May 10th, 1773 – The Tea Tax of 1773

152473-004-E0D19F36.jpgEven with the victory of the Iberian Union over the English Armada in 1589 the defeat of the Spanish Armada the year prior had opened new opportunities for British trade. It would be a one that would be seized upon by the third Earl of Cumberland, George Clifford, and the 215 Knights, Aldermen, and Burgesses who, in 1600, would be issued a Royal Charter for the formation of the “Governor and Company of Merchants of London trading into the East Indies“, or the British East India Company, as it would more commonly be known as. With connections that extended throughout the Government and wove itself through Whitehall and later St. James Palace, it had initially concerned itself with commerce, building an elaborate trade network into India and the Far East. Even as the republican government of the Commonwealth of England was declared Lord Protector Oliver Cromwell would renew the Royal Charter with little to no alteration.

Yet by 1773 the focus of the Company had shifted and now it set its sights on Empire. This was to include its own army of almost 70,000 soldiers, comprised largely of the population of India. None of it came cheap, but then neither did the support of the government which was now demanding 400,000 pounds, 14% of England’s Treasury Revenue, in exchange for the free hand that it was giving to the Company. This, during a time when dividends to its shareholders rose from 10% to 12.5%, did nothing to improve their fortunes. But then neither did the reforms it was enacting of land payments they were offering. Now faced with a serious shortage of money, the company skirted on the edge of bankruptcy.

Luckily its influence had not waned in the 170 years since its formation, with a number of its shareholders sitting in Parliament. Now it was up to the Earl of Guilford, Frederick North, Prime Minister and Chancellor of the Exchequer, to find a solution to solve the problem for the Company. That solution would come in a series of acts passed by Parliament with the sole purpose of offering the beleaguered behemoth a government bailout.

the-tea-act1-pageThe first of these would be a 1.4-million-pound loan, roughly the equivalent of almost 2 billion pounds in today’s currency. Yet, in its dire position how could the company hope to pay that back? The answer would come in the form of the Tea Act of 1773, passed by Parliament on April 27th, and given Royal Assent by George III on May 10th, 1773.

Though it would ultimately create a virtual monopoly on tea for the British East India company in America, it wasn’t meant to be controversial. At the request of the Company it was actually intended, more than anything else, to lessen the toll that smuggling and non-consumption, a policy that the merchants and the residents of some colonies took on in protest of Parliament’s attempts to assert control over colonial trade, had taken. The British East India Company would even recommend a reduction or even a removal the duty on tea, the last of the hated Townsend Act duties imposed on the Americans still in effect. Lord North would heed that call, and reduce the duty from 9 pence per pound to three as the Prime Minister conceded that he would rather lower the tax “at the desire of the India Company than that of America”.

The effect, Lord North and the East India Company had hoped, would be that the Colonists would realize the price offered now by legitimate trade would be significantly cheaper than the tea offered up by smugglers of Dutch Tea. How could they protest, how could they find offense when it would save them money? In the end, at least in North’s mind, it would be a win-win. He would not only save the Company, but also assert the supremacy of Parliament in matters of taxation over the colony while ensuring the colonies were appeased by the lowering of the duties.

He would be wrong, as it did nothing more than create further resentment in the colonies and stoked the fires of rebellion as the Massachusetts Legislature, for one, declared, “It is easy to see how aptly this scheme will serve both to destroy the Trade of the Colonies, and increase the revenue. How necessary then is it, that each Colony should take effectual methods to prevent this Measure from having its designed Effect.”
Like so many of his contemporaries in Parliament and Government, North failed to understand the sentiment of the Colonies, he failed to understand the mood of the Colonists and the cause that drove them. In many senses, it wasn’t hard to see why, in his outrage, Benjamin Franklin would declare that the British “have no idea that any people can act from any other principle but that of self-interest” as they somehow convinced themselves in Parliament that this cheap tea was somehow, someway, “sufficient to overcome all the patriotism of an American.”

To them it wasn’t a question of the tea. In fact the Colonials had choked down many cups of smuggled tea that would have hardly met the quality standards imposed by the East India Company, not because of price or availability. It was because of the principle ingrained in the Magna Carta, that principle they believed to be their right as natural born Englishmen. This was namely that Parliament, a Parliament that they had no representation in, no voice on the floor of, had no right to tax them without their consent. To approve of this was to assert the dominance of Parliament, removing power from their hands. They would pay a higher price and swallow the inferior product if for no other reason than to maintain that fundamental, core principle. No frivolous luxury was going to rob them of that. No frivolous luxury was going to rob them of their rights as Natural Born Englishmen.

Though protests would begin slowly it would not take long before the colonies were in open rebellion, and nowhere was this more apparent that Massachusetts, where Governor Thomas Hutchinson was determined to make a stand where few of his other counterparts would, asserting the dominance, asserting the supremacy of Parliament and their right to tax the colony, insisting on the lawful unloading of the Tea in Boston Harbor. The resulting protest would become a story of American lore as the colonists made their position abundantly clear in word and deed.

In the end it would be the arrogance of Parliament, combined with their ultimate disinterest in the will and the desire of the people, a Parliament far removed from the daily lives of the people it governed over, that would light the fuse of the powder keg of Revolution as the government looked to its own interest over that of the peoples. But then, in the minds of many, this had been proven time and time again. Why would this bailout that took itself from their pocket, ignoring their petitions and protests, be any different? It was but the latest offense.


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