Tea Smuggling and Britain

British home demand drove tea smuggling. European ports shipped tea to Great Britain, where, despite the English East India Company’s formal monopoly on tea imports, high taxes and high Company shipping costs gave smugglers an advantage. British taxes could more than double tea’s price in the 1760s: bohea auctioned in London at 2s1d a pound in 1767 before tax, with an after-tax cost of 4s5d. By contrast, in Amsterdam, bohea cost 1s10d. The Netherlands was not the only low-tax location for tea: the Danish government charged a 1 percent tariff on re-exported tea and a 2.5 percent tariff on tea for Danish consumption. European East India Companies also had lower shipping costs than their English rival—the Dutch East India Company (VOC) since 1740.¹ Between 1765 and 1774, the English East India Company (EIC) auctioned roughly 6.8 million pounds of legal tea a year for home consumption within Great Britain. In addition, conservative estimates give another 4 to 6 million pounds of tea smuggled into Britain annually, for a yearly demand of 11 to 13 million pounds. This suggests a per capita tea consumption level of 1.31 to 1.55 pounds of tea annually. If the Company’s theory that sales of smuggled tea exceeded sales of legal tea were correct, this estimate would be low. Certainly, high British taxes were self-defeating. In the decade between 1766 and 1776, British tea tariff revenue fell 10 percent, despite population increase and “growing consumption of Tea by all ranks of People.”² The rest was smuggled.

Colonial tea volumes were much smaller. On average 373,000 pounds of legal tea were imported into North America per year between 1768 and 1772, one-sixteenth of the British average. Estimating smuggled tea volumes is difficult. London tea merchant William Palmer thought colonists consumed 3 million pounds of tea a year; merchant Samuel Wharton gave 5 million; Massachusetts Governor Thomas Hutchinson gave 6.5 million. Large estimates were used to justify large tea-trading concessions (Wharton for his brothers in Philadelphia, Hutchinson for his sons in Boston) and should be taken with a grain of salt. Hutchinson also estimated that five-sixths of the tea imported in 1770 was smuggled, which implied, based on records of legal tea imported that year, a colonial market of less than a million pounds of tea. But the estimate that slightly more than half of British tea was smuggled is also a good low-bound estimate for the colonies. Assuming half the tea in the thirteen colonies was smuggled in 1768–1772 would put per capita consumption at about 0.34 pounds of tea per year and annual consumption at about 746,000 pounds. We might also make a higher-bound estimate that colonial tea smuggling comprised three-fourths of colonial supply—giving an annual demand of 1.49 million pounds at a per capita level of 0.69 pounds of tea a year. Even this estimate means the British market for smuggled tea was three to five times greater than the colonies’. But at least, in ignoring Parliament and smuggling tea, colonists were being British.³

Smugglers surrounded Britain. Tea came from France, the Austrian Netherlands (present-day Belgium), the Netherlands, various German states, Sweden, Denmark (which then included Norway and the Faroe Islands), Portugal, and Spain. The Channel Islands provided excellent smuggling depots. Between 1772 and 1782, three-quarters of the tea brought to Europe by all the European East India Companies was smuggled into Britain.⁴

The VOC was foremost among the European companies, importing between 18 and 21 million guilders a year of Asian commodities. In the 1770s, about 40 percent (by value) of VOC imports were retained in the Netherlands; 60 percent were re-exported to Britain, Germany, and the Baltic. Not all European tea ended up in Britain. Dutch and German demand for tea was significant, and even poor Amsterdammers consumed tea.⁵

Dutch and British traders also trafficked tea from other European companies around the North Sea and the English Channel, making the Netherlands a contraband entrepôt. When colonials spoke of “Dutch” tea, they referred to tea smuggled through this network. The term “Dutch tea” should not be taken literally.⁶

