Financial Impact of the Seven Years’ War on British Colonies

In 1763 the Seven Years’ War ended with the British Empire emerging as victors. The victory came at great cost to Great Britain’s economy. The national debt almost doubled from 75 million pounds to 133 million pounds between 1755 and 1763. Given that Britain fought in North America to uphold the security of her colonial possessions, British ministers deemed it fair that the cost of the war should be shared with the colonies. Subsequently, import duties on popular goods were raised and a number of Acts regarding excise taxes were passed. These included the Sugar Act of 1764, the Stamp Act of 1765 and the Townshend duties beginning in 1767. The consequences of these actions were to place great financial burdens on the North American colonists, but more importantly, to

threaten their long established governmental institutions and to put in jeopardy what they believed to be their rights as Englishman.

Before the Seven Years war, England had passed many laws relating to the regulation of colonial trade in order to make sure that the benefits of imperial trade ultimately came back to England.

For example, the Navigation Acts of 1660 and 1663 specified a number of key trade related rules. First, they specified that all colonial trade had to be carried on ships owned by British or colonial traders. Secondly, all colonial goods bound for North America had to pass through certain English ports, in order to be taxed and monitored. Finally, enumerated goods such as sugar were to be shipped only to English ports. Despite these laws existing, the government in London did not enforce them strictly up until 1763. This policy is often referred to as ‘salutary neglect’ and it had the effect of introducing a perceived sense of autonomy and self-determination in the North American colonies. Following 1763, the British government began to enforce the Navigation Acts British lawmakers began to introduce more Acts which further restricted and monitored colonial trade and increased taxes. To the parliament in London this was just enforcing and building upon old laws, an opinion that was not shared by the

colonists.

On April 5th 1764, the Sugar Act was introduced. It was intended to be an update of the Molasses Act of 1733. This act levied a tax of six pence per gallon of molasses in attempt to curb trade between the sugar plantations of the French Caribbean colonies, which had an excess of molasses, and New England, where it was used to produce rum. The colonists quickly found ways to circumvent this regulation and the tax subsequently went uncollected. The Sugar Act halved the tax to three pence per gallon but, unlike the act of 1733, measures were introduced to enforce the collection. From Parliament’s perspective, the tax had been cut; for American merchants, the tax had effectively increased from zero to three pence. The Act was seen to be a threat to the economic livelihoods of the colonists, especially in the coastal regions. A letter written to Thomas Whately, a Member of Parliament, by Jared Ingersoll of New Haven, Connecticut on 6th July 1764 corroborates this. Ingersoll claims the tax could ‘amount to a prohibition of the trade’ of molasses and sugar because he believed that the price of the goods when combined with the tax would ‘not leave any profit to the Merchant’.

The Stamp Act of 1765 was a natural progression from the Sugar Act. It consisted of a direct tax on the majority of printed materials and publications such as court documents, newspapers, playing cards and official transactions and its purpose was to pay troops who were stationed in North America who took part in the Seven Years’ War. The Stamp Act was deeply troubling to the colonists for a number of reasons. Firstly, they saw no need for the presence of a British standing army, arguing that they were a threat to liberty. However, it was the manner in which the Stamp Act had been introduced which caused the most outrage and offense among the colonists. Unlike previous acts, the Stamp Act was passed by Parliament in London rather than through the provincial assemblies of the North American colonies, therefore the colonists were being taxed without their consent. Consequently, it was seen by many to be a violation of their fundamental rights as Englishmen. A letter ‘from a gentleman in Philadelphia to his friend in Bristol, Sept. 7. 1765’ succinctly summarises popular at opinion at the time. The author states that the ‘uneasiness and commotion’ surrounding the Stamp Act is due to the fact ‘that we are to be taxed by this act, without being represented on your side of the water, or being first heard for ourselves’. It is this perceived infringement of the colonists’ rights and privileges that lead the whole of the North American colonial society to feel threatened, and subsequently led to varying forms of protest. Groups such as the Sons of Liberty provided organised, underground opposition to Parliament and the Crown. Street protests, effigy burning and destruction of property took place across the thirteen colonies. The elites of society also met to contest the Stamp Act for example, the Stamp Act Congress, made up of representatives from across the North American colonies, met in New York in October 1765, resulting in the creation of the Declaration of Rights and Grievances. This declaration restated the colonists desires to possess the ‘rights of Englishmen’, which they felt had been threatened, for example the right to no taxation without representation.

