England's Financial System and Its Term Paper

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Instead, Britain could use its vast navy and naval blockades to enforce the provisions of the Sugar Act. Therefore, while the Sugar Act actually lowered the amount of the duties, it resulted in far stricter enforcement of the laws. The result of the Sugar Act was immediate economic hardship in the colonies:

Rum distilling slumped badly and colonial exports overall dropped sharply. The slowing economy was further impacted by currency contraction as people, uncertain of the future, tried to retain their funds; efforts were made to settle debts with paper money rather than gold or silver.

The Sugar Act caused alarm in the American colonies, partly because of the expected economic disadvantages, but also because of a number of other reasons, one of the most important being the severe implementation by the navy." Although the colonists grumbled about the Sugar Act and threatened to boycott British merchants, the Sugar Act was actually the only successful direct tax that England was able to impose upon the colonists.

After seeing how the colonists responded to the Sugar Act, Britain became wary of imposing another direct tax upon the colonists. After all, England was not in the habit of imposing direct taxes upon its colonies. Instead of taxes, its financial system depended upon a system of mercantilism, which relied upon relatively good relations between the colonies and the mother country. This concept was reinforced when the colonists objected to the Sugar Act, because British merchants intervened on behalf of the colonists when they began to feel the impact of the colonial boycotts. There is some evidence that Prime Minister George Grenville wanted to maintain a positive economic relationship with the colonies. In fact, when confronted with the fact that revenues were still too low, Grenville offered the colonists the option of developing their own taxation system and raising their own taxes. However, Grenville did not tell the colonists how much money they needed to raise, which made it virtually impossible for them to come up with their own taxes. This fact gives some substance to the idea that Grenville intended to propose the Stamp Act to Parliament, regardless of the colonists' response to his proposal.

While the colonists were unhappy with prior taxes, they were especially unhappy with the Stamp Act of 1765. Not only did the Stamp Act impose taxes on the colonists, but it did so for an especially repugnant reason: "to finance the quartering of troops in North America." The Stamp Act "was imposed on all American colonists and required them to pay a tax on every piece of printed paper they used. Ship's papers, legal documents, licenses, newspapers, other publications, and even playing cards were taxed." However, it is important to keep in mind that the troops were in North America in order to protect the frontier, not in order to provide military power against the colonists themselves. Furthermore, the tax imposed by the Stamp Act was relatively small; what made it offensive to the colonists was the fact that it was intended as a revenue-producer, rather than as a method to regulate commerce.

In fact, it did not appear to matter to the colonists that "the British authorities were not trying to oppress the colonists and regarded the stamp tax as entirely reasonable." The British were simply seeking to impose a tax that would provide them with the funds needed to govern and protect the colonies. Regardless of British intention, the Stamp Act was the first direct, internal tax, and the colonists vehemently opposed its imposition. Therefore, the colonial resistance to the Stamp Act was largely a symbolic resistance to the concept of taxation without approval by colonial legislatures and as a means of revenue production.

In response to the Stamp Act, the Virginia House of Burgesses adopted Patrick Henry's Stamp Act Resolves:

These resolves declared that Americans possessed the same rights as the English, especially the right to be taxed only by their own representatives; that Virginians should pay no taxes except those voted by the Virginia House of Burgesses; and that anyone supporting the right of Parliament to tax Virginians should be considered an enemy of the colony.

Virginia's governor did not approve the resolutions, but they did demonstrate to the colonists that they were not powerless against England's attempts at taxation. In fact, the colonists took several actions to protest the imposition of the Stamp Act. Following Virginia's groundbreaking action, "almost all assemblies in the colonies challenged the right of the British to tax the territories." Furthermore, the colonists prepared for a widespread boycott of British merchants. The most concentrated formal response was the meeting of the Stamp Act Congress, which was the first time that the colonies formally united to protest the British government. Even more effective than the formal response was the street-level response to the Stamp Act. The colonists rioted, using force to intimidate potential tax agents and public demonstrations to solidify radical opposition.

After a year of protests, rioting and debating Parliament withdrew the Stamp Act, having grossly overestimated its own power and realizing the situation indeed had changed after the French-Indian war." No longer did the colonists readily submit to British law; instead, they had begun to act as a sovereign nation, long before they ever declared their independence from Great Britain.

Despite the fact that the colonists were successful in their efforts to have the Stamp Act repealed, England did not wholly abandon its attempts to tax the colonies. More importantly, England could not abandon its attempts to tax the colonies. While British merchants were becoming wealthy because of the colonies, they were a source of financial expense for the British government. To remedy that situation, a year after the Stamp Act fiasco, the Crown sought to impose the Townsend Duties upon the colonists. The Townshend Revenue Act imposed taxes on glass, paint, oil, lead, paper, and tea. The purpose of the Townshend Revenue Act was to raise money for the administration of the colonies. However, like the Stamp Act, the Townshend Act provided for direct, internal taxes in the colonies. In addition, the British government demonstrated an intention to strictly enforce those duties. In the summer of 1768, "customs officials impounded a sloop owned by John Hancock, for violations of the trade regulations." Colonial response was immediate and violent; the colonists mobbed the tax office. In response, British troops occupied Boston on October 1, 1768.

Bostonians offered no resistance. Rather they changed their tactics. They established non-importation agreements that quickly spread throughout the colonies. British trade soon dried up and the powerful merchants of Britain once again interceded on behalf of the colonies.

It is important to understand that the colonists did not initially take the position that they were entirely opposed to taxation. Furthermore, the colonists did not disagree with the proposition that Britain had the right to impose taxes. However, "Americans believed that they were entitled to certain fundamental rights, the 'rights of Englishmen,' which put certain activities beyond the reach of any government." One of those rights was the right to be free from taxation without representation. Furthermore, while the colonists initially objected to internal taxes, like stamp taxes, the actual revolution occurred in response to the imposition of external taxes. This position is supported by the fact that Americans had the same strong negative reactions to American tax agents after the Revolution as they had to British tax agents before the Revolution. The fact that the American colonists were so opposed to taxes suggests that the American Revolution was inevitable, because Britain had to collect some taxes from the colonists. Even with a hands-off attitude, Britain did incur governmental expenses for the colonies, which it reasonably expected the colonists to pay. However, the colonists had become spoiled by England's initial hands-off financial policy, and began to balk at paying any taxes. This attitude lasted long after the Revolution and resulted in several anti-tax movements and rebellions in the years immediately following the Declaration of Independence and the Continental Congress.

Given that the colonists initially resisted the imposition of taxation without representation, and then moved to protesting the imposition of any taxes at all, it becomes clear that the American Revolution was more than a reaction to taxation. On the contrary, it was a Revolution against Imperialism. For example, one of the acts that the colonists found egregious had nothing to do with taxation. The Currency Act, which was passed by Parliament on September 1, 1764, simply gave Great Britain control over colonial currency. As a British colony, it was reasonable for the Crown to want to regulate this currency. After all, fluctuating paper currency values that were not based on the pound sterling made it difficult for British merchants to conduct trade with the colonists. The problem was that Parliament made no attempt to regulate the paper currency that was then being used in the colonies, but instead abolished paper currency. "The colonies protested vehemently against this. They suffered…

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