Some Dutch tea came from Sweden. The Swedish East India Company (SEIC), run by a mix of Swedes, Britons, and others, imported Asian goods for re-sale abroad. Foreigners could buy tea at the SEIC auction in Gothenburg, and the Company made sure to publish its auction catalogs early enough to allow foreign buyers to attend. Swedish tea demand was important, but the Company re-exported over 90 percent of its tea, most reaching Britain and North America via intermediaries.⁷

Denmark re-exported 81 percent of its Chinese imports in 1753–1770. Only Danish merchants could buy the Danish Asiatic Company’s tea, but after marking it up, they sold it to British or Dutch middlemen. It would be a mistake to assume that these re-exports went only to Britain. Some went to the German Baltic and was probably consumed in Germany. Before the 1780s, the Danish and Swedish companies imported between one-quarter and one-third of the tea destined for Europe, in some years carrying more tea than the English Company did. They were significant suppliers to Britain and the Continent.⁸

France was another source. In the western side of the English Channel, the little Breton town of Roscoff became a major exporter of tea and eau de vie to Devon, Cornwall, and Ireland. On the eastern side of the Channel, Archibald Hunter, part of an Anglo-American family, hoped to enter Dunkirk’s smuggling trade, where tea re-exports were big business. Hunter explained that the town’s “monied men … find their advantage in buying” tea at Dunkirk and selling it on to Britain, and that June—when the cutters arrived with tea from the European companies’ auctions—was “the only time in the year to make money here.” Hunter explained how Virginians could join their English cousins in smuggling. Virginians might smuggle to France by loading tobacco off the books after officially clearing customs in Virginia. Colonial vessels were supposed to stop in Britain before landing in France, but doing so put them at risk of seizure in France. So they could stop at Madeira and take wine to Falmouth, then go to France, or arrive in France with false papers making it look like they had come from the Channel Islands. After acquiring cargo in Dunkirk, they might leave the French port in a storm, pretending they had been blown to sea, taking “all kinds of India Goods,” including tea, back to Virginia.⁹

Colonial Tea Smuggling Networks

Colonial smugglers only needed to draw up existing commercial networks, which made colonial tea smuggling so ubiquitous one writer thought the “whole Navy of England” could not stop it. The Netherlands was an attractive place to sell colonial cargoes and get products (besides tea) for the return. In Hamburg, Gothenburg, and other European ports, British factors—merchants who received and sold goods on commission—filled colonial orders for tea. Sometimes colonial firms sent one of their own. The Hunters had stationed Archibald Hunter in Dunkirk since 1770, selling Virginia tobacco and shipping European goods home. In 1774, he tried smuggling tea to Britain. “I shall endeavor to send you some tea,” he wrote to James Hunter in London. Colonial smugglers also used British finance. When Nathaniel Hammond was dispatched from Newport to Gothenburg for tea in 1770, he brought a bill of exchange drawn on the London firm Hayley & Hopkins.¹⁰

Merchants also shipped tea to European colonies in the Caribbean, from whence it was smuggled to British North American and Caribbean colonies. Dutch St. Eustatius and Danish St. Thomas (opened to shipping of all flags in 1764) supplied tea to North America. A vessel that traveled between Nevis and Rhode Island might put in a clandestine stop at St. Eustatius for tea. The Caribbean was an important area for colonial shipping; its supply of sugar and coffee and its demand for lumber, foodstuffs, and cloth complemented North American markets. A little tea could be slipped in along the way, for colonial tea smugglers were often regular traders who smuggled a little on the side. This was what Newporters Samuel and William Vernon did when they sent Captain William Tanner in the Dolphin on a surreptitious voyage to Hamburg, with instructions to proceed on to Sweden, load tea, and then take it to the Danish Caribbean island of St. Croix.¹¹

