The phrase don’t spoil the ship for a ha’p’orth, or a halfpennyworth, of tar means don’t risk the failure of a large project by trying to economise on trivial things.

It was originally to lose a sheep, or a hog, for a (half)pennyworth of tar, that is to say, for want of spending a trivial sum on tar—with reference to the use of tar to protect sores and wounds on sheep from flies.

The spelling ship represents a dialectal pronunciation of sheep; in A Concise Dictionary of Phrase and Fable (1993), B. A. Phythian explains that, because of this similarity in pronunciation,

non-countryfolk obviously assumed that the expression referred to a ship, the assumption being reinforced by the reference to tar, which was widely used on wooden ships to coat and preserve the timbers. To complete this transformation of a rustic expression into a nautical-sounding one, the rather extravagant and unconvincing idea of ‘losing’ an entire ship for the sake of a small economy was changed to ‘spoiling’.

The earliest known instance of the phrase is from Advertisements for the unexperienced planters of New-England, or any where. Or, The path-way to experience to erect a plantation With the yearely proceedings of this country in fishing and planting, since the yeare 1614. to the yeare 1630. and their present estate. Also how to prevent the greatest inconveniences, by their proceedings in Virginia, and other plantations, by approved examples. With the countries armes, a description of the coast, harbours, habitations, land-markes, latitude and longitude: with the map, allowed by our royall King Charles (London, 1631), by John Smith (baptised 1580-died 1631), English soldier and colonial governor:

As for Corne they are very ignorant: If upon the coast of America, they doe not before the end of this October (for toies [= foolishly?]) furnish themselves with two or three thousand bushels of Indian Corne, which is better than ours, and in a short time cause the Salvages to doe them as good service as their owne men, as I did in Virginia, and yet neither use cruelty nor tyranny amongst them; a consequence well worth putting in practice: and till it be effected, they will hardly doe well. I know ignorance will say it is impossible, but this impossible taske, ever since the massacre in Virginia, I have beene a suter [= suitor, petitioner] to have undertaken, but with 150. men, to have got Corne, fortified the Country, and discovered them more land than they all yet know or have demonstrated: but the Merchants common answer was, necessity in time would force the Planters doe it themselves, and rather thus husbandly [= in the manner of a good husbander] to lose ten sheepe, than be at the charge of a halfe penny worth of Tarre.

In The Countryman’s Instructor; or, A briefe and plaine method of intelligence containing many experienced remedies for the Diseases commonly befalling to Horses, Sheepe and other Cattle (London, 1636), John Crawshey, who described himself as a “plaine Yorkshire man”, wrote:

To conclude with the old proverbe, hee that will loose a sheepe (or a hogge) for a pennyworth of tarre, cannot deserve the name of a good husband [= farmer]: you may guesse at my meaning.

The noun hog was used to denote a young sheep from the time it is weaned until its first shearing (it was also applied to any of various other farm animals of a year old). In A Collection of English Words not generally used, with their Significations and Original, in two Alphabetical Catalogues, the one of such as are proper to the Northern, the other to the Southern Counties (London, 1691), the English naturalist and theologian John Ray (1627-1705) recorded, in North Country Words:

A Hog; a Sheep of a year old; used also in Northampton and Leicester shires, where they also call it a Hoggrel.

And, in South and East Country Words, he wrote:

Hogs; Young Sheep, Northamptonshire. Used also in the same sense in Yorkshire.

However, John Ray understood hog as meaning a domestic pig in A Collection of English Proverbs (Cambridge, 1678):

Ne’re lose a hog for an half-penny-worth of tarr.
A man may spare in an ill time: as some who will rather die, then [= than] spend ten groats in Physick. Some have it, lose not a sheep, &c. Indeed tarr is more used about sheep then [= than] swine.

The earliest instance of the phrase with the spelling ship that I have found is from The Public Ledger, and Daily Advertiser (London) of 12^th April 1822, which reported that the day before a certain William Kelly had been sentenced to six months’ imprisonment for fraudulently obtaining five shillings from one Mary Burk:

The prosecutrix stated, that […] the prisoner asked her, if she had got her business settled. She said she had not, and told him her story. He told her, it would be foolish “to spoil the ship for a halfpenny’s worth of tar;” and said, that for the value of 3s. 6d. or so, he could get her business done.

The earliest instance of the phrase with both the forms ship and ha’p’orth that I have found is from The Bell’s New Weekly Messenger (London) of 12^th October 1851:

The Sub-marine Telegraph—We confess ourselves not a little disappointed at the non-carrying out—or, rather, the carrying out and non-carrying home—of the sub-marine telegraph. We had hoped to have been able to talk from London to our friends in Paris; and though the voice employed would have been what the critics call wiry, or ropy, we should have been perfectly satisfied. We have been longing to see England and France bound together by the tie of this extraordinary cable. The long and short of it seems to be, that the rope is not long enough; and after “laying out twenty-four miles,” two-thirds of a mile remain still due to enable the rope to meet its engagements. It is a great pity that, while the manufacturers were spinning a yarn, they should have stopped short at the point of interest; and though the incident does not exactly amount to “spoiling the ship for a hap’orth of tar,” it realises the idea of injuring the metal rope for a little copper.

In English Proverbs and Proverbial Phrases (London, 1869), the English author William Carew Hazlitt (1834-1913) wrote:

To spoil the ship for a halfpennyworth of tar.
But, in Cornwall, I heard a different version, which appeared to me to be more consistent with probability: “Don’t spoil the sheep for a ha’porth of tar;” and this agrees with a third variation: “Don’t spoil the hog for, &c.,” a hog in some counties (Lincolnshire, for instance,) standing for a sheep of a year old. But, as Mr. Dyce (Gloss. Shakesp. art. Ship*) observes, the two words, sheep and ship, seem formerly to have been pronounced very much alike.

* In fact, in The Works of William Shakespeare (Volume 9 – London, 1867), by the Scottish literary scholar Alexander Dyce (1798-1869), this observation appears under the headword sheep:

sheep, formerly often pronounced (as it still is in certain counties) ship, and even so written.