Tuesday, November 14, 2006

The Colonists as Faithful Subjects Under the Grenville Program

The Stamp Act of 1765 is conventionally taken as the beginning of the sequence of events immediately preceding the American Revolution. But it was only the most famous of the series of policy decision concerning the colonies enacted by Lord George Grenville’s prime ministerial rule in British Parliament (1763-5). During this period, the British Government turned its attention at American after a generation of war with the French and a century of neglect. This was a period that forced the colonies to understand the implications of imperial rule.

In order the finance the Seven Years’ War (the French-Indian War as Americans know it), Britain had borrowed money from the Dutch, merchant bankers, the Bank of England (established in 1694), and private companies and individuals at high rates of interest. Lord Grenville believed that it was his duty to pay this debt off, but could not afford to upset Independent Gentlemen and British nobility by increasing their taxes in so doing.

He therefore,

(1) left the colonial land tax at ₤4/-, which was not popular. Under peacetime conditions, the land tax stood at ₤3/- and most people expected the tax to be reduced after the signing of the Peace of Paris in 1763.

(2) He cut expenditures in the army and navy. This was seen as more weakness on the part of the government back home, especially with the growing empire, and unpopular with the colonists since it was mainly they who helped meet these costs.

(3) Grenville also believed that since Britain was defending the empire, the colonies should help defray the costs. Consequently, he introduced a series of policies known as the Grenville Program.

The colonial assemblies, however, were much rather in favor of voluntary financial contributions, as had been done in the past. Central to Grenville’s colonial policy, and certainly central to Britain’s prevailing mercantilist ideology of the time, was the detailed investigation in 1763 into the American evasion of the trade laws: the Customs Board estimated the average annual revenue from the American customs to be a mere ₤1,800.

This was intolerable to Grenville, whose guiding principles were strict adherence to legality and financial solvency. Attempts to enforce the existing trade regulations, as by incentives to naval officers and customs officials, preceded their alterations by Parliament in the American Duties Act of 1764. The most controversial of this new duty enforcement was the creation of a new vice-admiralty court—a court that exercises jurisdiction over maritime affairs—for the trial and punishment of smugglers, but whereas these courts were unhindered by juries.

The prospect of a trial without a jury excited the temperaments of colonists, to whom London booksellers, as Edmund Burke tells us, sold more books on law theory in the American colonies than anywhere else in the British Empire. Also important were the writs of assistance which helped enforce the Acts of Trade by allowing customs officers to conduct general searches of premises for contraband. In 1761, James Otis represented Boston merchants in their challenge to the renewal of the writs. He failed to convince the court, but gained public prominence in arguing that colonists’ natural rights were violated by the writs.

The first deliberative attempt to tax the colonies and to fulfill the Proclamation of 1763 was the Sugar Act, which was an alteration of the molasses duty which converted it into a source of revenue as well as a trade regulation. The molasses duty was originally 6d per gallon. But this was evaded by smuggling or by collusion with the customs officers who charged about 10% of the duty.

The Grenville Treasury Board dropped the idea of a molasses prohibition, accepting that trade was vital to the economy of New England. Thus the rate of duty that would produce the highest revenue therefore became the Treasury’s highest concern. Their conclusions estimated that the point at which marginal revenue equaled marginal cost of productivity lost through taxation was 3d per gallon. Grenville maintained that the molasses duty had the twofold aim of producing revenue and maintaining imperial preference, since there would still be no duty on molasses imported from the British West Indies.

The Grenville ministry also sought to amend the legislation on the status of colonial paper money as legal tender. The Currency Act of 1764 applied only to the nine colonies south of New England, which had had a similar act since 1751. Out of those, only North Carolina and Virginia had a suspect currency, but the British Government thought a general regulation was preferable for discriminatory measures.

The problem centered on the use of depreciated Virginia currency for the payment of debts from that to British creditors. The Bute ministry, Grenville’s predecessor, had warned the Virginia assembly to mend its ways, but without effect. The Currency Act under Grenville immediately prohibited all colonial paper money as legal tender, but would not cancel existing monetary issues. This had little immediate effect and did not incur sustained colonial criticism until after the Stamp Act crisis.

