Mercantilismand actsppt

Mercantilism is:
An economic Philosophy
An economic Theory
An economic Policy
An economic System

The British perspective:
Mercantilism was explained by its proponents,
as a "a philosophy of nation building, a series
of economic controls intended to strengthen a
country ... against other … empires. A
major tenant of this view was self-
sufficiency: sources of supply--raw
materials, agriculture, and industry--should be
developed domestically, or in colonies, to
prevent interruptions by hostile foreigners”

Mercantilism: Main Goals
Encourage growth of native merchant ships, this included the colonial ships.
Protect English manufacturers from foreign competition.
Protect English Agriculture, especially grain farmers.
Increase the wealth of a nation (i.e. accumulate as much hard money as possible
—colonial money was worthless in England; merchants wanted gold) and to
become the wealthiest/most powerful nation.
Become self-sufficient; aka: meet all the needs within the empire (not only
necessitated colonies, but also a tightly regulated trade, since trade was
perceived as a zero-sum game: A nation can gain in international trade only
at the expense of other nations).
Develop a favorable balance of trade.

The main goal of mercantilism:
increase the money in a country’s
treasury by creating a favorable
balance of trade. A country had a
favorable balance of trade if the value of
its imports (what it sold) exceeded the
value of its exports (what it purchased).
Colonies helped a country
produce/acquire the goods to maintain a
favorable balance of trade.
Say Spain sold $500 in sugar to France, and France sold $300 in cloth to Spain.
France would also have to pay Spain $200 worth of precious metals to pay for all
the sugar. Spain would then have a favorable balance of trade because the value
of its exports (sugar) was greater than the value of its imports (cloth). Spain
would become richer because of the precious metals it received from France.

Characteristics of Mercantilism
1.1. ““Bullionism”Bullionism”  the eco. health of a nation could
be measured by the amount of precious metal
[gold or silver] which it possessed.
‘Hard’ money was the source of prosperity,
prestige, and strength for a nation.
Bullionism dictated a “favorable balance of trade.”“favorable balance of trade.”
• Export more than you import [a trade surplus].
 High tariffs on imported manufactured good.
 Low tariffs on imported raw materials.
1. Each nation must try to achieve economic
self-sufficiency.
Those founding new industries should be rewarded
by the state.

3. Thriving agriculture should be carefully
encouraged.
Less of need to import foods.
Prosperous farmers could provide a base
for taxation.
4. Sea power was necessary to control foreign
markets.
Less need to use the ships of other nations
to carry your trade goods.
Your own fleet adds to the power and
prestige of the nation.
5. Impose internal taxes of all kinds.

8. A large population was needed to provide a
domestic labor force to people the colonies.
9. Luxury items should be avoided
They took money out of the economy
unnecessarily.
10. State action was needed to regulate and enforce
all of these economic policies.
State-sponsored trade monopolies.

Mercantilism in Effect
Build a formal empire
acquire/protect markets (both
resource/product)
establish colonies
Develop strong military
to defend empire (Navy especially
important)
Navigation Acts (political aspects of
mercantilism 1660’s – 1700’s)

The colonists supplied raw materials to England for either manufacture or re-export and they
provided additional markets for the finished products produced from those resources (England also
sold them in European markets).
The colonies played a large role in England’s becoming self-sufficient.
For this system to succeed, the Parliament needed to pass laws and regulations to protect wealthy
British merchants and industrialists, even at the expense of its colonists (i.e. those laws were
intended to benefit the English economy exclusively).
A mercantilist economy is a managed economy, managed by the larger and stronger power (i.e. the
home/mother country).
The circular flow model

Colonies
Colonies helped nations grow rich in several ways.
They provided various raw materials
They provided mines that produced gold
and silver.
They served as markets for goods made
in the home country.
Trade expansion enabled English
manufacturing base to grow and it
necessitated an enlarged merchant
fleet.
Additional bases for the royal navy (i.e.
outposts).
As suppliers of raw materials only, the colonists could
not compete with England in manufacturing (unless the
goods could not be produced in England).

FISH
IRON
TIMBER
INDIGO
RICE COTTON
RESOURCES
RESOURCES
MANUFACTURED GOODS

Mercantilist policies
As its colonies in North America
became more successful and profitable,
the home government began to
increase its control over them.
Between 1651 and 1673, the
Parliament passed four Navigation Acts
intended to ensure a favorable balance
of trade.

