Representation without Taxation: The Colonial Roots of American Taxation, 1700-1754

By Rabushka, Alvin | Policy Review, December 2003 | Go to article overview

Representation without Taxation: The Colonial Roots of American Taxation, 1700-1754


Rabushka, Alvin, Policy Review


IN A PREVIOUS issue of Policy Review (August & September 2002), I published an article entitled "The Colonial Roots of American Taxation, 1607-1700." In it, I described the mixed bag of public finance schemes in the American colonies first years--and the determination with which the continent's earliest European settlers tried to avoid even relatively low taxes. It seems fair to say, overall, that the low taxes of those years contributed to the rapid growth of the colonies.

In this article, we will look at the first half of the eighteenth century, from 1700 to the beginning of the French and Indian War in 1754. It is a unique period in American history; the colonists discovered what we might call "representation without taxation," a tax-free means by which to finance government based on the collection of interest payments on loans secured against the assets of borrowers. Representation without taxation came about partly by intent and partly by accident. Yet the lesson quickly spread throughout most of the colonies, and the low-tax colonial environment of the seventeenth century gave way almost to a no-tax environment in the first half of the eighteenth--again, not coincidentally, a time of rapid growth in the colonies.

Growth and money

THROUGH NATURAL GROWTH and immigration, the population of the American colonies grew rapidly in the first half of the eighthteenth century. In 1700, the estimated population of the colonies stood at 250,888, of whom 27,817 were Negroes. (1) By 1750, the number reached 1,170,760, a more than fourfold increase, of whom 236,420 were Negroes (a nearly tenfold rise, reflecting the rapid growth in slavery and the diminishing relative importance of white indentured servants). The official establishment of Georgia in 1732 filled out the last of the original 13 colonies. (During the same period, the population of England grew far slower, from 5,026,877 to 5,739,364. Union with Scotland in 1707 added another 1,275,000 to this total.)

Despite some urban growth, the colonies remained largely agricultural communities. In 1700, the population of the five leading port cities of New York, Philadelphia, Boston, Charles Town (Charleston), and Newport was estimated at about 21,200. In 1743, that number had risen to 53,382 (which rose in turn to 72,881 in 1760). By 1754, Philadelphia had become the third largest city in the British Empire, surpassed only by London and Bristol. Although these numbers are small in modern terms, they were large by the standards of the mid-eighteenth century. By 1754, the American colonies had become a serious economic rival of the mother country. For example, Philadelphia merchants exported a large variety of natural products of the greater Philadelphia region, including agricultural products, animals and animal products, raw materials, and wooden products, among others, importing manufactured goods and other raw materials in return. Other ports specialized in the produce of their surrounding regions.

In general, incomes, wages, living standards, and the opportunity to own land in the colonies far surpassed those of the average man in Great Britain or continental Europe. The result was steady immigration to the American colonies.

During the first half of the eighteenth century, representative assemblies (lower houses of colonial legislatures) gained increasing control over internal colonial public finances, wresting the power of the purse from colonial governors and crown-appointed councils (upper houses). Representative assembly members were accountable to their electorates, which consisted of adult male taxpayers. Registered voters, who qualified on the basis of wealth or income or freeman status (and religious and other qualifications in some colonies), constituted less than half of all males, and voter turnout was often less than one-quarter of eligible voters. Taxation was a dominant issue in election campaigns during legislative proceedings. …

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