersey. West New Jersey was administered by a group of wealthy Quakers, including William Penn (1644–1718), but it was sparsely populated and had no major cities of its own.      

After the founding of Philadelphia in 1682, the region's producers saw the new city as a natural commercial center for the Delaware River. William Penn (1644-1718), founder and first proprietor of Pennsylvania, selected a site near the confluence of the Schuylkill and Delaware Rivers to better facilitate shipping. Pennsylvania grew quickly during the five decades before the American Revolution, adding eight inland counties to the original counties huddled by the river (Bucks, Philadelphia, Chester, and the lower counties that later became Delaware). Immigrants—free, indentured, or enslaved—strengthened the hinterlands' connection to the burgeoning urban center as they spread through the countryside. In addition to Quakers and other English colonists, Pennsylvania attracted Scots-Irish, Germans (including the “Pennsylvania Dutch”), and dissenting religious groups. 

Population Boomed

[caption id="attachment_24293" align="alignright" width="300"]An eighteenth century engraving featuring a view of Philadelphia from the New Jersey side of the Delaware River. Also featured in the bottom right of the engraving is an eighteenth century street map of Philadelphia. To the bottom right are engravings of prominent buildings in Philadelphia including an engraving of the Pennsylvania State House (after the American Revolution it became known by a new name, Independence Hall). During the seventeenth and eighteenth centuries, the Delaware River connected Philadelphia to some of its hinterlands and the rest of the British world. (Library of Congress)[/caption]

At first, in the late seventeenth and early eighteenth centuries, Philadelphia primarily exported raw farm products and timber from these homesteads of the fertile Delaware River valley lands, and the numerous creeks and rivers served as transportation routes for the goods. In the eighteenth century, the European colonists developed their own settlements in the hinterland areas. Timber resources allowed for a vigorous shipbuilding enterprise. The plantations of Delaware Bay moved away from tobacco to more diversified farm products such as meat, grain, and timber. The population boomed from migration from the Chesapeake Bay region and immigration abroad, though the towns and cities that grew remained satellites of Philadelphia.

[caption id="attachment_25186" align="alignright" width="300"]roberts-old-mill-germantown-philadelphia-e1348597337449-575x330 During the 1750s the Philadelphia hinterlands evolved into the breadbasket of the British Empire. Grain mills like this one, Roberts' Old Grist Mill in Philadelphia County, developed in Pennsylvania and northern Delaware. (Library Company of Philadelphia)[/caption]

By 1750, increasing grain production made Philadelphia's hinterland the breadbasket of the British Empire. The new emphasis led to an increase in flour mills for processing the grain. Mills of various kinds operated throughout the hinterland but had the highest concentration and outputs in Pennsylvania and northern Delaware, where fertile lands combined with strong streams for waterpower to facilitate the milling of grain. Likewise, iron production and its attendant forges and foundries grew during the same period, primarily in Berks and Lancaster Counties in Pennsylvania and in western New Jersey. 

[caption id="attachment_24291" align="alignright" width="300"]Black and white photograph of the exterior of an iron furnace. Iron furnaces, like this one in Lebanon County, Pennsylvania, began to operate during the 1750s in West New Jersey (now southern New Jersey) and Berks and Lancaster Counties in Pennsylvania. (Library of Congress)[/caption]

Supplies of timber, flour, iron, and similar stores made Philadelphia an important provider of war materials during the colonial wars. However, the Seven Years’ War (1754-63), which erupted from conflicts in far western Pennsylvania, interfered with trade. In Pennsylvania specifically, it created conflicts over the extent of protection the colonial assembly would provide for the hinterlands as the area suffered from destructive raids. During the War for Independence, Philadelphia and its Pennsylvania hinterlands experienced disruption but not for extended periods of time, allowing economic activity to largely continue and cement its role as a producer. By the end of the eighteenth century, it led the new nation in production of textiles and leather goods, as well as metalworking and carpentry. 

Road Improvements

In the late eighteenth century, the creation and improvement of roads from Philadelphia deep into the hinterlands eased travel, improving freight transportation but also pushing the frontiers beyond its reach. Benjamin Franklin (1706-90) advocated for improving road networks, emphasizing the communication benefits as postmaster general. Improving communication and mail helped information from centrally located Philadelphia reach its hinterland and other colonies (later states) faster than ever, further increasing Philadelphia's economic and political influence. In 1794, Pennsylvania completed a paved turnpike connecting Philadelphia with Lancaster, which lowered transportation costs by as much as two-thirds and was the first of its kind in the nation. This simultaneously drew Lancaster more into Philadelphia's orbit, and made it a commercial center in its own right, as a gathering point for central Pennsylvania's goods.

