Sugar Act Quick Facts
- Also Known As: The Sugar Act is also called the American Act of 1764, the American Revenue Act, and the Plantation Act.
- Date Introduced: On March 9, 1764, the provisions of the Sugar Act were introduced to the House of Commons.
- Introduced By: Prime Minister and First Lord of the Treasury George Grenville proposed the Sugar Act.
- Date Passed By Commons: On March 30, 1764, the House of Commons passed the Sugar Act.
- Date Passed By Lords: On April 4, 1764, the House of Lords passed the Sugar Act.
- Royal Assent: On April 5, 1764, King George III announced his Royal Assent for the Sugar Act.
- Date of Enforcement: On September 29, 1764, the Sugar Act went into effect.
- Length of Enforcement: The Sugar Act was enforced for about two years.
- Replaced By: The Sugar Act was replaced by the Revenue Act in 1766.
Definition of the Sugar Act of 1764
The Sugar Act definition, in terms of Colonial America and U.S. History, is a law that was passed by Parliament in 1764 for the purpose of raising revenue from the American Colonies by regulating trade. The law created controversy because colonists believed the way the bill was passed by Parliament and how the rules were enforced violated their rights as subjects of the King under the English Bill of Rights.
This illustration from 1749 depicts the process of making sugar at a sugar cane plantation, mostly likely in the West Indies. Image Source: Library of Congress.
10 Important Facts about the Sugar Act of 1764
- The Sugar Act of 1764 was an extension of the Molasses Act of 1733, which was set to expire in 1763.
- The main purpose of the Sugar Act was to raise money from the American Colonies to help pay for some of the costs of a standing army in North America.
- The Sugar Act actually lowered the tax on molasses but added taxes to other goods.
- Enforcement of the Molasses Act and Sugar Act ended Salutary Neglect and violated the rights of colonies as British subjects of King George III.
- Americans protested the Sugar Act by refusing to buy British goods.
- The ideas behind the slogan “no taxation without representation” became popular and were used by men like Samuel Adams and James Otis to write pamphlets that contained many of the ideas that fueled the American Revolution.
- Colonists saw the taxes from the Sugar Act as “indirect” taxes because they were aimed at merchants and indirectly affected colonists who had to pay higher prices on products made from molasses.
- Colonists viewed the taxes from the Sugar Act as “external” taxes because they were levied by an external body — Parliament — and not the colonial legislatures. If the taxes came from the legislatures, they would have been considered to be “internal” taxes.
- The Sugar Act violated the rights of colonists by allowing trials to be held in the Vice-Admiralty Courts instead of common law courts.
- The Sugar Act was repealed in 1766 and replaced by the Revenue Act.
More Causes of the American Revolution
Stamp Act Crisis. After Parliament passed the Stamp Act in 1765, Americans protested with violence, led by the Sons of Liberty.
Townshend Acts. In 1767 and 1768, Parliament passed new tax laws. Colonial resistance led to British troops occupying Boston.
Intolerable Acts. A series of laws intended to punish Boston for the Boston Tea Party. They led to the call for a Continental Congress.
British Treasury Needs Money After the Seven Years’ War
Key Fact — Although Britain won the Seven Years’ War and took control of most French territory in North America, it came with a massive long-term cost that forced the British Treasury to rush to find ways to come up with the money needed to pay off the debt and cover new expenses.
After the French and Indian War, the British Treasury needed to raise revenue for two main reasons:
- Rising national debt due to the French and Indian War.
- Rising Administrative and military costs in North America.
Increase in British National Debt During and After the French and Indian War
- Over the course of the French and Indian War, the national debt of Britain nearly doubled.
- From 1755 to 1764, the national debt grew from around £72 million to roughly £130 million.
- During the war, the British Treasury raised money through taxes on landowners in Britain and also borrowed money.
- Due to the high interest on the money that was borrowed the national debt continued to increase.
Increase in Military and Administrative Expenses in North America
- British territory in North America expanded when the 1763 Treaty of Paris was signed.
- France ceded nearly all of its territory to Britain.
- In March 1763, Prime Minister Lord Bute established a standing army of roughly 10,000 soldiers in North America.
- The estimated annual cost of the standing army in North America was between £220,000 and £400,000 per year.
Reasons for a Standing Army in North America
Key Fact — The British Treasury needed to find a way to pay for the army in North America as soon as possible. It could not wait until a plan to reorganize the colonies was developed and put in place and it could not wait to hope the colonial governors would come up with a solution.
British leaders felt the standing army in North America was needed for several reasons:
- To slow down the westward expansion of the colonies while the government worked on a plan to reorganize the colonies.
- To protect the western frontier from the threat of attacks from the French and Native American Indian tribes, like Pontiac’s Rebellion.
