The long-term success of Danish St. Croix’s sugar economy depended not only on the island’s fertile land but also on the planters’ ability to adapt to changing trade conditions.
By skillfully shifting between molasses and rum production based on international tariffs, St. Croix remained a key supplier in the Atlantic economy throughout the 18th century.
1. The Role of Tariffs in the Molasses Trade
The British Molasses Act of 1733 was intended to cripple foreign competition by imposing a heavy tax — six pence per gallon — on non-British molasses imported into the American colonies.
This directly targeted islands like Danish St. Croix, aiming to redirect colonial merchants to buy from British sugar colonies such as Jamaica and Barbados.
In practice, the Molasses Act was widely ignored. Smuggling flourished, with Danish West Indies molasses pouring into New England distilleries despite British regulations.
The Sugar Act of 1764 lowered the tax to three pence per gallon but introduced strict enforcement. Smuggling became riskier, and Danish molasses exports to the American colonies began to decline, though they never disappeared entirely.
2. The Role of Tariffs in the Rum Trade
While Britain tightened controls, Denmark pursued a different strategy.
Danish trade policies kept tariffs on rum exports low, encouraging St. Croix’s sugar planters to distill molasses into rum locally.
As a result, rum became a highly profitable export, particularly to Denmark and other European markets where competition was less fierce.
However, selling rum to British colonies was difficult. Britain imposed high tariffs on foreign rum, forcing much of St. Croix’s rum into smuggled trade routes into North America rather than through official British ports.
After American independence in 1783, U.S. tariffs on foreign rum and molasses fluctuated. At times, U.S. merchants preferred Danish molasses over British sources, especially when trade with the British Caribbean was restricted.
3. Economic Shifts and Adaptation
St. Croix’s planters adapted quickly to tariff changes:
- When molasses tariffs were low, they exported more raw molasses to New England for distillation.
- When molasses tariffs rose, they increased local rum production, shipping directly to Europe or smuggling into other markets.
Denmark’s generally free-trade policies for rum and low taxation on molasses exports gave St. Croix a crucial competitive advantage.
The ability to pivot between molasses and rum depending on global market conditions helped sustain the island’s sugar economy even as political landscapes shifted.