The Currency Act of 1764

Virginians, only indirectly effected by the Sugar Act, were deeply effected by the second part of the Grenville program—the Currency Act of 1764. During the French and Indian War Virginia had printed several paper money issues to finance the war and provide currency in the specie-short colony. The various issues, eventually totaling over £500,000, circulated for a fixed number of years and then were to be redeemed upon presentation to the treasurer, Speaker John Robinson. As the war lengthened and the number of paper money issues increased, considerable confusion developed over the amount of money outstanding, the rate of exchange, and its use as legal tender for personal debts as well as public taxes. Although backed by the "good will" of the General Assembly, this money (called "current money") was discounted when used to pay debts contracted in pounds sterling. Although the official exchange rate set by the assembly was £125, Virginia current money equalled £130-£165 per £100 sterling, averaging £155-£160 in 1763 and early 1764. The citizens were compelled by law to accept inflated Virginia paper currency as legal tender for debts which they had contracted in pounds sterling. The fiscal problems were most critical in Virginia, but they also existed in most colonies outside New England whose colonies parliament restricted under a currency act in 1751. In response to pleas from London merchants, Grenville devised and parliament passed the Currency Act of 1764, prohibiting the issuing of any more paper money and commanding all money in circulation to be called in and redeemed.

The result in Virginia was sheer consternation, especially among the hard-pressed Tidewater planters. In the process of calling in the money a severe currency shortage developed and some financial hardship occurred at the same time the Stamp Act took effect. More significant than the economic impact was the political impact of the Currency Act on Virginia politics and the political fortunes of key Virginians. Among the many Virginians caught up in the Currency Act none was more involved than Speaker John Robinson. At his death in May 1766 an audit revealed massive shortages in his treasurer's account books resulting from heavy loans to many Tidewater gentry and political associates. The Robinson scandal brought about a redistribution of political leadership in Virginia and brought into the leadership circle the Northern Neck and Piedmont planters who formerly were excluded.[12 ]

The third facet of the Grenville revenue plan was the infamous Stamp Act. Grenville and his aides perceived the tax bill as a routine piece of legislation which would extend to the colonies a tax long used in Britain. Grenville announced in March 1764 the ministry's intention to present to the commons a stamp tax bill at the February 1765 session of parliament. He "hoped that the power and sovereignty of parliament, over every part of the British dominions, for the purpose of raising or collecting any tax, would not be disputed. That if there was a single man doubted it, he would take the sense of the House...." As another observer put it, "Mr. Grenville strongly urg'd not only the power but the right of parliament to tax the colonys and hop'd in Gods Name as his Expression was that none would dare dispute their Sovereignty."[13 ] The House of Commons, as quick as the Virginia House of Burgesses to proclaim its sovereignty rose to Grenville's bait and declared in a resolution of March 17, 1764 that "toward defending, protecting, and securing the British colonies and Plantations in America, it may be proper to charge certain Stamp Duties in the said Colonies and Plantations...." In that simple phrase parliament declared its full sovereignty over the colonies and from it never retreated.

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Virginia and the Stamp Act, 1764

That Grenville might have hoped that the "power and sovereignty of Parliament ... would not be disputed" suggests the degree to which he did not comprehend 18th Century colonial constitutional developments. Virginia reaction was immediate, clear, unequivocal, and illustrative of just how deeply ingrained were Virginia's constitutional positions about the limits of parliamentary authority. In 1759 the General Assembly had elected a joint committee to correspond regularly with its London agent and to instruct him on matters of policy and legislation pending in England. This committee was meeting on July 28, 1764, in Williamsburg drafting instructions to agent Edward Montagu on the Sugar Act when word arrived from Montagu about the commons resolution. The Committee of Correspondence's reply was instantaneous:

That no subjects of the King of great Britain can be justly made subservient to Laws without either their personal Consent, or their Consent by their representatives we take to be the most vital Principle of the British Constitution; it cannot be denyed that the Parliament has from Time to Time ... made such Laws as were thought sufficient to restrain such Trade to what was judg'd its proper Channel, neither can it be denied that, the Parliament, out the same Plentitude of its Power, has gone a little Step farther and imposed some Duties upon our Exports....

P.S. Since writing the foregoing Part ... we have received your letter of the parliam'ts Intention to lay an Inland Duty upon us gives us fresh Apprehension of the fatal Consequences that may arise to Posterity from such a precedent.... We conceive that no Man or Body of Men, however invested with power, have a Right to do anything that is contrary to Reason and Justice, or that can tend to the Destruction of the Constitution.[14 ]

Navigation Acts were acceptable, Stamp Acts were a "Destruction of the Constitution."