The conflict between Britain and her American colonists was triggered by the financial costs of the Anglo-French wars of the previous thirty years, in particular the Seven Years War (1756-63). A principal theatre of conflict had been in North America, where it was felt that the colonials had failed to play their part either financially or in the fighting. In the years immediately after the war, the army in North America consumed 4% of British government spending. This cost, combined with the victories over the French had increased British interest in their colonies. Ironically, those victories had also removed one element tying the Americans to Britain - fear of French strangulation. In 1756, the French held Canada, the Ohio Valley and the Mississippi, isolating the British colonies on the eastern seaboard. By 1763 that threat had been removed.

At the heart of the division between the colonists and Britain was a fundamentally different concept of the purpose of the colonies. To the British, their American lands were there largely to provide raw materials to Britain and be consumers of British manufactured goods. This feeling expressed itself in an increasing control and restriction of American trade and industry that helped to build up resentment, especially in New England, where manufacturing goods for export to the southern colonies was already an important part of the local economy. In contrast, many of the colonists saw themselves as carving a new society from the wilderness, unrestricted by decisions made 3,000 miles away across the Atlantic.
These pressures were tolerable as long as British regulation of the rules was fairly lax. However, in the decade before the colonies rebelled there was a new level of interest in exploiting the American colonies. The first move was an attempt to limit further expansion by the colonies. In 1763 it was decided to draw a border behind the existing colonies, along the line of the Alleghenies. The land to the west was to be left to the Indians, who were to be encouraged to become consumers of British goods. New colonists were to be encouraged to go north to Nova Scotia, where they could produce much needed timber for the navy, or south to Florida. These limits on their expansion caused much discontent amongst the colonies, costing many, including George Washington, a good deal of money.

The next increase in the tension came in 1765 with the Stamp Act and a trade act know as the Sugar Act. It was the Stamp Act that caused the most protest. This was a direct tax, levied on the paper required for legal transactions and on newspapers. It had been proposed in 1764, and the Americans had been given the year to suggest alternative methods of raising the money needed to administer and defend the colonies. Instead, this year was used to organise opposition to the act.

The Stamp Act caused hostility for a variety of reasons. First, the policy of limiting westward expansion that it was intended to help fund was not popular in the colonies. Second, it was the first direct taxation to be imposed on the colonies from London. All previous taxation had been in the form of trade duties. Finally, the act brought to the fore an issue that was bound to eventually emerge - the status of the legislative assemblies that existed in several of the colonies. In Britain they were considered to be subordinate to Westminster on all issues, in the colonies a new theory emerged that the Westminster Parliament had control over imperial issues, but not over colonial taxation. Combined with a boycott of British goods, the riots caused by the Stamp Act caused the fall of the government of Lord Grenville. The new government of Lord Rockingham repealed the Stamp Act in 1766, but at the same time passed a Declaratory Act confirming Parliamentary authority over the colonies.

The next government attempt to raise money was the Revenue Act of 1767. Put forward by Charles Townsend, then Chancellor of the Exchequer, this was a scheme based on indirect taxes on trade, organised across all of the colonies by a board of commissioners. Townsend suggested that the proceeds could fund both the armed forces needed on the borders, and a civil list that could free royal governors from any need to rely on colonial assemblies for funding. The government had reasonable grounds to expect that this new approach would be acceptable - during the controversy over the Stamp Acts the colonists had accepted the validity of indirect taxation - but instead it was to face protest on both sides of the Atlantic.

In Britain the protest came from those merchants whose exports were being taxed and then boycotted. In America the Revenue Act aroused deep suspicion. The talk of a civil list convinced many that the Act was designed to impose absolute authority from Britain. With an expected yield of only £40,000, it was unlikely that any money would be left after the army had been paid for, so these fears were unjustified, but the more radical voices amongst the colonists were able to link the Declaratory Act and the Revenue Act and create a British plot to destroy all colonial liberties. The Revenue Act was commonly held to have overstepped the natural laws that limited the authority of Parliament. From Massachusetts Samuel Adams issued a circular letter calling for common action against the Act. At first this letter appeared to have had little impact, until Lord Hillsborough issued a counter-circular to the colonial governors instructing them to ignore Adams' letter, while the Massachusetts assembly was suspended. The Massachusetts protest now became a focus of discontent, convincing many, including George Washington that the British government was intent on gaining total control of the colonies. A campaign of non-importation was launched, although the smuggling of English goods did not stop.

Non-importation hit the American ports hard, especially Boston, where lawless conditions eventually forced the British to post troops in the city. Meanwhile, a change of government in Britain brought Lord North to power (1770). By 1769 the British government had decided to abolish all but the duties on Tea, and in 1770 Lord North removed all the other duties. Tea was retained in part as a symbol of sovereignty and in part because it raised just over £11,000 each year.