- To help enforce the Proclamation Line of 1763.
Slow Down Westward Expansion of the Colonies
- Britain needed time to set up a plan for administration and oversight of the colonies.
- Some leaders, like Governor Francis Bernard of Massachusetts, and even Grenville, had already been developing plans to reorganize and restructure the colonies.
Threat of the French Taking Back the Territory
- Although the French turned the territory over to the British, they did not completely leave North America.
- Quebec was still populated by French-speaking citizens who were Catholic and viewed as a threat by Protestants in the colonies.
- It was possible there would be another war between France and Britain, and if France won Britain might have to give the territory back to France.
- The French continued to have an influence in the Ohio Country and Great Lakes Region and encouraged the Native American Indian tribes to rise up against the British.
Pontiac’s Rebellion Justifies the Need to Protect the Frontier
- Once the French military forces left the Ohio Valley colonists began moving into the region.
- The migration upset the leaders of some Native American Indian tribes because their tribal hunting grounds were in the Ohio Valley.
- Two chiefs, Pontiac of the Ottawa and Kyathushuta of the Seneca, urged tribes in the region to rise up against the British.
- In May 1763, the tribes began a series of loosely coordinated attacks against British forts and settlements.
- The attacks seemed to justify the idea that the British needed to keep an army in the colonies to help defend the frontier.
This illustration depicts the Ottawa chief, Pontiac, taking up the “war hatchet.” Image Source: Wikipedia.
Proclamation Line of 1763
- In October 1763, the government took political action to help end Pontiac’s Rebellion.
- King George III announced a proclamation that prohibited colonists from settling west of the Appalachian Mountains.
- The Ohio Valley was reserved as “Hunting Grounds” for the tribes, who were considered British subjects.
- The Proclamation also established four new British colonies.
- East Florida
- West Florida
- Province of Quebec
- The army helped put down the rebellion and to keep settlers out of the Ohio Valley, but it was too small to cover the entire area.
- The uprising lasted roughly a year, but Pontiac did not surrender until 1766.
- Colonists still settled in the area, which Parliament dealt with in 1774 when it passed the Quebec Act.
Options for Raising Revenue
Key Fact — George Grenville became Prime Minister in April 1763 and started working with other government officials to find ways to generate revenue to help pay for a portion of the costs of the government and military needs in North America. Eventually, it was decided the money raised would only be used to cover the cost of the military and Grenville never intended to have the colonies cover the entire cost.
Grenville became First Lord of the Treasury, Chancellor of the Exchequer, and leader of the House of Commons.
- George Grenville was First Lord of the Admiralty under Lord Bute during Bute’s administration.
- Grenville sponsored a bill that allowed the British Navy to suppress smuggling and to have the trials of accused smugglers heard in the Vice-Admiralty Courts.
Grenville and the other Lords of the Treasury considered three places where revenue could be raised in order to deal with the increase in national debt and rising expenses. In the end, the Treasury decided to raise money from the American Colonies.
- Landowners — British landowners were an option. However, many of the members of Parliament — both Commons and Lords — were landowners. They had paid heavy taxes during the war and were not interested in continuing to pay the taxes during peacetime, especially if the funds would be used to pay for expenses that were incurred by operations in the American Colonies.
- Working Class — Lord Bute had placed a tax on cider to help spread the burden to the working class. However, it was unpopular and Grenville knew it could be used against him by his political enemies.
- American Colonists — Colonists living in America had a low tax burden, and the taxes they paid went to the colonial legislatures. When it came down to it, the money was going to be used to pay for government administration and protection of the new territory in North America. Laying a tax on the American Colonies made the most sense to Grenville and the other Lords.
Options for Raising Revenue from the American Colonies
Key Fact — Grenville looked at existing laws to find a way to tax the colonies. The Commissioners of Customs recommended the enforcement of the Molasses Act.
Once the Treasury decided to target the American Colonies as the target for the new taxes, it went about the business of trying to determine the best way to charge the tax and enforce the collection of the money. The Treasury asked the Commissioners of Customs for ideas. The Commissioners compiled a report that presented three recommendations.
- People who held offices and were responsible for collecting customs would need to live where in the area they oversaw. Some people held the title but paid someone else to collect the taxes. In other words, a customs officer could not live in England and pay someone in New Hampshire to collect taxes for them.
- Customs officials should receive payment from out of the taxes collected. The Commissioners believed this would entice officials to enforce the laws.
- Taxes on poplar items, like molasses, should be lowered so that merchants would be willing to pay the taxes. Smuggling was not cheap, but it was less expensive than paying the taxes and paying bribes.
The first two recommendations were implemented immediately by the Board of Treasury. This action, in fact, was the beginning of the end of Salutary Neglect.
