A Willing Philadelphia Story: Richard Vague on the Wealthiest & Most Invisible American Founding Father

00:00:01 Andrew Keen: Hello, everyone.

00:00:02 Andrew Keen: It's always nice to see old friends on the show.

00:00:05 Andrew Keen: Four years ago, we did an excellent show with Richard Vague, one of America's most original financial thinkers, about wiping the financial slate clean.

00:00:16 Andrew Keen: Back then, Richard had a book out. It was entitled The Case for a Debt Jubilee — let us all off our debts.

00:00:25 Andrew Keen: It's an interesting, innovative idea. I'm not sure if it actually happened.

00:00:29 Andrew Keen: And Richard is back again with a new book, The Banker Who Made America: Thomas Willing and the Rise of the American Financial Aristocracy, 1731 to 1821.

00:00:42 Andrew Keen: Richard, as always, is joining us from Pennsylvania. He is Mr. Pennsylvania.

00:00:47 Andrew Keen: Richard, congratulations on the new book.

00:00:50 Richard Vague: Really appreciate that, and thank you so much for having me on your show.

00:00:54 Andrew Keen: So before we get to the new book, Richard, what happened to your old debt jubilee? Do you have any luck with that?

00:01:03 Richard Vague: Well, not really. That's such a new idea and such a controversial idea that we made a little progress. We got a few folks on board, but we still have a long way to go. But it's still a very important idea, and I think eventually all western societies — perhaps all countries — are gonna have to deal with this in some form or fashion.

00:01:29 Richard Vague: So if it didn't happen today, it's gonna have to happen at some point.

00:01:33 Andrew Keen: Yeah. Well, as Keynes said, in the long run we're all dead, Richard. You've written a number of books, and most of them are more sort of polemical on the debt and financial front. I was surprised with this one. It's more of a history book.

00:01:48 Andrew Keen: The Banker Who Made America. Most people, including myself, don't know much about Thomas Willing. Why did you choose to write this book? You spent a lot of time researching and writing it.

00:02:01 Richard Vague: Well, it started out as an exercise in trying to understand the origin of the leverage ratio in banking. You know, if you're starting — no.

00:02:12 Andrew Keen: No, Richard. You've lost me already. What does that mean?

00:02:16 Richard Vague: So banks operate at a leverage ratio. In the United States, typically that's at 10 to one. So for every $1 in capital they have, they can lend out $10.

00:02:28 Andrew Keen: Oh, okay.

00:02:28 Richard Vague: And that's an enormously important fact when you're studying economics. And it was, you know, in the '07 period right before the crisis, some institutions had gotten to 20 or 30 to one leverage ratios. It's an absolutely central fact.

00:02:43 Andrew Keen: And, of course — I mean, from my point of view it's important because it means they're all liable to collapse if somebody calls in the debt. And if it's 20 to one, 30 to one, even 10 to one, it's always possible. Right?

00:02:58 Richard Vague: That's — you're hitting the nail on the head. I mean, the fragility of the system is a function of the leverage ratio that's allowed or permitted. And so it caused me to be very curious about how those ratios developed in the first place, which took me back to the origins of US banking. In fact, I'm now working on the book on the origin of the Bank of England in 1694, and it's the same question. But as I got into the story of America's first bank and the decisions being made, I found this character named Thomas Willing, who was the wealthiest man in America and the first bank president.

00:03:35 Richard Vague: And lo and behold, he voted against the Declaration of Independence, and this whole big social story emerged in conjunction with my analysis of the bank, and that ended up being this book.

00:03:50 Andrew Keen: Well, I can't resist making the Willing joke, Richard. I mean, is it appropriate that he was called Willing, or should he have been called Unwilling?

00:04:01 Richard Vague: Well, certainly — you know, he was powerful enough to turn down the United States government for a loan when he was their banker. So perhaps Unwilling is the term, but it was originally a Welsh name. It was originally Llewellyn, and was Anglicized.

00:04:16 Andrew Keen: Oh, okay. Llewellyn. Yeah. I mean, the Welsh have a bit of a reputation for being tight with money. Of course, I'll suddenly lose all my Welsh listeners now.

