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February 2000
Volume 18, Number 2

Manipulating Trade
Llewellyn H. Rockwell, Jr.

The left, most recently New York politico Lenora Fulani, likes to render the Boston Tea Party as a protest against corporate capitalism, and thereby analogous to the property-destroying protests at the World Trade Organization meetings in Seattle. A more traditional interpretation regards the Boston Tea Party as simply a revolt against taxed tea, so perhaps the WTO, which purports to support tariff reductions, fulfills the promise of the Tea Party.

Actually, the truth yields an even broader lesson: that imports should never be taxed, that special privileges should never be granted to one producer over another, and that international trade should never be manipulated for political purposes. This is the true American way, and it cuts against both the interventionist WTO and the protesters demanding that it do even more to hamstring free trade and free enterprise.

In the five years before the Tea Party in 1773, the colonists had decided to boycott all British products, including tea, in protest of the Townshend duties. These were high taxes on paper, dye, glass, and particularly tea, designed to replace the revenue lost from the repeal of the hated Stamp Act. The disastrous Townshend duties taught the colonists that external taxes were no better than internal ones, and the revolt against them spread, leading to the tarring and feathering of customs agents and other tax collectors.

Pressured by these protests, Parliament repealed most of the duties, but the high levy against tea was left standing to maintain revenue. As a substitute for British tea, a thriving underground market rose up for Dutch tea. This market was well served by heroic American smugglers who cared more about providing consumers with what they wanted than their supposed obligation to be loyal to government.

In 1773, the British government attempted to break the smugglers by granting an import monopoly to the East India Tea Company, which would, in turn, back the power of loyal British subjects in the colonies.

The East India Tea Company was not a regular corporation but rather a heavily armed and imperialist government-within-a-government. It threatened to become a proxy for the British government itself, selling tea, paying the salaries of appointed officials loyal to the British empire, and causing every manner of economic disruption.

Indeed, the East India Company, as Pennsylvania's John Dickinson pointed out in a riveting speech from the period, "levied war, excited rebellions, dethroned prin-ces, and sacrificed millions for the sake of gain. The revenue of mighty kingdoms have centered in their coffers. And this not being sufficient to glut their avarice, they have, by the most unparalleled barbarities, extortions, and monopolies, stripped the miserable inhabitants of their property and reduced whole prov-inces to indigence and ruin."

Liberal historians like to say that the Americans hated the new British tea policy because it undercut the price of smuggled teas. In fact, the colonists hated it because it fed taxes to the crown and its partisans, and proved that Britain would stop at nothing in using the system of international trade to manipulate political outcomes. As historian Charles Adams puts it, "if a monopoly could be granted for tea, it could also be granted for other products, and become a device to punish anti-British merchants and reward loyalists."

The American patriots who threw British tea in the harbor-provoking a full-scale crackdown and finally the Revolutionary War-were fighting not only against taxes but also against special privileges for producers and for the right of untaxed free enterprise. As Murray Rothbard wrote, the revolutionaries were attempting to "deny Parliament's rights to legislate for and to tax the colonies, and pay for the salaries of colonial officials."

The Declaration of Independence accuses the King of "cutting off our Trade with all parts of the world" and "imposing Taxes on us without our Consent"-with the second directly following the first. It is impossible to understand the meaning of this without understanding that the Boston Tea Party was a protest against the use of trade by the state to benefit some at the expense of others.

Our agenda today ought to be exactly that of the Sons of Liberty in Boston: the right to economic enterprise should be unimpeded by taxes or special privileges. This is all that true free traders, in the tradition of the American revolutionaries, have ever demanded.


Llewellyn H. Rockwell, Jr., is president of the Mises Institute.


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