Sunday, June 27, 2010

Boston Tea Party --- "the first instance of Anti-Free Trade protectionism"

It is an understatement to say that the late 1700’s were a turbulent time in American History. The colonists were fed up with being considered second class citizens and more and more of them were eager to rid themselves of the ‘tyrannical yoke’. The British Crown, in the meantime, saw them as restless rabble-rousers who needed to be clamped down upon.

While all of this is true, and the ‘tyrannical yoke’ was undoubtedly referred to often, it is unlikely any colonist at the time saw it exactly that way. The Colonies felt they had just won the French and Indian war, and were happy to have come out the victors and return to their lives. Back in Europe, however, it was not only called the Seven Years’ war, but the British felt very successful in having kicked the French and Spanish out of North America and thought the American colonies should therefore help pay for the stationed troops.

King George III (who may or may not have been slightly insane) decided to do so by means of the Stamp Act in 1765. This declared that every piece of official printed paper (from newspapers, to magazines, to many documents) in the colonies had to have a royal “Tax stamp” on it, which obviously cost money. While the British saw this as just, the Americans balked at the idea, already foreseeing the end of journalism due to the extra costs.

Then, two years later, came the Townshend Acts, another series of taxes and revenue raising acts. Named after the then Chancellor of the Exchequer (the British version of the Treasury Secretary) there were at least 5 of these acts. The New York Assembly refused to comply with one of them, after which the New York Restraining Act was added on.

The British then created the American Customs Board with the sole purpose of enforcing these Townshend Acts. The board was located in Boston, and its members were so unpopular it wasn’t long before they requested a military guard. Things between local colonists and the military guard got out of hand one day. The spark wasn’t so much idealism as it was due to one of the British Captains not having paid a local wigmaker his fee. Of course, this opportunity was seized upon by many colonists who joined in the shouting and jeering. This chain of events ultimately culminated with the Boston Massacre.

The British Crown decided to repeal all of the Townshend Acts except for the Tea Act. It was argued that at least one Act should remain as a show of British sovereignty. The result was that American colonists decided to boycott tea from the British East India Company. Many of the local tea merchants at this time, such as John Hancock, were also smugglers. Boycotts such as this allowed people like him to smuggle tea from Holland without paying taxes.

Due in part to these smugglers, the British Crown finally decided, in 1773, to do away with any tax on tea and the British East India Company was able to sell tea again to the colonies at a competitive price. This would obviously be seen as a victory for the colonists: all of the Townshend Acts had been repealed and the Americans had succeeded in their boycott. The British had caved in!
Unfortunately, the reality was that the tea coming in from the East India Company was much cheaper than the smugglers’ tea. People started buying the cheaper tea, and the local merchants were underpriced in the process.

This removal of the Tea Tax did not benefit the local merchants, so they decided to protest. They threatened the British consignees (those receiving the British tea) through vandalism, and they organized protests when the British East India Company ships started coming into the harbor. After some weeks of a standoff, the owners of the ships agreed to sail back to Great Britain, but the mayor of Boston did not let them. So on December 16, 1773, Bostonians dressed as Narragansett Indians boarded the ships and threw around 45 tons of tea into the harbor.

Interestingly, getting rid of the cheaper East India Company tea would raise the price of tea for the average American. The fact that this was all done in opposition to a tax removal (and the subsequent loss to local merchants) means that the Boston Tea Party was not in opposition to “Taxation without Representation”, but was actually the United States’ first instance of Anti-Free Trade protectionism.

Posted via email from Jim's Theory Blog Posts

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