00:04:24 Andrew Keen: But is Willing — or was Willing — tight with money? Is that what defined him? Is that what makes him such an important character in the American economic story?

00:04:35 Richard Vague: Well, he is the very rare combination of somebody who is very conservative and prudent and very bold at the same time. And, you know, that means he's very careful in keeping accounts of things. He has insurance. He takes the necessary precautions, and then he takes big risks. So that, I think, is one of the defining characteristics of him.

00:05:00 Andrew Keen: When I think of American finance — and most of us do — at the beginnings of the revolution, we think of Hamilton. He was the central banker, and they even made a musical about him. How does Willing compare to Hamilton? I mean, should Willing be better known than Hamilton in terms of the creation of an American bank? Was he Hamilton before Hamilton?

00:05:27 Richard Vague: Well, they were across-the-street neighbours. And, frankly, Willing was one of Hamilton's mentors. And when Hamilton was in Saint Croix as a 16-year-old, he did his first transaction with Willing, who was at that time the largest merchant trader in Philadelphia. 41-year-old Willing and 16-year-old Hamilton traded wheat flour. And they were very close over an extended period of time and were hand in glove together.

00:06:02 Richard Vague: You know, the relationship the two had was really the same relationship that the Fed and the Treasury have today. And their institutions were side by side, and their homes were across the street from each other. But Hamilton was over the Treasury, and Willing was over the equivalent of the Fed — called the Bank of the United States.

00:06:23 Andrew Keen: You're a Philadelphia man, a Pennsylvania guy. Is one of the reasons you wrote this because, at this point at least, Philadelphia was, of course, the largest, the most important city in the United States, and Willing was Mr. Philadelphia back then?

00:06:43 Richard Vague: That helped, you know, because I could walk down the street and there was Willing's Alley where his home was. And in fact there's this two-block stretch of Philadelphia on 3rd Street between Spruce and Chestnut.

00:06:59 Richard Vague: And at one point in time, you had Alexander Hamilton living on that street. George Washington was living there in a home that Willing actually built. James Wilson, the father of the Constitution, was living right there. And right across the street were the two institutions — the Treasury and the Bank of the United States, and others beyond those.

00:07:24 Richard Vague: It was, I think, the most important two-block stretch in all of America at that moment, and there's barely a placard to note it at this point in time.

00:07:34 Andrew Keen: So, of course, we all know about George Washington. We know about Alexander Hamilton. We know about John Adams, but we don't know much about your friend Thomas Willing. How does he — how should he be presented in this pantheon? Is he up there with Washington and Hamilton and Adams?

00:07:54 Richard Vague: You know, John Adams writes a letter in 1813 to Richard Rush, who was at the Treasury at the time, and says point blank that Washington and Hamilton were governed by Willing and his coterie of influential individuals. So if Adams is saying that Willing is that powerful, I think we need to take Willing pretty seriously.

00:08:23 Andrew Keen: So, mate, tell us the story. I mean, what did Willing do? And had he not been around — had he been knocked over, kicked in the head by a horse back in Philadelphia of the late eighteenth century — how might American history have been different?

00:08:39 Richard Vague: Well, he and his firm arguably saved the revolution in its first months in 1775 by procuring gunpowder. The war had started. The British knew that the Americans had limited access to gunpowder and acted very specifically and pointedly to try to destroy their reserves. Willing is the largest merchant trader in North America, and he has smuggling connections through the Caribbean and directly with the French and the Dutch, and uses those smuggling connections right after the Battle of Bunker Hill to restock the Americans with gunpowder and guns.

00:09:27 Richard Vague: And there wasn't another source at that moment.

00:09:30 Richard Vague: So there is an argument things would have been very different. And from that point forward, he becomes the biggest supplier — of financing, gunpowder, weapons, and other materiel — he and his partner Robert Morris, by the way. The firm's called Willing, Morris and Company. And the two of them together really are the principal suppliers of finance and materiel to the revolution.

