Facts about the Sugar Act, which was the first act passed by Parliament to raise money from the colonies. It started the debate over "no taxation without representation," the right of Parliament to tax the colonies, and the controversy over internal and external taxes — all direct causes of the American Revolution and the War for Independence. The Sugar Act made an economic depression in the colonies worse and did considerable harm to trade and commerce in the American Colonies. Show
The Sugar Act definition, in terms of Colonial America and U.S. History, is a law that was passed by Parliament in 1764 for the purpose of raising revenue from the American Colonies by regulating trade. The law created controversy because colonists believed the way the bill was passed by Parliament and how the rules were enforced violated their rights as subjects of the King under the English Bill of Rights. The Sugar Act of 1764 — Quick Facts
This illustration from 1749 depicts the process of making sugar at a sugar cane plantation, mostly likely in the West Indies. Image Source: Library of Congress. 10 Facts about the Sugar Act of 1764
British Treasury Needs Money After the Seven Years’ WarKey Fact — Although Britain won the Seven Years’ War and took control of most French territory in North America, it came with a massive long-term cost that forced the British Treasury to rush to find ways to come up with the money needed to pay off the debt and cover new expenses. After the French and Indian War, the British Treasury needed to raise revenue for two main reasons:
Increase in British National Debt During and After the French and Indian War
Increase in Military and Administrative Expenses in North America
Reasons for a Standing Army in North AmericaKey Fact — The British Treasury needed to find a way to pay for the army in North America as soon as possible. It could not wait until a plan to reorganize the colonies was developed and put in place and it could not wait to hope the colonial governors would come up with a solution. British leaders felt the standing army in North America was needed for several reasons:
Slow Down Westward Expansion of the Colonies
Threat of the French Taking Back the Territory
Pontiac’s Rebellion Justifies the Need to Protect the Frontier
This illustration depicts the Ottawa chief, Pontiac, taking up the “war hatchet.” Image Source: Wikipedia. Proclamation Line of 1763
Options for Raising RevenueKey Fact — George Grenville became Prime Minister in April 1763 and started working with other government officials to find ways to generate revenue to help pay for a portion of the costs of the government and military needs in North America. Eventually, it was decided the money raised would only be used to cover the cost of the military and Grenville never intended to have the colonies cover the entire cost. Grenville became First Lord of the Treasury, Chancellor of the Exchequer, and leader of the House of Commons.
Grenville and the other Lords of the Treasury considered three places where revenue could be raised in order to deal with the increase in national debt and rising expenses. In the end, the Treasury decided to raise money from the American Colonies.
Options for Raising Revenue from the American ColoniesKey Fact — Grenville looked at existing laws to find a way to tax the colonies. The Commissioners of Customs recommended the enforcement of the Molasses Act. Once the Treasury decided to target the American Colonies as the target for the new taxes, it went about the business of trying to determine the best way to charge the tax and enforce the collection of the money. The Treasury asked the Commissioners of Customs for ideas. The Commissioners compiled a report that presented three recommendations.
The first two recommendations were implemented immediately by the Board of Treasury. This action, in fact, was the beginning of the end of Salutary Neglect. Enforcing the Molasses Act to Raise RevenueKey Fact — British officials had no doubt they had the authority to enforce the Molasses Act, however, they significantly underestimated the impact it would have on the colonies, which were already suffering from an economic depression. The Treasury asked the Commissioners for more ideas on how to collect revenue. The Commissioners compiled another report and suggested that enforcement of the Molasses Act could be the solution. However, smuggling was an issue, and the Commissioners suggested smuggling could be reduced by:
Estimate of Revenue to be Earned by Enforcement of the Molasses ActThe Lords of Trade had two of the Secretaries to the Treasury, Charles Jenkinson and Thomas Whately, look into how much revenue could be generated from the enforcement of the Molasses Act. The key issue was to decide how low the tax on a gallon of molasses could be lowered so that:
The secretaries reported that:
Significant Increase in Payments on Molasses for Colonial MerchantsKey Fact — In many instances, merchants were still paying a customs official when they imported barrels of molasses. However, instead of paying 6 pence per gallon, which was supposed to be collected based on the Molasses Act, merchants paid the customs official a small percentage of the total. The customs officials pocketed the money and looked the other way. In other words, the merchants bribed the customs officials.
