The State of Franklin was set up in 1784 out of the westerly portion of the colonial state of North Carolina. Shortly after the War of Independence the original colonies were asked to pay for the war efforts and create a country with a sound financial policy. Since the taxing the population was difficult and cash was in short supply North Carolina ceded the western portion of the state to the federal coffers. Before the Congress could accept the offer North Carolina withdrew the offer. The citizens of the region decided that federal rule in the meantime was probably a good idea since North Carolina as a state had given this remote region little support in its fight with the Indians or protection from criminal refugees. They saw other benefits as an independent state in terms of taxation, representation and an understanding attitude toward local problems. Representatives of the North Carolina counties of Sullivan, Washington, Greene, and Davidson accepted the offer of cessation to federal territory. The state of Franklin existed for only four years to finally merge with the new state of Tennessee.
I am sensible of the honor which your Excellencey and your council do me, but being in Europe when your State was formed I am too little acquainted with the circumstances to be able to offer you anything just now that may be of importance, since everything material that regards your welfare will doubtless have occurred to yourselves. …I will endeavor to inform myself more perfectly of your affairs by inquiry and searching the records of Congress and if anything should occur to me that I think may be useful to you, you shall hear from me thereupon. —Franklin’s letter to Governor John Sevier, 1787
After the failed statehood attempt, the now de facto independent republic was ‘officially’ re-named Franklin.
The new legislature made treaties with the Indian tribes in the area, opened courts, incorporated and annexed five new counties (see map below), and fixed taxes and officers’ salaries. Barter was the economic system de jure, with anything in common use among the people allowed in payment to settle debts, including federal or foreign money, corn, tobacco, apple brandy, and skins (Sevier himself was often paid in deer hides). Citizens were granted a two-year reprieve on paying taxes, but this lack of currency and economic infrastructure slowed development and created confusion.
The year 1786 was the beginning of the end of the small state. Franklin was placed in a precarious position by not having been admitted to the United States. Because it shunned North Carolina’s claims of sovereignty over it, Franklin did not have the benefit of either the national army or the North Carolina militia. North Carolina offered to waive all back taxes if Franklin would reunite with its government. When this offer was rejected, North Carolina moved in troops under the leadership of Col. John Tipton and re-established its own government in the region. The two rival administrations competed side by side for many months. Loyalties were divided among local residents.