Facts about the Tea Act of 1773
The Great Parliament of Britain introduced the Tea Act in 1773. The British East India Company had massive piles of tea in storage. They were going through financial trouble. To make it easier for the Company to sell their tea, the British Parliament passed the Tea Act.
What was the Tea Act of 1773?
The British East India Company had stocks of tea stored in their London warehouses. At the same time, “illegal” tea was being smuggled and sold by other people in the global trade. A lot of the tea at that time was actually smuggled Dutch tea. This made it difficult for the British East India Company to sell their stocks at proper prices. The Dutch tea was cheaper and more accessible, even if it was illegal. Around 85% of all tea in America was Dutch tea.
Through the Act, the British East India Company could ship their tea to America. They did not need to pay any duties or taxes for the shipping. As a result, British tea became less expensive.
Why was the Act passed?
Before the Tea Act of 1773, American merchants could buy tea from the British East India Company. The merchants added their own prices to the British prices. The cost of British tea went up. There were fewer and fewer people buying British tea. , the warehouses of the Company started filling up with unsold tea.
This was a major problem for the British East India Company. How could they sell their tea if it was so costly? To combat this problem, the British Parliament passed the Tea Act in 1773. It also had another use. Tea bought from the British had taxes levied on it. American merchants ended up paying those taxes. By doing so, they recognized the economic power of the British Parliament.
Around 1773, the British East India Company was facing lots of trouble around the world. There was a war and famine in Bengal. They had trouble in Europe competing for colonial powers. On top of that, they had to make payments to British Government. These factors made it difficult for their tea trade to continue.
The British Parliament passed the Tea Act to save the tea stocks of the British East India Company. They ruled that tea coming from the Company would not be taxable when it entered America. Yet, customers and buyers would have to pay taxes on the purchase of British tea.
The model of taxation in the Tea Act upset many people. Many thought it was unfair to let British tea into America tax-free. At the same time, Americans were paying tax on their own purchases of British tea. The British Parliament and Government became a recognized tax-collecting authority. Because Americans ended up paying the tax while buying British tea.
Benjamin Franklin suggested allowing tax-free British tea in America. He wanted to help the British East India Company. He suggested only an Import Duty of three pence per pound in the world for British tea.
A lot of people opposed this Act. It was not fair to the American colonists who bought British tea. Merchants buying British tea were at a loss. They could not sell it for a profit. Their loss was due to the taxes they had to pay.
There was another group that lost- those who wanted to smuggle tea. Smuggling was illegal. But, it was profitable. With no taxes, British tea became easier to buy.
The Act also authorized the British Parliament to collect taxes from Americans. This second issue was more important.
Many people in America were against the Tea Act. They felt cheated. The British taxes were unfair to them. They resisted by letting the tea rot on docks in Charleston. Colonists in New York and Philadelphia sent the tea back to Britain.
The Boston Tea Party
The famous Boston Tea Party took place on December 16, 1773. The people of Boston were against the Tea Act. They refused to let British ships land in the port.
The British Governor Hutchinson was stubborn. He did not allow the ships to go back or to go to another port.
Colonists in Boston disguised themselves as Indians. Then, they stormed the British ships. They took all the British tea and dumped it into the harbour. This act of resistance became known as the Boston Tea Party.
The British were angry at this rebellion. They blocked the Boston port. Their demand was the payment of the dumped tea. Till the colonists paid the full amount, the British would not open Boston harbour. This order came from Governor Thomas Hutchinson.
Trade in Boston suffered. Since the Governor blocked Boston harbour, they could not carry out any trade. Their economy suffered.
Significance of the Boston Tea Party
The Americans were angry. Their economy suffered. The Boston Tea Party was the first step in America’s war for Independence. It was a rallying cry for all Americans to oppose British rule and unfair taxes.
The Taxation of Colonies Act 1778 took back the taxes of the Tea Act. Yet, it was not enough. The American people marched forward in their war of independence against the British.
In 1861, the Tea Act was taken off from the Constitution formally.
Provisions of the Tea Act
1. The British East India Company could export tea to North America
2. The Company did not need to sell tea at the London Tea Auction
3. Tea from Britain to North America was not taxable
4. People buying British Tea had to pay tax when they bought it
The Tea Act was meant to save the British East India Company when they were struggling. But, it was not fair to the American people. This conflict became more and more serious. British Government and Parliament did not take the Americans into consideration. There was a forced imposition of unfair taxes on the colonists in America.
The American opposition to the Tea Act was one of the first strides in the American War for Independence.
At A Glance
- Tea Act of 1773
- Introduced to save British East India Company’s stocks of tea
- Levied unfair taxes on American colonists and merchants
- Led to Boston Tea Party on December 16, 1773
- Significant in American War for Independence