The French and Indian War, or Seven Years War, represented the decisive turning point in British-colonial relations. The Treaty of Paris in 1763 ratified Britain’s undisputed control of the seas and shipping trade, as well as its sovereignty over much of the North American continent east of the Mississippi River (including French Canada).

But a steep price accompanied the fruits of total victory. The British Government had borrowed heavily from British and Dutch bankers to finance the war, and as a consequence the national debt almost doubled from £75 million in 1754 to £133 million in 1763. In order to address this onerous liability, British officials turned to larger import duties on enumerated goods like sugar and tobacco, along with a series of high excise (sales) taxes on goods such as salt, beer, and spirits. This taxation strategy tended to burden consumers disproportionately. In addition, government bureaucracy expanded in order to collect the needed revenue. As the number of royal officials more than doubled, Parliament delegated new legal and administrative authority to them. Thus, even as British subjects lauded their preeminent position in the world, they chafed under the weight of increased debts and tightened government controls.

Given Britain’s exertions on the North American continent for the sake of colonial security, both ministers and members of Parliament determined that the colonies were obligated to share the costs of empire. But the war exposed the weakness of British administrative control in the colonies on various fronts. The subsequent efforts on the part of royal officials to rectify these deficiencies and collect unprecedented amounts of revenue violated what many American colonists understood as the clear precedent of more than a century of colonial-imperial relations. New world institutions of self-government and trade, having matured in an age of salutary neglect, would resist and ultimately rebel against perceived British encroachment. Taxation policy became a central point of contention, because it tended to threaten both the prosperity and autonomy of colonial society.

1756-1757 Colonial assemblies in Massachusetts and several other colonies refused to support the war by raising taxes or troops unless royal governors relinquished control over military appointments and operations. Virginia’s House of Burgesses declined to raise the necessary war revenue through taxation at all, preferring a deficit financing method that relied on printing more paper money. Rampant inflation ensued, and British merchants refused to accepted depreciated currency.

The balance of trade between England and the colonies tilted decisively in favor of the former as a direct consequence of the French and Indian War. Military spending and a general increase in the demand for goods and services contributed to significant increases in colonial wealth (and prices). Colonial agricultural exports rose especially rapidly in the 1750s and 1760s. Colonists used the windfall to consume British manufactured goods at an ever increasing rate, supplementing a trend that been on the rise since the mid-1750s. Even with the boom in agricultural exports, colonists consumed more than they exported. British merchants, in the throes of the Industrial Revolution, responded by extending credit to their American customers. Accordingly, extended consumer debt became a common phenomenon in the colonies.

1760 King George III became King of England.

1762 During the late 1750s, the Board of Trade cited the war as justification for cracking down on smugglers and other abuses of the Navigations Acts. Parliament passed the Revenue Act of 1762 in an attempt to halt bribery as routinely practiced by colonists circumventing the Molasses Act. To do so, the Revenue Act dispensed with absentee customs officials who, rather than collecting duties on site, resided in England and relied on deputies susceptible to corruption. The measure was part of a larger effort to block colonial trade with the French Sugar Islands, since many colonists were undeterred by the war and continued their lucrative trade with French possessions. The British government also encouraged the Royal navy to apprehend and detain smugglers. Customs officials became more aggressive in using search warrants, called "writs of assistance" to track down smuggled goods. A young Boston attorney, James Otis, assailed such writs as contrary to the British constitution and beyond the Power of Parliament to administer. By the mid-1760s, however, the custom service collected more than £30,000 a year in duties. During the era of salutary neglect, the figure amounted to only £2,000 annually.

1763 A new generation of British ministers, including Charles Townshend and William Pitt, assumed power. They were convinced that the continued expansion of British trade and national influence depended on the reform of imperial administration and taxation in the North American colonies.
Peace on the continent removed the stimulus of a war economy and brought about a recession in the colonies. Debtors in both urban and agricultural sectors experienced the credit squeeze. The balance of trade continued to favor Britain, rendering colonial economies more and more dependent on British commercial ties and financial policy well into the 1770s. Even as colonial standards of living rose, indebted colonists grew increasingly suspicious of British motives and interests.

