Military history

CHAPTER 60

The American Duties Act (THE SUGAR ACT)

1764

AS EXPERIENCE rather than theory engendered its plans for reform, so the ministry implemented its program less systematically than opportunistically, as it became politic to do so. Just in the way Grenville expected, the opposition launched two major attacks during the Commons’ winter session: one based on discontentment with the cider tax, the other arising from unease at the way the government had employed a general warrant against John Wilkes without regard for parliamentary privilege. That the ministry expected these to be its great tests was evident from the start of the session. The king’s opening speech, which Grenville wrote, emphasized the need for attending to “the heavy debts contracted in the course of the late war”; a royal message to the Commons, also Grenville’s handiwork, asked the M.P.s to determine if Wilkes ought to be deprived of his seat in the House, and hence of parliamentary privilege. To set the agenda, however, was not to control the debates, and William Pitt determined to seize what seemed a glittering opportunity to bring down Grenville’s ministry. Beside him stood Charles Townshend, whom some thought Pitt’s peer in eloquence, and who many believed would inherit his political mantle.1

Despite Pitt’s and Townshend’s success in shifting the debate from Wilkes’s rather nasty behavior to the abstract issues of liberty of the press and freedom from arbitrary arrest, the government retained comfortable margins in the early votes. Moreover, at Christmastime, Wilkes did Grenville the enormous favor of fleeing to France, and on January 19 the House, finding him in contempt, voted his expulsion. But the government’s majority waned in late January and early February when Grenville defended the cider tax, beating down a critical resolution to modify it by just twenty votes. The opposition, scenting blood, mounted an all-out effort to overthrow the ministry in mid-February, on the grounds that it had abused its power in the use of general warrants. Such drastic measures, smacking as they did of despotism, worried many independent M.P.s who had little regard for Wilkes but harbored enormous affection for Pitt. Yet in the end not even the Great Commoner’s speeches could carry the day, and a resolution that would have declared general warrants unconstitutional failed by ten votes. Having thus retained control despite an opposition challenge “beyond all example and belief,” Grenville could propose his own legislative program—and indeed could do so with great confidence, for at the height of the debates the king had finally assured him that he would support the ministry, come what might. The independents who had been following Pitt’s lead reassumed their accustomed posture of docility, and Grenville’s majority swelled to comfortable dimensions at last.2

In February, Grenville showed, the hard way, that he could hold a majority in the House of Commons. He had squared off with William Pitt in debate; watched him take the constitutional high ground; ceded him the votes of the independents; and won. In March, Grenville therefore showed what he could do in another way when, at the zenith of selfconfident strength, he introduced the colonial measures over which his subordinates had labored for months. On the ninth, Budget Day, he outlined the whole scope of his revenue program to a House of Commons that responded with applause and only a few insuppressible yawns. (“Brevity was not his failing,” Horace Walpole quipped, but granted that Grenville’s three-hour speech showed “art and ability too.”) Sure of support from M.P.s and king alike, the prime minister now behaved like a man with a mission, submitting measures too detailed to be immediately comprehended in a tone that did not invite discussion. “This hour,” he told the House, “is a very serious one. France is in great distress at present, greater even than ours. Happy circumstance for us, as we are little able to afford another war, we now have peace; let us make the best use of it.”3

In the end Parliament passed every measure Grenville put before it, with small discussion and huge majorities. In part this was because the opposition had already failed to overthrow the government and its leading spokesmen had departed—Pitt in collapse retreated to his estate in Kent, while the mercurial Townshend went up to Cambridge for a brief sulk and some extended reflection on how he might most advantageously offer his services to the ministry. But the silence of the opposition also spoke a more resounding truth, which was that no significant segment of the Commons disagreed with anything Grenville proposed. As Israel Mauduit, one of the agents representing Massachusetts’s interests to the House of Commons, reported, there did not seem to be a single man in Parliament, who thought that the conquered provinces ought to be left without Troops, or that England after having run so deeply in Debt for the conquering of these provinces, by which Stability & Security is given to all the American Governments, should now tax itself for the maintenance of them. The only Difference of opinion . . . was that Mr Grenville said he did not expect that America should bear more than a good part of this expense; whereas other leading Members not of the Ministry said it ought to bear the whole.4

The Commons consolidated all but one of Grenville’s measures—a stamp tax that the prime minister proposed and then withdrew, in order to give the colonies’ agents time to comment and officials in the Treasury a chance to collect needed information—into an omnibus measure, the American Duties Act of 1764, and passed it on March 22. The Lords concurred with even less debate and the king gave his approval on April 5. From the perspective of British politicians, the act’s salient features were the speed of its passage (less than two weeks) and the size of the government’s majority (nearly three to one) in the House of Commons. None of the M.P.s seemed especially concerned that it would radically revise the relationship between Britain and the colonies. But for the colonists, who first learned of it in May, nothing could have been more significant than the new law’s contents.

