Tax and Tariff Laws as Causes of the Revolution

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Tax and Tariff Laws as Causes of the Revolution

Mercantilism. The cry “No taxation without representation” is a shorthand expression that recalls a series of events. To understand the origins and significance of this slogan one has to examine the tax and tariff laws that were essential elements of Britain’s mercantile economic theory at the time. Mercantilism was the philosophy which held that colonies existed for the benefit of the mother country. Colonies were sources of raw materials

for the home country’s factories and markets for its manufactured goods. Commercial laws aimed to promote these objectives always. These statutes can be grouped as follows: laws that regulated the nationality of the owners and crew members of all ships entering colonial or home ports; laws governing the destinations of all products being shipped; tariffs, subsidies, and export taxes designed to promote certain industries; and prohibitions of competition in one area with protected industries of another area.

Molasses. Prior to 1733 the colonies had developed a thriving trade with the Caribbean, sending to the islands grain, vegetables, lumber, and fish in exchange for sugar and molasses. The New England colonies in particular were large distillers of rum that was consumed locally and was important as a medium of exchange in the fur and slave trades. Consistent with the mercantile theory, in order to protect the English colonies’ sugar growers from competition with the other islands, the Molasses Act of 1733 imposed a six-pence-per-gallon tariff on molasses imported from French, Dutch, or Spanish islands and a one-penny tariff on molasses produced on Britain’s sugar islands. A gallon of molasses delivered into the colonies cost about ten pence, including the cost of shipping, so this discriminatory duty on foreign molasses produced an enormous incentive for a distiller to avoid it.

Noncompliance. Parliament enacted the Molasses Act to protect the sugar planters, but they apparently did not realize the effect the tariff would have on the colonial purchasers. English planters supplied only about one-quarter of the molasses needed by the distillers. The high tariff on foreign molasses would have a stifling effect on

the rum producers and would cause hardship in all the other industries that relied on rum as a medium of exchange. Even the local customs officers came to appreciate this burden because they allowed shippers to declare only a small fraction of their high-tariff cargoes. One can easily imagine the sort of connivance or corruption that was involved as both importers and customs officers shared a common objective of not paying the tariff. In fact the widespread evasion of the molasses tariff makes it clear why smuggling was thought of as a respectable activity.

Sugar Act. At the conclusion of the Seven Years’ War, Britain found itself with an enormous national debt. In addition the territory taken from France required a military presence. Parliament determined that the colonies should contribute to the cost of the recent war and the future defense effort. The first step was the Revenue Act of 1764, generally referred to as the Sugar Act. This act reduced the tariff on foreign molasses from six pence per gallon to three pence (Parliament recognizing, at long last, that six pence was too high) but introduced new tariffs on sugar, wine, silk, and linen. Parliament also increased customs efforts to enforce the tariff. Colonial reaction was swift although the limited number of products affected and the luxury nature of most of them tempered the resistance. Some colonial merchants and leaders pledged to boycott the products covered by the new duties. For the first time colonists argued that Parliament was depriving them of a fundamental constitutional right. A resolution of the Massachusetts House of Representatives maintained that the colonists had not consented to these taxes and all British subjects enjoyed the essential right to tax themselves.

COMMON SENSE

First published in Philadelphia in January 1776, Common Sense was quickly reprinted and copies circulated throughout the colonies. Paine presented the arguments of natural law in a form that captured the attention of the general population. “Society in every state is a blessing, but Government, even in its best state, is but a necessary evil: in its worst, an intolerable one. Government, like dress, is a badge of lost innocence; the palaces of kings are built on the ruins of the bowers of paradise.... [Monarchy is an absurd form of government because one honest man is worth] all the crowned ruffians who ever lived,” Paine referred to King George III as “the Royal Brute of Great Britain.” He urged that separation from Britain was the only way for the colonies to avoid continued tyranny and commercial exploitation. “Oh, ye that love mankind! Ye that dare oppose not only the tyranny but the tyrant, stand forth.”

