Led by a Thread: Taxation and the Coming of the American Revolution

On Thursday, February 13, 1766, Benjamin Franklin stood at the bar of the British House of Commons to be questioned by members sitting as a Committee of the Whole. He was then the agent of the Pennsylvania Assembly in London. Of the 174 questions recorded, one went to the heart of the matter: what had been the temper of America toward Great Britain before the year 1763? Franklin's answer was that it had been "the best in the world." The colonists had submitted willingly to the Crown and to acts of Parliament, and they had cost Britain nothing in forts or garrisons to keep them obedient. "They were governed by this country at the expence only of a little pen, ink and paper," he said. "They were led by a thread." Asked what their temper was now, he answered: "O, very much altered."^[1]

Franklin chose 1763 because that was the year the Peace of Paris ended the Seven Years' War, known in the colonies as the French and Indian War, and left Great Britain in possession of Canada and dominant among the European powers in eastern North America. It was also the year the British government began searching in earnest for a way to make the American colonies help pay for the empire they now shared. The revenues Parliament hoped to collect over the next twelve years were modest beside Britain's national debt. What turned a quarrel over revenue into a revolution was that Britain's need for money forced a long-unspoken constitutional question into the open, and once it was asked, neither side could find an answer the other would accept. This is the story of those twelve years.

The Price of Victory

The war that ended in 1763 had been the most expensive Britain had ever fought. It had been paid for largely with borrowed money. Adam Smith, writing in The Wealth of Nations in 1776, set out the figures. In 1755, before the war broke out, the funded debt of Great Britain stood at £72,289,673. By 1764, counting both funded and unfunded debt, the total had risen to £139,516,807, a figure Smith took from a contemporary writer on public finance.^[2] In less than a decade the nation's obligations had nearly doubled.

Peace did not bring relief from expense. The new territories had to be garrisoned, and the frontier had to be held against the Native nations of the Ohio country and the Great Lakes, who rose against British posts in 1763 in Pontiac's War. The ministry decided to keep a standing army of regulars in North America after the peace. To George Grenville, who became First Lord of the Treasury in April 1763, and to many members of Parliament the reasoning seemed simple. The war had been fought largely to protect the colonies, the colonists were lightly taxed, and they should help pay for their own defense.

Franklin laid out the colonial side of the account in 1766. The colonies, he told the House, had raised, clothed, and paid nearly 25,000 men during the war and had spent many millions. Pennsylvania alone had disbursed about £500,000, and the reimbursements Parliament granted it had not exceeded £60,000. Pennsylvania was still taxing itself heavily to discharge its war debt, with levies scheduled to run until at least 1772.^[3] From the American point of view the colonies had already made substantial contributions and were still paying the debts they had incurred. From the British point of view they had paid only what their assemblies chose to grant. That difference, between contributions freely granted and taxes imposed, would become the central issue of the next twelve years.

Molasses and the Sugar Act

Grenville began by revising an old tax. Since 1733 Parliament had imposed a duty of sixpence a gallon on molasses imported into the mainland colonies from the French and Spanish West Indies. The duty had been meant to protect British sugar planters, and it had been so widely evaded through smuggling that it raised almost nothing.

The American Revenue Act of 1764, soon called the Sugar Act, cut the duty on foreign molasses in half, to threepence a gallon. Grenville meant this duty to be collected, and the preamble of the act announced a purpose that no earlier trade law had stated so plainly. It declared it "just and necessary, that a revenue be raised, in your Majestys said dominions in America, for defraying the expences of defending, protecting, and securing the same."^[4] The duty was now openly a source of income for the Crown.