Geography made smuggling hard to stop in North America. Ships offloaded illegal cargoes down the shore before officially making port, then proceeded to the customs house and declared whatever legal cargoes were aboard or arrived empty and claimed to be “in ballast.” Other goods, like wine, were smuggled too. In Maine, the Chesapeake, and North Carolina, trade was too dispersed for customs houses to be effective; in other areas, customs houses were far from major points of trade. In South Carolina, over one hundred vessels claimed to be engaged in “coasting” trade within the province. Such coasters went uninspected, and nothing prevented them from going to the Caribbean and returning with tea. Thousands of coasting and fishing vessels went unchecked, never entering a customs house, able to collect tea in the Caribbean and redistribute tea across North America.¹²

Nor did customs officers, in the rare instances smugglers happened upon them, make much difference. In New York City, the customs house had only one vessel and three men on foot for enforcement, with the vessel often out of service. By late 1774, it was gone. Unsurprisingly, New York smuggling was extensive. Smugglers routinely bribed customs officers. When that failed, smugglers could use the routine apparatus of the customs service against them. Though customs agents did occasionally seize smuggled goods, these goods were then put up for auction, whereupon the smugglers could buy back their tea. Alternatively, smugglers fought back. In 1771, smugglers bringing tea into Philadelphia overpowered customs agents and locked them below deck in the officers’ own vessel. Customs collector John Malcom claimed that he was the only man in the Boston Customs House who dared “Stoping Large Quantitys of the Dutch and French East India Companys Tea.” Notably, he was tarred and feathered twice in the winter of 1773–1774.¹³

Such attacks on customs collectors were quintessentially British. In Bristol and Salisbury, English gangs attacked collectors seizing smuggled tea. In the latter, customs collectors were left “Weltring in their Blood.” Smugglers beat officers who seized tea in Reading “very cruelly.” In Wells, a supervisor commandeered dragoons to seize smuggled tea, but the smugglers gave him chase, took the tea back, and wounded the supervisor, “beating out one of his Eyes.” The Commissioners of Excise considered tea smuggling in Britain a matter of “great Magnitude & Enormity,” a trade taking up about one hundred vessels and utilizing large armed gangs who passed inland and were dangerous.¹⁴

British Tea Tax Reform and Failure, 1768–1772

How to solve the smuggling problem? Parliament could cut the tea tax to make smuggling unprofitable. A lower tax on a larger trade might even bring in more revenue—which is what happened when Prime Minister William Pitt passed the Commutation Act in 1784. Chancellor Charles Townshend tried something similar in 1767. His Indemnity Act dealt with two taxes. The first was the 25 percent duty on East India Company tea sold at the London auction. Townshend refunded this if the tea was re-exported to Ireland or North America. In its place, the Revenue Act set a new tea tax to be levied in colonial ports at 3d per pound. For bohea priced at 3s per pound, this represented a tax cut of two-thirds. Townshend kept this duty for British consumers, but eliminated the inland duty on black and singlo teas (1s per pound, previously charged in addition to the 25 percent duty). The rebated 25 percent applied to the colonies, and the cut in inland duty applied to Britain. The Indemnity Act had an almost immediate effect: in July 1767, the price of bohea in England fell from 2/9 to 2/1. British merchants sent out 500,000 pounds of tea to the colonies that year and over 800,000 the year following, a record. Townshend wanted to establish the precedent of colonial taxation. He also provided for a new customs board based in Boston to implement the tax in North America. This was cumbersome. It has been easier to tax tea before it left Britain.¹⁵

US historians remember the Townshend Acts for their effect on the colonies: their new taxes on lead, glass, paint, paper, and tea; the North American customs administration; and the vice-admiralty courts created to interdict smuggling. But in terms of revenue, the acts focused on Britain, where most tea was consumed and smuggled. Combatting smuggling in Britain might even put European smugglers out of business.

