Why did the Salem settlement need a theocracy in Act 1 of The Crucible and why did some settlers turn to individualism?

Reasons for the existence of a theocracy

Arthur Miller clearly states in his notes that Salem was seen as one of the last vestiges in what was deemed a fight against Satan and his disciples.

The edge of the wilderness was close by. The American con-tinent stretched endlessly west, and it was full of mystery for them. It stood, dark and threatening, over their shoulders night and day, for out of it Indian tribes marauded from time to time ...

... the Salem folk believed that the virgin forest was the Devil’s last preserve, his home base and the citadel of his final stand. To the best of their knowledge the American forest was the last place on earth that was not paying homage to God.

For these reasons, among others, they carried about an air of innate resistance, even of persecution.

Because they had taken so much risk in leaving their homeland, it was essential that they receive all the help they could get in establishing and further stretching the new frontier with which they were now faced. 

The citizens were deeply paranoid about threats against their person, their beliefs and their souls. The devil was a continuous threat. To defend themselves against this most pernicious menace, they turned to the church for protection. Every aspect of their lives had to be ruled by the Holy Book, for even the slightest deviation from its admonitions and its preaching, would put one at risk. The result of this was that the church and the law became practically inseparable.

Because the citizens of Salem felt so insecure, they willingly submitted to the church's authority for it provided them not only with the protection that they so desperately needed, but also provided them with spiritual guidance. This guidance strengthened them against possible attacks by Satan and his minions. It gave them power not only to fight his evil, but also enabled them to resist whatever temptation he may bring their way. 

The church provided them a safe haven and unified them in the fight against whatever threats may present themselves. Their paranoia was also boosted by superstition and naivete. It is for these reasons that they so strictly adhered to the church's teachings and willingly and unquestioningly submitted to its rule.

The result of this servile obeisance was that they essentially became pawns in the hands of figures of power, who abused their authority as leaders in especially the church, to practise their vengeance and force their arrogance on naïve, god-fearing and honest people.

Individualism

There were some citizens, however, who resented the power some individuals in the church exercised and abused, and they turned away from the institution, preferring to practice religion in ways they deemed more appropriate. Such a person was, for example, John Proctor. He had repeatedly criticised the Reverend Parris for using his parishioners to profit in a material sense.

To Proctor, the reverend was not a true 'man of God', but rather one who abused his position for his own benefit. Parris had, for instance, asked for the deeds to the rectory - a request that galled not only John, but many others as well. John's criticism turned Parris against him. The reverend then makes it his duty to meddles in the court's affairs during the witch-trials, intent on getting back at John - a sure abuse of power.

Why did the Salem settlement need a theocracy in Act 1 of The Crucible and why did some settlers turn to individualism?

The author's notes say that the Puritans chose a theocracy to maintain unity in their settlement.  The rules of the settlement were extremely strict which in some senses they needed for survival, but after living under such strict law for so long, people began to crave freedoms that were denied to them by the theocracy.  Anyone who broke the rules, however, was not only seen as a lawbreaker, but as a heathen because law and religion were considered one entity.

Why did Salem need a theocracy?

The Puritans came to America because of their religion, so therefore, they established their colony in Massachusetts under a theocratic system of governing, which is all they knew.

Puritanism is not just a religion, but a lifestyle.  Therefore, it is natural that the governing body of the community would be the church.  Under church officials leadership the Puritans struggled to establish their community in the harsh conditions of the northeast.

The colony established in America encountered almost intolerable hardship, cold, brutal winters, attacks by Indians, Pirates, a lack of food, shelter, death of loved ones.  Their ability to survive was challenged and their faith, which propelled them to travel to America sustained them.

"Their religion required them to act honorably towards their fellow men and to help each other. They were expected to meet regularly at the Meeting House."

"A strong work ethic was also part of their theology. All of these things contributed to their survival."

The theocracy that the Puritans formed in Salem actually sustained them because of the unity and care of neighbor that their religious beliefs require them to practice. 

Why did the Salem settlement need a theocracy?

A theocracy is a government that is run by its religious leaders.  The religious leaders establish the rules and conduct of the community based on God and the rules of their religion.  First of all, the Puritans came to America to escape religious persecution in Europe.  It was important to them to establish their own community based on their own religious beliefs and the teachings of God.  However, settling a wild, primitive new world was not easy.  The Puritans had to build homes, plant crops, and survive the wilderness that surrounded them.  The way to unite them to achieve all of these goals was to make sure everyone believed the same thing.  As an integral part of the community, the Church controlled the destiny of Salem by imposing religious laws upon them.  The Church determined the education young Puritans would learn and settled any conflicts or law suits in the community.  Their reach was immense and an important unifying force that kept the tenets of the Church alive and flourishing in the new America for awhile.