The enforcement provisions mattered as much as the rate. Under the act, forfeitures in the colonies could be prosecuted in a court of vice-admiralty, which sat without a jury, at the choice of the informer who brought the case. In disputes over seized goods the burden of proof lay on the owner, and an officer whose seizure had "probable cause" was shielded from suit even if the owner won.^[5] To colonial merchants these clauses looked like an attack on trial by jury. Years later, Edmund Burke described Grenville as a statesman of real ability whose training led him to take "regulation to be commerce, and taxes to be revenue."^[6] The Sugar Act drew petitions from several colonies, but protest was confined largely to merchants and lawmakers. The next measure would reach nearly everyone.

The Stamp Act

The Stamp Act, which received the royal assent in March 1765, was meant to raise what its preamble called "a further revenue" within the American dominions, again toward "defraying the said expences" of defense. It was to take effect on November 1, 1765.^[7] Legal documents, licenses, and printed matter had to be written or printed on paper bearing an embossed stamp, which could be bought only from official distributors. A document on unstamped paper had no standing in court.

The schedule ran to dozens of items. A pleading in a court of law required a stamp of threepence. Admission to practice as an attorney cost ten pounds, a college degree two pounds, and a pack of playing cards one shilling. Newspapers were to pay a halfpenny or a penny on each copy, depending on the size of the sheet, and every advertisement printed in a newspaper was charged two shillings. Deeds, mortgages, bills of lading, liquor licenses, and apprentices' indentures were all taxed. The duties were to be paid in sterling, which was chronically scarce in the colonies, and violations could again be prosecuted in courts of admiralty.^[8]

The tax fell hardest on the most articulate people in colonial society. Lawyers, merchants, and printers could hardly work without stamps. Franklin would later tell the Commons that much of the revenue would come from lawsuits over debts and so would be paid by the poorest colonists, making it "a heavy tax on the poor, and a tax upon them for being poor."^[9]

A Summer of Fury

Boston moved first. On August 14, 1765, an effigy of Andrew Oliver, the man appointed to distribute the stamps in Massachusetts, was hung from a tree in the South End that Bostonians would soon call the Liberty Tree. That evening a crowd paraded the effigy through the town, pulled down a small building Oliver had put up near his wharf and was presumed to intend as the stamp office, burned the effigy on Fort Hill, and attacked Oliver's house. The next day Oliver announced that he would resign his commission.^[10]

The violence did not end there. Oliver's brother-in-law, Thomas Hutchinson, was lieutenant governor and chief justice of the province, and rumors spread that he had privately encouraged the Stamp Act in letters to England. By his own account Hutchinson had argued against the act before it passed, but once it became law he told grand juries that resistance to an act of Parliament was a serious offense, and that was enough to make him a target. On the evening of August 26, as he wrote four days later to Richard Jackson, the province's agent in London, he was at supper with his children when word came that the mob was coming. His eldest daughter refused to leave without him, so he withdrew with her to a neighbor's house. Within minutes, he wrote, "the hellish crew fell upon my house with the Rage of devils & in a moment with axes split down the door & entred."^[11]

The crowd worked through the night. They tore off the wainscoting and wall hangings, beat down the partition walls, cut away the cupola, and had begun stripping slate and boards from the roof when daylight stopped them. By his reckoning they carried off about £900 sterling in cash, along with silver, portraits, and clothing, and scattered or destroyed the manuscripts and public papers Hutchinson had been collecting for thirty years. "Such ruins were never seen in America," he wrote.^[12] The next morning, because the Superior Court could not sit without him, the chief justice appeared on the bench in the only clothes he had left. According to a report by the young lawyer Josiah Quincy, he apologized for his dress and swore before God that he had never promoted the Stamp Act in any way.^[13]

Many Bostonians who opposed the act were appalled. The Reverend Jonathan Mayhew, whose sermon on liberty the day before had been blamed for inflaming the crowd, wrote to Hutchinson that he would "rather lose my hand, than be an encourager of such outrages."^[14] Hutchinson himself believed that the men who had organized the first protest "never intended matters should go this length."^[15] Whatever its organizers intended, the violence worked. Across the colonies, stamp distributors resigned under pressure, and by November 1 there was almost no one left in America willing to sell the stamps.