1764 Parliament passed the Currency Act, which banned the use of paper money as legal tender in all colonies. British merchants had asked for relief from the depreciated currency brought about by deficit financing in Virginia. The act represented an effort to wrest control of monetary policy from colonial assemblies.

Guided by Prime Minister George Grenville, Parliament enacted the Sugar Act. This measure amended the Molasses Act of 1733, which had imposed a 6 pence import duty on foreign molasses. The Sugar Act lowered the duty to 3 pence, in an effort to make the British sugar industry competitive without completely wrecking the mainland export trade or distilling industry. As such, it was never really designed as a revenue act, but, like its predecessor, as a means to regulate trade. Colonists generally understood such regulatory powers as a legitimate authority of Parliament. The Sugar Act inspired minor protest in specific states (Massachusetts, New York, and Pennsylvania), where distillers and merchants were hardest hit. Men like John Hancock of Boston, who had made their fortunes smuggling French molasses, emphasized financial hardship more than philosophical objections to tax policy.

A more far-reaching consequence of the Sugar Act involved its transfer of smuggling cases from provincial courts to vice-admiralty courts. Friendly local juries did not render decisions in vice admiralty courts; instead, royally appointed judges handed down decisions under a system that provided a financial incentive to find guilt. Trials were not based on common law, but decided entirely on the basis of Parliamentary legislation. The Sugar Act also shifted the burden of proof to accused merchants, who had to demonstrate the legality of their trade under the Navigations Acts.

1765 Guided by Prime Minister In order to cover about £60,000 of the £200,000 required to station troops in the colonies, George Grenville persuaded Parliament to pass a Stamp Act similar to one enacted and successfully administered in England in 1694.

Under the Act, colonists would be required to buy stamps from royal collectors and affix them to a wide variety of printed materials, including legal documents, playing cards, newspapers, and land titles. Stamps had to be purchased with sterling, rather than local paper currency, and the vice-admiralty courts were again expected to enforce the law in place of provincial common law juries.

Unlike the Molasses or Sugar Acts, the Stamp Act levied a direct tax on the colonies designed to raise revenue rather than to regulate trade. Colonists considered such measures unconstitutional (contrary to established common law precedent or custom). From time immemorial, colonial legislatures had exercised exclusive authority to levy direct revenue taxes in North America, their sovereignty derived directly from the people they represented. By contrast, no colonial representatives sat in the House of Commons. During the debate on the Stamp Act in England, Benjamin Franklin informed British officials that, at minimum, the colonies would need to be represented in Parliament if such taxes were to be imposed.

To the British, such demands made little sense. Direct representation was superfluous; each member of Parliament sat "not as Representative of his own constituents, but as one of that august Assembly by which the Commons of Great Britain are represented." This conception of virtual representation ran contrary to colonial experience. Arthur Lee of Virginia asked rhetorically whether any member of Parliament actually "know us, or we him? No. . . .Is he bound in duty and interest to preserve our liberty and property? No. Is he acquainted with our circumstances, situation, wants, etc.? No. What then are we to expect from him? Nothing but taxes without end."

The Stamp Act galvanized colonial society and engendered widespread resistance. It also served as a unifying force among the individual colonies. For the first time since 1754 (and for only the second time ever), colonial delegates convened an intercolonial body, the Stamp Act Congress, in December 1765. The Congress issued the Stamp Act Resolves, declaring: (1) taxes could be imposed only by the elected officials of the colonies; (2) the distance between Britain and North America precluded colonial representation in Parliament, virtual or otherwise; and (3) the compromise of jury trials represented an abrogation of traditional "rights and liberties." The Congress still abided by Parliamentary sovereignty (though understanding its powers to be limited) and humbly requested the Stamp Act be repealed.

