The Price of Tea

We’ve all heard and read about the Boston Tea Party. In one night, the Sons of Liberty dumped ~92,000 pounds (~46 tons) in 342 chests of tea into Boston Harbor. The British East India Company reported the tea was worth £9,659, which today would be worth £1,488,402 or $2,266,082 (at the exchange rate of £1 = $1.20).

How many members of the Sons of Liberty committed this act? Numbers vary between 30 and 130, but there were enough to move the chests of tea from the holds of merchant ships, break them open and dump the contents into the harbor.

So what caused the Boston Tea Party. The best word to describe the root cause is greed by the British government, which gave the British East India Company a monopoly on worldwide tea sales. As a result, in the Thirteen Colonies, tea from British-controlled tea farms in India was much more expensive than tea from Dutch plantations in Indonesia. Enough Dutch tea was smuggled into the Thirteen Colonies to cause a precipitous drop in British East India Company sales which caused the company to  complain to Parliament.

In 1767, it passed The Indemnity Act, which refunded duties paid by the British East India Company on tea re-exported from England to the Thirteen Colonies. The law expired in 1772, so Parliament passed the Tea Act of 1773.

By the time The Tea Act was passed, the British East India Company had warehouses in England full of tea that, due to its high price, no one would buy. This created a financial crisis for the British East India Company and had them teetering on the edge of bankruptcy. Their financial crisis also affected the British government, which relied on duties and taxes paid by the British East India Company.

The Tea Act of 1773 restored the refund on duties. It allowed the company to ship tea directly from the plantations to its customers. It also allowed the company to contract with merchants in the Thirteen Colonies who would take the tea on consignment and sell it locally. Merchants in four cities were selected – Boston, Charleston, New York, and Philadelphia. Parliament authorized ships to take 5,000 chests (~250 tons) of tea to Boston, Charleston, and Philadelphia.

However, a three pence/pound tax was built into the act that required the tax to be paid once the tea landed in the Thirteen Colonies. Essentially, the act shifted the payment of the tax onto the actual buyer of the tea.

Most in Parliament wanted to eliminate the three pence/pound of tea tax. Still, Lord North, the British prime minister, was adamant. He didn’t want to lose the tax revenue, so the tax remained.

So the table for the Boston Tea Party was set. Three ships – Beaver, Dartmouth, and Eleanor – arrived in Boston harbor, each carrying about 22 tons of tea. The Royal Governor would only allow the tea to be unloaded once the duty was paid. The local merchants refused. There were several large protests, and after one, men dressed as Mohawk Indians boarded the ship and dumped the tea overboard.

Notice from Boston’s “Chairman of the Committee for Tarring and Feathering” that denounced the tea consignees as “traitors to their country.