In October 1765 delegates from nine colonies met in New York in what became known as the Stamp Act Congress. Their resolutions, adopted on October 19, professed loyalty to the king and "all due subordination" to Parliament, but they drew a firm line on taxation. It was "the undoubted right of Englishmen, that no taxes be imposed on them, but with their own consent, given personally, or by their representatives," the delegates declared. The colonists were not represented in the House of Commons and "from their local circumstances cannot be," and so no taxes could be constitutionally imposed on them except by their own legislatures.^[16] The act's defenders had a ready answer. Thomas Whately, a secretary to the Treasury under Grenville, argued in a pamphlet of 1765 that the colonists stood in the same position as the many Englishmen without a vote: "none are actually, all are virtually represented in Parliament."^[17] To the delegates in New York, a body the colonists had not chosen could not give their consent. Merchants agreed to stop importing British goods, and Franklin reported that colonists had agreed to eat no lamb so that more wool could be spun at home.^[18]

Repeal and Declaration

By the winter of 1765–66, Grenville had fallen from office, and the new ministry under the Marquess of Rockingham faced an unenforceable law and a boycott that was hurting British merchants. Pressed by the Commons on why the colonists accepted old trade duties but refused the stamps, Franklin drew a distinction that would not last. An external tax, he explained, was a duty on imported goods, which was added to the price, and "if the people do not like it at that price, they refuse it; they are not obliged to pay it." An internal tax, by contrast, "is forced from the people without their consent, if not laid by their own representatives." Asked whether soldiers could enforce the act, he warned: "They will not find a rebellion; they may indeed make one."^[19]

Parliament repealed the Stamp Act in March 1766. On the same day it passed the Declaratory Act, which asserted that the colonies were subordinate to the Crown and Parliament of Great Britain, and that Parliament "had, hath, and of right ought to have, full power and authority to make laws and statutes of sufficient force and validity to bind the colonies and people of America . . . in all cases whatsoever."^[20] Americans celebrated the repeal and paid the declaration little attention, as Franklin had predicted. The colonists, he had told the House, would regard such declarations much as they regarded Parliament's claimed right to tax Ireland, which Parliament asserted but never exercised. He also offered a warning. Some in England had been arguing that if Parliament had no right to impose internal taxes, it had none to impose external ones either. "At present they do not reason so," Franklin said of the colonists, "but in time they may possibly be convinced by these arguments."^[21]

Townshend's Duties and the Pennsylvania Farmer

The test came within a year. Charles Townshend, Chancellor of the Exchequer in the ministry of William Pitt, now Earl of Chatham, proposed in 1767 to raise an American revenue through duties of exactly the kind Franklin had described as acceptable. The Revenue Act of 1767 placed import duties on glass, red and white lead, painters' colors, many grades of paper, and tea, which was charged at threepence a pound. These were external taxes, collected at the ports, but the purpose of the revenue alarmed many colonists more than the tax itself. The preamble stated that the money was to make "a more certain and adequate provision for defraying the charge of the administration of justice, and the support of civil government" in the colonies. Royal governors and judges whose salaries had depended on the annual votes of colonial assemblies would now be paid by the Crown out of American customs revenue, freeing them from the assemblies' control. The act also confirmed the power of colonial superior courts to grant writs of assistance, general warrants letting customs officers search houses and warehouses for smuggled goods, and so revived a controversy over such writs that had already erupted in Massachusetts in 1761.^[22]

The most influential answer came from John Dickinson, a wealthy Philadelphia lawyer who had helped draft the Stamp Act Congress's declaration of rights and grievances. In twelve essays that began appearing in Pennsylvania newspapers in the winter of 1767–68 and were reprinted throughout the colonies, he wrote in the character of a modest farmer. The second letter went directly to Franklin's distinction and discarded it. Parliament, Dickinson granted, had an unquestioned authority to regulate the trade of the empire. But the new duties were imposed "not for the regulation of trade" but "for the single purpose of levying money upon us." The question was therefore simply "whether the parliament can legally take money out of our pockets, without our consent." If the colonists once admitted that Britain could tax its exports to America for revenue, he warned, she would need only to lay those duties on goods the colonists were forbidden to manufacture for themselves, "and the tragedy of American liberty is finished."^[23]

