Great Britain’s Evolving Tax Policies
From Salutary Neglect to fiscal aggression

Sir Robert Walpole, leader of the Whigs in the House of Commons, becomes chief minister to King George I (and George II, 1727-1760), a position he occupied until 1742. In this role, and during his service as First Lord of the Treasury and Chancellor of the Exchequer, Walpole became the primary architect of imperial colonial policy between 1714 and 1742. Relieved of the burden of global war with France, Walpole deferred to the wisdom of his personal motto, “Let sleeping dogs lie,” when dealing with the North American colonies. He accepted the status quo, instituted few new policies, and scaled back the degree of official interference in colonial affairs, an approach that came to be known as “salutary neglect.” Walpole decided that forceful imperial rule only stood to interfere with his preference for a merchant-dominated empire based on trade.

Walpole’s benign hand and deference to merchants fostered an already prominent trend toward legislative autonomy in the colonies. Prior to 1689, royal authorities and authoritarian elites wielded the upper hand in colonial politics. In the 18th century, as colonial societies grew and became more diversified, colonial politics tended to become more representative and slightly more democratic. The ideological influence of the Glorious Revolution complemented these demographic changes. Drawing on the example of the English Whigs, leaders of the American representative assemblies established the same committees that existed in the House of Commons. Foremost among the powers coveted by colonial legislatures was the authority to levy taxes. Control of taxation, in turn, served as a wedge to procure greater constitutional equity relative to a royal or proprietary governor. The connection was simple: Assemblies voted for taxes that paid the governor’s salary, an important bargaining chip in negotiations over the control of patronage and the budget. Sovereignty over taxation and revenue also served to stymie the implementation of unpopular imperial edicts. Royal bureaucrats and absentee proprietors roiled at such insolence, but legislative autonomy became a fact of political life in the colonies. Of course, royal governors continued to exert their influence through control of patronage and land grants, but political authority gradually reverted to parochial leaders who controlled the assemblies. These assemblymen, in turn, marshaled local support to resist governors or royal bureaucrats.

In British politics, Walpole secured support for the Crown’s policies through assiduous dispensations of patronage, pensions, and gifts. This strategy had a discernible impact on the royal customs bureaucracy in the colonies. The patronage system tended to fill colonial posts with mediocre officials concerned with their own enrichment rather than the integrity of imperial trade policies. Such men were more susceptible to bribes and less likely to challenge the will of local elites. Patronage eviscerated the Board of Trade, traditionally the institutional spearhead for colonial discipline. Lacking reliable support, even the most reform-minded governors and officials could do little but assent to colonial preferences.

Walpole’s opponents in Parliament decried the strategy he employed to build a strong “court party,” claiming that it encouraged corruption and enervated the principles of constitutional monarchy established during the Glorious Revolution. These “Real Whigs” were joined by another set of critics loosely referring to themselves as the “country party.” The latter criticized Walpole’s close ties with merchants and financial institutions, and warned of the threats to liberty embodied by high taxes, extensive royal bureaucracies, a standing army, and large national debts.  Ironically, even as Walpole’s patronage system worked to their political advantage by etiolating royal influence in North America, colonists found much that was appealing in the rhetoric of the minister’s opponents. They still rankled at the arbitrary power royal governors employed – vetoing legislation and using land grants and appointments to influence legislators’ votes. Real Whig ideology indicted excessive executive power and corruption as forces corrosive to representative bodies and traditional liberty. Such rhetoric resonated with colonists, especially influential assemblymen.

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.