1764 – Sugar Act

The origins, implementation and consequences.

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1764 – Sugar Act

Definition of Sugar Act

The American Revenue Act of 1764, so called Sugar Act, was a law that attempted to curb the smuggling of sugar and molasses in the colonies by reducing the previous tax rate and enforcing the collection of duties. It added several products such as hides, skins and potash to the list of enumerated commodities that could be legally exported under the Navigation Acts. It was introduced by the new British Prime Minister, George Grenville. The 1764 Sugar Act amended the existing 1733 Sugar and Molasses Act.

Purpose of the Sugar Act

The goal of this law was threefold. First, the British realized that smuggling was close to endemic and that the rule of law was being undermined by illegal trade. Second, protecting British trade by introducing new trade restrictions following the established Navigation Acts. Three, the French Indian War had taken a toll on British finances and Americans had to pay for their own protection. With these objectives in mind, the Sugar Act was designed to crack down colonial trade with countries other than Britain, especially France and Spain with colonies in the West Indies while increasing revenue to pay British debt.

Sugar cane plantations in the colonies of the West Indies

The older Sugar and Molasses tax charged the customer a duty of 6 pence per gallon of molasses. The bribe to customs officials per gallon of smuggled molasses was 1.5p. The new Sugar Act lowered the duty to 3p per gallon. The British wrongly assumed that Americans would be willing to accept the newly reduced tax. The smuggling continued until 1766 when the tax was lowered to one pence, making it cheaper to legally pay the tax than to smuggle. The revenues collected amounted to an average of £30,000 a year from 1765 to 1774.

Year	Molasses	Sugar	Coffee	Madeira	Port	Pimiento	Indigo	Total Sugar Act
Source: Alvin Rabushka, Taxation in Colonial America, 753. Princeton University Press
1765								14,091
1766								26,696
1767								33,844
1768	11,927	4,145	937	7,000	254	99	28	24,659
1769	18,488	12,836	1,425	6,510	433	107	139	39,938
1770	15,103	8,759	1,418	5,341	108	72	109	30,910
1771	15,806	5,269	818	4,872	240	80	1	27,086
1772	20,328	14,055	1,461	6,055	417	159	95	42,570
1773								39,531
1774								27,074

Effects of the Sugar Act

In order to enforce the collection of taxes violators were tried in admiralty courts where a judge decided the outcome rather than in colonial courts in where the decision was left to a jury. Admiralty courts were located in Halifax, Nova Scotia while colonial courts were local. Admiralty judges were awarded 5% of the confiscated cargo as compensation which gave them the financial incentive to find the violator guilty and thus enforcing the law vigorously. This new system removed the traditional British protection to a fair trial.

In addition to lowering the tax on sugar and enforcing collection of taxes, the new law also affected the trade of certain commodities. Lumber and iron were added to the list of products that could be traded only with England. Duties were introduced to the importation of coffee, pimiento, wine from Madeira and the Azores and French and West Indian goods. With few exceptions vessels going to the colonies had to pass through Britain, unload its cargo, pay duty on it, reload it and sail to the colonies. These measures increased the cost of doing business and undermined local industry.

The Sugar Act and the American Revolution

Because of the strict enforcement the act did accomplish its goal of reducing smuggling which affected colonial economy, especially in Massachusetts, New York and Pennsylvania. The protests against the act were heavier in affected colonies and almost non-existent in unaffected ones. The law nevertheless promoted boycott of British luxury goods in some colonies and gave some boost to local manufacturing.

For the first time the Sugar Act raised different constitutional issues. While many perceived the Sugar Act as an infringement of their constitutional rights because they were, for the first time, taxed to raise revenue for the benefit of the crown, others viewed it as a tax to regulate the flow of trade and as a continuation of the existing and long accepted 1733 Molasses Act. Those who perceived the law as unconstitutional thought that the law transformed a trade regulation into a revenue measure. Colonial residents had a fragmented view and it was not perceived in a uniformed way. The following year most colonial residents would agree that the proposed Stamp Act of 1765 violated their colonial rights of “No taxation without representation”.