After Dickinson the issue was no longer whether a tax was collected inside the colonies or at their ports, but whether its object was to regulate commerce or to raise money. By that test the Townshend duties were as unconstitutional as the stamps. Merchants again stopped importing British goods, and in 1768 Massachusetts urged the other assemblies to joint opposition and refused an order from the colonial secretary, Lord Hillsborough, to retract its appeal. That autumn regiments of regulars arrived in Boston, and the friction between soldiers and townspeople culminated on the night of March 5, 1770, when troops fired into a crowd on King Street and killed five people.

Threepence on Tea

The Townshend duties failed as revenue too. On May 13, 1769, Lord Hillsborough sent a circular letter to the colonial governors assuring them that the ministry had "at no time entertained a design to propose to Parliament to lay any further taxes upon America for the purpose of raising a revenue," and promising that the duties on glass, paper, and colors would be taken off because they had been "laid contrary to the true principles of Commerce."^[24] Under the new First Lord of the Treasury, Lord North, Parliament repealed the Townshend duties on glass, lead, painters' colors, and paper in 1770. The duty on tea remained, chiefly so that the principle of parliamentary taxation would not be surrendered.

Burke later mocked the arrangement as "a preamble without an act." The problem, he argued, had never been the size of the tax. "No man ever doubted that the commodity of Tea could bear an imposition of three-pence," he told the House. "It is the weight of that preamble, of which you are so fond, and not the weight of the duty, that the Americans are unable and unwilling to bear."^[25]

For three years the tea duty remained in force while much of the tea Americans drank came from Dutch smugglers. In 1773 the East India Company was close to ruin, and Burke later spoke of some ten million pounds of tea lying unsold in its warehouses. To rescue it, Parliament passed the Tea Act in May 1773, which licensed the company to export tea directly to its own agents in America and relieved that tea of the duties paid on it in England. The threepenny American duty remained. Burke argued that America, where tea had become "next to a necessary of life," could have absorbed that surplus had the duty not stood in the way.^[26] Now the company's tea would be cheap enough to undersell the smugglers, but every chest sold would still carry the tax.

The colonists saw the bargain as a test of principle, and in most ports the consignees were pressured into resigning. In Boston, where the governor's own sons were among the consignees,^[27] Hutchinson refused to grant the tea ships a pass to leave the harbor without unloading. Under the customs laws the duty had to be paid within twenty days of arrival or the cargo could be seized, and the deadline for the first ship, the Dartmouth, was about to expire.^[28] On the afternoon of December 16 a great meeting at the Old South Meeting House learned that the governor would not relent. That evening a body of men, some disguised as Indians, went aboard the three ships at Griffin's Wharf. According to the Massachusetts Gazette and Boston Weekly News-Letter, they broke open 342 chests of tea in about three hours and emptied them into the harbor. Hutchinson, writing his history later in exile, gave the same number and defended his refusal of the pass.^[29] Contemporary counts differ slightly: the Boston minister Samuel Cooper, writing to Franklin the next day, put the figure at about 340, and the East India Company's claim for compensation listed 340 chests.^[30]

John Adams, then a Boston lawyer, wrote in his diary the next day that the destruction of the tea was "the most magnificent Movement of all." To let the tea be landed, he reasoned, "would be giving up the Principle of Taxation by Parliamentary Authority, against which the Continent have struggled for 10 years."^[31]