00:09:54 Andrew Keen: But, Richard, the way you're presenting him — and the way you present him in the book — is less as an arms trader and more as a banker, someone who greased not just the revolution in financial terms, but enabled the creation of a viable new state. Is that fair?

00:10:12 Richard Vague: Absolutely. There was a period early in the war when the primary way they were financing themselves was by printing Continental Currency, and this is the famous currency that quickly became worthless.

00:10:27 Andrew Keen: Yeah. I mean, classic. That's Weimar Germany. That's the best recipe for inflationary chaos, isn't it?

00:10:34 Richard Vague: And it's really the quantity — because they're issuing more currency than their GDP. It's over 100% of GDP being issued every year. It's about $500,000,000 worth of currency issued over just a couple of years when the GDP was barely over $200,000,000. So by 1780 that's become worthless, and the French and the Dutch weren't as forthcoming with loans as one would have wished. And there's no place to go, and that's when they come up with the idea of starting a bank, and they finance the back half of the war in no small part with the money that this bank creates.

00:11:18 Andrew Keen: So this is in a way the first example, informally at least, of a Bank of America financing the revolution.

00:11:28 Richard Vague: Without question. You know, this is the purpose of that bank. By the way, just as the purpose of the Bank of England in 1694 is to fund war, the purpose of the first bank in America is to fund war, and there's this very inextricable connection between war and debt and banking that really is at the heart of financial systems.

00:11:55 Andrew Keen: And, of course, that hasn't changed as we speak, Richard. The Pentagon is seeking $200,000,000,000 to fund another American war — in Iran. It's perhaps an attack on a supposedly revolutionary country rather than Britain. But some things never change, do they?

00:12:13 Richard Vague: Some things never change.

00:12:16 Andrew Keen: So give me an alternative scenario. As I said, if Willing got kicked by a horse in the streets of Philadelphia before the revolution, what might have happened? Had he not done what he did, would the revolution have fizzled out? Would you have had a catastrophic inflation? What kinds of alternative scenarios? You're an alternative-scenario thinker. What might have happened?

00:12:44 Richard Vague: Well, let me say first that America from 1700 to 1800 is the fastest-growing economy — it's the biggest financial expansion in world history. The colonies, and then as they turn into the country, go from essentially no GDP in 1700 to one-third the GDP of Britain's by 1800. They go from 200,000 people to 5,000,000 in one century. So it's an extraordinary century, and it kind of refutes this idea of these beleaguered Americans against an impregnable Britain. So I think America inevitably becomes independent.

00:13:34 Richard Vague: But I think if you don't have a guy like Willing and his firm, it might not happen in the 1770s. It might have happened ten, twenty, thirty, forty years later.

00:13:44 Andrew Keen: Meanwhile, it was a great political debate, of course, around the Federalist Papers — what kind of state America should become. There were Anti-Federalists who were very much against centralized federal government. It was a very interesting and important debate. Jefferson, Hamilton and Madison were on one side, maybe Jefferson on the other. Did Willing understand the politics of creating a Bank of America in terms of a centralized government? Was he a political revolutionary, or was he just someone who was much more interested in making money than in politics?

00:14:25 Richard Vague: Well, there's a letter that appears in this period, and there are other intimations of this, that folks voted for the Federalist position for fear of Thomas Willing not approving their loans. So he is a huge presence on political matters, and that includes the ratification of the Constitution, which is where the Federalist Papers come from. But he was absolutely for it and rallied the country toward it, in no small part because of the influence of the bank. It happens with the Jay Treaty.

00:15:04 Richard Vague: It happens again and again. And that's one of the reasons Jefferson, and then much later Andrew Jackson, really feared it — because of its political influence.

00:15:16 Andrew Keen: Yeah. I mean, Jackson — of course, I don't want to turn this into another Trump conversation, but we can easily trace the dots from Jefferson to Jackson to Trump. What about this idea of an elite? There are a lot of Anti-Federalists, Richard, as you know — populists, maybe Trumpian or Jacksonian populists — who feared big government, feared elites.

00:15:42 Andrew Keen: Could we see Thomas Willing as an example of the new financial elite that would run America? I mean, if one was a Marxist historian, might he be Exhibit A in the American capitalist republic?