Townshend’s new tax was low enough to make legal tea competitive. In 1766, before Townshend’s reforms, bohea had auctioned in London at 3s per pound, compared to 1/11 in Holland. The 1767 tax cut, which amounted to about 7d to 1s a pound (depending on the auction price), bridged most of that gap. But while the Townshend Act enabled the Company to compete, the Company failed to do so. The Company cut its tea prices, but not enough, leaving market share to smugglers. This is despite the Company importing 44 million pounds of tea between 1768 and 1772 to take advantage of the Townshend Acts. Increased imports necessitated lowering auction prices further to move volume. Failing to make sufficient price cuts, the Company saw no increase in sales volume. By 1773 the Company had a backlog of 17 million pounds of tea. The prime minister, Lord North, thought this a three-year supply. Legal tea sales declined between 1769 and 1773, even as the Company cut its bohea prices, due to smuggling. With lower prices and lower sales volumes, tariff revenue plummeted. This hurt the Company, since the Indemnity Act required the Company to reimburse the government for tariff revenue lost in the tax cuts. The Company’s half-baked execution of its “business plan” left it owing about £300,000 for lost import duties. Before the inland duty was re-imposed in 1772, the Company also had to reimburse merchants who purchased its tea but could not sell it on because of its high price. This cost the Company another £560,000.¹⁶

The Company failed to manage inventory. It should have radically cut tea purchases and prices as its backlog grew. It also should have imported a different assortment of tea—notably, congou, a black tea the Company imported in small amounts, despite its benefitting from the cut in inland duty. The reimbursements the Company would be expected to make in 1772 had been spelled out in 1767, making these costs foreseeable once the Company’s sales volume fell short. With £2 million of capital tied up in inventory, even selling tea at a loss would raise needed funds.¹⁷ Instead, the Company, too big and too connected to fail, just got a government bailout.

This pointed to the problem at the heart of the Company: it could not function like a business. On paper it did not have to; it was supposed to have a monopoly on supplying the British market with Asian goods. But there were many other European East India Companies. While they all had formal state monopolies, their respective European states were linked by trade, making the East India Companies function more like national champions than monopolies. The East India Companies competed with each other in a European and trans-Atlantic marketplace. The EIC and VOC had been vying in the tea trade since at least 1685. These firms often relied on the political competitiveness of their government patrons rather than the economic competitiveness of their businesses. When the VOC and EIC wanted to stop the rival Ostend Company, the Netherlands and Britain applied diplomatic pressure to kill it. Market competition was harder, but companies that pursued it profited. During the Indemnity Act the Scandinavian companies shifted their focus to green teas and congou.¹⁸

The East India Company even suffered from competition against itself. Crew and officers of its vessels unloaded some of its tea in Ireland, the Channel Islands, or France before reaching London. This tea was smuggled into Britain untaxed. Smugglers evaded customs agents to land Company tea and India goods in the Thames. Merchants bought legally imported tea, re-exported it to Ireland for the tax rebate, then smuggled it back to Britain. Much of the jump in re-exports to Ireland was part of this tax fraud. From an average of 301,000 pounds of tea exported to Ireland in 1763–1767, re-exports tripled to 924,000 pounds of tea annually in 1768–1772.¹⁹

The Colonial Response to the Townshend Acts

In the colonies, Patriots objected to the Revenue Act in the winter of 1767–1768, even though, for tea at least, it represented a tax cut. The colonial smuggler liked the old taxes that had kept out the legal competition. In the summer of 1768, Patriots wrote against the Revenue Act. But in the first eighteen months of the law (July 1767 to December 1768), legal tea imports increased 42 percent in Philadelphia and 100 percent in New York as merchants stocked up. Patriots also resisted customs officers by force, as had occurred in Britain for years. Custom houseboats were burnt, seized goods “rescued,” officers tarred and feathered. In 1768, John Hancock openly landed wines without going through customs, then registered his vessel “in ballast.” Not one of the various witnesses who saw it was willing to testify against him. This omertà enabled smuggling. Boston Patriots launched a non-importation movement, pledging not to import objectionable goods from Britain, including tea. New York and Philadelphia merchants joined in early 1769. But merchants in regional ports, like Halifax, Portsmouth, Providence, and Newport did not. Those towns saw spikes in legal tea imports, which then supplied New England demand despite Boston’s non-importation (see table 2.1). Maryland merchants kept their movement weak, and tea imports increased in the Chesapeake in 1769 despite the Virginia Resolves. Tea imports continued in South Carolina, too. While some merchants signed non-importation pledges, non-signers still imported, including Thomas and Elisha Hutchinson (sons of the governor) and Richard Clarke & Sons in Boston, all of whom would be among the East India Company’s tea consignees in 1773. In 1769 the Hutchinsons brought in roughly 50,000 pounds of tea, half of Massachusetts’s legal supply. Benjamin Woods Labaree, in his canonical The Boston Tea Party, thought these men “obstinate,” but they had buyers, and tea imports continued across the colonies. Were they not just practical? The Hutchinsons’ tea was carried on a ship owned by John Hancock, a Patriot with a pragmatist’s nose for money.²⁰