Regulations to Support
Mercantilism
To encourage certain types of
manufacturing, the British government
subsidized producers of those products,
thus making them more profitable to sell
or more affordable to buy.
The British government also granted
monopoly status to producers of certain
commodities (e.g. British East India Co.)

In short, the government’s taxing/spending authority was
used to encourage/discourage certain behaviors and economic
activities.

Enforcement of Mercantilism
Navigation Acts
Keep colonies dependent on mother country -> maximize profit
Restrictions on buying
Buy only from Britain; duties on foreign goods
Restrictions on selling
Could only ship/sell to Britain (enumerated goods)
Restrictions on shipping
All trade only on British ships, all goods shipped through
England, crews must be ¾ English
Restrictions on manufacturing
Prohibited in colonies: keep colonies dependent on Britain,
prevent competition (monopoly)

The purpose of the various navigation acts was to protect the wealth that the colonies brought to
England. By the late 17th century England had a trade policy for the colonies that went like this:
1. Any ship carrying goods to and from America or England had to be English built with primarily
English crews (Remember the colonies were still part of England)
2. The colonists were required to buy certain manufactured goods (those enumerated) only from
England. Exceptions were allowed with things England didn't produce. Non-English goods had to go
to England first where a tax was assessed/levied before its shipment to the colonies (thus, the goods
became either less profitable to sell or less affordable to buy).
3. Certain raw materials coming from the colonies (those enumerated) could only be sold back in
England (later this included grown farm products).
4. Americans were forbidden to manufacture certain goods from their own raw materials (those
enumerated). For example, tobacco could only be processed back in England where the English
manufactures would receive the majority of the profit from selling the cured tobacco.

Only English or English colonial ships could carry cargo between
imperial ports.
Certain enumerated goods (e.g. tobacco, rice, and furs) could not be
shipped to foreign nations except through England or Scotland.
The Parliament would pay “bounties” to colonists who produced
certain raw goods, while raising protectionist tariffs on the same goods
produced in other nations.
Colonists could not compete with English manufacturers in large-scale
manufacturing.

Regulations To Support Mercantilism
NAVIGATION ACT OF 1651
All imports or exports had to be carried on British
ships (English ships and merchants were always
favored, excluding other countries from sharing in the
wealth produced/acquired by the British Empire).
http://williamsburghotel.com/triangle/Js_three_ships.gif
Targeted the Dutch control of world
wide shipping—sought to eliminate
Dutch competition from colonial
trading routes.
All crews must be at least 1/2 British or
Colonists.
NE economy - “carrying trade” -
increased.

Regulations to Support
Mercantilism
Act of 1660
Required all exports from the colonies to go through British
ports (English merchants would then sell or trade the
materials around the world).
Long list of “enumerated goods (tobacco, sugar, indigo,
cotton, molasses, rice) that could only be shipped to
England or an English colony.
It also required all Colonial imports to go through British
ports whereupon each product was taxed before its
shipment to colonial ports.
Required all colonial trade to be on English ships (master
and ¾ crew must be English).

The Navigation Act of 1660, following the policy laid down in the statute of 1651
enacted under the Commonwealth, was a direct blow aimed at the Dutch, who were
fast monopolizing the carrying trade. It forbade any goods to be imported into or
exported from His Majesty's plantations except in English, Irish, or colonial vessels
of which the master and three fourths of the crew must be English; and it forbade
the importation into England of any goods produced in the plantations unless
carried in English bottoms. Contemporary Englishmen hailed this act as the Magna
Charta of the Sea. There was no attempt to disguise its purpose. "The Bent and
Design," wrote Charles Davenant, "was to make those colonies as much dependant
as possible upon their Mother-Country," by preventing them from trading
independently and so diverting their wealth. The effect would be to give English,
Irish, and colonial shipping a monopoly of the carrying trade within the Empire.
The act also aided English merchants by the requirement that goods of foreign
origin should be imported directly from the place of production; and that certain
enumerated commodities of the plantations should be carried only to English ports
(these enumerated commodities were products of the southern and semitropical
plantations: "Sugars, Tobacco, Cotton-wool, Indicoes, Ginger, Fustick or other
dyeing wood“).