At the same time non-importation collapsed in the colonies as the spread of lawlessness convinced colonial opinion that resistance to the Revenue Act was threatening the stability of society. On 5 March 1770 a Boston mob attacked a company of soldiers guarding the customs house. The soldiers stood firm until one was knocked down by the rioters at which point the soldiers were ordered to fire, killing five of the rioters ('Boston Massacre'). While some radical campaigners saw this as a sign of what they saw as the brutality of British rule, much colonial opinion was repulsed by the actions of the mob. This was especially true in New York, where a radical leader, Alexander McDougall, had used the economic crisis in the port to threaten the authority of the New York Assembly. A conservative reaction set in in New York and at the end of the summer of 1770 New York abandoned non-importation, which soon collapsed across the colonies, leaving only an unwillingness to drink taxed tea.

For the next three years it looked as if the danger of a colonial revolt had been averted. Lord North made little or no effort to interfere in the colonies, while in America inter-colony rivalry revived, as typified by the activities of the Green Mountain boys. However, this image was false. The return to even grudging loyalty only lasted for as long as the British didn't act. Expectations and attitudes on the two sides of the Atlantic were too far apart for any permanent understanding to be established within the Empire.

It was this gulf that gave the issue that finally led to war its potency. The crisis was caused by the financial loses suffered by the British East India Company as it moved from trading concern to political authority. Part of Lord North's plan for restoring the fortunes of the company, seen as vital for reducing the national debt, was a scheme for disposing of the Company's Tea surplus. Previously, East India Company tea had to imported into England, where it paid 1s tax before being exported to American by English middlemen, who paid a further 3d. North gave the Company permission to sell direct to the American colonies, paying only the 3d duty. If implemented this would have halved the cost of tea in the colonies, from 20s. per pound to only 10s.

This new policy worried the radicals in the colonies. The boycott on Tea was the only protest against British rule that was still effective, and there was a great fear amongst radical opinion that this new cheap tea would end that boycott. In New York and Philadelphia, where smuggling was rife, the boycott of taxed tea was secure, but Boston was seen as a weak point. Too well policed for smuggling, the radicals were afraid that if tea was landed in the port, it would be drunk across the colonies, breaking the boycott. Their reaction was to prevent the tea from being landed. On 16 December 1773 a group of Boston radicals, dressed as Indian braves, dumped thousands of pounds worth of tea into the harbour, a protest immortalised as the Boston Tea Party.

The British reaction was critical. A low-key response could have defused the situation, but instead Lord North decided on confrontation. The reaction to events in Boston in 1770 led the government to expect that the other colonies would once again repudiate radical action in Massachusetts. However, the actions taken by Lord North's ministry could not have been more offensive to colonial sensibilities. Early in 1774 a series of acts, called the 'coercive' or 'intolerable' acts in the colonies, were passed in an attempt to restore order in Boston and Massachusetts. The port was closed until the lost tea had been paid for. The governor was given the power to transfer trials to Britain. Boston was made to provide barracks for troops inside the town. Finally, the constitution of the colony was changed. Massachusetts had a two chamber system, with an elected house of representatives who had the power to appoint the upper house, or councillors. This was now changed so that the Crown could appoint the councillors.

Rather than isolating Massachusetts, these acts united the colonies in protest. In particular, British interference with the constitution of one of the colonies was felt to threaten all. At the same time news of the Quebec Act reached the colonies. This was a sensible response to the problem facing in Canada of ruling a largely French population, only recently conquered. It allowed for tolerance of French Catholicism, even giving the Catholic majority a place on the new Canadian council. Canada's borders were also expanded to include the areas of Illinois and Detroit, where there was already a French population. In the thirteen colonies this act caused great hostility. Once again westward expansion had been blocked. Worse, at least as far as New England was concerned, was the tolerant attitude to Catholicism. The colonial response was the first Continental Congress, which met in Philadelphia in September 1774.

When this Congress met it demanded the repeal of all colonial legislation passed since 1763. Until this demand was agreed to, Congress agreed to block all imports and exports to and from Britain other than those crops, which the southern states depended on, to refuse to pay any taxes to Britain and to prepare to resist any British troops. However, the Congress did not at this stage want independence. Despite this, conflict was now inevitable. In British eyes Congress was an illegal body, not to be dealt with. Even so, opinion was split on how to respond to American discontent. In November George III was already certain that there would be fighting, but there were still conciliatory voices in Parliament. In America, General Gage, now Governor of Massachusetts as well as commander in chief of the British forces in North America, warned that the discontent was widespread and requested large-scale reinforcements, but back in Britain the scale of the trouble was not yet appreciated. Lord North was not alone in seeing Massachusetts as the heart of the problem, and in April 1775 the first fighting reinforced that idea.