The Tea Act of 1773: Definition, Summary & Facts

Instructor: Mark Pearcy
How did the American colonies and the British government come to the brink of war and revolution in 1773? Mostly because of tea. The British plan to tax the colonies, and their resistance, can be summed up in the description of one very badly-timed law: the Tea Act of 1773.

The Problems With Empire-Building: The Tea Act of 1773

Imagine you had to raise money in a government. There's basically only one way to do it--to raise taxes (or to put a tax on something that wasn't already taxed). A tax, as we all know, is just a little additional charge on some good or service, which goes to the government to run all the things we need in our regular lives.

So imagine you needed to tax something. You want it to be something that will generate some actual money and not spare change--so it has to be something that people would use, or buy, in a pretty good amount. But at the same time, you don't want it to be too common since then everyone will have to pay for it all the time and they'll start to get irritated.

So what would it be? Soda? Chocolate? Cigarettes? The Internet?

In 1773, the government of Great Britain faced a very similar choice. Weighed down by old debts and new responsibilities, England decided to tax a whole range of items, trying to find that perfect fit between raising revenue and not alienating the taxpayer. That was tough, since the taxpayers in this case were brand-new to British taxation--American colonists. The story of how the British and the Americans finally moved towards outright revolution can really be summed up best by looking at the Tea Act of 1773.

A Little Bit of Background

We have to backtrack just a little bit first. In 1763, Great Britain had just won a major war, the French and Indian War (also known as the Seven Years' War in Europe). This was a conflict between Great Britain and France. Long story short, the British won, but came away with two nagging issues: first, they were deeply in debt (since they had basically spent their way to victory), and second, they now claimed most of France's property in North America as a prize of victory (meaning all that land had to be dealt with--and that costs money, too).

Map Depicting British Possessions After the French and Indian War, 1764

So what to do? The British government did the math and realized that taxes were going to have to go up. Since the average English citizen (quick note: 'British' refers to the entire British empire, the whole United Kingdom and its overseas colonies; 'English' refers to England, the dominant nation in the United Kingdom) was already paying a fairly high tax burden, the British crown decided that maybe it was time the American colonists paid their fair share.

That was a sticky issue, though, because as Americans would quickly point out, they were already paying a pretty fair share, just in a different manner than in traditional taxes. The relationship between the colonies and Great Britain was based on a system called mercantilism. Simply put, colonies would produce raw materials (cotton, for example), which would then be shipped back to the mother nation, which would then produce finished products (clothing, for example, or ship sails), which would then be sold right back to the colonies…who were required, by law, to purchase only from the British. So the American point was, in effect, 'We make plenty of money for you, but in trade, not in taxes.'

However, the British believed there was a flaw in the mercantile system. It would have worked great for the British if Americans were only buying goods from the mother nation--but they weren't. In fact, they bought quite a lot of goods from other sources. Since this was not technically legal, it was referred to as smuggling. But most Americans viewed this as harmful as, say, going five miles above the speed limit today…technically a crime, but since everyone's doing it, not that big of a deal.

When you're broke, though, as the British government was in 1764, every little cent starts to count. That year, the British government under Prime Minister Lord George Grenville tried its first tax on the colonies, the Sugar Act. This was followed, over the next few years, by a series of taxes on a variety of goods as the British tried to get the right mix of incoming tax revenue without incurring too much American grumbling.

Lord George Grenville, British Prime Minister 1764

From 1764 to 1773, the British taxed molasses (the Sugar Act), legal documents and playing cards (the Stamp Act of 1765), paper, paint, and glass (the Townshend Acts of 1767). Each time, the reaction in America got worse--angry protest, boycott (a refusal to buy) of British goods, even violence. By 1768, when the British government decided to send troops to the colonies' biggest city, Boston, tensions were at their high point.

How Does This Get Around to Tea?

One of the Townshend Acts' taxes was on tea. Tea was probably the most common drink in the British Empire at this point; every citizen drank it, at least a little bit, at just about every age. The Townshend Acts had taxed it, but it wasn't a particularly effective revenue-raiser for the British government; so in 1773, with hostility between Americans and the Crown now particularly high, the new British Prime Minister, Lord North, had an idea.

Lord North, British Prime Minister 1773

One of the biggest corporations in 18th-century Europe was the British East India Company, which shipped tea around the world, including to the colonies. The East India Company was in financial trouble in 1773 and had been stuck with an enormous surplus of tea. Lord North had an idea that he thought would kill around four birds with one stone: fix the East India Company, end smuggling in the colonies, force the Americans to accept British taxation, and raise a little money on the side.

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