Actual wording of one of the English Navigation Acts from 1660:
"For the increase of shipping and encouragement of the navigation of this nation, wherein under the good providence
and protection of God the wealth, safety and strength of this kingdom is so much concerned, be it enacted … that
from and after the first day of December one thousand six hundred and sixty … no goods or commodities whatsoever
shall be imported into or exported out of any lands, islands, plantations or territories to his Majesty belonging or in
his possession, or which may hereafter belong unto or be in the possession of his Majesty, his heirs and successors, in
Asia, Africa or America, in any other ship or ships, vessel or vessels whatsoever, but in such ships or vessels as do
truly and without fraud belong only to the people of England or Ireland, dominion of Wales or town of Berwick-
upon-Tweed, or are of the built of and belonging to any of the said lands, islands, plantations or territories as the
proprietors and right owners thereof, and whereof the master and three fourths of the mariners at least are English,
under the penalty of the forfeiture and loss of all the goods and commodities which shall be imported into, or
exported out of, any the aforesaid places in any other ship or vessel, as also of the ship or vessel with all its guns,
furniture, tackle, ammunition and apparel, one third part thereof to his Majesty, his heirs and successors, one third
part to the governor of such land, plantation, island or territory where such default shall be committed, in case the
said ship or goods be there seized, or otherwise that third part also to his Majesty, his heirs and successors, and the
other third part to him or them who shall seize, inform or sue for the same…. And all admirals and other commanders
at sea of any the ships of war or other ship having commission from his Majesty, or from his heirs or successors, are
hereby authorized and strictly required to seize and bring in as prize all such ships or vessels as shall have offended
contrary hereunto, and deliver them to the Court of Admiralty, there to be proceeded against; and in case of
condemnation one moiety of such forfeitures shall be to the use of such admirals or commanders and their
companies, to be divided and proportioned amongst them according to the rules and orders of the sea in cases of
ships taken prize, and the other moiety to the use of his Majesty, his heirs and successors."

To benefit British merchants still more directly by making England the staple not
only of plantation products but also of all commodities of all countries, the Act of
1663 was passed by Parliament.
"No Commoditie of the Growth Production or Manufacture of Europe shall be
imported into any Land Island Plantation Colony Territory or Place to His
Majestie belonging . . . but what shall be bona fide and without fraude laden and
shipped in England Wales [and] the Towne of Berwicke upon Tweede and in
English built Shipping."
The design of this act was to maintain "a greater correspondence and kindnesse"
between the plantations and the mother country; to encourage shipping; to render
navigation cheaper and safer; to make "this Kingdome a Staple not only of the
Commodities of those Plantations but also of the Commodities of other Countries
and places for the supplying of them -- " it "being the usage of other nations to
keepe their [Plantations] Trade to themselves.“
Keep in mind a mercantilist system is a closed market.
Staple Act

The Act of 1673 was passed to meet certain difficulties which arose in the
administration of the Act of 1660.
The earlier act permitted colonial vessels to carry enumerated commodities from
the place of production to another plantation (i.e. colonial port) without paying
duties. Under cover of this provision, it was assumed that enumerated
commodities, after being taken to a plantation, could then be sent directly to
continental ports free of duty.
The new act provided that, before vessels left a colonial port, bonds should be
given that the enumerated commodities would be carried only to England. If
bonds were not given and the commodities were taken to another colonial port,
plantation duties were collected according to a prescribed schedule.

A “complicated piece of legislation” is how historian David S. Lovejoy describes the duty on plantations. The
Plantation Duty Act limited American trade; it attempted to force planters to trade exclusively with England and her
colonies and to redirect revenue to Great Britain. There were numerous objections to the duty. In the end, the
Albemarle governor, John Jenkins, ignored enforcing the act, and the tax contributed greatly to a later rebellion (the
Culpeper Rebellion).
The Plantation Duty Act had several provisions. One, it placed a penny tax on each pound of tobacco. Two, it
required a five-shilling tax for every hundred weight of sugar. Three, collectors were appointed in the colonies. The
latter meant that, for the first time in history, writes Lovejoy, the British government placed a “revenue-collecting
administration in British North America.”
Across the British Empire, people protested the duty. London merchants worried that it might have a negative effect
on the sugar trade and thereby disrupt trade between the Indies and New England. In New England, merchants
erroneously believed that once a duty had been paid, the ship’s cargo could then be transported to any port; but that
was not the case. Confusion abounded among American merchants. Even the Irish argued that the duty targeted
them.
Although the Lord Proprietors supported the Act’s passage, many North Carolinians protested (or ignored) the new
law. The Albemarle region of North Carolina offered the stiffest resistance. As required by law, the Albemarle
governor, John Jenkins, appointed tax collectors, but the agents performed their duties with a noticeable lack of
enthusiasm. Yet Jenkins did not pressure the agents to enforce the law. In Albemarle, citizens believed they should
be able to deal directly with England rather than having to first go through New England traders. The Plantation Duty
Act angered an independent-thinking region that had already showed its dislike for government regulation and that
did so later during the Culpeper Rebellion.

