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The East India Company, famed for spreading English influence throughout India, had fallen on hard times in the early 1770s. Its market for Indian teas in the American colonies was a casualty of the taxation tiff that was growing increasingly ugly. In 1767, British policymakers had imposed a duty on tea and other commodities destined for the colonies. A boycott of British goods convinced the government that it should repeal the unpopular Townshend Duties in 1770, but insisted on retaining the tax on tea as a matter of principle. Not surprisingly, the Americans continued to boycott tea. As a result, the East India Company had warehouses full of tea, but was teetering on the brink of bankruptcy.
The Tea Act and Tea Parties
Governor THOMAS HUTCHINSON allowed three ships carrying tea to enter Boston Harbor. Before the tax could be collected, Bostonians took action. On a cold December night, radical townspeople stormed the ships and tossed 342 chests of tea into the water. Disguised as Native Americans, the offenders could not be identified.
An act passed by the British Parliament in 1773 to reduce the tax on tea shipped to the colonies. It allowed the British East India Company to sell tea to the American colonies at a price lower than that of smuggled tea and to create a monopoly of the tea trade in the colonies. Tea and other items were previously taxed under the Townshend Acts of 1767, which were repealed in 1770 except for the acts' provision to tax tea. Americans saw the act as a violation of their constitutional rights. Their protests led to the Boston Tea Party.
The Tea Act was an Act of the Parliament of Great Britain (13 Geo III c. 44, long title An act to allow a drawback of the duties of customs on the exportation of tea to any of his Majesty's colonies or plantations in America; to increase the deposit on bohea tea to be sold at the East India Company's sales; and to empower the commissioners of the treasury to grant licences to the East India Company to export tea duty-free.), passed on May 10, 1773.
Transcript of the Tea Act of 1773
What caused the Boston Tea Party?
At the beginning of 1773, the East India Company found itself greatly embarrassed by the American nonimportation agreements concerning tea. That Company had seventeen million pounds of tea in store unsold. They could not pay dividends nor debts. Bankruptcies were the consequence, and these produced so great a shock to credit that a panic prevailed. The Company implored the ministry to take off the duty on tea. The ministry refused, for the royal prerogative forbade it. Leave was granted to the Company to send tea to America on their own account, without paying an export duty, and so enable the colonists to buy it cheaper from England than from any other market. The king and Lord North, losing sight of the principle involved, foolishly thought this measure would quiet the Americans, "for," North said, "men will always go to the cheapest markets." So another opportunity for reconciliation was lost.
The Tea Act
The Tea Act, passed by Parliament on May 10, 1773, would launch the final spark to the revolutionary movement in Boston. The act was not intended to raise revenue in the American colonies, and in fact imposed no new taxes. It was designed to prop up the East India Company which was floundering financially and burdened with eighteen million pounds of unsold tea. This tea was to be shipped directly to the colonies, and sold at a bargain price. The Townshend Duties were still in place, however, and the radical leaders in America found reason to believe that this act was a maneuver to buy popular support for the taxes already in force. The direct sale of tea, via British agents, would also have undercut the business of local merchants.
Significance of the Tea Act, 1773
It is important to understand that the Tea Act actually placed no new tax on tea. Instead it simply gave a tax break to the East India Tea company.
The Tea Act, 1773
Because of the American colonists' non-importation agreement of 1768 following the Townshend Duties, the East India Company had been losing money from a lack of sales of tea to the colonies. In 1770, Lord North had repealed four of the five Townshend Duties, keeping only the tax on tea. The American colonists had refused to buy the commodity, which had resulted in financial difficulties for the East India Company.