RevWar

The Stamp Act (1765) – The first direct tax on the American colonies

American newspapers reacted to the Stamp Act with anger and predictions of the demise of journalism. (from Wikipedia)

Here in the United States of America, we are used to having to pay sales taxes on all varieties of merchandise. We’re also used to having to pay fees whenever we file any sorts of legal documents.

The Stamp Act, which was passed 22 March 1765, was the first direct tax on the American colonies. Once it was enacted in November of that same year, all kinds of printed matter was subject to taxation, such as:

Legal documents;
Magazines;
Newspapers;
Playing cards and dice. (Yes, dice.)

It was bad enough having to pay the tax to begin with, but to make matters worse, they were funding something they didn’t want in the first place.

In this book, Alan Axelrod, PhD writes:

“The purpose of the Stamp Act was to help defray the cost of maintaining British soldiers in the colonies. But colonists had had their fill of British soldiery in the French and Indian War, and they resented the tax. Worse, any infringement of the new tax was to be tried in the vice-admiralty courts rather than by local magistrates.”

Alright, so first of all, the colonists’ money was going towards the maintenance of British soldiers, whose presence they already found to be exhausting. This was not something they were happy about. The Crown must have suspected there would be resistance to the idea which is why it was determined that violations of the act would be tried in vice-admiralty courts.

What does that mean? Why would that be such a big deal?

Well, the vice-admiralty courts were established to hear cases involving maritime disputes, such as between merchants and seamen. That, in and of itself, doesn’t sound problematic, but just wait… What’s one thing an American citizen can count on today if he is charged with a crime?

The Sixth Amendment to the Constitution of the United States says the following:

In all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial, by an impartial jury of the State and district wherein the crime shall have been committed, which district shall have been previously ascertained by law, and to be informed of the nature and cause of the accusation; to be confronted with the witnesses against him; to have compulsory process for obtaining witnesses in his favor, and to have the Assistance of Counsel for his defence.

Guess what. A case heard in vice-admiralty court has no jury, much less a local jury. There was only one guy who was going to decide your fate if you were brought up on a charge in the vice-admiralty court, and that was the vice-admiralty court judge, a man who was directly appointed by the Crown.

The Currency Act (1764) – The ugly, old cousin of the Federal Reserve Act

Obverse and reverse of a three pence note of paper currency issued by the Province of Pennsylvania and printed by Benjamin Franklin in 1764. (from Wikipedia) — Obverse and reverse of a three pence note of paper currency issued by the Province of Pennsylvania and printed by Benjamin Franklin in 1764. (Image from Wikipedia)

The Currency Act of 1764, along with its earlier iteration, the Currency Act of 1751 (which applied only to New England), in essence, prohibited the colonies from issuing their own paper currency as “legal tender.”

This created a problem for colonists because there were no gold or silver mines in the New World and approved currency (silver and gold coins) could only come from proper trade as regulated by Mother Britain. And since the Crown restricted trade with Dutch, French and Spanish colonies in the West Indies, that meant the only means by which the colonies could obtain approved currency was with Great Britain, herself.

According to this article, “Triangular Trade, coupled with the policy of Mercantilism, provided a ‘favorable balance of trade’ for Great Britain but an ‘imbalance of trade’ in the colonies resulting in a massive trade deficit. The trade deficit was a direct result of the British policy of Mercantilism and its use of the Triangular trade routes. The result of this caused the colonies to suffer a chronic shortage of funds. The Currency Act threatened to destabilize the entire colonial economy of New England, the Middle Colonies and the Southern colonies.”

In other words, the Currency Act plunged the American colonies into a great, big ol’ depression.

In fact, good ol’ Benjamin Franklin, who was living in London at the time lobbied for the Currency Act to be repealed. (He wasn’t the only one, of course, but you all know who he is I assume.)

Franklin knew that choking the barely burgeoning economies of the young colonies would not only prove detrimental to the growth and future success of said colonies, but would ultimately backfire through inevitable rebellions. And that’s exactly what happened. The Currency Act, even more than the Sugar Act, started to really turn up the heat in the years ahead of the American Revolution.

In 1763, when Franklin was asked by the Bank of England why the American colonies were seeing such prosperity, he had responded:

“That is simple. In the Colonies we issue our own money. It is called Colonial Scrip. We issue it in proper proportion to the demands of trade and industry to make the products pass easily from the producers to the consumers. In this manner, creating for ourselves our own paper money, we control its purchasing power, and we have no interest to pay no one.”