1696-1725: England worked toward more efficient royal control over colonies.
After 1725, policy changed – Robert Walpole began policy of “salutary neglect”
Prior to the conclusion of the French and Indian War (1763), England followed a
policy of salutary neglect toward the colonies, which meant the trade laws that most
hurt the colonial economy were not enforced.
Prior to the looming war against the French, the British employed salutary neglect to
maintain colonial loyalty.
Salutary neglect
Non-enforcement of laws; colonies became accustomed to “breaking the rules”
w/o consequences – future source of conflict when Eng. gov’t tries to enforce
rules and punish violations (after French and Indian War)
Distance
Difficulty enforcing
What would be required to strictly enforce rules?

Changes initiated by the British as of 1763 under new Chancellor of the Exchequer, George Grenville:
Upon becoming Chancellor of the Exchequer (1763), Grenville discovered from the treasury books that the
American Customs Service was costing more to operate than it was bringing in and he was determined to
tighten up the service to prevent smuggling.
Meant enforcing the Molasses Act (purpose to collect $; a novel idea)
Americans at once pointed out that the sixpence duty on foreign molasses
Was prohibitive and would ruin those industries.
Though Grenville, didn’t intend to destroy those industries, he did intend to make it furnish a revenue; so he
kept the duty but cut it in half.
Customs system was overhauled (attempt to begin to collect taxes)
Elaborate series of papers were to be filled out by shippers for every cargo.
Violations were to be tried in Admiralty Courts
(colonial juries notoriously easy on smugglers)
Admiralty Courts were independent and had jurisdiction over offenses
Committed at sea and in regard to maritime laws (Navigation Acts)
(no trial by jury; colonists felt Parliament could not curtail the right of trial by
Jury; it was a check on executive power)

Amiralty Court at Halifax Nova Scotia used to try navigation violations.
(extension/enforcement of its jurisdiction to new laws of Parliament in
addition to all laws of trade and navigation as well as over ordinary
maritime
matters)
Prerogative courts composed not of juries but of single judges whose
posts were “political offices in the hands of the royal governors, to be
bestowed upon deserving friends and supporters”
Colonists stripped of invaluable privilege of trial by jury; a crucial
protection and check on executive power under the British Constitution
British navy instructed to enforce the Navigation Acts

The Usual method for tax collection
These collectors were susceptible to a
more lucrative kind of graft:
Violations of the Sugar Act were
punishable by seizure of the offending
vessel and cargo
Both would be sold and the proceeds
divided into thirds:
1/3 to English treasury
1/3 to colonial governor
1/3 to customs officer
responsible for seizure
To an enterprising officer bent on
amassing a fortune, the prospect of
making as many seizures as possible
was inviting
Perceived as a racket to colonists

Usual method used by tax collectors contd.
(1.) Follow lax procedure for a perio
(2.) shift suddenly to a strict procedure.
•(3.) seize all vessels that were
following hitherto the policy
allowed.

Usual method used by tax collectors contd.
This practice involved little risk for the collection officers
for example, the Sugar Act (a Navigation Act) provided that they were to be free from any damage suits for
mistaken seizure as long as they could show “probable cause”
Since these cases would be tried in Admiralty courts w/o juries, civil suits brought by colonial merchants were
usually thrown out; besides, such suits were often very costly to the one bringing them
Furthermore, these officials were afforded protection by British troops stationed in America
These racketeers were hated by the colonists, merchants, traders

Writs of assistance
Similar to John Doe search warrants:
Writs of assistance: “our houses, and
even our bedchambers, are exposed to
be ransacked, our boxes, trunks, and
chests broke open, ravaged and
plundered by wretches whom no
prudent man would venture to employ
even as menial servants”.

