The Tea Act, approved by the British Parliament on May 10, 1773, actually placed no new tax on tea and was not designed to increase revenue.  It was intended to benefit the East India Company by giving them the exclusive right to sell tea in the colonies, creating a monopoly which the colonists perceived as another means of “taxation without representation”.

The British government used the East India Company as a tool to spread its influence in India but in the early 1770s it was at the edge of bankruptcy. Its deteriorating financial situation was partially due to a tax on tea and other goods passed on 1767 as part of the Townshend Revenue Act in the colonies, high duty taxes in Britain and smuggling of cheaper Dutch tea.  The Townshend duties were very unpopular and the Americans reacted by boycotting British goods eventually convincing the government in repealing the tax. In 1770, Lord North repealed four of the five duties, however the three pence per pound tax on tea continued to be collected since its repeal could be understood as a retreat from the Parliament’s right to tax the colonies. Residents of the colonies continued to boycott the commodity.

Engraving of John Lamb reading the Tea Act in New York on December 17, 1776.

Under these circumstances a black market for tea flourished and the East India Company saw its stock of tea increase to 18 million lbs in its warehouses. By 1770 sales to the colony decreased to an alarming level due to illegal trade while the Bank of England refused to grant the company more credit.

Interestingly one of the intentions of The Tea Act was to lower the price of tea in the colonies by eliminating the merchant middleman. Instead of the commodity being shipped through Britain, where it was taxed, and in turn re-exported to the colonies, The Tea Act allowed the tea to be shipped directly making it 9 pence per pound cheaper even with the 3 pence per pound tax. In addition the act allowed the East India Company to choose its distributors or special consignees thus creating a monopoly that was not well received in the colonies.

Despite the economic benefit to end consumers of tea, the law damaged the position of independent shippers, smugglers and local shopkeepers. John Hancock was a well known tea smuggler whose tea inventory was seized by custom officials. Powerful business interest, Samuel Adams and the Sons of Liberty convinced the population to view the act as another means of “taxation without representation” as they could not buy tea from other merchants at the same price as from selected official merchants. Opposition developed in different colonial ports. In Philadelphia and New York colonist did not allow East India Company ships to weigh anchor in their ports and were returned to sea. In Charleston, South Carolina the tea was left to rot. In Boston the colonist did not allow them to unload and their cargo and Samuel Adams and the Sons of Liberty took justice in their own hands by throwing 342 chests of tea in the waters of the harbor. The Boston Tea Party protest was the culmination of colonial resistance against this law.

Illustration of the Boston Tea Party, Boston residents dressed as Native Americans.

Back to Stamp Act History homepage