00:16:02 Richard Vague: Absolutely. He is a wealthy coastal elite, and this really comes into play in the battle over the Declaration of Independence, because the wealthy elites — who are frankly making money hand over fist in this century; Willing increases the size of his firm by 70 times during the course of his life — they're making money hand over fist, and they aren't loyalists per se, but they've got a good thing going and they're not really inclined to declare independence. And in the meantime, they're — by the way — Anglican.

00:16:44 Richard Vague: And in the meantime, you have these renegades — Scots-Irish Presbyterians — flooding into the country during the 1700s.

00:16:52 Andrew Keen: The MAGA people.

00:16:54 Richard Vague: And they hate the British. And they are for equality and egalitarianism, and they are for independence. And there's a huge showdown on July 2, 1776, and it's the renegades that prevail, and it's folks like Willing who have to acquiesce.

00:17:20 Andrew Keen: Perhaps. But then on the other hand, I mean, America doesn't turn into some sort of populist democracy. You yourself are a member perhaps of that kind of financial elite. I know you had a very senior job in Pennsylvania running the economics of the state. Are you sympathetic — you, Richard Vague — to Willing?

00:17:45 Andrew Keen: And those financial elites — are they essential in the creation, do you think, of American democracy? And had those rebels been much more successful, might — I mean, certainly American history would have been very different, but much less democratic, much less peaceful?

00:18:03 Richard Vague: Well, you're asking exactly the right question, because as the Declaration of Independence is being signed, Pennsylvania radicals have taken over the state government and created a new constitution that is the most democratic constitution ever created in the United States. It has a lower house that's elected annually. It does not have an upper house. It does not have a president or governor with veto power. The judiciary is elected, not appointed.

00:18:36 Richard Vague: It is as democratic as we ever got in the United States, and the elites — like Willing — hate it and immediately push back on it and regain control of the state government. They have learned the lessons of the danger of too much democracy when they show up in 1787 to enact the new United States Constitution, which from my point of view is a bit of a counterrevolution against democracy. It has an upper house that is not elected by the people. It has a president that is not elected by the people — they don't want the president to be elected by the people. It has a judiciary that is not elected by the people.

00:19:23 Richard Vague: They're appointed — and appointed for life — because courts at that time are the enforcement agent of the elite on matters like rent and debt. So the pendulum swings wildly in this period from a very pure democracy to something that's significantly tempered and is a compromise.

00:19:47 Andrew Keen: It's the old canard about whether or not there even was a revolution in America. Some people would say there wasn't, which was bad. Some people would say there wasn't, and that's why it actually succeeded. Did Willing ever cross swords with Thomas Paine? I would have assumed that Paine would have loathed Willing.

00:20:06 Richard Vague: Well, it's funny you should ask, because Thomas Paine ends up working for Robert Morris and Thomas Willing. Yep. He's on the payroll.

00:20:17 Andrew Keen: Is he? Wow. What was he doing?

00:20:19 Richard Vague: He was helping defend some of their policies, and I take that strictly as a matter of — he needed money.

00:20:25 Andrew Keen: Oh, that's amazing. I mean, surely Paine would have loathed Willing, wouldn't he, as a member of that old financial elite?

00:20:32 Richard Vague: Man's gotta eat.

00:20:34 Andrew Keen: Wow. Well, that's — I don't know what that says about Paine. What about Benjamin Franklin, perhaps Philadelphia's most famous son? I'm assuming that he would have been more sympathetic to Willing.

00:20:48 Richard Vague: They had an interesting relationship that spanned many decades. Willing's first entrée into public life is at the Albany Conference, where Franklin — you know — has the "Join or Die" snake invented for the 1754 Albany Conference, which is really a way of working together against the Indians. He's — Willing's — twenty-five years younger than Franklin, but they meet there. Willing's firm is the largest advertiser in Franklin's paper, the Pennsylvania Gazette.