These racketeers were hated by the colonists, merchants, traders.
These customs officers also posed a political/constitutional danger.
James Wilson:
“the crown will take advantage of every opportunity of extending its prerogative in opposition to the privileges of the
people, [and] that it is the interest of those who have pensions or offices at will from the crown to concur in all its
measures”.
These “baneful harpies” were instruments of power/prerogative who would/could upset the balance of the
constitution by extending “ministerial influence as much beyond its former bounds as the late war did the British
dominions”.
In the end, this extension of executive patronage, based on a limitless support of government through colonial
taxation, was viewed as very dangerous.
Resentment and fear of the extension of patronage offices (i.e. plural office holding) in the colonies.

Stamp Act (1764)
Bill proposed by new Chancellor of the Exchequer (English version of
the U.S. Secretary of the Treasury), George Grenville and approved by
Parliament (March, 1765);
law went into effect November, 1765
Law designed to defray cost of maintaining troops
Almost anything formally written on or printed (lawsuits, diplomas,
deeds and wills, almanacs, advertisements, bills and bonds,
customs papers, newspapers, marriage certificates) would have to
be on special “stamped” paper shipped from British Central Stamp
Office in London to agents in colonies who would dispense it only
after tax was paid as proof it was paid.
Stamp Act aroused 2 particular groups: lawyers and printers

Stamp Act
Even though official aim of the act to raise $, the sums it brought in
were quite small
To colonists, herein was the danger:
Because the sums involved were quite small, “some persons…may be
inclined to acquiesce under it.” (i.e. the smaller the taxes, the more
dangerous they were b/c they would the more easily be found acceptable by
the incautious)
This would establish a precedent by the tacit submission of the colonies;
thus, if this attempt was successful (more likely if the tax was small),
Parliament would pass other laws which would impose further taxes

Colonial response(s) to Stamp Act
Requested with all due humility that
Parliament repeal the tax
Boycott (non-importation
agreements)—attempt to get British
merchants/manufacturers, a
powerful voting bloc in a country of
shopkeepers and traders, to feel the
pinch from the lack of business with
the colonies in the hope they would
bear pressure on their
representatives to rescind the tax.
Intimidate stamp distributors by
vandalizing their property or
threatening them with mob violence
(e.g. “tarring and feathering”), thus
they would do nothing to execute
the act (next slide).
Civil disobedience (principle of
nullification and non-compliance);
do nothing that required the stamps
Proceed without using required
stamps
Based on the principle that the law
was unjust b/c it taxed the colonists
w/o their consent—remember, the
law and ethics are not always in
agreement.
Radical response:
• Some saw it as an attempt to
suppress knowledge of what was
happening by replacing duties and
restraints on the press
• Some imagined that Grenville
designed by this act to force the
colonies into rebellion so he can use
it as a pretext to crack down on
them with severity and reduce them
to servitude and dependency
• Sons of Liberty: “fight/resist”

“The Bostonians paying the exciseman, or tarring and feathering”
(1774 British political cartoon)
Note: It wasn’t the
humiliating/degrading/undignified
manner with which the colonists tarred
and feathered tax collectors; rather,
imagine the possibility of suffocation
if/when hot tar is poured over you—or
better yet, imagine trying to remove
the tar from your skin once it cooled
(hardened), especially, given that it
bonds to the skin.

Stamp Act Congress
Stamp Act Congress represented another type of colonial response to
the Stamp Act.
Originated in VA House of Burgesses, sparked by Patrick Henry, who
adopted a set of resolutions (formal statements of opinion or official
positions taken on an issue) denouncing Parliamentary taxation (other
colonial assemblies followed)
At invitation of Massachusetts, 9 colonies sent delegates to a Congress in
New York (October, 1765)
Delegates joined together in a set of resolutions and petitions denying the
Authority of Parliament to tax them.
Though beyond Parliament’s power to tax; resolutions acknowledged
colonists were not beyond Parliament’s power to legislate (colonists made
the distinction)
Even though theoretically, the colonists’ arguments implied they were
wholly beyond Parliamentary control (i.e. the only thing binding
Englishmen and colonists together was the fact they were subjects of
the same king., few colonists were willing to raise this issue yet.