Maintaining the leaky non-importation regime into 1770 proved difficult. Boston Patriots marked “Importer” on the doors of merchants known to import goods and taunted customers. At a January 1770 merchants’ meeting, merchants caught breaking non-import pledges were boycotted, but legal tea continued to come. Boston Patriots had extracted pledges of non-consumption from colonists, which they sought to renew. But the renewed vows of non-consumption did not last. Patriots had to lock up the Hutchinsons’ tea in May 1770 to keep Bostonians from buying it. Yet in 1770, non-importation did operate effectively in other colonies. Legal tea imports collapsed in New York, Pennsylvania, the Chesapeake, and South Carolina. In South Carolina, even the future Company consignees, Leger and Greenwood, ceased tea imports from Britain. This prevented colonists from drinking dutied tea whether they wanted to or not.²¹

But non-importation struggled in Boston, as John Mein showed. At the January merchants’ meeting Patriots had denounced John Mein for his defiance of Patriot authority. Mein, a printer, responded a few months later by publishing public information from the custom house: which ships had brought in which goods that year. Mein listed 32 vessels arriving from Britain and Ireland, many with banned goods. Eleven vessels brought 146.5 chests of tea, including John Hancock’s ship Lydia, with seventeen chests of dutied tea for six different buyers and his Paoli, which brought in another 38 chests.²² Though Hancock offered to return some goods, the tea stayed. The official Patriot reason was that it was difficult to smuggle tea to England.

Mein’s exposé suggested Patriotism really was the last refuge of the scoundrel. It detracted from the Patriots’ self-image as virtuous upholders of colonial rights and gave credence to the Tory line that Patriots were hypocrites who asked others to sacrifice while they profited. Out-of-colony merchants and newspapers began to ask, Why should our merchants eschew imports, if all it did was create scarcity for Bostonians to exploit?²³ Boston Patriots controlled the Boston crowd, ensuring that their friend Hancock was not attacked for smuggling tea, while Mein was attacked and financially ruined.²⁴

Yet merchants still turned against non-importation. Mein’s publication, combined with the Repeal Act, which ended Townshend’s duties on most goods, except tea, left little will to continue. A sunset clause in the Townshend duties meant the tea tax was set to expire in 1772. Because Parliament repealed the duties on some goods, non-importation is sometimes remembered as a success, however its leakiness suggests it was not. New York merchants ended non-importation in July 1770. Boston ended it in September, Philadelphia in October, South Carolina in December. All claimed still not to import British tea. However, colonists in Massachusetts, the Chesapeake, and the Lower South reverted to importing tons of it.²⁵

Between the Townshend and Tea Acts

Boston took 40 percent of all legal tea shipped to North America between 1768 and 1772. This was well known enough for the Sons of Liberty to have to deny it. Merchant vessels from London might have several vessel co-owners and bring in cargo for several different cargo owners, which made it easy for merchants of all political leanings to be invested in vessels carrying dutied tea, including, as the comptroller of customs noted, “Mr. John Hancock the Patriot.” Hancock’s clerk, William Palfrey, disputed this in print, but Hancock’s vessels did carry over 80,000 pounds of dutied tea for various owners between 1768 and 1772. Hancock was hardly the only one. William Dennie was invested in tea ships as well (he would seek the Boston consignees’ resignation in 1773). So were Bostonians Joseph Jackson and Gustavus Fellows and Salemite John Derby. Loyal merchants like George Irving and Thomas Boylston were invested, as were London and Nantucket men. Some, including Hancock, also smuggled in tea from the Netherlands.²⁶

