In the early days of the American Revolution, many colonists remained loyal to the British Crown. These Loyalists tended to be wealthy, influential people who had strong ties to Britain. They were also afraid of losing their property and status if the revolution was successful. Some Loyalists even took up arms against the rebels.
As the war went on, however, more and more Americans began to switch sides and join the Patriot cause. Some did so because they genuinely believed in the Patriot cause of liberty and democracy. Others switched sides because they saw that the Patriots were winning and they didn't want to be on the losing side. Still others switched sides simply because they hated or feared their Loyalist neighbors more than they loved or respected Britain.
The man in this story probably turned neutral for a combination of these reasons. He may have initially been a Loyalist, but as time went on he may have come to believe in the Patriot cause or he may have just wanted to distance himself from all the fighting. Whatever his reasons, by 1778 he had clearly decided that neutrality was the best course for him and his family.