Patrick Henry opposes Stamp Act before VA
House of Burgesses (May 29, 1765)

British response to colonial reaction(s) to Stamp Act
anti-stamp act faction within Parliament:
Merchants/manufacturers (under pressure by boycott)
pressured their representatives to rescind the act;
these individuals petitioned Parliament for relief from
the negative affects of the act.
Other members in Parliament favored repeal because they
believed the act was based on erroneous principle to begin
with (that Parliament had the authority to tax the colonists:
agreed with colonial view that taxation was not part of the
Governing/legislative power)
Anti-Stamp Act factions led by William Pitt and the Marquis of
Rockingham
In an attempt to win votes, Rockingham subjected
members of Parliament to a speech delivered by Ben
Franklin (02-13-1766)

Franklin’s speech
Franklin, as a matter of political expediency (to win
votes/repeal the act)
Succeeded in conveying the false impression that
Americans were objecting to merely to internal taxes,
taxes on trade (he made American demands seem
moderate)
Indirect—external tax: imports coming into colonies are
taxed, but tax is part of purchase price (it’s added to the
price of the good and is paid outside the colonies
(purpose: to regulate commerce)
Direct—internal tax: imports coming into colonies are
taxed and the tax isn’t added to the price of the good;
it’s added after the purchase, specifically as a tax (i.e.
to raise $)
In reality, the cololnists were opposed to all impositions/taxes
equally b/c all taxes equally diminish the estates upon which
they are charged (they didn’t differentiate between or among
taxes)
He also conveyed to the members the impression that
Americans were:
Oppressed by Stamp Act
Most members of Parliament, having never bothered to have
read colonial declarations/petitions, believed him.

To some colonists, passage of the Stamp Act reinforced idea that there was a
conspiracy; what the highest officials professed was not what they in fact intended and
their words masked a malevolent design.
Passage of the Stamp Act was not merely an impolitic and unjust law that threatened
the priceless right of the individual to retain possession of his property until he or his
chosen representative voluntarily gave it up to another; it was to many also a danger
signal indicating that a more general threat existed.
Though it could be argued, given the swift repeal of the act, that nothing more was
involved than ignorance or confusion on the part of the people in power who really
knew better and who, once warned by the reactions of the colonists, would not repeat
the mistake—there nevertheless appeared to be good reason to suspect that more was
involved. From whom had the false information and evil advice come that had so
misled the English government?
Some (Adams, Oxenbridge Thacher, James Otis, Stephen Hopkins) thought from
officials bent on overthrowing the constituted forms government in order to satisfy
their own lust for power, and not likely to relent in their passion.
To some (John Adams, Josiah Quincy) the key figures were easily identifiable: Mass.
Governor, Thomas Hutchinson.

Joseph Warren (1766):
“If the real and only motive of the minister was to raise money from the colonies, that method should
undoubtedly have been adopted which was least grievous to the people…”
The choice of so blatantly obnoxious a measure as the Stamp Act, consequently, “has induced some to imagine
that the minister designed by this act to force the colonies into a rebellion, and from thence to take occasion to
treat them with severity, and, by military power, to reduce them to servitude…such a supposition was perhaps
excessive: ‘charity forbids us to conclude [the ministry] guilty of so black a villainy. But…it is known that
tyrannical ministers have, at some time, embraced even this hellish measure to accomplish their cursed
designs,’ and speculation based on “admitting this to have been his aim” seemed well worth pursuing (an
extreme view).
John Adams:
it seemed “very manifest” that the ultimate design behind the Stamp Act was an effort to forge the fatal link
between ecclesiastical and civil despotism, the first by stripping the colonists “in a great measure of the means
of knowledge, by loading the press, the colleges, and even an almanac and a news paper with restraints and
duties’ the second by recreating the inequalities and dependencies of feudalism ‘ by taking from the poorer
sort of people all their little subsistence and conferring it on a set stamp officers, distributors, and their
deputies”
Arthur Lee:
“[A]s the influence of money and places generally procures to the minister a majority in Parliament, so an
income from unchecked taxation would lead to a total corruption of free government in America….” (result:
slavery)