The Stamp Act was finally repealed via Royal assent on 18th March, 1766, however, much like the Sugar Act which preceded it, the Stamp Act was merely part of a series of reforms, which further and further infringed upon the liberties of the North American colonists. The Declaratory Act was introduced in tandem with the Stamp Act’s repeal in order to prevent a perceived capitulation to the colonists; it asserted that Parliament had the complete legal authority over the American colonies ‘in all cases whatsoever’. The introduction, beginning in 1767, of the Townshend Acts, continued the trend of taxation without representation and demonstrated the unremitting disregard to the political maturity which the colonists had gained over the previous century of salutary neglect. The first of the Townshend Acts was the Revenue Act. It was introduced partly as a result of a misapprehension of an argument proposed to Parliament by Benjamin Franklin, which lead to Parliament believing that the colonists declared the Stamp Act unconstitutional on the grounds that it was an ‘internal tax’ rather than an ‘external’ tax. Subsequently, the Chancellor introduced new trade duties on imports from Britain to the American colonies such as tea, paper, paint and glass. Along with this, new laws were introduced to crackdown on smuggling thereby preventing the colonial merchants from avoiding these new taxes. On this occasion it was not the fact that an external tax had been introduced which threatened the colonists; rather, it was the manner in which the revenues raised by the act were to be used.

The transcript of the Revenue Act states that duties will be used ‘for defraying the charges of the administration of justice, and the support of the civil government’ within the colonies. This was a practice previously reserved for the colonial assemblies therefore more control was being taken from them and transferred to Parliament. Although the uproar was not quite as immediate as that triggered by the Stamp Act there was still significant opposition. Key figures in the American Independence movement were at the forefront of the protests and boycotts which the act spawned. Samuel Adams penned a letter imploring all the colonies to protest the acts which was subsequently adopted and supported by the Massachusetts Assembly; George Washington was part of a committee to introduce boycotts and trade embargoes in Virginia. Tensions continued to rise in the following months, punctuated by the Boston Massacre on 5th March 1770. On 12th April 1770 the Townshend Acts were partially repealed by Royal Assent however the duty upon tea remained. Therefore, as with the repeal of the Stamp Act before it, there was little practical change, and the colonists were still threatened with increasing controls from Parliament.

The Tea Act of 1773, passed on 10th May, 1773 finally ignited the revolutionary fuse of the colonies. Tea smuggling had become widespread among the colonies so the act was introduced to support the struggling East India Company by allowing the Company to export directly from Britain to the colonies without paying duty, thereby making it cheaper to purchase in the colonies. Although the tea supplied by the Company was potentially cheaper than that offered by smugglers, because the Townshend Act was still partially enforced, many colonists saw the Tea Act as an insidious scheme to tie the colonies into paying duties while luring them into lowering their ‘constitutional guard’. Resistance to the Act was strong and culminated in the Boston Tea Party on 16th December 1773. Parliament responded by introducing the Coercive Acts, beginning in March 1774, which further compounded threats to the liberty of American colonists by temporarily closing the port of Boston and by assuming virtual control of the Massachusetts government. Just over 12 months later, the Revolutionary War would begin.

In conclusion, the reforms initiated after the Seven Years War demonstrated a gradual but obvious change in Britain’s policy towards its North American colonies. 1763 marked the end of a century of salutary neglect, in which American colonial institutions of self government were established, and the beginning of a period in which the integrity of these institutions was to be threatened. Granted, the opposition to the Sugar Act was primarily economically motivated, however beginning with the Stamp Act in 1765, Parliament began to threaten the American colonial political establishment, as well as the liberties and rights of the people it represented. As subsequent acts were passed this threat escalated, ultimately culminating in the American Revolutionary War and the independence of the colonies from Britain.