Enforcing the Molasses Act to Raise Revenue
Key Fact — British officials had no doubt they had the authority to enforce the Molasses Act, however, they significantly underestimated the impact it would have on the colonies, which were already suffering from an economic depression.
The Treasury asked the Commissioners for more ideas on how to collect revenue. The Commissioners compiled another report and suggested that enforcement of the Molasses Act could be the solution. However, smuggling was an issue, and the Commissioners suggested smuggling could be reduced by:
- Requiring penalties for smuggling to be paid in specie — gold or silver. Hard money was hard to come by in the colonies. The Commissioners thought that if the penalties had to be paid in gold or silver people would be less likely to smuggle.
- Requiring all foreign ships sailing from Britain to the colonies to have their entire cargo inspected.
Estimate of Revenue to be Earned by Enforcement of the Molasses Act
The Lords of Trade had two of the Secretaries to the Treasury, Charles Jenkinson and Thomas Whately, look into how much revenue could be generated from the enforcement of the Molasses Act. The key issue was to decide how low the tax on a gallon of molasses could be lowered so that:
- Merchants would pay the tax instead of smuggling goods or bribing customs officials.
- The tax would generate revenue.
The secretaries reported that:
- Enforcing the Molasses Act would actually reduce the number of barrels of molasses imported by the colonies.
- The tax on a gallon of molasses should be lowered from 6 pence per gallon to 3 pence per gallon.
- At 3 pence per gallon, they estimated the colonies would still import roughly 100,000 gallons of molasses.
- The estimated revenue that would be generated by the enforcement of the Molasses Act would be roughly £1000,000.
Significant Increase in Payments on Molasses for Colonial Merchants
Key Fact — In many instances, merchants were still paying a customs official when they imported barrels of molasses. However, instead of paying 6 pence per gallon, which was supposed to be collected based on the Molasses Act, merchants paid the customs official a small percentage of the total. The customs officials pocketed the money and looked the other way. In other words, the merchants bribed the customs officials.
- In Boston, it is estimated merchants paid a bribe of 10 percent to the customs official.
- In Salem, the bribe was around a 1/2 penny.
- In New York, the bribe was anywhere between a 1/4 penny and a 1/2 penny per gallon.
Colonies Protest Raising Revenue on the Sugar Trade
Key Fact — Rhode Island, New York, and Massachusetts protested the Sugar Act before it was passed by Parliament. The protests were either ignored or arrived in London too late to be considered.
Jasper Mauduit Opposes Enforcement of the Molasses Act
Jasper Mauduit represented Massachusetts in London. It was his job to discuss issues with British government officials that affected the colony.
- Mauduit learned about the possibility of the enforcement of the Molasses Act and a 3 pence tax per gallon of molasses.
- He sent a letter to Massachusetts, informing the colony the tax would probably be 2 pence, but he would try to have it reduced to 1 pence per gallon.
- He also assured Massachusetts that Britain did not intend to levy a tax on the colony in order to help pay down the debt incurred by the war.
- He sent a letter to the Treasury, opposing a tax higher than 2 pence per gallon.
- The Treasury ignored Maudiut’s arguments.
Rhode Island Protests to the Board of Trade
- Rhode Island sent a “remonstrance” — or protest — to the Board of Trade.
- It argued the profits from the molasses trade allowed it to buy goods from British merchants.
- It pointed out that the British sugar plantations in the West Indies were not capable of producing enough molasses to meet the demand.
- Roughly 80 percent of the molasses was imported, tax-free, from the French West Indies, and 20 percent from the British West Indies.
Stephen Hopkins was a leader of the opposition to the Sugar Act in Rhode Island. Image Source: New York Public Library Digital Collections.
New York Protests to Parliament
- The New York Assembly prepared a “memorial” — also a form of protest — to send to Parliament.
- It made many of the same arguments as the Rhode Island protest.
- The New York Memorial was approved by the House of Representatives on April 20, 1764.
Passage of the Sugar Act
There was very little opposition or debate over the Sugar Act when Grenville submitted it to Parliament.
- Grenville introduced his budget to Parliament on March 9, 1764, and the new taxes were included in the budget.
- The provisions were collected into a single bill, known as the Sugar Act.
- The Sugar Act was passed by the House of Commons on March 30.
- The House of Lords approved the Sugar Act on April 4.
- King George III pronounced his Royal Assent on April 5.
- The Sugar Act went into effect on September 29, 1764.