00:21:28 Richard Vague: There's obviously sympathy there, but they're on opposite sides of a debate around the Penn family. You know, the assembly resents the fact that the Penn family has this huge tax advantage, and they hire Benjamin Franklin to go to London to try to convert Pennsylvania from a provincial colony to a royal colony, so the Penn family's tax advantage goes away. And they run against each other at one point for the assembly, and Willing wins. And then, to cap it off, towards the end of his life, Franklin writes a treatise in support of Willing's currency positions and compliments Willing and his bank as being an extraordinarily well-managed institution. So they have a long relationship that goes back and forth.

00:22:21 Andrew Keen: Franklin, of course, was, of all the founding fathers, the most innovative, the most entrepreneurial — perhaps in a capitalist sense, certainly in a technological sense. Did Willing lend Franklin money for any of his endeavours?

00:22:36 Richard Vague: Willing comes along too late. Franklin's already wealthy and set for life. He made some really good financial decisions. But I'll tell you, Franklin is kinda controversial throughout his whole life.

00:22:51 Richard Vague: When he passes away, the Senate refuses to put their flags at half-mast simply because they're put out with how radical Franklin became, and they're not in sync. So, you know, a lot of the hagiography about Franklin comes later. He's contentious and controversial all along.

00:23:16 Andrew Keen: Which perhaps is why some Americans — and we've done some shows on this — consider him the greatest of all the founding fathers, because he doesn't fit into any category. Who comes out of this narrative badly? Any of the founding fathers? Did Jefferson appear in the book?

00:23:34 Richard Vague: Jefferson's there in the book. And in fact that's a great question too, because Jefferson's in Philadelphia when he's vice president, and he's living just a couple of blocks away. And Philadelphia is a Federalist town, and all the wealthy guys — like Willing and his son-in-law William Bingham and Alexander Hamilton — these are Federalists. And Jefferson's kind of a fish out of water, and he's actively ostracized by the Philadelphia community. They give him the cold shoulder, and he kind of hates being in Philadelphia as a result.

00:24:11 Richard Vague: The one of the only folks that's gracious to him — that continues to have him over for dinner — is Thomas Willing. And both Jefferson and his treasury secretary, Albert Gallatin, comment specifically about Willing's graciousness.

00:24:32 Andrew Keen: Perhaps one reason for that is that, at least according to Wikipedia, he was a slave trader, Thomas Willing. I'm sure you address that in the book, Richard. And, of course, what we remember now of Jefferson is dominated by him being a slave owner and Monticello being a slave-owning estate, and his relationship with his enslaved concubines. Is that a blot on Willing — that he was a slave trader?

00:25:07 Richard Vague: It is.

00:25:09 Andrew Keen: I mean, to put it mildly —

00:25:12 Richard Vague: It's mitigated —

00:25:13 Andrew Keen: — by the buying and selling of individuals of different skin.

00:25:18 Richard Vague: It's mitigated by the fact that Pennsylvania's wheat crops don't require as much labour as Virginia and Maryland's tobacco crops or South Carolina's rice and indigo crops. So there's never that much of a slave presence in Pennsylvania and states north — not because they're virtuous and enlightened. It's just not that economically viable. So he does a little bit of slave trading, but not much. Now there's a footnote in that —

00:25:51 Andrew Keen: Well, he didn't have to. It wasn't as if he needed the slave trading to —

00:25:57 Richard Vague: That's right.

00:25:57 Andrew Keen: — maintain his wealth. So isn't that a bit of a blot — that he was willing to do this? There were many people — I think including Franklin, certainly including Paine — who were deeply hostile to the idea of slavery.

00:26:09 Richard Vague: It's a blot. And let me add another blot: in July '76, Willing's future son-in-law William Bingham — who is a big presence in this story — goes to the Caribbean under the instructions of Congress to raise money to fund the war. This is really one of the earliest sources of funding for the war they had. He's asked to commission privateers, and it's funded in part by Willing and Morris. So it's William Bingham, Willing, Morris.

00:26:53 Richard Vague: They captured 200 British merchant ships and essentially sell the proceeds and send the money back to Congress.

00:27:03 Richard Vague: Some of those ships are slave-trading ships.

