Term Paper on "Taxes and Financial Policy of England and How it Contributed to the Revolution"

Term Paper 10 pages (4145 words) Sources: 1+

[EXCERPT] . . . .

England's Financial System And Its Impact On The American Revolution

Even a beginning student of American History understands that the American Revolution was largely the result of England's financial policies. "No taxation without representation," is a familiar rallying cry, protesting the imposition of English taxes on colonial goods. However, while people may understand that taxes helped contribute to colonial unrest and encouraged revolutionary behavior, many lack a true understanding of the impact of British fiscal policies on the colonists. In order to understand how England's imposition of taxes helped lead to the American Revolution, one must first understand England's financial system at the time of the Revolution. During that time period, England was the world's largest imperial power, and its financial strength depended on two things: the wealth of its colonies, and its ability to control those colonies. Having gained an understanding of British colonialism, one must then understand the specific acts that the British passed to target the American colonies. The first of those acts was the Sugar Act. After the Sugar Act, the British passed the Stamp Act, which differed from the Sugar Act in that it represented a British attempt to impose a new type of tax. The colonists reacted vehemently against the Stamp Act, and the British responded by imposing the Townshend duties. While these three different acts may seem repugnant to modern Americans, they were consistent with England's position as the major colonial power. Therefore, it is clear that England's financial system, rather than any form of political tyranny, was responsible for the American Revolution.

At the time of the American Revolution, England had vast global holdings. Obviously, much of North America had been colonized by the British, but the American colonies represented only part of England's holdings. In fact, the British controlled the majority of islands off of North America and in the Caribbean. Furthermore, the British controlled large parts of India, parts of Eastern Asia, and much of Africa. The result is that Britain had an empire that rivaled the Roman Empire or the lands controlled by Alexander the Great. The British Empire was, in reality, far vaster than either of these preceding empires because it included such a tremendous portion of the New World, which had not yet been discovered during those two previous large empires.

This vast colonial system was incredibly lucrative for England, but it also created a significant financial burden. First, in order to secure the colonies, the English often had to expend tremendous financial and human resources. For example, although initial colonization of the United States was relatively inexpensive, Great Britain had to wage military actions against the French and several Native American tribes to retain control over the claimed area. This was not unusual and was a problem in colonies outside of North America as well; in fact, even after securing control of the colonies, the English could expect to face significant resistance from natives and from competing imperial powers. This competition led to English involvement in a series of wars and skirmishes, which taxed its tremendous financial holdings. These wars were only the latest in England's war-strewn history. Therefore, England desperately needed to use the financial resources of its colonies to re-fill its over-stressed coffers. While this policy may have appeared unfair to the colonists, requiring citizens in Britain to pay for the defense of overseas colonies would have been equally unfair to those citizens.

Of course, taxation represented only a small portion of the British financial system at the time of the American Revolution. On the contrary, taxation formed only a small part of the mercantile system. This was important because:

British colonialism in the eighteenth century was based on mercantilism, an economic practice which tied colonies to their mother country. Colonies shipped raw materials to Britain where they were either consumed or used for manufacturing and trade. Most important, the colonies had to buy their imports from the mother country. Mercantilism gave British merchants a monopoly on colonial trade.

Mercantilism gave Britain a tremendous economic advantage, not because of taxation, but because it gave British merchants a guaranteed market for their goods. Furthermore, mercantilism furthered the colonial system. For example, the Crown tried to prevent the colonists from importing items like molasses. This did not protect manufacturers in England, but British merchants who owned sugar plantations in other colonies.

Britain was not alone in having a mercantile system. On the contrary, many nations believed that their economic prosperity was dependent upon the amount of capital that they could control. In fact, imperialism and the drive to colonize foreign lands were based on the idea that controlling more access to goods placed a country in a better economic position. Another aspect of mercantilism is the belief that global trade exists in a fixed volume. Therefore, those who control more resources will not only get a larger amount of global trade, but also a larger percentage of global trade. Furthermore, adherents of the mercantilist theory believe that the government should encourage exports but discourage imports through the uses of tariffs, duties, and other taxes. Therefore, Britain's treatment of the American colonies did not differ from how other imperialistic nations treated their colonies; in fact, Britain gave its colonists greater rights than colonists of most other countries enjoyed. On the contrary, it may have been the fact that the colonists had long enjoyed a hands-off financial policy from Great Britain that made them react so vehemently to the Crown's attempts to impose taxes and duties on them.