Americans remember the American Duties Act of 1764 as the Sugar Act because it emphasized molasses and sugar duties, but this is as much a misnomer today as it was when the colonists coined it. In fact the bill contained a variety of provisions, all of which Grenville intended to work together to help resolve the problems of finance and control that plagued the postwar empire. While in form the act was a replacement for the expiring Molasses Act of 1733, it went well beyond any previous mercantilist statute. Its many sections included three kinds of measures: those intended to make customs enforcement more effective, those that placed new duties on items widely consumed in America, and those that adjusted old rates in such a way as to maximize revenues.

In the first category fell the act’s most complicated provisions. Some sought to eliminate corruption in the customs service—for example, by requiring governors to take oaths promising to uphold the law, and by threatening dishonest customs officials with severe punishments, including dismissal, heavy fines, and disqualification from future appointments. Most of the act’s new regulations, however, afforded protections to make the customsmen more secure in their jobs, or to give them tools to detect and suppress smuggling. From the customs officers’ standpoint, the most important of these provisions limited the risks they ran when they made mistakes. Merchants or ship captains wrongfully accused of smuggling had always been able to sue the customs officers who had seized their property or ships, and colonial juries often subjected errant customsmen to heavy damage judgments and fines, even when they had acted in good faith on faulty information. The American Duties Act decreed that juries finding customs officers guilty of making illegal seizures could award damages not in excess of twopence and impose fines of no more than one shilling, and even forbade judges to charge court costs to customs officers who had lost suits. Accused officers had only to prove they had probable cause to suspect smuggling when they made illegal seizures. Neither the extent to which any customsman violated the law nor any losses his victim had suffered as a result were to be allowed as considerations.

As these protections tended to increase the self-confidence of colonial customs officers, provisions dealing with jurisdiction stacked the legal deck in the Crown’s favor once the seizures came up for condemnation and sale. Since the end of the seventeenth century vice-admiralty courts had sat in the colonies to adjudicate customs cases. Defendants, however, could always petition to have their cases transferred from these prerogative courts, where judges alone heard evidence and delivered verdicts, to common-law courts where juries decided the outcome. The American Duties Act ended this indulgence by giving Crown prosecutors the authority to decide what court would conduct the trial—and then magnified their advantage by erecting a new court, the Vice-Admiralty Court for All America, with original jurisdiction over the colonies as a whole. If decisions in the eleven existing vice-admiralty courts were immune to the influence of juries, defendants might still appeal to mobs to intimidate their judges. But that was unlikely to be a successful defense strategy in the garrison town of Halifax, Nova Scotia, where the newly created court would sit.

Finally, the act tightened the lax procedures of the American customs service by requiring merchants and ship captains to post bonds (a thousand pounds for ships of less than a hundred tons, two thousand pounds for larger vessels) to insure their compliance with the law, and by creating an elaborate regimen of documentation to prevent frauds. Even in the coasting trade, which had never been closely regulated, customs officers were henceforth to certify the contents of ships’ cargoes in advance of sailing and to list them on sealed “cockets.” Upon arrival at his destination, the captain had to present the cocket to a customs inspector, who would unseal it and compare it to the cargo; any disparity between the contents of the hold and the cocket would be grounds for prosecution, fines, and the forfeiture of the bond posted at the port of embarkation. Such procedures had long been used in Britain, where swarms of customs officers, underofficers, and clerks searched cargoes and tracked the paperwork that sustained the system. This was, however, the first systematic extension of bonds and cocketing to the intercolonial trade, where the customs personnel had been few and documentation rudimentary. More officials would obviously be needed to staff the new system, but Grenville expected that the increased efficiency of collections and the prevention of smuggling would more than pay for increases in manpower. 5