00:27:07 Richard Vague: So the early part of the Revolutionary War is funded at least in small part by selling captured British slave ships.

00:27:15 Andrew Keen: Not really surprising.

00:27:19 Andrew Keen: American debt, of course, has grown now to $39 trillion. As, in a way, the founder of a Bank of America, what do you think Willing would make of the America of 2026 with its $39 trillion of debt?

00:27:36 Richard Vague: Well, Willing was the only person to ever turn down the US government for a loan, and he did it twice. And the other thing he did is he actually called one of the US's loans early and forced the US to repay. So we know where Willing stands on that issue.

00:27:57 Andrew Keen: Meaning what?

00:27:59 Richard Vague: That he forced the government to be prudent. And, you know, one of the interesting things about the Revolutionary War is the war costs about $75,000,000 in 1770s dollar equivalent over the eight-year period of the war. But in the early periods they're spending $20,000,000 a year. But America begins to realize that it doesn't have to win the war. All it has to do is not lose.

00:28:31 Richard Vague: So it begins cutting its budget. In 1780 the budget's $8,000,000. By 1781 — the year of Yorktown — the budget's $3,000,000. So it's gone from $20,000,000 down to $3,000,000, and Willing's one of the guys basically saying to the US government: you need to manage this war with less expense.

00:28:54 Andrew Keen: Your book got a lovely review in The New Yorker by one of America's most respected cultural writers, Adam Gopnik — "Who Bankrolled the American Revolution?" — and it's an excellent piece. I would encourage all our viewers and listeners to read it alongside, of course, Richard's new book. Gopnik addresses the old canard of "follow the money." Is your book The Banker Who Made America, Richard — are you really arguing that the history of America, particularly of the revolution, is a financial history and that we should always follow the money?

00:29:37 Andrew Keen: At the end of his piece, Gopnik isn't convinced that following the money always leads us to the answer.

00:29:45 Richard Vague: Well, he's smarter and better than I am, so I'd believe his theory before I'd believe mine.

00:29:50 Andrew Keen: Well, he brings up Watergate, which I'm sure you don't address in your book.

00:29:55 Richard Vague: I don't. But no — I would have that as somewhat of an indictment of almost all history that's written: it's written without reference to the financing dimension of it. And the financial dimension of the American Revolution is profoundly important. And the cause of the revolution — it plays a big part.

00:30:16 Richard Vague: So for example, the land speculators — such as George Washington — desperately want to speculate on land west of the Appalachians, but the British not once but twice act to prevent them from ever doing that, in the Royal Proclamation of '63 and then again in '73. So being precluded from lucrative financial opportunities is one of the things that makes George Washington so in favour of the war. From Willing's standpoint, Americans aren't allowed to create banks. This is another financial opportunity that Britain has precluded Americans from participating in. There's a whole laundry list of those that are, in my mind, more important than the proximate cause of high taxes.

00:31:06 Richard Vague: And by the way, remember that Americans' tax burden was way lighter than British citizens back in England. So it's a complex array of financial causes that I think are central to understanding why we did what we did.

00:31:24 Andrew Keen: Well, there you have it. The Banker Who Made America: Thomas Willing and the Rise of the American Financial Aristocracy, 1731 to 1821. He quite literally made America, didn't he, Richard? I mean, this is not —

00:31:38 Richard Vague: — a big part of it.

00:31:39 Andrew Keen: And I assume now you're working on the musical. Who's gonna be Thomas Willing in the musical?

00:31:44 Richard Vague: Well, I was hoping you might consider that.

00:31:46 Andrew Keen: No. I can't sing, Richard.

00:31:48 Richard Vague: Well, you know, that may not matter with modern technology.

00:31:53 Andrew Keen: Well, we'll have to think about it. We'll negotiate off air. As always, Richard, a real honour and a pleasure to have someone so erudite and fun on the show. The book, as I said, is just out — The Banker Who Made America — got a wonderful review in The New Yorker. An important new book about a perennially important subject, Richard. We'll have you back on the show anytime you want. Thank you so much.

00:32:15 Richard Vague: I'm so grateful to you. Take care.