Colonies Protest Raising Revenue on the Sugar TradeKey Fact — Rhode Island, New York, and Massachusetts protested the Sugar Act before it was passed by Parliament. The protests were either ignored or arrived in London too late to be considered. Jasper Mauduit Opposes Enforcement of the Molasses ActJasper Mauduit represented Massachusetts in London. It was his job to discuss issues with British government officials that affected the colony.
Rhode Island Protests to the Board of Trade
Stephen Hopkins was a leader of the opposition to the Sugar Act in Rhode Island. Image Source: New York Public Library Digital Collections. New York Protests to Parliament
Passage of the Sugar ActThere was very little opposition or debate over the Sugar Act when Grenville submitted it to Parliament.
The Sugar Act of 1764 — Important Facts and DetailsLong Title of the Sugar ActThe long title — or proper name — of the Sugar Act was: “An act for granting certain duties in the British colonies and plantations in Africa, for continuing, amending, and making perpetual, an act in the sixth year of the reign of his late majesty King George the Second, (initituled, An act for the better securing and encouraging the trade of his Majesty’s sugar colonies in America) for applying the produce of such duties, and of the duties to arise by virtue of the said act, towards defraying and disallowing several drawbacks on exports from this kingdom, and more effectually preventing the clandestine conveyance of goods to and from the said colonies and plantation, and improving and securing the trade between the same and Great Britain.” The First Revenue Act
Harm Caused by the Sugar Act in Colonial AmericaKey Fact — The American Colonies considered the taxes from the Sugar Act as “external” taxes because they were levied by Parliament — an external legislative body — and not the “internal” legislative bodies — the colonial legislatures. New Taxes Raise Prices
Enforcement Disrupts and Damages Colonial Trade
Trials in the Vice-Admiralty Courts Violated the Rights of the Colonists
Protests against the Sugar Act led to boycotts of some British luxury goods, which did boost local manufacturing in some instances. Americans protested the Sugar Act primarily because of its economic impact. A year later, during the Stamp Act Crisis, the slogan “no taxation without representation” became a rallying cry against Parliament’s right to tax the colonies. The Sugar Act was enforced for about two years, until 1766, when it was replaced by the Revenue Act of 1766. The Revenue Act of 1766 reduced the tax on molasses to one pence per gallon. Sugar Act Reaction — How did the Colonists Respond?Key Fact — The American Colonies considered the taxes from the Sugar Act as “indirect” taxes, because they only applied to merchants who were shipping goods. The taxes did not apply to a large portion of the colonists, even though many of them were indirectly affected by the rising cost of molasses and the products it was used to make. Samuel Adams rose to fame during the Sugar Act crisis. Image Source: Wikipedia. Results of the Sugar ActThe Sugar Act resulted in:
End of Salutary NeglectWhile British officials worked on coming up with ways to raise money, they started enforcing the Molasses Act. This ended Salutary Neglect, which was an unwritten policy that had been followed for decades by British customs officials. Under the policy, customs officials had been encouraged to neglect the enforcement of trade laws on colonial merchants. Once the Sugar Act was passed, customs officials were required to comply and the bill even gave captains of ships in the Royal Navy the authority to enforce the rules. Beginning of “No Taxation Without Representation”The passage and enforcement of the Sugar Act contributed to the growth of an ideological movement in Colonial America that help fuel the American Revolution. The ideas behind the slogan “no taxation without representation” were key arguments against Parliament’s taxation policies in regard to the 13 Original Colonies. |