ACCOUNTING FOR THE STAMP ACT CRISIS

Accounting Historians Journal, The, Dec 2008 by Oats, Lynne, Sadler, Pauline

Abstract:

In 1765, the British Parliament imposed stamp duties on the American colonies, setting in motion the chain of events which ultimately led to the American Revolution. This paper analyzes the practicalities of the Stamp Act to provide insights into the way in which a tax instrument that was successful in one setting failed to achieve similar success in another. The reasons for choosing stamp duties as an appropriate fiscal measure, the colonial reaction to the tax, and the way in which the tax was accounted for by the British government bureaucracy are examined. The paper demonstrates the value of using an accounting lens to provide a more nuanced interpretation of the Stamp Act crisis.

INTRODUCTION

Taxation lies at the heart of the relationship between the state arid its subjects and is intertwined with accounting. Its design is informed by accounting and its implementation creates new accountings for both the state and the subject. The purpose of this paper is to examine a particular incarnation of taxation - the imperial stamp duty imposed by the British Parliament on the American colonies briefly from 1765 to 1766, the demise of which is referred to as the "Stamp Act crisis." The version of stamp duty imposed on the colonies bore strong resemblance to that in operation in Great Britain with some modifications to accommodate colonial conditions. By the middle of the 18th century, a stamp duty had become an accepted part of the tax landscape in Britain, and the administrative machinery by which it was collected was firmly established. In view of this, the vehement rejection of a similar impost by the colonists was not a response that was either anticipated or expected. The response by the colonists can, we argue, be partly attributed to inadequate design. The British government failed to consider fully the logistical difficulties that would arise in putting the stamp duty in place in a remote location.

As a precursor to the American Revolution, the Stamp Act crisis is an important object of study. Indeed, much has been written about it in terms of its broader political implications [Morgan and Morgan, 1953; Gipson, 1954; Morgan, 1973; Thomas, 1975; Bullion, 1982] and from the perspective of contemporary ideology [Bailyn, 1967]. We have, however, identified a gap in the literature as little has been written about the Stamp Act crisis from the viewpoint of its logistics. The questions of how it was to be administered, what problems were associated with its implementation, and how the proceeds were accounted for have rarely been addressed. In this paper, we consider the practicalities of the Stamp Act, its initial design, and the mechanics of its operation, so as to provide insight into a neglected aspect of the crisis and the method of accounting. This paper also makes a contribution to the literature relating to 18th century taxation in a colonial setting, another topic on which little has been written.

The focus of our examination is a set of accounts discussed below. These were drawn up in 1772, and provide clear evidence in an accounting context of the failure of the stamp duty to operate as planned. We consider these, together with other primary source documents, and formulate an additional explanation for the failure of the imperial Stamp Act. The episode highlights the difficulties in achieving action at a distance in a pre-modern setting. The set of audited accounts, contained in the National Archives, followed the return of unused stamped paper to Britain and relate specifically to the "American Stamp Duties" [N.A.: AO3/10861]. The main account, shown in Figure 1, is supported by a number of subsidiary accounts. In order to explain the way in which the final version of the Stamp Act was administered, we draw on these accounts, which raise a number of questions about the logistics of implementing the stamp duty. Although referred to in passing by a number of commentators, we have been unable to uncover any systematic attempt to unravel and explicate the 1772 American Stamp Act accounts, other than a description of its contents in Koeppel [1976]. The accounts provide a fascinating glimpse into the convoluted way in which the process of handling the stamped paper was managed between the various actors responsible for putting the Stamp Act into operation. Unfortunately, we have been unable to locate the underlying working papers and, as a result, some of the entries depicted in the accounts cannot be verified or even explained.

A cursory examination raises some interesting issues to which this paper will refer; for example, the role of the warehouse keepers, one of unstamped goods and one of stamped goods. In addition, there is the matter of only ?4,000 recorded as received for a tax that was predicted to produce significantly more revenue, the cancellation of stamped paper to the value of approximately �155,000, and the outstanding balances due from the stamp distributors in the colonies. All of these are evidence of the signal failure of the Stamp Act in America.