Stamp Act. In March 1765 Parliament passed the Stamp Act, which imposed a tax on a wide variety of printed material such as newspapers, pamphlets, leases, legal documents, bills of lading and other shipping documents, licenses, and advertising leaflets. Buyers or issuers of taxed paper would pay the tax by buying revenue stamps, ranging from a halfpenny to twenty shillings, which were to be affixed to the paper. The Stamp Act was the first attempt by Parliament to impose an internal tax, as opposed to the previous duties that were all on goods imported into the colonies. In an effort to gain support for the new tax, the law provided that only Americans would be appointed as stamp-tax collecting agents. The wide variety of documents affected meant that the tax would affect all aspects of everyday life. (One writer suggested that coastwide shipping would be hard hit by the Stamp Act because he estimated that each time a ship cleared a port the cost of stamps for its documents would be about two pounds.) In addition, cases involving the enforcement of the act were to be tried in the admiralty courts. Although the new law was not to take effect until November 1765, the colonists’ reaction was immediate and violent. In New York and Boston, mobs burned the stamps and ransacked the homes of both the lieutenant governor, Thomas Hutchinson, who supported the

A PENNSYLVANIA FARMER SPEAKS

John Dickinson wrote twelve “Letters from a Farmer in Pennsylvania to the Inhabitants of the British Colonies,” which were published in the Pennsylvania Chronicle, a Philadelphia newspaper, at the rate of about one a week between December 1767 and February 1768. They were republished in other newspapers shortly after their appearance, and pamphlet versions soon circulated throughout the colonies. The content of each letter was as follows:

1.) 2 December 1767: The first letter opened with the statement: “I am a farmer, settled, after a variety of fortunes, near the banks of the river Delaware, in the province of Pennsylvania.” The missive also described some of the author’s personal qualities—his education, social status, interest in promoting the cause of liberty, and his view that men had to work to defeat new threats to their liberty.

2.) 7 December 1767: The second letter addressed the Townshend duties and focused on the difference between taxes designed to raise revenue and charges imposed for the regulation of trade. The author conceded that Parliament had the power to regulate trade since that benefited both the colonies and the mother country. If Parliament were to tax the colonists, however, they would be “taking money out of our pockets, without our consent . . . . Our boasted liberty is but a sound and nothing else.

3.) 14 December 1767: Dickinson urged resistance to the unconstitutional imposition of taxes. He argued against violence, however, because violence would lead to retaliation and eventually to separation, which he opposed. The missive described a series of possible, peaceful steps to be taken, such as petitions and nonimportation agreements.

4.) 21 December 1767: The fourth letter was a lengthy dissertation denying that there was any difference between internal taxes and external taxes. Both were unconstitutional according to Dickinson. The fact that the colonists had not previously protested against import duties in the past did not matter because the duties in the past had been regulatory charges, not taxes.

5 & 6.) 28 December 1767 and 4 January 1768: These two letters explained how one should determine whether a particular imposition was an allowable external imposition or an improper internal tax. The author suggested that Parliament’s intent in enacting the measure was to be considered. If the intent was to raise revenue, the law was improper; if it was to regulate trade, the law was acceptable.

7.) 11 January 1768: The farmer asserted that the Townshend duties were an effort by a small faction in Parliament to undermine American freedom. Since the colonies were not represented in Parliament, the leadership was tempted to increase its popularity at home by imposing taxes on the colonies. The earlier effort, the stamp tax, had run into enormous opposition in the colonies. Now the leadership had decided to use indirect taxes, which were less understood.

8.) 18 January 1768: The farmer said Parliament’s real purpose was described by Prime Minister George Grenville: to ensure “the dependence and obedience of the colonies.” Parliament was seeking to have the colonies pay the cost of the recent war with France, yet the acquisition of Canada and Florida was of no benefit to the original colonies. Grenville had told the British public that the colonies were so “rolling in wealth, and...of so bold and republican a spirit that they are aiming at independence . . . . The only way to retain them in obedience is to...draw off part of their riches in taxes.”

9.) 25 January 1768: In this letter the farmer argued that Parliament was trying to limit the colonial assemblies’ power of taxation and appropriation. For example, the assemblies had no control over the judiciary or the colonial officials other than the ability to refuse to pay their salaries. The Townshend Acts, by providing that the Crown would pay these salaries, eliminated that important power. The statutes would limit the colonial assemblies to the making of laws “to yoke stray cattle.”