Dutied tea importations rebounded in the Chesapeake and South Carolina, too. After non-importation ended, Leger and Greenwood initially held back from ordering new teas from London. But once they realized other Charleston merchants were importing dutied tea, they resumed their own imports, bringing in an average of 20 chests of dutied tea per year.²⁷

Meanwhile, smuggled tea was dominant in New York and Philadelphia, cities that received almost no legal tea. Joseph Reed, a Philadelphia Patriot, estimated Pennsylvania tea consumption at hundreds of thousands of pounds per year, entirely smuggled. Political virtue and commercial expediency drove mid-Atlantic merchants to maintain ties with the Netherlands and import Dutch tea. Bohea prices spiked from a baseline of roughly 2/6 sterling in New York and Philadelphia in 1769 to 4/10 in Philadelphia and 6/4 in New York in 1770, before returning to around 2/6 in 1772 as Dutch and British tea were eventually able to meet colonial demand. One of the “lessons of history” from the Townshend Act boycotts would be that non-importation could affect consumer prices.²⁸

The other “lesson of history” driving Boston Patriots in 1773 was the fear that so-called non-importers and non-consumers would cheat.²⁹ Merchants like the Clarkes and the Hutchinsons had violated the Townshend Act boycotts. This was one reason for the Company to ship tea to them in 1773. Similarly, Patriots confronted the Boston consignees so acrimoniously that year because those consignees were the only recipients of the Company’s tea in 1773 to have flagrantly violated non-importation in 1769 and 1770. Boston consumers had violated the boycott in 1770, too, to the point that Patriots had to keep tea away from them, a logic of non-consumption by force majeure which would inform how Boston, Charleston, and Philadelphia Patriots responded to the tea ships a few years later. All this cheating was blamed on the merchants, leaving unsaid the obvious follow-on: merchants sold tea because colonists paid good money for it. If the new tea boycotts were to be more extensive or better enforced than the old ones, then they risked a greater effect on prices, too.

The Tea Act, 1773

The 1773 Tea Act continued Townshend’s Revenue and Indemnity Acts within the colonies. The rebate on tea re-exported to the colonies persisted, as did the 3d per pound tax in colonial ports. (However, higher taxes on tea in Britain ensured smuggling there.) The Company was encouraged to re-export tea to the colonies without auctioning it in London; thus, cutting out London middlemen and lowering prices, though colonial merchants could still get tea from their regular London suppliers if they so chose. In 1773, colonial smugglers could buy bohea in Holland for 1s9d per pound and sell it in the colonies for 2s7d (a markup of nearly 50 percent). The EIC instructed its consignees to sell bohea in the colonies at 2s per pound, which would have taken away much—but perhaps not all—of the smuggler’s profits. Historians disagree whether the Company would have undersold smugglers. It had failed to do so in Britain under the Townsend Acts, and the EIC with its high shipping costs would have struggled to undersell the VOC permanently.³⁰ By setting a floor below which it would not sell, the Company left room for smugglers should Dutch wholesale prices fall, as they did in the spring of 1774. But the Company anticipated success: the tea it sent to the colonies in 1773 was more than double the volume of all legal tea sold in North America the previous year.

In 1772, the Company faced severe financial difficulties: it defaulted on customs payments and loans to the Bank of England. A general credit crisis, ironically begun when a bank shorting East India Company stock defaulted, made things worse. The Company now governed parts of India; tax revenues there were low, and expenses were high. Its British importing business was strained: of the various Indian and Chinese items it brought in, tea was becoming its main product but remained widely smuggled. Smuggling suggested a yet-uncaptured British tea market, but the Company was burned by its 1767–1772 attempt to capture market share.

