2.1 Economic causes of the American Revolution

British economic policies in the American colonies sparked growing resentment. Laws like the Navigation Acts, Sugar Act, and Stamp Act restricted trade, raised taxes, and limited colonial economic autonomy. These measures aimed to benefit Britain at the expense of colonial prosperity.

Mercantilism shaped the British-colonial economic relationship, with colonies serving as sources of raw materials and markets for British goods. Restrictions on colonial manufacturing and currency policies maintained dependence on Britain. These constraints fueled arguments for revolution based on economic grievances and desires for self-determination.

British Economic Policies and Colonial Resentment

British policies and colonial resentment

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• Navigation Acts restricted colonial trade to British ships led to reduced profits for colonial merchants
• Sugar Act (1764) lowered tax on molasses but increased enforcement expanded list of taxable goods (paper, glass)
• Currency Act (1764) prohibited colonies from issuing paper money created economic instability
• Stamp Act (1765) required stamps on legal documents, newspapers, and printed materials increased cost of daily transactions
• Townshend Acts (1767) imposed duties on common goods (glass, lead, paint, paper, tea) raised prices for colonists
• Tea Act (1773) granted monopoly to East India Company for tea sales in colonies undermined local merchants

Mercantilism in colonial economics

• Mercantilism prioritized accumulation of wealth through favorable trade balance shaped British-colonial economic relationship
• Colonies served as sources of raw materials (timber, tobacco, cotton) and markets for British manufactured goods
• Restrictions on colonial manufacturing limited economic diversification (Iron Act 1750)
• British maintained trade surplus with colonies through strict policies
• Currency policies limited colonial currency maintained dependence on British pound

Impact of British taxes on colonies

• Agriculture: tobacco and sugar planters profits decreased due to trade restrictions grain farmers faced export regulations
• Manufacturing: limits on finished goods production stunted industrial growth
• Shipping and trade: Navigation Acts reduced colonial merchant profits increased smuggling
• Retail and consumer goods: import duties raised prices led to boycotts of British goods
• Banking and finance: Currency Act hindered local economic management lack of specie (gold and silver) created monetary issues

Economic arguments for revolution

• Taxation without representation: colonists demanded elected representatives in Parliament for tax decisions
• Natural rights and property: John Locke's ideas on government's role in protecting property rights influenced colonial thinking
• Free trade arguments: Adam Smith's critiques of mercantilism gained popularity among colonists
• Self-sufficiency: campaigns promoted colonial manufacturing reduced dependence on British goods
• Economic potential of America: independence would unleash colonial economic power
• Unfair burden of British debt: colonists resented paying for Seven Years' War costs
• Boycotts as political action: non-importation agreements used as economic leverage against British policies