Stamp Act 1765 - Background

Background

The British victory in the Seven Years' War (1756–1763), known in British America as the French and Indian War, had been won only at a great financial cost. During the war, the British national debt nearly doubled, rising from £72,000,000 in 1755 (equal to £8,918,706,522 today) to almost £130,000,000 by 1764, equal to £15,002,493,671 today. Post-war expenses were expected to remain high because the Bute ministry decided in early 1763 to keep ten thousand British regular soldiers in the American colonies, which would cost about £225,000 per year, equal to £28,759,937 today. The primary reason for retaining such a large force was that demobilizing the army would put 1,500 officers, many of whom were well-connected in Parliament, out of work. This made it politically prudent to retain a large peacetime establishment, but because Britons were averse to maintaining a standing army at home, it was necessary to garrison most of the troops elsewhere.

Stationing a few troops to separate Indians and frontiersmen was one role. The outbreak in May 1763 of Pontiac's Rebellion, an Indian uprising against the British expansion, reinforced the logic of this decision. The main reason to send 10,000 troops deep in the wilderness was to provide billets for the officers who were part of the British patronage system.

George Grenville—who became prime minister in April 1763—had to find a way to pay for this large peacetime army. Raising taxes in Britain was out of the question, since there had been virulent protests in England against the Bute ministry's 1763 cider tax, with Bute being hanged in effigy. The Grenville ministry therefore decided that Parliament would raise this revenue by taxing the American colonists without their consent. This was something new: Parliament had previously passed measures to regulate trade in the colonies, but it had never before directly taxed the colonies to raise revenue.

Politicians in London had always expected American colonists to contribute to the cost of their own defense. So long as a French threat existed, there was little trouble convincing colonial legislatures to provide assistance. Such help was normally provided through the raising of colonial militias, which were funded by taxes raised by colonial legislatures. Also, the legislatures were sometimes willing to help maintain regular British units defending the colonies. So long as this sort of help was forthcoming there was little reason for the British Parliament to impose its own taxes on the colonists. But after the peace of 1763, however, colonial militias were quickly stood down. Militia officers, tired of the disdain shown to them by regular British officers and frustrated by the near-impossibility of obtaining regular British commissions, were unwilling to remain in service once the war was over. In any case they had no military role, as the Indian threat was minimal as was any foreign threat. Colonial legislators saw no need for the British troops.

The first tax in Grenville's program to raise a revenue in America was the Sugar Act of 1764, which was a modification of the Molasses Act of 1733. The Molasses Act had imposed a tax of 6 pence per gallon (equal to £3.75 today) on foreign molasses imported into British colonies. The purpose of the Molasses Act was not to actually raise revenue, but instead to make foreign molasses so expensive that it effectively gave a monopoly to molasses imported from the British West Indies. It did not work: colonial merchants avoided the tax by smuggling or, more often, bribing customs officials. The Sugar Act reduced the tax to 3 pence per gallon (equal to £1.44 today) with the hope that the lower rate would increase compliance and thus increase the amount of tax collected. The act also taxed additional imports and included measures to make the customs service more effective.

American colonists initially objected to the Sugar Act for economic reasons, but before long they recognized that there were constitutional issues involved. The British Constitution guaranteed that British subjects could not be taxed without their consent, which came in the form of representation in Parliament. The colonists elected no members of Parliament, and so for Parliament to tax them was seen as a violation of the British Constitution. There was little time to raise this issue in response to the Sugar Act, but it came to be a major objection to the Stamp Act the following year.