By 1773, solutions to the Company’s money problems centered around halving dividend payouts (a step its rentier shareholders took with great reluctance) and a bailout loan of £1,400,000 from the British government.³¹ The Tea Act, which sought to increase the Company’s exports to North America, was passed in this context.

The Company initially planned to draw down its tea stockpile by exporting to Europe. One estimate suggested that if the Company sold 11.5 million pounds of tea to Europe, it could generate over £1,400,000—enough to cover the loan from Parliament. The tea probably could have sold if granted full drawback on all duties. But sales at such volume would depress prices. And as long as taxes on tea remained high in Britain, the tea sold to Europe would be smuggled back into Britain, just like the tea re-exported to Ireland had been.³² The Company decided to sell tea in North America instead.

Yet the colonial market was too small to affect Company finances meaningfully. The Company shipped roughly 600,000 pounds of tea to the colonies in 1773, 3.5 percent of its total tea on hand.³³ Though passed just months after the Company’s bailout, the Tea Act offered only a marginal improvement to the Company’s cash flow. It is easy to assume the Tea Act was meant to address the Company’s financial problems, but it was not, for those problems had already been addressed.

In addition to cutting dividends, borrowing, and seeking new markets, the Company improved its inventory management. It had 17 million pounds on hand, but this figure is misleading. The Tea Act required the Company to maintain 10 million pounds of tea on hand as a condition of allowing direct Company exports to the colonies. The surplus beyond that of 7 million pounds could be sold off over time. Between 1774 and 1783, the Company imported 48.1 million pounds of tea and sold 59.4 million pounds. The difference was drawn down from supply. The Company sold an average of 5.944 million pounds of tea a year between 1774 and 1783, roughly what it had been selling in the 1760s, just with less additional tea on order. The Company paid off its government loan by 1776. Meanwhile, the King’s duties grew handsomely (the Company estimated that in these years a chest of hyson tea generated nearly three times as much revenue for His Majesty’s Customs as it did profit for the Honourable Company). By the time of the Commutation Act in 1784, which lowered tariffs on tea consumed in Britain, the Company had too little tea to meet the increased demand for legal tea. So the Company bought up supply on the Continent—25.5 million pounds between 1785 and 1787—and increased imports from China to 12 million pounds a year. The broad tax cut and the Company’s purchase of European supplies finally put British tea smugglers out of business.³⁴ Had Parliament done this ten years earlier, it likely would have put American tea smugglers out of business, altering the course of the imperial crisis. The Company’s financial problems were resolved without North American help.

Though not much for the Company, the tea shipped to North America in 1773 was a lot for a colonial merchant. So the Company held the merchants in the four receiving cities jointly responsible for the cargo. It limited consignees to a 6 percent commission, of which their London referrals took a share. Having a capped commission and a capped sales price on one hand, and facing, once Patriots turned the populace against them, uncapped losses across all their businesses on the other, quitting the tea consignment business made sense. The four Philadelphia consignee firms, who managed a larger shipment, could expect to share no more than £2,400 sterling profit.³⁵ The Boston consignees held out—driven, at least initially, by their belief in the Boston market for legal tea.

Commissions would only be paid upon sale, motivating consignees to sell tea fast and in bulk, perhaps even at auction, to every retailer and wholesaler they could. The Company did not send tea anywhere else in the Americas, leaving potential buyers for the consignees’ cargoes spread from Quebec to the Antilles. Manhattan consignee Henry White hardly knew every merchant, even in Albany. So Albany merchants would order tea from their usual New York suppliers, who knew them and accepted their credit; in turn, the latter would get it from consignees like White or wholesalers in London. The North American consignees competed with the wholesalers who bought tea at Company auctions in London. This prevented White or any other North American merchant from taking over the legal tea market. However, the price cap of 2 shillings a pound for bohea would hurt smugglers.

