The Revenue Acts

When George Grenville took over as "first minister" (his own term for the position that would later become prime minister) in the spring of 1763, he and his ministerial colleagues faced a daunting task: new financial resources had to be found to pay for the defense of the American colonies and to manage the massive national debt incurred to win the Seven Years War. As a political debacle at home over the imposition of a new cider tax clearly showed, English taxpayers had reached their limit. Americans, however, paid comparatively little, if anything, in taxes and Parliament had already agreed to compensate them for what they spent to contribute to the war effort. Consequently, there was a growing sense in the ministry, in Parliament, and among the English people that it was not unreasonable to look at the colonies as financially able and morally bound to—for the first time in their history—share the imperial cost of their own defense. The result was a series of laws passed by Parliament between 1764 and 1773 that have become collectively known as the Revenue Acts: The Plantation (or Sugar) Act (1764), the Currency Act (1764), the Stamp Act (1765), the Townshend Acts (1767), and the Tea Act (1773).

Grenville's attention turned first to existing trade laws to maximize their revenue potential. The most prominent of these was the Molasses Act of 1733, which established a prohibitive six pence per gallon duty on molasses (the basis of rum) imported into the colonies from non-British colonies in the West Indies. In doing so, the 1733 law created a lucrative smuggling trade centered in New England. Little money was collected from the duty, therefore, until enforcement was strengthened in 1760, after which time revenue substantially increased. In 1763, Grenville issued strict orders to customs officials to further step up their enforcement, which included the power to seize ships suspected of smuggling and the employment of naval warships to arrest violators (a standing policy of rewarding ships crews with profits from the sale of condemned cargoes infused the effort with a hefty-and unhelpful-dose of self-interest). American merchants, particularly those in New England (and especially those who made fortunes from smuggling), were understandably disturbed by the relatively quick transformation from exploitable neglect to rigid, even zealous, enforcement in only a few years.

In 1764, Grenville and his successors embarked on a complete overhaul of imperial trade policies, focusing on those that closely tied commerce to revenue. The result was a set of laws passed by Parliament between 1764 and 1773 that have become collectively known as the Revenue Acts. The Plantation Act, also known as the Sugar Act, was the first to be adopted, on April 5, 1764. Although the Act covered a great deal of commercial ground, its reduction in the duty on molasses from six pence to three pence per gallon and plan to vigorously collect it caused the most consternation in the colonies. Aggravation was especially sharp in New England, where Samuel Adams and James Otis argued that it invaded the colony's charter rights to govern itself by imposing taxation without representation.

The next Revenue Act was the Currency Act of 1764, passed on April 19, 1764. Aimed almost directly at Virginia's attempts to establish its own monetary policy in the 1750s, the bill was an attempt to strengthen imperial commercial exchange by extending to the rest of the American colonies an existing ban on new issues of paper currency already in place in New England. It appeased British merchants who protested the ability of Americans to pay their sterling debts in currency of their own choosing, in this case substantially depreciated wartime paper. This prohibition unintentionally created a cash crisis in the transatlantic economy and became a major grievance in most of the colonies.

Grenville's next step was the introduction of an American Stamp Bill in March 1764 that would apply to the colonies a tax on all sorts of paper (from newspapers to legal documents to playing cards) that had long been in place in England. He Grenville withdrew it when an objection was raised that the colonies should be first consulted. He therefore postponed the measure to give the colonies time to respond and propose alternatives. What Grenville received were assurances from some colonial representatives, such as Benjamin Franklin, that the colonies would submit to it-albeit unhappily-as they had submitted to the Sugar Act, while from other colonial sources he heard protests. Either way, Grenville received no alternatives, so he re-introduced the bill on February 6, 1765. The bill passed both houses of Parliament by large majorities the House of Commons and was ratified by royal assent on March 22, 1765. Because of widespread colonial opposition, Parliament repealed the Stamp Act almost exactly one year later, on March 18, 1766.

Grenville was no longer in office when Charles Townshend, Chancellor of the Exchequer in the short-lived ministry of William Pitt (elevated to Earl of Chatham), easily pushed his Revenue Act through Parliament in June 1767. With Pitt largely absent from London due to illness, Townshend took charge and deftly exploited the distinction drawn by colonials between acceptable external taxes (such as customs duties) and unacceptable internal ones (such as direct levies on property or goods in the colonies). The Townshend Act placed import duties on British china, glass, paper, pasteboard, lead, paint, and tea. The act also created a Board of Customs Commissioners, based in Boston, to enforce them. Once again, wide-ranging opposition to Parliament's authority to tax colonies without their consent arose in America, from non-importation agreements to riots. Parliament responded just as it had in the Stamp Act crisis, with yet another government (this one led by Frederick, Lord North) repealing an ill-advised Revenue Act passed by a previous government, but not without making a statement of constitutional principle. In April 1770, all of the Townshend duties were repealed, except for the three pence per pound duty on tea, leaving it only with the 1764 molasses duty as symbols that Parliament could indeed tax the colonies.

The last Revenue Act was the Tea Act of 1773, which had very little to do with either constitutional principle or raising a revenue. It was, rather, a pragmatic measure by Lord North to bail out the virtually bankrupt East India Company by allowing it to sell its only real asset, a surplus of almost 18 million pounds of tea sitting in London warehouses. The act eliminated all duties on tea that it re-exported to the colonies, thereby driving the cost well below that of smuggled Dutch tea, and gave the East India Company a monopoly on tea sales in America. Lord North and his ministers believed that the colonials would hardly recall the remaining Townshend duty on tea, with prices so low. They were wrong. American radicals quickly and effectively characterized the act as a subtle way to make colonials swallow the principle of parliamentary taxation. Violence and destruction greeted attempts to land the tea when ship captains did not agree to return their cargo to Britain. The Boston Tea Party, in particular, led not to repeal but to the Coercive Acts of 1774, the enforcement of which drove Britain and the colonies into the War for Independence.