The Currency Act of 1764 made the Colonial Script that Franklin had referred to in the earlier statement illegal.

After the Currency Act went into effect, Franklin said:

“In one year, the conditions were so reversed that the era of prosperity ended, and a depression set in, to such an extent that the streets of the Colonies were filled with unemployed.”

One might think that after the American Revolution, this new nation would be able to avoid the types of money troubles the colonists had under the Currency Act, but it seems we never learn.

After the Revolutionary War, the fledgling United States government was up to its eyeballs in debt. That is when talk began about establishing the First Bank of the United States, which was a predecessor to the modern day Federal Reserve.

While Alexander Hamilton was the First Bank of the United States’ greatest champion, Thomas Jefferson and James Madison were deeply opposed to such an institution. They believed that a central bank was unconstitutional, and that it would create an unfavorable balance relating to currency that, in this case, favored merchants and investors, at the expense of ordinary colonists, just as the Currency Act had created a detrimental imbalance in trade between the colonies and Great Britain.

The Sugar Act (1764) – Why did a law that reduced an earlier tax end up outraging colonists?

The Sugar Act was described in The North-Carolina Magazine (New Bern, NC) - Friday, 3 Aug 1764 — The Sugar Act was described in The North-Carolina Magazine (New Bern, NC) – Friday, 3 Aug 1764

The Sugar Act of 1764 was the first law enacted after the French and Indian War intended to help restock Great Britain’s coffers. It was passed 5 April 1764 and went into effect 29 September 1764.

It was an update to the Molasses Act of 1733, which charged a six pence per gallon tax on any molasses imported from non-British colonies.

The Sugar Act reduced the tax on molasses from six pence to three pence per gallon. That sounds good on its face, but the problem was this new tax would be strictly enforced, whereas the Molasses Act had not been, thanks to a policy referred to as Salutary Neglect. (Basically, that just meant the tax on imports wasn’t strictly enforced and Great Britain looked the other way while her young colonies attempted to find their feet and prosper.) Additionally, the Sugar Act also listed other foreign goods that would be taxed including:

sugar
coffee
certain types of wines
pimiento
certain types of fabric (such as printed calico and cambric, a plain cotton or linen)

The export of materials such as lumber and iron were also regulated by the Sugar Act.

The impact of this new law affected the colonies in various ways, not the least of which was it led to a decrease in the production of rum in America. This was a huge problem, because rum was wildly popular in those days. The nation’s first president even learned early in his political career that free-flowing booze was an asset to a successful campaign. In his book Last Call: The Rise and Fall of Prohibition, Daniel Okrent writes:

“When twenty-four-year-old George Washington first ran for a seat in the Virginia House of Burgesses, he attributed his defeat to his failure to provide enough alcohol for the voters. When he tried again two years later, Washington floated into office partly on the 144 gallons of rum, punch, hard cider and beer his election agent handed out”roughly half a gallon for every vote he received.”

The Sugar Act was repealed in 1766.

What started the American Revolution?

Join, or Die by Benjamin Franklin was recycled to encourage the former colonies to unite against British rule

How does the end of one war ultimately lead to the start of another? Surprisingly, or maybe not so surprisingly, it’s a lot easier than you might think.

Take for example the French and Indian War. It was was actually just the American regional flavor of the worldwide Seven Years War, which was waged from 1754-1763. (Yes, the Seven Years War lasted nine years, not seven years”because most heated segment of warfare ran from 1756 to 1763”seven years.)

At the end of all that fighting, Great Britain enjoyed the success of having won control of several areas that had previously been French or Spanish territories. But the victories didn’t come without a cost. In fact, by 1763, the British government was close to bankruptcy.

No worries, though! King George III and Parliament came up with some brand new shiny taxes came to save the day. And for the first time since English settlement of the American colonies, the period of Salutary Neglect was over. That meant no more of England turning a blind eye to trade violations”no matter how crippling enforcement proved to be to the young colonies.

In a matter of about a decade, American colonists endured increasing difficulties thanks to the Crown’s efforts to refill Great Britain’s coffers through strangling taxes and regulations.

From 1764 to 1776, Americans were burdened with such an onslaught of tariffs and restrictive laws that a Revolution was inevitable.

Finally, all hell broke loose. On April 19, 1775, the Battles of Lexington and Concord were waged, beginning the American War for Independence.

To learn more about the history as it unfolded, click here.

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