Humble petitions were accompanied by stronger measures. Widespread mob uprisings throughout the colonial seaport towns served to harass British stamp agents and tax collectors. The Sons of Liberty, an urban organization composed primarily of middling tradesmen, artisans, clerks, and journeymen, were particularly adept at employing intimidation and violence to hamper the distribution of stamps; they frequently burned tax collectors in effigy and ransacked the homes of British officials. Such mob activity was not simply anarchistic rioting; it constituted an accepted, semi-choreographed form of political activity, an expression of the will of the "people out of doors."

The sudden manifestation of an organization like the Sons of Liberty reflected the particularly intense urban resistance to the Stamp Act. Recent British policies embodied in the Sugar Act, Currency Act, and Stamp Act targeted city-based products, industry, trade, and financial activity. Middling artisans and wealthy merchants alike had experienced economic dislocations that stemmed from recession and an influx of cheap British goods and foreign labor. The combination of British governmental regulation and business competition had begun to undermine loyalty to empire.

Accordingly, a colony-wide boycott of British manufactured goods to protest the Stamp Act’s implementation appealed to a broad audience. Advocates meant the so-called Non-Importation Agreement as a form of economic coercion against London merchants (and their representatives in Parliament), but it was an appealing economic palliative as well. Colonists throughout the colonies subscribed enthusiastically to the plan, effectively reducing British imports to a trickle.

1766-1768 The Non-Importation strategy imparted its desired effect. Lord Rockingham, Grenville’s successor, encouraged hard-pressed merchants from London, Liverpool, Bristol, and Glasgow to petition Parliament to repeal the Stamp Act. Unlike his predecessor, Rockingham was more of a Walpolian Old Whig, preferring the expansive trade fostered by salutary neglect to the tax revenues wrung from aggressive colonial policy. Attempting to balance the interests of forgiving merchant with those in Parliament who wanted to punish colonial impudence, Rockingham brokered a compromise. He secured the repeal of the Stamp Act, but issued a Declaratory Act reaffirming that Parliament "had, hath, and of right ought to have, full power and authority to make laws and statutes of sufficient force and vitality to bind the colonies and people of America . . . in all cases whatsoever." In effect, colonists could not take exception to any Parliamentary law, which many British politicians assumed included those authorizing taxation.

1767 Charles Townshend, Chancellor of the Exchequer under William Pitt, had been a proponent of colonial administrative reform since his tenure on the Board of Trade in the 1750s. After the collapse of the Rockingham ministry, Townshend eyed the colonies as an alternate source of imperial revenue that would allow him to reduce the British Land Tax. The resulting Townshend Act imposed duties on glass, paint, lead, paper, and tea imported into the colonies. Townshend earmarked anticipated revenue to fund the salaries of governors and other colonial administrators. It was a conscious effort to shift the balance of power in colonial government; by liberating royal officials from their financial dependence on American legislatures, Townshend hoped to eliminate the most tangible obstacle preventing regular enforcement of parliamentary laws and royal directives. Townshend also reorganized the Customs Service under the Revenue Act of 1767, creating a Board of American Customs Commissioners in Boston and four new vice-admiralty courts in Boston, Philadelphia, Charleston and Halifax.

During the Stamp Act debate, many colonial commentators, including Ben Franklin, had attempted to delineate the spheres of influence between Parliament and local legislatures by distinguishing "external" from "internal" taxation. This distinction collapsed once the colonists realized that Townshend’s "external" taxes on imports, rather than regulating commerce, strove to raise revenue much like the "internal" Stamp Act had. The fact that the duties imposed were moderate did not mollify the critics. Their supposedly innocuous nature, argued John Dickinson in Letters From a Farmer in Pennsylvania, masked the true perniciousness of the taxes:

"Nothing is wanted at home but a PRECEDENT, the force of which shall be established by the tacit submission of the colonies . . . IF Parliament succeeds in this attempt, other statutes will impose sums of money as they choose to take, without any other LIMITATION than their PLEASURE."

The Sons of Liberty and other colonial leaders resorted once more to a non-importation/non-consumption strategy to coerce Parliament into repealing the Townshend Act. Though embraced less rapidly than in 1765, the boycott took hold throughout the colonies. By 1769, colonial exports exceeded imports by over £800,000.

