Political compromise ultimately proved impossible because both sides had radically different understandings of what the American colonies were for. The British tended to regard the colonies as little more than a cash cow, a useful source of revenue for the Treasury. The American colonists, on the other hand, were adamant that, if not quite a nation, the thirteen states were more than just a remote colonial outpost. On American soil, the ancient English concept of liberty had taken firm root and the American colonists believed themselves fully entitled to the benefits of that inheritance.

To the British, this was just so much humbug. The aristocrats who ran the British government looked down on the Americans as colonial upstarts who were no more entitled to the liberties they demanded with such insistence than their equivalents in British society such as merchants and tradesmen.

Over time, attitudes hardened considerably. Attempts at reaching an amicable settlement were routinely made, but without success. A dialogue of the deaf ensued in which the British and the Americans talked past each other, both sides clinging stubbornly to their jaundiced world-view. As disagreement was grounded in a matter of principle it was almost inevitable that neither side would give way.

Political leaders on both sides of the Atlantic failed to reach a compromise because it would have been very difficult for either side to back away from its demands.  Leaders on both sides would have lost tremendous amounts of prestige for themselves and for the entities they represented.

If the British had backed down, they would have been weakening the image of their government.  It would have looked as if the government would simply give in to any pressure from a group that did not want to obey the law.  This is dangerous for any government.  If the colonists would have backed down, they would have lost much of their ability to govern themselves.  They would also have appeared weak and frightened in the face of danger. 

For these reasons, neither side was eager to compromise.