Background: The Navigation Acts

The English Navigation Acts, which were passed in the 17th and 18th centuries, restricted foreign trade by England's colonies. In essence, the Acts forced colonial trade to favor England and prevented colonial trade with the Netherlands, France, and other European countries. These Acts formed the basis for British overseas trade for nearly 200 years.

Rationale

The major impetuses for the Navigation Acts were the ruinous deterioration of English trade in the aftermath of the Seven Years' War and the opening of trade between the Spanish Empire and the Dutch Republic. Within a few years, Dutch and Spanish merchants overwhelmed English merchants in commerce on the Iberian Peninsula, the Mediterranean, and the Levant. Even the trade with English colonies was dominated by Dutch merchants, who crowded out English direct trade with a sudden influx of commodities from the Levant, the Mediterranean, the Spanish and Portuguese empires, and the West Indies, carried in Dutch ships and ultimately increasing Dutch profit. For the British government and its traders, the most direct solution was to seal off the British-Scottish markets to these unwanted imports.

Passing and Enforcing the Navigation Acts

The Navigation Act was first passed in October of 1651 by Parliament, led by Oliver Cromwell. This first Act reinforced a longstanding government principle that English trade should be carried in English vessels. The Act banned foreign ships from transporting non-English goods to England or its colonies. The Act specifically targeted the Dutch, excluding the Netherlands from essentially all trade with England. In some instances, British colonists and foreign merchants subverted the Act; for example, in the West Indies, the Dutch kept up a flourishing "smuggling" trade due to the preference of English planters for Dutch goods and the better deal the Dutch offered in the sugar trade. The Dutch colony of New Netherland also offered a loophole through intercolonial trade, as settlers in different colonies traded with each other.

Later revisions of the Act added new regulations. Ships' crews had to be three-quarters English, and ship captains were required to post bond to ensure compliance. The 1663 revisions required all trade to be carried in English vessels. Importers of enumerated commodities (goods that were only permitted to be sent to limited destinations, such as sugar, rice, and tobacco) had to land and pay a tax in England before going on to other countries. This increased both the cost to the colonies and the shipping time. Colonists could trade in their own ships with foreign plantations or European countries other than England, provided they did not violate the enumerated commodity clause.

The Acts were in full force for a short time only. After the second Anglo-Dutch War (1665–1667), which ended disastrously for England, the Dutch were permitted to ship commodities produced in the German hinterland to England as if these were Dutch goods. Even more importantly, England conceded to the principle of "free ship, free good" which provided freedom for Dutch ships from molestation by the British Royal Navy on the high seas, even in wars in which the Dutch Republic was neutral. This enabled the Dutch to conduct their "smuggling" unhindered as long as they were not caught red-handed in territorial waters controlled by England.

Effect on the Colonies

The Navigation Acts, while enriching Britain, caused resentment in the colonies and were a major contributing factor to the American Revolution. The Acts required all of a colony's imports to be either bought from England or resold by English merchants in England, regardless of what price could be obtained elsewhere. Colonists widely flouted the Acts, and efforts by the British to prevent smuggling created hostility and caused colonial unrest. Later laws such as the Molasses Act of 1733 (the first of the Sugar Acts) levied heavy duties on the trade of sugar from the French West Indies to the American colonies, forcing the colonists to buy the more expensive sugar from the British West Indies instead and only added fuel to the growing fire.

Historians debate the economic impact of the Acts, with some arguing that the burden on the individual was small while the impact on overall economic growth extreme. Others argue that the political friction caused by the Acts was more serious than the negative economic impact, because the merchants most affected were the most active politically. As the colonial economy matured, the Acts would block it from serious competition with British manufacturers. 

On the whole, the Navigation Acts were more or less obeyed by colonists, despite their dissatisfaction, until the Molasses and Sugar Acts. The Molasses Act led to extensive smuggling, as no effective means of enforcement was provided until the 1750s. Irritation with stricter enforcement under the Sugar Act of 1764 became a greater source of resentment by merchants in the American colonies against Great Britain, contributing to the American Revolution.

Oliver Cromwell, by Samuel Cooper

Oliver Cromwell led Parliament in passing the first Navigation Act  in 1651.