10.) 31 January 1768: The farmer pointed to Ireland as an example of what would happen to the American colonies. In Ireland the royal government controlled the expenditure of all public money, and most of the civil offices were held by nonresidents.

11.) 8 February 1768: It was important that people appreciate the role of precedent and example with respect to government actions, the farmer argued, and immediate resistance to oppression was necessary. “When an act injurious to freedom has been done once, and the people bear it, the repetition of it is most likely to meet with submission.”

12.) 15 February 1768: In conclusion the farmer appealed for unity among the colonies. He urged vigilance and resistance to oppression. If the colonies united and presented their grievances together, they would succeed.

tax policy, and the tax collector. In several cities mob action forced the newly appointed collectors to resign their offices. In Philadelphia a mob was unsuccessful in forcing that city’s collector to resign, but he agreed not to sell any stamps until collectors in neighboring colonies did so.

Assemblies React. The colonial assemblies also reacted and debated resolutions to be sent to Parliament in protest. Patrick Henry argued in the Virginia House of Burgesses that the act was unconstitutional with his famous “Caesar had his Brutus” speech. The Massachusetts House of Representatives invited each of the colonies to send representatives to a meeting in New York to consider how the colonies, together, should respond to the act. This meeting, the Stamp Act Congress, was the first such congress initiated by the colonies. After two weeks of debate, the delegates agreed on moderately phrased petitions to Parliament and the king, in which they asked that the Stamp Act be repealed. Parliament reacted to the violence, to the complaints of English merchants about the boycotting of English goods, and to the petitions from the colonial assemblies and also recognized the obvious unenforceability of the Stamp Act. In March 1766 Parliament repealed the Stamp Act and at the same time enacted the Declaratory Act in which Parliament reaffirmed its right to tax the colonies.

Quartering or Mutiny Act. In May 1765 Parliament passed the Quartering or Mutiny Act, which required the colonists to provide barracks or other quarters for British troops stationed in the colonies. The act specified that, depending on the type of building provided, the colonists might also have to furnish the troops with “fire, candles, vinegar and salt, bedding, utensils for addressing their victuals and small beer or cider—or rum.” The colonial assemblies were to appropriate money for these obligations in the same manner as they funded other local obligations. Nearly every colony resisted to some extent. Massachusetts refused to appropriate any money. New York appropriated the requested funds, except any money to buy salt, vinegar, cider, and rum. New York’s refusal led Parliament to enact the Restraining Act, which would suspend the New York assembly unless that body complied with the Quartering Act provisions. (New York’s assembly complied just in time to avoid the suspension.) Pennsylvania and Connecticut complied with the law in every respect, a fact that may have contributed to the change of heart in New York.

Townshend Acts. The 1766 repeal of the Stamp Act alleviated the constitutional crisis in the colonies, but it did nothing to help resolve Britain’s financial problem. The continuing need for revenue led Parliament to try again. In June 1767 the chancellor of the exchequer Charles Townshend, who was responsible for financing the government, proposed a series of measures imposing duties, establishing a new customs board, and expanding the admiralty courts. The Townshend Acts imposed duties on a variety of English manufactured goods imported into the colonies—glass, paint, paper, and tea. Townshend said the distinction that American writers made between internal and external taxes was nonsense and that Parliament had the power to impose either type. However, since external taxes provoked less resistance, Parliament should impose these first. Money generated by these duties would pay the cost of colonial civil government, including the new customs administration. Colonial assemblies had traditionally paid for their own civil government and on several occasions withheld salaries of the governor or judges as a way to control these officials. The Townshend revenues were meant to provide a funding source that did not require appropriation by either colonial legislatures or Parliament—the king, through his customs agents, had control over this money.

Customs Commissioners. Another Townshend measure established a board of customs commissioners located in the colonies, replacing the power of the one in London. Since local customs officers were responsible to the board of customs commissioners, Parliament thought that a new body in the colonies would encourage more diligent and honest enforcement of the laws. Boston was selected as its location, and the residents immediately viewed it as another example of British oppression. The board became a focal point for resistance to Parliament’s efforts as soon as the commissioners arrived in 1768. One famous incident was the seizure of John Hancock’s ship, Liberty. However, the stronger enforcement of the customs laws and the abuses that arose from these efforts quickly contributed to the rising sentiment that the colonists’ constitutional rights were being violated.