The Problem with the Colonial Response

The colonial response to the Tea Act was unexpected in Britain. Townshend’s colonial tea duty had been levied uneventfully in 1771 and 1772. The ministry thought the continuation of a tax cut and the chance to remove expensive London middlemen were boons to the colonies. Peter Oliver, who served as chief justice in Massachusetts, pointed out that the Tea Act was enacted with a “lenient Principle,” a liberality that tried to improve the common man’s lot to reduce smuggling rather than interdicting smugglers with force. Thomas Hutchinson, relying on his experience importing and selling dutied tea—which he did until 1773—originally thought the tea would be landed in 1773 without trouble.³⁶

This was in part because tea did not seem too important. Tea was widespread but represented only 2.9 percent by value of the goods legally shipped from Britain to the colonies. Woolens, by contrast, comprised 37 percent of English exports to the colonies. Fabrics of all sorts represented over half of all English shipments to the colonies. Neither the Townshend nor Tea Acts touched these vital goods, which supplied British workers with jobs and colonists with warmth. Instead, those acts tinkered with taxes on paint, tea, glass, and other “luxuries.” But the Tea Act disappointed expectations that Townshend’s tea tax would be sunset. It renewed attention to colonial taxation. And Patriots objected to the Company’s monopoly. As Governor William Tryon of New York explained to Lord Dartmouth, secretary of state for the colonies from 1772 to 1775, even “if the tea comes free of duty, I understand then it is to be considered as a monopoly of dangerous tendency … to American liberties … let the tea appear free or not free of duty, those who carry on the illicit trade will raise objections.”³⁷

The complaint of monopoly was bizarre. It argued that the Company’s tea would push out other tea, dominate the colonial market, then allow the Company to raise prices. Lower prices would thus cause higher ones, or so the reasoning went. But the Company could not raise prices in the colonies much beyond what merchants would bid for it in London without creating a new smuggling problem, and it could not raise prices of the tea it sold in London and the Americas without losing market share (and costing His Majesty customs revenue), problems highlighted by the Company’s failures in 1767–1772. The VOC still existed, smugglers sold Dutch tea in Britain, and colonists were good at smuggling it. Patriots who worried that the Company’s de jure monopoly (which had existed for a century) would become a de facto one overlooked these points.

Nor was the Dutch tea that Patriots preferred a principled, ideological alternative. The European East India Companies, like the English one, were formal, state-sanctioned monopolies. The Netherlands did not tax tea re-exports, but Sweden and Denmark maintained just the sort of low, nominal taxes that Patriots opposed. Colonists had no elected representatives in Parliament, but they did not have elected representatives in any other European government, either. At least in Parliament they had colonial agents. Some of these polities had abolished representative politics altogether. The Netherlands had a recognizably representative government. But France and Denmark had absolutist monarchies, and Sweden’s king sidelined the legislature with a constitution that made him, as the New York Journal noted, “absolute Sovereign” in 1772. And, of course, there was the Great Qing, which taxed all tea as it left China. This was, quite plainly, taxation without representation.

Few colonists knew what taxes smuggled tea bore. VOC tea was the least bad, and the catch-all term, Dutch tea, concealed ideologically problematic French, Danish, and Swedish tea. Perhaps, since these European states did not rule North America, their tea seemed innocuous. Or perhaps Dutch tea was re-imagined as a serviceable ideological alternative by smugglers and consumers who wanted to protest the Tea Act without giving up tea.³⁸

One of the central questions nagging at histories of the tea protests has been: How much action was driven by ideological principle, and how much was driven by the self-interest of smugglers? To this we might add the self-interest of consumers. Before 1773, widespread smuggling and leaky boycotts were good businesses for smugglers and consumers. Before 1773, smuggling and boycotts were revolutionary actions for Patriots. Yet in the years ahead, as politicians sought an effective ban on all tea, and as many merchants and consumers still trafficked it, tea’s career as a political symbol and as a consumer good pulled it in competing directions.