CHAPTER VII

THE CONTEST OVER TAXATION BY PARLIAMENT

THE POLICY OF GRENVILLE

In the face of a stupendous war debt the safety of the enlarged empire demanded increased expenditures for defense. The tardiness of the response of colonial assemblies to calls for troops, and the poor discipline of the militia and volunteers which America had contributed had called out bitter complaints by British officers during the late wars. Reliance upon such resources was perilous in a sudden crisis like Pontiac's War. A force of two thousand regulars under imperial control, judiciously distributed among the border posts, would provide adequate protection in case of Indian uprising or trouble from the French in the new Canadian possessions.

Indispensable as this program seemed, the expense involved was a serious problem. British taxpayers were already groaning under a burden which had been doubled by the war. Considerable economies might have been effected by purging the civil service of unnecessary offices created to reward the holders for political services, but the ministers lacked the courage to undertake drastic reforms. Besides, America was able to contribute something towards the cost of her protection, and it seemed only fair that she should be required to do so.

Two months after the signing of the Treaty of Paris there came to the head of the government as prime minister the man upon whom fell the chief burden of formulating the new defensive and financial program. This man was George Grenville. He was honest and conscientious and prized efficiency, but had little insight into the mind of Americans, and set about his task with slight anticipation of the reception in store for his plans.

It was clear to Grenville that the navigation system must be made a source of revenue in the colonies. He was amazed

when his investigations revealed the extent of the evasion of the trade acts, and promptly tightened up the administration by appointing trustworthy collectors, sending vessels to patrol the American coast on the lookout for smugglers, and increasing the number of admiralty courts. In April, 1764, the Sugar Act was passed. It replaced the Molasses Act of 1733, and reduced the duty on foreign molasses from the prohibitory rate of sixpence per gallon to threepence, with the expectation that smuggling would cease and that the trade would yield a revenue. The new law laid duties upon a number of other imports, such as wines, silks, and coffee.

Grenville estimated that these imposts would yield about £45,000 per annum, while the cost of maintaining garrisons would amount to £360,000. Of this he planned that one third should be raised in America, but he was at a loss for the best means of doing it. Parliament passed a Billeting Act in 1765, which required the colonies wherein troops were stationed to provide them with quarters and certain supplies, and for the rest Grenville finally decided to recommend a tax requiring the use of stamps on a great variety of papers employed in everyday business transactions. He announced the plan nearly a year in advance of asking Parliament to pass the bill, to give the colonial agents opportunity to suggest an alternative means of raising the sum desired from the colonies. As they merely protested against any kind of direct tax, Parliament passed the Stamp Act in February, 1765, without debate.

The Sugar Act and the enforcement of the trade regulations aroused the merchants. A duty of even threepence per gallon on molasses would kill the trade, they said, and injure British as well as colonial merchants, since it was the source of the specie for paying balances due England. Imports from the mother country must cease if the Sugar Act were enforced. To aggravate the situation a Currency Act of 1764 forbade the colonies to supply the deficiency of specie by issues of paper money. The remonstrances of the merchants aroused little public attention. In an attempt to awaken the fears of the people the Boston town meeting declared that if Parliament could tax trade, it could tax lands and houses. But in form the Sugar Act was nothing new, and even the merchant class was more

concerned with its practical effects than with the significance of the shift from a duty to regulate trade to one designed to raise a revenue. But indifference quickly disappeared with the passage of the Stamp Act. As almost everyone would have to use the stamps, the law brought home to every American the claim of a distant legislature to the right of taxing communities which sent no representatives to sit in it.

Even before the passage of the Stamp Act James Otis, of Massachusetts, published a memorable pamphlet against it, entitled Rights of the British Colonies Asserted and Proved (1764). In this he advanced the idea of a truly imperial parliament, composed of representatives from all parts of the empire, to regulate trade and lay taxes for imperial purposes. That the existing Parliament had such powers Otis denied, because of its unrepresentative character. Americans were not interested in gaining representation in Parliament; but in denying its right to tax unrepresented colonies Otis struck a responsive chord.

In Virginia Patrick Henry played a rôle somewhat like that of Otis in Massachusetts. He came forward in the House of Burgesses with resolutions declaring "That the General Assembly of this colony have the only and sole exclusive right and power to lay taxes and impositions upon the inhabitants of this colony." Supporting these resolutions, in a burst of that eloquence which made him famous as one of America's greatest orators, he cried, "Cæsar had his Brutus and Charles the First his Cromwell; and George III-." Then as those about him exclaimed "Treason! Treason!" he concluded -"may profit by their example. If that be treason make the most of it!"

