In the peace settlement which followed the Seven Years' War, Canada was handed over to Britain by France, (along with trading posts in India). However, French sugar islands in the West Indies, captured by the British, were given back to France. France was also allowed fishing rights off the Newfoundland coast (the islands of St. Pierse and Miquelon).

The British government, in deciding whether to keep Guadeloupe or Canada, had chosen, to the world's surprise, Canada. The business interests in the City of London were horrified. If France was going to be allowed to keep one of its two colonies in America, let it keep the useless, frozen wastelands in the north, but not the fabulously productive sugar islands. Two and a half centuries later, however, the British government's decision would seem to have been the correct one.

By making Canada British, however, the Government in London eliminated one of the forces that bound the Thirteen Colonies to their mother-country. This force was fear of the French threat to the west, over the Appalachians. Since they no longer needed British protection from France, the American colonists looked more critically at the government in London.

Britain's favourable treatment of the French and Canada, as well as the Indians who lived in the area, accelerated the disillusionment Americans felt with their British rulers. The Proclamation of 1763 reserved huge tracts of former French land for Canada's native Indian population, blocking the expansion westward of farmers in the thirteen colonies. 

The Quebec Act of 1774 was even more hated. It allowed the French population of Canada to keep their old civil law and their right to participate in the government of Canada without having to give up their Roman Catholicism. Worst of all, the Quebec Act allocated lands in the Ohio area, (i.e. the lands which the colonists had fought for in the Seven Years' War), to British Canada rather than to any of the Thirteen Colonies. The Quebec Act was a major cause of the coming American Revolution.