This was one of the first decisions of British Parliament that gave a real boost to organizers smuggling in New England colonies. Simultaneously it promoted corruption among customs officials. To crack down colonial trade with countries other than Britain, especially France, the government created a new on foreign molasses.
The Molasses Act of 1733 was enacted by the British Parliament on the 13 colonies of America with the purpose of protecting its sugar plantations in the West Indies. This act was not designed to raise revenue but it was part of England’s mercantile policy of the time and a continuation of the Navigation Acts. Molasses was imported in great quantities by the colonies and particularly by New England where it was used to manufacture rum which was then exported to the rest of the colonies; it was a highly profitable and thriving business. Not only did the New England colonies imported molasses from Jamaica and Barbados but also from non-British plantations such as Santo Domingo and Martinique, colonies of Spain and France respectively. The British argued that their colonies in the West Indies produced enough quantity to supply its colonies.
Sugar cane plantations in the West Indies to manufacture the cane into sugar and molasses
British sugar cane growers could not compete successfully against the more fertile lands of French and Spanish colonies in the West Indies. Instead of fair trade, British producers wanted to protect their market and lobbied Parliament for a tax on foreign molasses. On December 25, 1733 the Molasses Act came into effect imposing a duty of 6d per gallon on molasses imported from non-British colonies.
Manufacturers of rum feared that supply of molasses and its higher price would affect its manufacturing capacity and therefore lose market share in an already competitive market. If the duty was paid it would amount to 100% of its value. Colonial businessmen bypassed this law by smuggling molasses from French and Spanish colonies at a cheaper price. The customary bribe to clear customs in New York and Massachusetts amounted to half a penny a gallon, this trade prospered for many years, yet the British authorities did not seriously enforce it.
The act collected £330 sterling in its first year, falling to £76 annually during the 1738-1741 period, well below the cost to administer it.
In 1763, Charles Townshend, then president of the Board and Trade, proposed to use the act to raise revenue from the colonies. He set to reduce the tax rate from 6d to 2d per gallon of molasses. The purpose was make traders pay the lower tax instead of smuggling and enforce its collection with the 1763 Hovering Act. The following year the Molasses Act was replaced by the Sugar Act setting the tax at 3d.
