The American Colonies Act 1766 (6 Geo 3 c 12), commonly known as the Declaratory Act, was an Act of the Parliament of Great Britain, which accompanied the repeal of the Stamp Act 1765. Parliament repealed the Stamp Act because boycotts were hurting British trade and used the declaration to justify the repeal and save face. The declaration stated that Parliament’s authority was the same in America as in Britain and asserted Parliament’s authority to pass laws that were binding on the American colonies.
Representatives from a number of the Thirteen Colonies assembled as the Stamp Act Congress in response to the Stamp Act 1765, to call into question the right of a distant power to tax them without proper representation. The British Parliament was thus faced with colonies who refused to comply with their Act. This, combined with protests that had occurred in the colonies and, perhaps more importantly, protests which had arisen in Great Britain from manufacturers who were suffering from the colonies’ non-importation agreement, all led to the repeal of the Stamp Act. Normally the economic activity in the colonies would not have caused such an outcry, but the British economy was still experiencing a post-war depression from the Seven Years War. Another reason for repeal of the Stamp Act was the replacement of George Grenville, the Prime Minister who had enacted the Stamp Acts, by Charles Watson-Wentworth, 2nd Marquess of Rockingham. Rockingham was more favorable towards the colonies and furthermore he was antagonistic towards policies that Grenville had enacted. Rockingham invited Benjamin Franklin to speak to Parliament about colonial policy and he portrayed the colonists as in opposition to internal taxes (which were derived from internal colonial transactions) such as the Stamp Act called for, but not external taxes (which were duties laid on imported commodities). Parliament then agreed to repeal the Stamp Act on the condition that the Declaratory Act was passed. On March 18, 1766, Parliament repealed the Stamp Act and passed the Declaratory Act.
The Declaratory Act proclaimed that Parliament “had hath, and of right ought to have, full power and authority to make laws and statutes of sufficient force and validity to bind the colonies and people of America … in all cases whatsoever”. The phrasing of the act was intentionally unambiguous. In other words, the Declaratory Act of 1766 asserted that Parliament had the absolute power to make laws and changes to the colonial government, “in all cases whatsoever”, even though the colonists were not represented in the Parliament.
Although many in Parliament felt that taxes were implied in this clause, other members of Parliament and many of the colonists—who were busy celebrating what they saw as their political victory—did not. Other colonists, however, were outraged because the Declaratory Act hinted that more acts would be coming. This Declaratory Act was copied almost word for word from the Irish Declaratory Act, an Act which had placed Ireland in a position of bondage to the crown, implying that the same fate would come to The Thirteen Colonies. However, the colonists never explicitly called for its repeal, and would seek reconciliation with the crown up until the last minute.
The political theorist Edward Mims described the American reaction to the Declaratory Act:
When in 1767 this modernised British Parliament, committed by now to the principle of parliamentary sovereignty unlimited and unlimitable, issued a declaration that a parliamentary majority could pass any law it saw fit, it was greeted with an out-cry of horror in the colonies. James Otis and Sam Adams in Massachusetts, Patrick Henry in Virginia and other colonial leaders along the seaboard screamed “Treason” and “Magna Carta”! Such a doctrine, they insisted, demolished the essence of all their British ancestors had fought for, took the very savour out of that fine Anglo-Saxon liberty for which the sages and patriots of England had died.
Despite British recognition in 1783 of the independence of the United States, the Declaratory Act remained in force for the British Empire’s remaining colonies in the western hemisphere. The Act was not repealed until 1964, by which time the handful of remaining British colonies in the West Indies were governed under constitutions explicitly granted under the authority of Parliament (in particular by the West Indies Act 1962). However, since the Taxation of Colonies Act 1778 passed during the American Revolution, the British Parliament has never again attempted to directly impose taxation upon any of its colonies (today known as British overseas territories). Instead, whenever the British government perceived a need for colonial contributions towards the defence of the Empire (such as happened during the Anglo-German naval arms race of the early 20th century), it appealed to the direct financial contributions from the colonies for the defence of the Empire, it appealed to the colonial governments themselves to make those contributions, with varying levels of success.