Following the Peace of Paris, British possessions in North America stretched from the northern reaches of Hudson Bay to the Florida Keys and from the Atlantic coast to the Mississippi River. The French and their Indian allies, who had long terrorized the American colonists, were no longer a threat. The British navy ruled the seas. It protected a global commerce that underwrote British financial preeminence. Already Britain was taking its first steps in an industrial revolution that would make it the “workshop of the world” for much of the nineteenth century. The American colonists shared in the prosperity of Britain's trade and enjoyed the fruits of it manufactures. Victorious over all foes, King George's subjects — both British and American — could take just pride in the burgeoning power of Britannia. Now was the time to enjoy the spoils of victory.

A combination of events and economic necessity would soon sour the glorious prospect of 1763. Pitt's successors had to pay for victory. Within a dozen years the American empire, won so gloriously by the sacrifices of men like Wolfe, would be shattered.

William Pitt was a statesman, not a financier. Through his single-minded determination to crush the French, he had engineered victory in America. But the cost of the armies that took Fort Duquesne, Montreal, and the city of Quebec, and the fleets that sustained them, had been ruinous. At the end of the war, the British national debt had reached the stunning figure of £144 million.

The ministry of George Grenville, which tackled the issue of the debt in 1764 and 1765, was typical of British governments in the 1760s. These governments were short-lived, usually lasting only around two years, relying on the favor of the young and opinionated King George III and fragile majorities in Parliament. Careful, sustained policymaking was difficult in such a political atmosphere.

Pride in Britain's and Parliament's achievements in the war united the men who served in the various governments of the 1760s. The empire, even if founded in a fit of absent-mindedness, was now seen as a measure of British greatness. The men in charge of affairs in London believed that imperial policy could no longer be allowed to drift along customary channels as it had for so many years in the past. Pitt's heirs saw themselves, too, as men of action and decision. They would streamline and render more efficient the machinery of imperial governance. They would address problems that had hitherto been ignored. The well-meaning resolution of these men would lead to disaster.

The British people had been taxed heavily for years, and there was growing unrest in certain influential quarters about the level of taxation. The American colonists, by contrast, were only lightly touched by the British Exchequer, mostly through the regulations of the Navigation Acts; even there the colonists often found ways around paying the necessary duties. Parliamentarians remembered the colonists' grudging response to requests for money during the war. George Grenville believed it only reasonable that the Americans contribute to defraying the debt of a war that had brought them so many benefits.

In the spring of 1764, Grenville carried through Parliament a series of acts designed to refurbish colonial administration and raise revenue from America. A Currency Act prohibited the cash-strapped colonies from issuing paper currencies. This placated British merchants but hobbled many colonial economies. New regulations essentially ended the period of salutary neglect.

The American customs service was overhauled. Colonists accused of smuggling now had to cover the cost of trial and could no longer sue for damages if their goods were seized unfairly. Most ominous of all from the colonists' standpoint, a new vice-admiralty court with jurisdiction for all North America was established at faraway Halifax; colonists might be forced to defend themselves in the wilds of Nova Scotia rather than in friendly local courts. Americans were now faced with the unsettling prospect of the enforcement of the Navigation Acts. Finally, the Sugar Act increased duties on sugar and a variety of other products. For the first time in history, Parliament had passed a tax intended to raise money directly from the American colonists.

The American colonies were undergoing a postwar economic slump when word of Grenville's legislation arrived. A rejuvenated British customs service was hardly welcome. The British government was able to raise ten times as much revenue from the colonies as it had before the Grenville Acts. But however irksome they were, the new laws did not threaten the fundamental prosperity of the colonies. More alarming to the Americans were the principles involved. Over the long period of salutary neglect, the Americans had grown used to governing themselves. They cherished the rights that they perceived had been sanctified by time. One of the ironies of this period is that in the eyes of the American colonists, it was the British government that was behaving in a revolutionary fashion, upsetting all precedent and tradition.

The actions of successive British ministries evoked memories of the seventeenth-century English struggle against royal absolutism. The Americans believed that Parliament threatened liberties consecrated by the Glorious Revolution. The new customs regulations subverted the principles that a person was presumed innocent before being proven guilty and was entitled to a trial by his peers. The Sugar Act imposed taxes on the colonists that they believed could only lawfully be imposed by their own elected representatives. To resist the Grenville Acts was simply to stand up for their liberties as good Englishmen. Opposition centered at first in commercial Massachusetts. The legislation was denounced, other colonies were contacted to coordinate resistance, and a boycott was begun on imported British goods. By the end of the year the nonimportation movement had spread to New York and beyond.