Issues of Taxation
Colonists British
Importance of property:
Source of life (subsistence/food/resources)
Source of liberty (self-reliance, self subsistence,
Independence of other men)
w/o property, people could be starved into submission; if
liberty rested on property, a threat to property was a
threat to liberty
Locke’s theory: property must not be taken w/o people’s
consent given either in person or by their representatives.
Taxes were a gift, given by the people
through their representatives; taxes were
legitimate only in a representative system;
and even then, they only apply to those
constituents who were actually
represented.
No taxation without representation; they
fact they were not represented in
Parliament should exempt them from “the
burden of ungranted/involuntary taxes
(colonists asserted this as a
privilege/right).
Seven Years War against France doubled English
national debt.
British people of the British Isles already saturated with
taxes while colonists taxed very little (colonists were
only paying ¼ taxes the British in the British Isles were
paying during the height of taxation.
(Idea of relieving their own burdens by taxing the
colonists).
During the period of benign/salutary neglect; the
colonies had prospered (bountiful resources &
availability of land)
By 1750’s Avg. American was better off socio-
economically than anywhere in the world.
If the colonists could afford to bribed the customs
agents, surely they could afford to pay the miniscule tax
(i.e. they could afford to pay).

Issues of Taxation
Colonists British
As a matter of principle, how could property
remain secure if it could be taken away at the
pleasure of another?
Colonists viewed the taxes as a means of collecting
in America $ which would benefit only the
constituents of the Parliament that levied the tax.
The authority to tax was reserved exclusively to
assembly of their own elected representatives;
Parliament had no authority to tax colonists at all.
Colonists pointed out that the British System
obviously reflected this b/c taxes could only
originate in the House of Commons. Theory of
virtual representation only applied to Great
Britain b/c there, even though many people had no
right to vote, they were still bound to the voting
population/ representatives by similar interests; on
the other hand, the interests of the colonists (3,000
miles away) were apt to be the opposite of the
British people in the British Isles and wholly
incapable of expression through virtual
representation.
Also opposed actual (direct) representation as a
matter of principle; even with actual representation,
colonial representatives would be a minority within
Parliament and therefore would still be out voted
on matters where colonial—British interests came
into conflict.
Colonists were not/could not be represented in
the House of Commons
If the colonists were going to benefit from the
protection of the royal navy, they should share in
the burden.
(i.e. they should pay)
Power to tax belonged exclusively to Parliament;
most important feature of its supremacy over the
king and the most important guarantee of English
liberty.
Agreed that English liberty forbade laws/taxation
w/o consent, but asserted that no such thing was
involved in any of the acts (Sugar Act, etc…)
Theory of virtual representation:
British officials pointed out that limited suffrage in
England meant most British subjects in the British
Isles were not actually represented either; both
these home subjects and the colonists were,
however, represented by each and every member of
Parliament which as a collective body represented
the entire empire
(in reality; members of Parliament were generally
provincial)

Rockingham could not bring about
repeal until at first he arranged for
a Declaratory Act:
The Declaratory Act reasserted
Parliament’s power to make
laws/statutes binding the colonies
in all cases whatever (it didn’t
specify taxation even though it was
implied).

Did mercantilism help the
Colonies?
Protectionism:
Protection from foreign competition helped New England's ship
building industry.
Individual colonies benefited by specializing.
Various colonial exporters benefited when they exported to Britain
because competing goods from foreign nations were subject to tariffs
theirs were not.
The colonies were easily made into “international traders” because of
the British Empire.
Bounties: incentive payments to encourage production of highly
desired goods (tobacco)
Steady market for raw materials & cash crops
Defense -> protect colonies
Shipbuilding industry developed in colonies

But,
The Navigation Act severely restricted colonial trade to
the benefit of England.
On the other hand, colonists paid more than they
otherwise would have for imports from foreign countries
(Tariffs)
Southern planters, particularly rice and tobacco planters,
bore much of the burden, because most Southern
exports went there, while smaller shares of the other two
regions' exports went there.
New Englanders often evaded this cost through trading
with foreign countries illegally (this situation wasn’t
helped by the fact that customs officers were often
bribed to look the other way).

Tension Develops
Limited profits of colonists (threatened
prosperity)
Foreign goods more expensive (taxes)
Colonists resentful of restrictions
Colonists treated as inferiors –
“colonials”

Mercantilism and the triangular trade proved quite profitable for New
England tradesmen and ship builders. But in the Southern colonies ,
where the Navigation Acts vastly lowered tobacco prices, economies
suffered.
The triangular trade also spurred a steady and significant rise in the slave
population and increased the merchant population, forming a class of
wealthy elites that dominated trade and politics throughout the colonies.
Along with the voluntary immigration of Europeans to the Americas,
Africans were forced to move to the New World as slaves.
African slavery began in the New World as early as the 1600s.

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