Economics of the Boston Tea Party and the Tea Tax

Michael Streich

Following the partial repeal of the Townshend Revenue Acts in April 1770, Parliament, following the recommendation of King George III, maintained the tax on tea, which would be paid by the American colonists without complaint until the Boston Tea Party turned tea into the “beverage of traitors.” The tax on tea, however, began in 1660 with the passage of the first Navigation Acts and was amended numerous times over the next 100 years. Parliamentary actions involving the East India Company, nonimportation agreements, and duty-free tea only hurt tea smugglers whose illegal tea imports after November 1773 were threatened.

 

Fluctuations in the Tea Tax Prior to 1767

 

Tea was a commodity that could only be imported into the American colonies on British ships coming from England. English tea originated in India where the East India Company facilitated tea cultivation and exportation. Tea entered the American colonies through New York, Boston, and Philadelphia. At the time of the Tea Party, Boston received the largest amounts of English tea, over-taking New York.

 

Prior to 1767, the taxes on tea were prohibitive, encouraging widespread smuggling. Some scholars suggest that much of the smuggled tea was tied to the Netherlands. Other historians, however, dispute this, suggesting that no solid evidence exists linking Dutch East Indies ports to illegal foreign tea imports into the colonies.

 

The importation of foreign tea was always subject to higher taxation. In 1711, for example, legal tea importation required a duty of four shillings per pound versus seven shillings per pound of foreign tea. Additionally, because the tea tax rose several times between 1660 and 1767 and was prohibitive, widespread smuggling of foreign tea occurred. Smuggling has been tied to many of the leading Northeast merchants of the period, including John Hancock.

 

The Ill-Fated Path toward the Boston Tea Party

 

Although the Townshend Revenue Acts were repealed, the threepence duty on tea was retained. For over two years, American colonists paid the tax without complaint. In 1773, however, Parliament exempted the East India Company from any duties on tea imported into the American colonies and allowed the company to ship tea directly to the colonies rather than through England.

 

The preferential treatment of the East India Company was tied to its precarious financial situation; the company was teetering on bankruptcy. Several board members held high positions in the British government. The East India Company already held a monopoly east of the Cape of Good Hope. Exempting the company from import duties, however, would severely undercut smuggling. English tea imports had already been decreased by Parliament to ten shillings per pound. Between 1763 and 1767, tea imports to the colonies averaged 328,125 pounds.

 

Colonial Reaction

 

The response of colonial agitators like Samuel Adams was predictable, given his letters or correspondence and public speeches. The imminent arrival of the English ship Dartmouth into Boston harbor, laden with hundreds of chests of tea, provided the object lesson Adams and the Sons of Liberty needed. On board the ship were 90,000 pounds of tea (some historians dispute this figure, accepting lesser amounts beginning at 35,000 pounds) valued at 10,000 English pounds sterling.

 

In mid-December 1773 at least fifty members of the Sons of Liberty – including Paul Revere, boarded the Dartmouth and destroyed the tea, tossing the chests into Boston harbor. They dressed as Indians, supposedly representative of the freedom embodied in the Native American, according to writer Robert Harvey. Similar actions took place in New York where the cargo of tea aboard the Nancy was destroyed.

 

Propaganda Effect of the Boston Tea Party

 

Like the Boston Massacre, the tea party was used to further the cause of Revolution. It did not help that Parliament overreacted. Robert Harvey states that, “…the goal of this huge destruction of property was plainly to goad the British government, so inept for so long, into action. This time the Sons of Liberty succeeded.” Americans stopped drinking tea and the tea party became an iconic event demonstrating the desire to stop immoral and illegal taxation.

 

References:

 

Oliver M. Dickerson, The Navigation Acts and the American Revolution (University of Pennsylvania Press, 1951)

Robert Harvey, “A Few Bloody Noses” (Overlook Press, 2002)

Copyright owned by Michael Streich