Otis and Henry had pointed out the constitutional argument with which parliamentary taxation could be combated. The stamps were not to go on sale until November 1, and there was ample time to organize resistance. Otis proposed a meeting of delegates from all of the colonial assemblies, and in October, 1765, twenty-seven, from nine of the colonies, met in New York. This "Stamp Act Congress" is memorable as the first effort of Americans to act together in opposing the policy of England. The resolutions adopted are the most authoritative expression of colonial opinion up to that time. Owning their allegiance to the Crown, the colonists claimed also all of the rights and privi

leges of subjects within the realm. One of these rights was that no taxes should be imposed upon them without their consent. As their circumstances precluded representation in the House of Commons, it followed, they held, that no taxes could be consistently levied on them except by their respective colonial assemblies. It was the Stamp Act against which they directed this argument. As to the Sugar Act, professing "all due subordination" to Parliament, they protested against it as an unwise and oppressive restriction on trade. Apparently they regarded the duty as a trade regulation rather than a tax, and the failure to denounce taxation in this form seemed to give assent to its legality.

Meantime opposition had shown itself in other ways. The merchants, to give weight to their contention that enforcement of the acts of trade would destroy their power to purchase British goods, organized a boycott on imports from England, and their appeals to the populace were in part responsible for several outbreaks of mob violence. In one of these the mansion of Thomas Hutchinson, chief justice of Massachusetts, was pillaged. Under the pressure of public opinion all of the stamp agents had resigned before November I arrived. Business was temporarily embarrassed for want of stamps, but soon went on as usual in entire disregard of the law.

As for the Billeting Act, the Americans in their excited state of mind could see in the presence of the troops only evidence of a determination to intimidate them into submission.

When Parliament met and took up the American situation, a change of ministry had taken place, and Grenville was no longer in position to defend his policies from the vantage ground of the premiership. His friends insisted that the repeal of the Stamp Act would be a surrender to rebellion. With the support of Chief Justice Mansfield, reputed to be the greatest lawyer of his time, they maintained the doctrine of parliamentary supremacy and ridiculed the idea that Parliament might lay an import duty, as in the Sugar Act, but not an "internal" tax, such as the Stamp Act provided. They held that the colonies, like the new cities of Manchester and Sheffield, were virtually represented in the House of Commons.

The new ministry was in a quandary. It must restore order

in America. English merchants were feeling the effects of the boycott and were asking for the repeal of the Stamp Act. But how could it be done without admitting defeat? The House called Franklin before its bar and interrogated him. He gave his opinion that the colonists would resist all internal taxes. Duties on commerce he thought they would accept unless mayhap the arguments in Parliament convinced them that they were wrong in making any distinction between internal taxation and taxation at the ports. If troops were used to enforce the law, "they would not find a revolution, but they might make one."

Parliament was not indisposed to make concessions. Some of the most influential members upheld the colonial view that parliamentary taxation was unjust and illegal. Pitt was one of these, and Lord Camden was another. Colonel Isaac Barré declared that he "rejoiced that the Americans had resisted," and referred to them as "Sons of Liberty." It was finally determined to repeal the Act, but to assert the theory of parliamentary supremacy in unmistakable terms. In March, 1766, therefore, the repeal was voted, and at the same time a Declaratory Act was passed asserting that Parliament possessed authority to "bind the colonies and people of America, subjects of the crown of Great Britain, in all cases whatsoever." Pitt would have added, "with the exception of taking money out of their pockets without their consent." The rejection of his qualifying clause was ominous.

The repeal of the Stamp Act closed the first act of the dramatic contest which began in 1763. The Americans celebrated the event with demonstrations of joy and loyalty. If they noticed the Declaratory Act at all, they thought of it as mere words used to cover the retreat of the discomfited party, and not as a threat of further attempts at taxation. That the other parts of Grenville's program remained in force also attracted little notice.1

None the less the issue remained unsettled, and the government still needed revenue. The times called for a constructive statesman who could devise a means of harmonizing imperial

1 At the same time that the Stamp Act was repealed the provisions of the Sugar Act were modified. The duty on molasses was reduced from threepence to one penny per gallon and the impost on certain articles exported from England was to be collected on exportation instead of at the colonial port, lest the colonists object to “taxation at the ports." The changes made the Act more clearly than ever a revenue measure, yet Americans overlooked it as completely as they did the Declaratory Act.