By the turn of the nineteenth century, Philadelphia's hinterland reached as far west as Lancaster and Reading on the Schuylkill River, and the city's influence extended to the edge of the Appalachian Mountains and the Susquehanna River watershed. The city commanded the Delaware River Valley as far north as Trenton at the falls of the Delaware. Ships going in and out of Delaware Bay called on Delaware's smaller ports, such as Wilmington and New Castle, creating a connection for Philadelphia at those locations as well. During the same period, however, New York City to the north and Baltimore to the south increasingly grew and rivaled Philadelphia as leading international ports for the mid-Atlantic states, especially from north of Trenton and the Susquehanna Valley, respectively.

From the time of its founding, Philadelphia's location and natural resources made it a commercial hub for the surrounding region. As the eighteenth century progressed, manufacturing capabilities increased and Philadelphia's exports became more diversified while the city increasingly grew as a commercial and political center through the periods of the American Revolution and early Republic. 

Jordan AP Fansler grew up in Pennsylvania, is a graduate of Saint Joseph's University in Philadelphia, and has worked at multiple museums in Greater Philadelphia.  His doctoral thesis and scholarly work focus on the relationship of citizens to their state, national, and imperial governments in the early-modern Atlantic World.

Bank of the United States (First)

Chartered in 1791 as part of the financial and economic reform plans of Alexander Hamilton (1755–1804), the first secretary of the Treasury, the first Bank of the United States played an instrumental role in establishing the nation’s credit. Based in Philadelphia, then the national capital, the bank drew many principal investors from the region and augmented the city's role as a center of business. The bank proved to be politically controversial and a foundational point of disagreement between developing political parties.

[caption id="attachment_20789" align="alignright" width="300"]image of exterior of first bank of the united states After fierce debate, Congress created the Bank of the United States in 1791 to strengthen the financial posture of the government and carry the federal debt. (Library of Congress)[/caption]

Hamilton's nationally-chartered bank followed a Philadelphia precedent, the Bank of North America,  established in 1781 to meet the economic challenges facing Americans during the Revolutionary War. Proposed by Philadelphia financier and superintendent of finance for Congress Robert Morris (1734-1806), the Bank of North America received a charter from Congress that provided incorporated status. Private citizens, including Philadelphia merchants and financiers, bought shares in the bank with hard money, providing the initial capital reserve for the bank to print notes and provide loans.  

When Hamilton took office as Treasury secretary in 1789, economic instability and the Revolutionary War debt threatened the nation and the individual state governments. Capitalizing on those circumstances and using powers he believed the new U.S. Constitution granted, Hamilton put forth a plan that included the Bank of the United States, chartered by Congress. The bank would stabilize currency, act as a depository for and lender to the government, and raise money for the nation to pay down the war debts.  Hamilton also recommended that the federal government assume the outstanding war debts of the states. By consistently paying down this debt, the nation would reestablish good faith for future loans. As an organ of the national government, the bank would also tie private citizens financially to the well-being of the United States, and those who held a stake in the war loans would likewise want to see the nation prosper to ensure their repayment. 

The First Rival Political Parties

[caption id="attachment_20798" align="alignright" width="210"]Portrait of Alexander Hamilton, standing In 1791, Secretary of the Treasury Alexander Hamilton followed through on one of his long-standing ideas—the establishment of a national bank whose main purpose would be to collect taxes, hold government funds, and make loans to the government and other worthy borrowers. (Library of Congress)[/caption]

The bank immediately ignited controversy and, together with other early disputes, fueled a developing political divide that led to the first rival political parties, the Federalists and the Democratic-Republicans. Each side argued that failure to follow their policies was tantamount to abandoning the Revolution, to the ruin of the nation. Federalists, who supported the bank, tended to be urban merchants and lawyers. They supported the bank, deeming it necessary for strengthening the nation's economy and the union in general. They believed that the Articles of Confederation had failed on both of those counts, and that the Constitution was adopted to enact just the types of vigorous national programs that Hamilton suggested. Their rivals, who often lived in rural areas and were often debtors rather than creditors, argued that the bank was unconstitutional.  It would be a tool to further enrich urban elites who had stockpiled wealth during the Revolution, and increase the emphasis on volatile financial markets. Furthermore, it would do little to aid destitute veterans requiring immediate debt relief. These opponents, led by Secretary of State Thomas Jefferson (1743-1826) in the cabinet, and James Madison (1751-1836) in the House of Representatives, also argued that by encouraging speculation and financiers, the bank would run counter to the Revolutionary principles and the virtuous agrarian ideal that best suited a republican form of government. Despite the controversy, Congress passed the legislation necessary to establish the bank, and President George Washington (1732-99) signed the bill into law, granting it a twenty-year charter to 1811.

[caption id="attachment_20921" align="alignright" width="237"]A Photograph of Carpenters Hall located at 320 Chestnut Street. The First Bank of the United States was originally headquartered in Carpenters' Hall, the meeting place of the First Continental Congress, located at 320 Chestnut Street. (Library of Congress)[/caption]

Originally headquartered in Carpenters' Hall, the meeting place of the First Continental Congress, after 1797 the Bank of the United States moved to its own building on Third Street (later part of Independence National Historical Park). The building, an example of neo-classical architecture emulating Greece and Rome, featured a colonnaded, marble façade alluding to the ancient republican ideals that the new nation espoused.

As with the Bank of North America, the Bank of the United States drew many of its major stockholders from the Philadelphia region. Thomas Willing (1731-1821), formerly president of the Bank of North America and business partner to Robert Morris, became the national bank’s first president. Willing, Samuel Howell (1723-1807), and David Rittenhouse (1732-96), all Philadelphians, served as the bank’s first appointed commissioners. Another of Hamilton's initiatives, the United States Mint, also located in Philadelphia, assisted the bank with its capacity to regulate the money supply. In addition to its local presence, the Bank of the United States connected Philadelphia to the nation through its branches in Boston, Baltimore, New York, and Charleston (opened in 1792); Norfolk, Va. (1800); Washington, D.C., and Savannah, Ga. (1802); and New Orleans (1805). Despite the difficulty of coordinating the far-flung branches, they assured the bank's opponents, especially those in the South where most of the branches were established, that it would be truly national and serve more than simply Philadelphia's merchant class.

[caption id="attachment_5538" align="alignright" width="300"]Painting of the First Bank of the United States Among the many ramifications of Alexander Hamilton’s economic policies were his plans for a national bank and the subsequent creation of the First Bank of the United States in Philadelphia (seen here.). This institution was followed by a Second Bank of the United States during the presidency of James Madison, and the Second Bank–the focal point of bitter partisan warfare between Andrew Jackson and his opponents–existed until 1836. (Library Company of Philadelphia)[/caption]

The national controversy surrounding the Bank of the United States abated after its creation, but the partisanship it engendered continued. Within months of its incorporation, the bank, through its initial branch in Philadelphia, played a hand in the credit bubble and restriction that set off the Panic of 1792, seemingly confirming fears about economic volatility held by the bank's opponents. In spite of that incident, by the end of the bank's twenty-year charter in 1811, national credit was largely established and the Democratic-Republicans controlling Congress allowed the charter to expire with the assets liquidated relatively peacefully, at least in Philadelphia. The Philadelphia branch's shares were primarily bought out by Philadelphian Stephen Girard (1750-1831), who operated the institution as a private concern, the Girard Bank. Only five years later, in the midst of depressed trade after the War of 1812 and European Napoleonic Wars, Congress instituted a Second Bank of the United States (also headquartered in Philadelphia).

The First Bank of the United States played a pivotal role in establishing the nation's credit. It drew from the traditions of banking already present in Philadelphia during the Revolution, was supported by Philadelphia's merchant class, and set a precedent of national banking. It contributed to the growing partisanship of the early Federal period and helped the Philadelphia region and its wealthy elite remain at the epicenter of national finance and the economy into the nineteenth century, even after the seat of government shifted to Washington, D.C.

Jordan AP Fansler grew up in Pennsylvania, is a graduate of Saint Joseph's University in Philadelphia, and has worked at multiple museums in Greater Philadelphia.  His doctoral thesis and scholarly work focus on the relationship of citizens to their state, national, and imperial governments in the  early-modern Atlantic World.

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