This vehement opposition appears irrational from a modern point-of-view. After all, while England needed to impose taxes to increase its own governmental resources, it did not intend to divert funds it collected from the colonies for that purpose. On the contrary, "the taxes the British tried to collect were modest; the money was to be spent entirely in the colonies for their benefit and protection. It was not going to be sent back to the mother country." The Crown was simply trying to remedy the fact that it was bearing the cost of governing the colonies, and reaping little direct financial reward from those colonies. Furthermore, even if England had chosen to divert the funds to pay for prior wars, the colonists had received tremendous benefits from some of those wars. For example, the colonists had benefited from "recent military victories that removed the threat of French imperialism and opened up the western frontier." Therefore, it would not have been unreasonable for the Crown to expect the colonists to foot the bill for some of those benefits.

By this time, it should be clear that taxation in the British colonies, at least in the form of tariffs and duties, began long before the American Revolution. The Navigation Acts allowed Britain to tax the colonies and supported the mercantile system, by placing import duties on non-British merchandise. The Navigation Acts were an indirect and external tax. Furthermore, by smuggling in goods and bribing customs officials, the colonists were largely able to mitigate the financial effects of the Navigation Acts. In fact, England tolerated widespread evasion of those laws. However, by the last 1760s, England tired of this evasion and sought to enforce the Navigation Acts through Writs of Assistance, which were open-ended search warrants. These search warrants helped enforce taxation, because they permitted customs agents to search for smuggled goods. Therefore, the Writs of Assistance had the potential to create substantial economic hardships for the colonies. The colonists objected to the Writs of Assistance because they had few limitations, and were issued without probable cause. The first formal challenge to those acts was mounted by Massachusetts lawyer James Otis in 1761. Otis' challenge was unsuccessful. However, "the case attracted attention and thereafter judges and lawyers worked together to frustrate customs officers trying to obtain the writ." The result was that most colonists were never oppressed by the Writ of Assistance.

Although the Writ of Assistance had proven largely ineffective, the Crown attempted to impose another tax that would require enforcement by customs agents. The Sugar Act, formally known as the Revenue Act of 1764, gave preferential treatment to British sugar merchants, who had been damaged by American colonists purchasing French molasses instead of British sugar. Britain had imposed duties on molasses and sugar prior to the Sugar Act. In fact, "the Molasses Act of 1733 had called for a tax of sixpence per gallon on non-British sugar and molasses imported into the North American colonies." However, by smuggling and bribing customs officials, colonists were largely able to avoid the tax. This condition would have changed dramatically under the Sugar Act, which imposed import duties on items beyond sugar, such as wine, fruit, coffee, cloth, and tropical foods. While French molasses had been easy to smuggle, some of these other goods had limited means of entry into the American colonies, which would have made smuggling them much more difficult. In fact, the custom agents would not require Writs of Assistance in order… READ MORE

How to Reference "Taxes and Financial Policy of England and How it Contributed to the Revolution" Term Paper in a Bibliography

Related Term Papers:

American Revolution and Outbreak of French Research Paper

American Revolution contribute to the outbreak of the French revolution?

The American and the French revolutions are two important moments in the history of Western civilization. They are part of… read more

Research Paper 20 pages (6922 words) Sources: 30 Topic: World History

---

Sociology History of Business Science Research Proposal

Delimitations

Today, modern business systems help an increasingly globalized world function in seamless ways. In fact, English is rapidly becoming the lingua franca of the business world and transnational borders… read more

Research Proposal 75 pages (20751 words) Sources: 20 Topic: Business / Corporations / E-commerce

---

Political Psychology Essay

American Revolution

Motivations of the American Revolution

Some may say that the American Revolution was conceived during the earliest days of British colonization. Inspired to move to the new world… read more

Essay 3 pages (717 words) Sources: 1+ Topic: American History / United States

---

Career Orientation of Bank Managers in Pakistan a Private Public Sector Comparison Term Paper

benchmark regarding bank manager careers in Pakistan. Islamic banking is a growing feature of banking in the region, and Pakistan as a nation has expressed interest in being the banker… read more

Term Paper 75 pages (21790 words) Sources: 1+ Topic: Economics / Finance / Banking

---

History of Swiss Banking System Term Paper

History Of Swiss Banking

In addition to the secrecy of Swiss banks, they differ from United States (U.S.) banks in two other significant ways, the variety of services offered and… read more

Term Paper 7 pages (2877 words) Sources: 1+ Topic: Economics / Finance / Banking

---

View 100+ more related papers  >>