If these enforcement measures were sticks that the government could use to beat smugglers into submission, the provisions of the act that created new duties offered several carrots to induce British manufacturers and merchants to support the bill, as well as what Grenville believed was a very important sweetener to lure Americans into accepting it. The carrots included the act’s elimination of “drawbacks,” or customs rebates, previously given on certain fine Asian and European fabrics reexported to the colonies through Britain, and its addition of new duties of two or three shillings per pound on all foreign silks, calicoes, and linens to be reexported in the future. The intended effect was to raise the price in the colonies of textiles produced outside the British Isles, and therefore to encourage the colonists to consume even more British-made cloth. Similarly, the new charges of one pound two shillings per hundredweight on “foreign white or clayed sugars”—those grown and refined in the French West Indies—on top of the previous five-shilling duty, would give British sugar producers an even greater advantage in the mainland colonies. Grenville expected neither of these taxes to raise significant revenue, but rather to function as the duties collected under the Navigation Acts always had, keeping commerce within the empire and creating a privileged market for British produce and manufactures in the colonies. Thus, predictably, both M.P.s tied to the cloth manufacturers and those in the West Indian sugar interest enthusiastically supported the act. The case of a new tax on Madeira, however, was more complex and less conventional in its expected effects. Why Grenville believed that raising the price of the most popular wine in America would work to the colonies’ advantage reveals his subtle conception of imperial trade—and suggests why colonists found it hard to discern in the American Duties Act the benefits he thought were obvious.

Along with an appetite for high-quality consumer goods, over the course of the eighteenth century Americans had developed a prodigious thirst for Madeira, which they imported, duty-free, from the Portuguese Wine Islands in exchange for wood products and fish. The American Duties Act imposed a new tax of seven pounds sterling on each tun—a cask holding about 252 gallons—brought to America directly from the Wine Islands. In contrast, wines imported from Britain (such as Madeira shipped to the colonies via the warehouses of British wine merchants) would bear a tax of only ten shillings per tun. The obvious results would be to diminish the direct trade between the colonies and Portugal, boost the incomes of British wine wholesalers, raise the price of wine in the colonies, and gain revenue for the Treasury. 6

Significantly, Grenville also expected this measure to encourage the colonists to drink rum distilled in America, since alcohol in this form would now enjoy a greater comparative price advantage than ever. Paragraph 28 of the act made Grenville’s motive clear to anyone who conceptualized the Atlantic trade system as he did, for this provision absolutely excluded French West Indian rum from America. Frenchmen in France drank little rum, and so long as grapes continued to grow, never would. Once the distilling planters of Martinique and Guadeloupe were denied access to the large American market, therefore, they would have little choice but to lay off rum-making and sell their molasses cheap to American distillers; lacking any other customers, they would have no alternative. In effect, market forces would compel French molasses producers to subsidize rum manufacture in the British colonies. Thus woven into the web of new duties was a boon to American rum manufacturers that— together with a final set of provisions—Grenville hoped would produce the most substantial customs revenues of all.7

For the third aspect of the American Duties Act was its adjustment downward of duties on molasses imported into the colonies from the French West Indies, and that formed the heart of Grenville’s plan. This reduction recognized the ineffectuality of the old regulations on the molasses trade and sought to take advantage of changes the war had brought about. The Molasses Act of 1733 had sought to discourage the consumption of molasses from the French West Indies in British North America by laying a prohibitive tax of sixpence on each gallon imported. The intent had been to exclude French molasses from North America and encourage the consumption of molasses from the British West Indies, but the law had never worked as it was intended. Unlike Frenchmen, Britons loved to drink rum, and British West Indian planters made handsome profits by distilling their own molasses into high-quality rum for sale in Britain; they therefore had little syrup to export to the mainland colonies, and what they did ship tended to be inferior in quality. American distillers had, as a result, come to rely on French suppliers. Because the sixpence duty on foreign molasses truly was prohibitive—molasses cost the equivalent of nearly fourteen and a half pence sterling per gallon and rum sold at wholesale for less than eighteen pence—the Americans had early resorted to smuggling. By the 1760s a remarkably open system of bribery was evident in every port with a rum distillery: customs officers pocketed “composition fines” of one and a half or tuppence per gallon on foreign molasses and made no effort to enforce the law.8

To a man with George Grenville’s loathing of corrupt practices, this sort of behavior had been bad enough before 1763, but the war had changed conditions in ways that made it truly intolerable afterward. The American commanders in chief had never succeeded in slowing, let alone suppressing, trade with the enemy because the war had lowered the price and increased the value of French molasses. There had always been traffic between the French West Indies and New England, where most of the distilleries in North America stood, because the French planters needed wood products (especially staves for barrels in which to pack their sugar) and foodstuffs (particularly beef for themselves and cheap fish for their slaves). Before hostilities began, they had been able to supply part of these needs by trade with Canada and Louisbourg, but with the loss of access to those supplies they had sold their molasses at bargain-basement rates to whatever Yankee captains turned up with the cargoes of staves and cod they needed. Meanwhile, the market for New England rum grew fantastically during the war: in part because the army and navy used this rude anesthetic to dull the discomforts of American service, and in part because the conquest of France’s trading posts in West Africa drove up the demand for rum there, where alcohol furnished the principal exchange commodity in the slave trade.

