Reasonable calm prevailed until 1773, when resistance flared up again over what now seems to have been an inconsequential matter. The English East India Company, in which many politically powerful people owned an interest, was experiencing financial difficulties. Parliament had granted the company a loan of public funds (such as Congress gave the Chrysler Corporation in 1981 and Bear Stearns in 2008) and had also passed the Tea Act of 1773, which permitted the company to handle tea sales in a new way. Until this time, the company, which enjoyed a monopoly on the trade from India, had sold tea to English wholesalers, who, in turn, sold it to jobbers, who sent it to America. There the tea was turned over to colonial wholesalers, who at last distributed it to American retailers. Overall, many people had received income from this series of transactions; besides, duties had been collected on the product when it reached English ports and again when it arrived in America. The new Tea Act allowed the East India Company to ship tea directly to the colonies, thereby eliminating the British duty and reducing handling costs. Consumers were to benefit by paying less for tea, the company would presumably sell more tea at a lower price, and everybody would be happy. But everybody was not happy. Smugglers of Dutch tea were now undersold, the colonial tax was still collected (a real sore point), and, most important, the American importer was removed from the picture, thus alarming American merchants. If the colonial tea
Angered colonists, disguised as Indians, invited themselves to a “tea party” to show the British how they felt about English mercantile policies. The damage to property was nearly ?9,000 (about $1 million in 2008 values).
This illustration emphasizes the political antagonisms launched by the Intolerable Acts of 1774.
Wholesaler could be bypassed, couldn’t the business of other merchants also be undercut? Couldn’t other companies in Great Britain be granted monopoly control of other commodities, until eventually Americans would be reduced to keeping small shops and selling at retail what their foreign masters imported for them? Wouldn’t just a few proBritish agents who would handle the necessary distribution processes grow rich, while staunch Americans grew poor? The list of rhetorical questions grew, and the answers seemed clear to almost every colonist engaged in business. From merchants in Boston to shopkeepers in the hamlets came a swift and violent reaction. Tea in the port towns was sent back to England or destroyed in various ways—the most spectacular of which was the Boston Tea Party, a well-executed three-hour affair involving 30 to 40 men (Economic Reasoning Propositions 1, scarcity forces us to make choices; and 2, choices impose costs). Many colonists were shocked at this wanton destruction of private property, estimated at nearly ?9,000 (or nearly $1 million in 2008 prices), but their reaction was mild compared with the indignation that swelled in Britain.
The result was the bitter and punitive legislation known as the Intolerable Acts. Passed in the early summer of 1774, the Intolerable Acts (1) closed the port of Boston to all shipping until the colonists paid the East India Company for its tea; (2) permitted British officials charged with crimes committed in an American colony while enforcing British laws to be tried in another colony or in Britain; (3) revised the charter of Massachusetts to make certain cherished rights dependent on the arbitrary decision of the Crown-appointed governor; and (4) provided for the quartering of troops in the city of Boston, which was especially onerous to the citizens after the events of the Boston Massacre four years earlier. In the ensuing months, political agitation reached new heights of violence, and economic sanctions were again invoked. For the third time, nonimportation agreements were imposed, and the delegates to the First Continental Congress voted not to trade with England or the British West Indies unless concessions were made. On October 14, 1774, the Continental Congress provided a list of grievances:
1. Taxes had been imposed upon the colonies by the “British” Parliament.
2. Parliament had claimed the right to legislate for the colonies.
3. Commissioners were set up in the colonies to collect taxes.
4. Admiralty court jurisdictions had been extended into the interior.
5. Judges’ tenures had been put at the pleasure of the Crown.
6. A standing army had been imposed upon the colonies.
7. Persons could be transported out of the colonies for trials.
8. The port of Boston had been closed.
9. Martial law had been imposed upon Boston.
10. The Quebec Act had confiscated the colonists’ western lands. (Hughes 1990, 59)
The Congress ultimately went on to demand the repeal of all the major laws imposed on the colonies after 1763 (Tansill, Documents Illustrative of the Formation of Union of the American States, 1927: 1-4). By this time, however, legislative reactions and enactments were of little importance. The crisis had become moral and political. Americans would not yield to the British until their basic freedoms were restored, and the British would not make peace until the colonists relented. The possibilities for peaceful reconciliation ebbed as the weeks passed. Finally, violence broke out with the shots of April 19, 1775, which marked a major turning point in the history of the world. On July 4, 1776, independence was declared. The Empire that had tilted in 1765 had now cracked.
World History
