Introduction
Ever since the days of King James II, the East India Company had enjoyed a very cosy relationship with the Crown. When King George III came to the throne in 1760, many high-ranking Government officials now owed their salaries to it, and the Exchequer’s entire fiscal policy rested on it. Naturally, Parliament would do anything to protect it.
EARLY in the reign of King George III, Britain’s thirteen colonies in North America were smarting under London’s heavy-handed regulation. The prevailing opinion in Westminster was that the nation’s wealth lay in maximising commercial tax revenue, and to achieve this Parliament insisted that the colonies trade through the Government’s exclusive trading partner, the East India Company.* The Navigation Acts required merchants to hire English ships and work out of English ports, and foreign competitors such as the Dutch were shut out. Inevitably, a lively smuggling industry sprang up.
One of the commodities affected was tea, imported from China.* By the 1770s, some 86% of American tea was smuggled, and the East India Company’s warehouses in London were full of unsaleable tea. To shift the surplus, the Tea Act of 1773 eased some taxes and (on Benjamin Franklin’s recommendation) allowed the Company to bypass English ports, but Americans still paid a premium for their tea to support a Government in which they had no Parliamentary representatives.
This economic philosophy is known as Mercantilism. It was believed that wealth is the same as money, and that there is only just so much money in the world. Consequently, other nations are rivals, and the only way to stay wealthy is to bind a sufficient number of countries or colonies into a customs union and cream off their taxes into the Treasury, while beggaring those outside with lopsided trade deals or sanctions backed up by naval blockades.
The Indian tea trade would not be established until 1834. British tea was superior to the tea of their Dutch competitors, but instead of allowing Americans to choose their own brand and price, they used trade tariffs to force non-Imperial merchants out of the market, with the result that many American bought the inferior smuggled tea as a matter of principle as well as price.
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