Interesting Facts and Details About the Sugar Act
Long Title of the Sugar Act
The long title — or proper name — of the Sugar Act was: “An act for granting certain duties in the British colonies and plantations in Africa, for continuing, amending, and making perpetual, an act in the sixth year of the reign of his late majesty King George the Second, (initituled, An act for the better securing and encouraging the trade of his Majesty’s sugar colonies in America) for applying the produce of such duties, and of the duties to arise by virtue of the said act, towards defraying and disallowing several drawbacks on exports from this kingdom, and more effectually preventing the clandestine conveyance of goods to and from the said colonies and plantation, and improving and securing the trade between the same and Great Britain.”
The First Revenue Act
- The language and official name of the bill made it clear that the purpose of the Sugar Act was to raise revenue by regulating trade between the American Colonies, Britain, other parts of the British Empire, and foreign nations.
- Prior to the Sugar Act, Parliament had not passed legislation over the Americal Colonies to raise money. The laws governing the colonies dealt with trade regulations or restrictions on manufacturing. Those laws are known as the Navigation Acts and the Trade Acts.
Harm Caused by the Sugar Act in Colonial America
Key Fact — The American Colonies considered the taxes from the Sugar Act as “external” taxes because they were levied by Parliament — an external legislative body — and not the “internal” legislative bodies — the colonial legislatures.
New Taxes Raise Prices
- The Sugar Act actually reduced the tax on molasses from six pence per gallon to three pence per gallon.
- The goal was to lower taxes to a point where colonial merchants would find it less expensive to pay the taxes instead of smuggling molasses and other goods.
- The purpose of lowering the tax on molasses was to induce importers to buy molasses from British colonies instead of smuggling it from competing French and Spanish colonies.
- However, it increased the number of items that would be taxed when they were imported to the colonies.
Enforcement Disrupts and Damages Colonial Trade
- The Sugar Act required increased enforcement of smuggling laws.
- Enforcement was carried out by the Royal Navy and British customs officials.
- The increase in enforcement reduced smuggling but disrupted local business and made the post-war economic depression in the colonies worse.
- The cost of popular imported items rose and exports to non-British markets were reduced.
Trials in the Vice-Admiralty Courts Violated the Rights of the Colonists
- The Sugar Act empowered customs officials to have all violations tried in vice-admiralty courts rather than local colonial courts where the juries often looked favorably on smugglers.
Protests against the Sugar Act led to boycotts of some British luxury goods, which did boost local manufacturing in some instances.
Americans protested the Sugar Act primarily because of its economic impact. A year later, during the Stamp Act Crisis, the slogan “no taxation without representation” became a rallying cry against Parliament’s right to tax the colonies.
The Sugar Act was enforced for about two years, until 1766, when it was replaced by the Revenue Act of 1766. The Revenue Act of 1766 reduced the tax on molasses to one pence per gallon.
Sugar Act Reaction — How did the Colonists Respond?
Key Fact — The American Colonies considered the taxes from the Sugar Act as “indirect” taxes, because they only applied to merchants who were shipping goods. The taxes did not apply to a large portion of the colonists, even though many of them were indirectly affected by the rising cost of molasses and the products it was used to make.
- Nine colonies officially sent messages to Parliament speaking out against the Sugar Act, and some of them explicitly stated that Parliament had no right to tax the colonies for the purpose of raising money.
- Boston merchants formed a group called the Society for Encouraging Trade and Commerce and published a pamphlet called “Reasons Against Renewal of the Sugar Act.”
- Samuel Adams rose to prominence in Boston as an outspoken critic of the Sugar Act and wrote, “Instructions to Boston’s Representatives”.
- Stephen Hopkins, the Governor of Rhode Island, questioned the constitutionality of the act in “The Rights of the Colonies Examined.”
- The colonies felt they had paid their fair share by providing troops to help fight in the French and Indian War. James Otis expressed this sentiment in “The Rights of the British Colonies, Asserted and Proved.”
- Colonial merchants organized boycotts of British goods. Instead of buying goods from British merchants, some colonists started making their own clothes and other products they needed.
Samuel Adams rose to fame during the Sugar Act crisis. Image Source: Wikipedia.
Results of the Sugar Act
The Sugar Act resulted in:
- The end of Salutary Neglect.
- The beginning of “No Taxation Without Representation.”
End of Salutary Neglect
While British officials worked on coming up with ways to raise money, they started enforcing the Molasses Act. This ended Salutary Neglect, which was an unwritten policy that had been followed for decades by British customs officials. Under the policy, customs officials had been encouraged to neglect the enforcement of trade laws on colonial merchants. Once the Sugar Act was passed, customs officials were required to comply and the bill even gave captains of ships in the Royal Navy the authority to enforce the rules.
Beginning of “No Taxation Without Representation”
The passage and enforcement of the Sugar Act contributed to the growth of an ideological movement in Colonial America that help fuel the American Revolution. The ideas behind the slogan “no taxation without representation” were key arguments against Parliament’s taxation policies in regard to the 13 Original Colonies.