Coercion and Congress

London's response was swift. In 1774 Parliament passed a series of measures that the colonists soon called the Intolerable Acts. One closed the port of Boston to commerce until the tea was paid for. Another remade the charter government of Massachusetts, a third allowed officials accused of crimes while suppressing riots to be tried outside the province, and a fourth revised the rules for quartering troops. Congress would also condemn the Quebec Act, passed in the same session, although that act was not itself a punishment for the destruction of the tea.^[32] General Thomas Gage, commander of British forces in America, arrived in Boston as governor in May, and Hutchinson sailed for England on June 1, never to return.^[33]

On April 19, 1774, as the punitive bills were moving forward, a motion was made in the Commons to consider repealing the tea duty, and Burke rose to support it. "For nine long years, session after session," he began, "we have been lashed round and round this miserable circle of occasional arguments and temporary expedients." He urged the House to return to the policy that had governed the empire before Grenville. "Leave America," he said, "if she has taxable matter in her, to tax herself."^[34] The House did not listen.

In September 1774 delegates from twelve colonies gathered in Philadelphia as the First Continental Congress. On October 14 they adopted a declaration condemning the revenue acts since 1764 and the punitive acts of 1774. The fourth resolution showed how far the argument had traveled since Franklin's testimony. The colonists, Congress declared, could not be represented in the British Parliament and were therefore entitled to "a free and exclusive power of legislation" in their own assemblies "in all cases of taxation and internal polity." They would accept acts truly restricted to regulating external commerce, but only on terms "excluding every idea of taxation internal or external, for raising a revenue on the subjects, in America, without their consent." The distinction Franklin had offered the Commons in 1766 was gone, as he had warned it might be. The declaration announced that Congress would enter into an agreement to cut off trade with Britain.^[35] On October 20, Congress adopted the Continental Association, which committed the colonies to stop importing British goods from December 1, 1774, and pledged to halt exports to Britain, Ireland, and the British West Indies from September 10, 1775, if the grievances remained unredressed.^[36]

Gage, meanwhile, tried to govern Massachusetts with an army. In the early hours of April 19, 1775, he sent a column of regulars out of Boston to seize military stores at Concord. On the green at Lexington, and later at Concord's North Bridge, they met armed militiamen, and the war began. It came one year to the day after Burke had begged the House of Commons to let America tax herself.

Why It Mattered

The twelve years from 1763 to 1775 began with a problem of public finance and ended with a war. The British debt was real, and the argument that the colonists ought to contribute was not unreasonable on its face. What made it so hard to resolve was the principle on which Parliament insisted and the colonists' growing determination to defend the authority of their own assemblies. Every attempt to raise money by act of Parliament forced the colonists to state more precisely why Parliament could not do so. As the dispute widened to questions of courts, executive power, and military authority, each new statement of colonial rights went further than the last. The objection grew from admiralty courts in 1764 to internal taxes in 1765, to any duty laid for revenue in 1768, and in 1774 to a claim of exclusive colonial power over taxation and internal government. Parliament, for its part, moved from asserting a right to declaring it "in all cases whatsoever," and then to enforcing it with soldiers. Neither side could retreat without conceding the principle the other had made the center of the dispute.

The amounts at stake were modest. The Sugar Act lowered a duty rather than raising one. The Townshend duties were modest, and the tax that finally provoked the destruction of the tea was threepence a pound on a commodity whose price was falling. Burke saw the paradox clearly when he said that it was the preamble and not the duty that Americans would not bear. Adams, Dickinson, and the delegates in Philadelphia believed that consenting to a small tax for revenue meant consenting to the power to impose any tax, and that a people taxed without their consent were no longer free.

When Franklin told the House of Commons in 1766 that the colonies had once been led by a thread, he was describing a relationship held together by habit, affection, and an unspoken agreement not to press questions of ultimate authority. The search for revenue after 1763 pulled at that thread until it broke. In the same examination Franklin had warned that soldiers sent to America would find no rebellion there but might well make one. Nine years later, on a village green in Massachusetts, his prediction came true.