Thus the war had caused a boom in New England’s consumption of French molasses: large before the conquests of Guadeloupe and Martinique made the trade legal; huge thereafter. With the end of the war and the return of the sugar islands to France, the molasses trade persisted— illicitly, once more—because the distillers had no other source capable of supplying their vastly expanded needs. The most authoritative estimate available to Grenville in 1763 held that the “Importation of foreign Molasses had increased greatly during the War to the Amount . . . of Sixty thousand Hogsheads annually: five times the quantity” colonial distillers had consumed before the conflict began. That placed the total between 6,000,000 and 7,500,000 gallons—far too many gallons of any taxable commodity for Grenville to ignore. His only concern was how best to tap this great resource.9

In place of the sixpence duty, which supplied no money to the Treasury and occasioned so much corruption among customs officers, the American Duties Act therefore instituted a tax of threepence per gallon of foreign molasses. Grenville expected this new rate to bring in between seventy and eighty thousand pounds sterling annually. He knew that if he merely set the duty at the same level as the going bribe of twopence, and thereby made it as cheap to obey the law as to evade it, he might realize even larger sums for the Treasury. Nonetheless he believed that the higher rate was justified on policy, if not merely fiscal, grounds. The colonists needed to understand that Britain meant business, and the best way to convince them of that was to enforce a higher (if less remunerative) tax and flex a few of the muscles that the act gave the American customs service. Thus Grenville reduced the duty both to produce revenue and to prod the colonies toward submission. Yet he intended neither the exaction nor the enforcement to be harsh enough as to discourage colonial rum distilling, which—benefiting from the exclusion of French rum from North America—he wanted to grow into a goose that would lay egg after golden egg for the Treasury.

And there was one final benefit that Grenville expected to derive from these measures, perhaps the most ingenious of all: to weaken the French hold on the West Indies. With Canada now in British hands, French planters would rely more than ever on the mainland colonies for wood and provisions, and thus, in case of another war, would be more vulnerable than ever. If legitimating trade between the mainland colonies and the sugar islands of a foreign empire did not fit comfortably within the mercantilist conceptions that framed the rest of the act’s provisions, it made excellent economic and strategic sense in the postwar world; particularly because Grenville trusted the Yankee consumers of molasses to pass along any increases in their own operating expenses to the French planters by charging higher prices for the staves, fish, and provisions the planters could get from no one else. Understood in this way, it was not British colonists who would ultimately foot the tax bill on molasses, but French planters on Martinique and Guadeloupe.10

Like an engineer constructing an intricate machine, Grenville designed the American Duties Act to perform many simultaneous complementary functions, all of which, he believed, would help create a workable empire. Better than most of his contemporaries, however, he understood that ingenious machinery alone would not suffice. Effective imperial reform required not only the erection of a militarily secure and financially sound institutional structure, but new habits on the part of the colonists and attitudes unlike the evidently self-interested ones they had shown during the war. Grenville thought of the American Duties Act, just as Halifax did the Proclamation of 1763, as a first step toward changing patterns of behavior long fixed, and attitudes deeply ingrained. The colonists needed to be taxed not only to provide the revenues necessary to defend and maintain order among them, but to habituate them to the duties and responsibilities that belonged to all British subjects.

Like the reform of the Indian trade and the prohibition of settlement beyond the Appalachian crest, the underlying issue in Grenville’s package of fiscal measures was always control: sovereignty: dominion. By delaying the imposition of a stamp tax, he intended to ease the transition for colonists who were certain to resist their new, subordinated role in the empire. He expected colonial opposition, but he also expected to prevail. Nothing the colonists could do would deter George Grenville from pursuing the end of imperial control to which taxation was a means. No colonial protests would prevent him from exercising the parliamentary sovereignty of which taxation was both tool and symbol.

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