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 tax of sixpence per gallon of 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 sixpence per gallon on molasses imported from non-British colonies. The importation duty was not implemented to raise revenue but to curve importation from foreign lands.

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. Colonial businessmen bypassed this law by smuggling molasses from French and Spanish colonies at a cheaper price, this trade prospered for many years, yet the British authorities did not seriously enforce it. Recognizing the ineffectiveness of the Molasses Act and the need to raise revenue to pay for troops stationed in America after the French and Indian War, the British parliament replaced it with The Sugar Act in 1764. This act lowered the duty by half but this time the authorities were serious about collecting the revenue.