More specifically, there used to be a letter named 'thorn' in Old and Middle English, pronounced with a 'th' sound. Over time thorn was drawn more and more like the letter 'y' (though it retained its 'th' sound), and eventually printers started using 'y' in its place to save on letter plates. Thorn had all but disappeared by the 1700s, but earlier texts including the King James Bible used 'y' with a superscripted 'e' as a short form of 'the', so it's likely the highly religious Quakers copied it.
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