The burden of mercantile debt in many regions, especially the Chesapeake, reinforced ideological misgivings concerning imperial tax policy. Planters in Maryland and Virginia owed millions to British creditors, including many yeoman who, before 1740, rarely flirted with foreign indebtedness. Now, trading posts affiliated with Scottish merchant houses extended credit to thousands of small farmers, embroiling them in a transatlantic trading system. Such economic burdens accentuated colonial resistance to British tax policies.

Thousands of British regular troops were stationed in Boston under General Gage, as (in contrast to 1765) Parliament contemplated a plan of military coercion.

1770 Responding again to economic hardship and merchant petitions, the ministry under Lord North repealed the Townshend duties, reasoning that it was contrary to the principles of mercantilism for Britain to tax its manufactured exports to America. As a symbolic gesture, however, North retained a small duty on tea. The compromise successfully eased tensions for the moment.

1773 In an effort to prop up the financially troubled East India Company, Parliament passed the Tea Act, granting it a virtual monopoly over the British tea market and allowing direct sales access to the colonies (colonial merchants were cut out of the loop entirely). As a consequence, East India Company tea cost the least of any available tea, foreign or domestic. Following the retention of the 3 pence Townshend duty on tea in 1770, colonists had generally boycotted British brands, turning instead to contraband Dutch brews. An estimated 90 percent of all tea consumed in the colonies was of the Dutch variety, so patriots could sip cheaply while avoiding the despised revenue duty altogether. Now, even with the Townshend duty added, East India tea remained the least expensive. Because the tax seemed "hidden" in this manner, colonists viewed the Tea Act as an underhanded way to foist the tax, and Parliamentary taxation power, onto the colonies. Lord North fundamentally miscalculated the unity and magnitude of the colonial response.

On the night of December 16, Massachusetts Patriots disguised as Indians illegally boarded the Dartmouth, a cargo ship bearing 342 chests of East India Tea valued at about £10,000. In defiance of Governor Thomas Hutchinson and British tax authority in general, the intruders dumped the entire shipment into Boston Harbor, precipitating a crisis that would lead to revolution.

1774 In response to the Boston Tea Party, Parliament passed a series of Coercive Acts (dubbed Intolerable Acts by the Colonists) to reestablish British dominion over the insubordinate colonies. The Massachusetts Government Act annulled the colonial charter of 1691, restricting the power of the House of Representatives and banning most local town assemblies. A Port Bill closed Boston Harbor until restitution was made to the East India Company. None was forthcoming.

The First Continental Congress met in Philadelphia in September. The Congress passed a Declaration of Rights and Grievances condemning the Coercive Acts and repudiating the Declaratory Act of 1766. By this date, colonists, including Virginia’s Thomas Jefferson, contended that Parliamentary Acts pertaining to America were void. They justified this position not on the basis of the legislation’s unjust character, as had been the case in 1765, but because they had come to deny that Parliament had any right to exercise authority over the colonies at all. Sovereignty could not logically be divided in a political system, the argument ran; according to John Adams, two supreme authorities could not exist in the same state, any more than two supreme beings could exist in the same universe. British officials had cited this traditional axiom to deny that any legislative body other than Parliament could wield supreme authority in the colonies. In the 1770s, however, colonists appropriated this reasoning to their advantage, countering that supreme legislative sovereignty rested, in fact, with the individual colonial assemblies. These bodies effectively served as miniature parliaments – each still technically headed by the royal authority of the king – and formed a loose confederation of independent states. The king, in fact, remained the colonies’ only link to the British Empire.

1776 In May, the Continental Congress encouraged individual colonies to adopt new governments and formally sever all ties to the English Crown. Subsequently, most colonies drafted constitutions severely circumscribing the power of the governor’s office, while vesting legislatures with supreme governing authority. This emasculation of magisterial stature in favor of representative bodies reflected the prominence of Whig ideology and republican ideals among leading American revolutionaries. Jefferson’s July Declaration further underscored the British monarch’s usurpation of American liberties, and formalized the movement for independence.