The British economy in 1763 was in a shambles due largely to the recent war with the French. The national debt of Britain had doubled, and taxes were outrageous. People in England thought that the colonies with their ever-growing wealth should be made to pay taxes too. The colonists had benefited the most from the war with protection and new lands to settle. However, at that time, they were not paying anything towards the support of the British army in America. Some of the colonies had given generously to the efforts of the war, both financially and militarily. England was still determined to recover some of the enormous costs of the war and assert control over the growing British Empire.
| mercantilism | An economic theory that countries should accumulate wealth in competition with other nations. |
In 1763, George Grenville became the prime minister of England. He was a conscientious man who was determined to make the colonists help pay the debt of the British Empire. He planned to do this using the standard economic theory of his day, mercantilism. Mercantilism was an economic theory based on the idea that countries should accumulate wealth by accumulating gold or silver in competition with other nations. As far as colonies were concerned, they were to provide the mother country with food and raw materials while purchasing manufactured goods exclusively from it. This would keep precious metals from being used to purchase raw materials from other nations and would provide a profitable market for manufactured goods.
England had, among its laws, the Navigation Acts that required the colonies to trade only with England on English ships. These had never been enforced, and the colonies had a substantial trade with Europe by 1763. Grenville's first decision was to enforce the Navigation Acts, cutting off American profits. This action caused many problems because England was unable to provide some products thought to be essential to the survival of the colonies. Products brought in from other countries had to first go to England where they were tagged with heavy taxes. Grenville decided to begin direct taxation of the colonies to help with England's financial crisis. These taxes will be discussed later.