After a century of colonial rule, Britain had essentially perfected the art of taxation. Just a hundred years earlier, during the 1600s, the revenue collected from the colonies was paid for entirely by way of land taxation. By the time the Stamp Act was introduced into Parliament the chief motive of the Grenville ministry had changed from collection of revenue to the assertion of sovereignty.

Despite news of colonial protests, Parliament proceeded with the Stamp Act, arguing that the virtual representation of the colonies was the basis of Parliament’s right to tax. Grenville asserted that even in Britain fewer than 5% were directly represented. In fact, great care had been taken to make the Stamp Act acceptable to the colonies. The wide range of duties, which averaged only about 70% of their equivalent in Britain, had been devised to provide an equitable distribution of the burden.

The defense of America was after all very expensive—the annual cost of the army alone standing at an estimated ₤350,000—and the burden of the colonists’ own internal taxation was very light. The revenue from the stamp duties would increase only as the colonies prospered, and the tax would be largely self-enforcing through the legal invalidity of unstamped documents. There was no foundation for the contemporary and historical myth that Britain would drain money from America.

On the eve of the Revolutionary War itself, a petition was submitted to the Crown to resolve these differences peacefully. It is known as the Olive Branch Petition. The document begins with Congress declaring themselves to be “We, Your Majesty’s faithful subjects of the colonies,” and entreating the King to consider this, “Our humble petition.”

The Congress recalls how British and colonial forces together had repelled the French and the Spanish and, owing to the sacrifice of the colonists, they thought that the victory would redound at least to some extent and would benefit themselves as well as the mother country.

This is addressed now to George III, “Your loyal colonists doubted not but that they should be permitted with the rest of the empire to share in blessings of peace and the emoluments of victory and conquest.”

The petition goes on to say that, in response to Grenville’s Parliamentary measures, which the colonists regard as somewhat disciplinary in nature, the colonists now must arm themselves for their own defense. All of this conveys anything but the true sentiments of a faithful people, the Olive Branch Petition being replete with statements that would leave no doubt as to the sincerity of the Continental Congress in seeking the full restoration of the British Empire.

Was Lord Grenville to blame for all of this? His ministry undoubtedly left a personal mark on American policy. A great deal was done in such a short time. The fact that Grenville’s ministry gave so much attention to the colonies was due not to any particular ideological approach, but to the need to solve problems, old and new.

The phrase “Grenville program” arguably implies a certain coherence that did not exist, since the colonial acts sprang from differing motivations. The policy of maintaining a large army in America, and the crucial public commitment to finance it by a colonial tax, for example, were both legacies of an earlier ministry, that of Lord Bute’s.

Grenville himself, a financier with legal background, was shocked at the disorder and defiance of authority revealed in the American scene. Hence the comment of an anonymous contemporary of his, “Mr. Grenville lost America because he read the American despatches, which his predecessors had never done.”

Further reading:

Thomas, P.D.G. British Politics and the Stamp Act Crisis: The First Phase of the American Revolution, 1763—1767. Oxford: Clarendon Press, 1975.

Thomas, P.D.G. “The Grenville Program, 1763—1765.” A Companion to the American Revolution. Malden, Massachusetts: Blackwell Publishers, 2000. 118-122.

Thomas, P.D.G. “The Stamp Act Crisis and its repercussions, including the Quartering Act controversy.” A Companion to the American Revolution. Malden, Massachusetts: Blackwell Publishers, 2000. 123-134.

Sheridam, Richard. “The Molasses Act and the Market Strategy for British Sugar Planters.” Essays in American Colonial History.

Ferguson, James E. “Currency Finance: An Interpretation of Colonial Monetary Practices.” Essays in American Colonial History.

John Hancock, Samuel Adams, John Adams etc. The Olive Branch Petition. June 2001. Georgia Tech. September 2005.

Unknown Author. Imperial Reorganization 1763—1764. 2005. USHistory.com. September 2005.

No comments: