J. L. BELL is a Massachusetts writer who specializes in (among other things) the start of the American Revolution in and around Boston. He is particularly interested in the experiences of children in 1765-75. He has published scholarly papers and popular articles for both children and adults. He was consultant for an episode of History Detectives, and contributed to a display at Minute Man National Historic Park.

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Friday, December 18, 2009

How Much Was the Tea in the Tea Party Worth?

Charles Bahne, author of The Complete Guide to Boston’s Freedom Trail wraps up his timely look at the Boston Tea Party with an analysis of the financial cost.

The account reproduced yesterday itemizes the East India Company’s cargo by ship and by kind of tea. In all, as you can see, the losses came to a grand total of £9,659/6/4—that is, 9,659 pounds sterling, 6 shillings, and 4 pence. (For you uninitiated out there, there were 12 pence in a shilling, and 20 shillings in a pound before British currency was “decimalised” in 1971.)

According to another document reproduced in the same booklet, Catalyst for Revolution, this “Invoice Amount” includes the American duty of 3 pence per pound of tea, and a commission of 8%, which was presumably to be paid to the local consignees.

But how much does that figure mean in terms that we 21st-century Americans can understand?

Three years earlier, in 1770, Paul Revere purchased his house at 19 North Square for £213/6/8. Do the math, and you’ll find that the destroyed tea was worth more than 45 times the price that Revere paid for his 7-room house. This wasn’t a mansion; it was an older house and the rooms were small. But the Revere home was probably typical of the housing stock for an average working-class family in Boston.

Out in the country, Abigail Adams paid £600 for the finest house in Braintree (now Quincy) while her husband John was away on diplomatic work in 1787. The tea was worth more than 16 times the price of this mansion.

(If you visit those houses, note that Revere’s house today is smaller than it was in his time, while Adams’s house is considerably larger than it was when the family bought it.)

After the American Revolution, in Massachusetts at least, British pounds were converted to U.S. dollars at a rate of £3 to $10, or £1 = $3.333333.... Applying that exchange rate, the East India Company’s losses amounted to $32,197.72—in 1773 dollars.

And if we want to factor in inflation over the last 236 years, two different websites offer data that we can use. Measuringworth gives us an inflation factor of 27.5 for a present-day value of $885,000; while Oregon State University Prof. Robert Sahr offers a factor of 26.3 for a modern value of $847,000.

Lastly, we can go to our local supermarket to see the present-day price of tea. I found a 100-bag box of Salada tea (official co-sponsor of Old South’s events this year) at $3.99. Based on the earlier calculations about the number of tea bags the cargo would fill, that’s about $739,000. Which might show that tea has become less of a luxury good than it was back then.

Of course, fancier blends cost more, just as Hyson cost more than Bohea in 1773. The best supermarket deal I found on Earl Grey, for example, came to $26.26 per pound. At that rate the Tea Party cargo would be worth more than $2.4 million today. Then again, that’s retail, not wholesale.

Thanks, Charlie! Knowing how much that tea was worth sure helps to explain the anger of the Parliament in London.

2 comments:

Avraham said...

Now it makes sense why they were so upset!

Rag Linen said...

This was a very helpful post as I'm trying to calculate the modern value of the destroyed tea too. I use similar math, but account for inflation of the GBP before converting GBP to USD; whereas, your calculation is reverse (first converting GBP to USD and then accounting for inflation of the USD). Click here to see my post and calculations (and follow the comments).

The order of my calculations result in a modern tea value of nearly $1.5 million.