The Townshend Acts also created three new admiralty courts to try Americans who ignored the laws. Sugar Act 1764 The tax on sugar, cloth, and coffee. These were non-British exports. Boston Tea Party The Boston Tea Party was an act of protest by the American colonists against Great Britain for the Tea Act in which they dumped many chests of tea into Boston Harbor. The cuts to taxation on tea undermined American smugglers, who destroyed the tea in retaliation for its exemption from taxes. Britain reacted harshly, and the conflict escalated to war in 1775. Capitation tax An assessment levied by the government upon a person at a fixed rate regardless of income or worth. Tariffs Income for federal government Tariffs have played different parts in trade policy and the economic history of the United States. Tariffs were the largest source of federal revenue from the 1790s to the eve of World War I until it was surpassed by income taxes. Since the revenue from the tariff was considered essential and easy to collect at the major ports, it was agreed the nation should have a tariff for revenue purposes. Protectionism Another role the tariff played was in the protection of local industry; it was the political dimension of the tariff. From the 1790s to the present day, the tariff (and closely related issues such as import quotas and trade treaties) generated enormous political stresses. These stresses lead to the Nullification crisis during the 19th century, and the creation of the World Trade Organization. Origins of protectionism When Alexander Hamilton was the United States Secretary of the Treasury he issued the Report on Manufactures, which reasoned that applying tariffs in moderation, in addition to raising revenue to fund the federal government, would also encourage domestic manufacturing and growth of the economy by applying the funds raised in part towards subsidies (called bounties in his time) to manufacturers. The main purposes sought by Hamilton through the tariff were to: (1) protect American infant industry for a short term until it could compete; (2) raise revenue to pay the expenses of government; (3) raise revenue to directly support manufacturing through bounties (subsidies). This resulted in the passage of three tariffs by Congress, the Tariff of 1789, the Tariff of 1790, and the Tariff of 1792 which progressively increased tariffs. Sectionalism Tariffs contributed to sectionalism between the North and the South. The Tariff