When Queen Elizabeth first chartered the British East India Company in 1600, it was under the official name of the United Company of Merchants of England Trading to the East Indies but was also referred to as “John Company” or the “Honourable Company.” Other countries had well-established East Indies companies of their own, including the Dutch and the French, but the British East India Company reigned superior over them all, becoming the East India Company (Rose, 23).
The East India Company operated as the de facto government outside of England. They were permitted to acquire territory, mint money, command an army, sign treaties, make war or peace as they saw fit, and to develop judicial and tax system. The East India Company operated as an extension of the Crown, were the single largest employer in Britain, hired as many soldiers as did the Crown, and became the world’s first and largest multinational company (Rose, 23).
Chinese products, such as porcelain, silk, and spices were new, unknown, and very welcome back home, but English woolen broadcloth was not useful in the semi-tropical region of Canton. It may have been welcome in the cold northern regions of China, but Canton was the only port open to foreign trade. The only commodity the Chinese wanted from the British was silver (Tea Muse, np).
Other East India companies, primarily the Dutch and the French, rivaled the British East India Company. They were eventually eliminated as competitors, but the British saw them as enough of a threat to prohibit them from importing tea to England in 1669 (Fromer, 204) The East India Company now had a monopoly on tea coming into England that would last until 1834. The monopoly on tea benefited both the Company and the Crown, which charged taxes on all tea brought into the country (Ukers, 43).
By 1815, Britain dominated much of the world with military and economic control and the Empire had few rivals (Dalziel, 41). This could not be done without a strong military to support and protect colonies and possessions, but maintaining and expanding an empire was costly (Dalziel, 60). By taxing tea as a luxury item, the revenue from tea would go a long way in paying for British military expenses.
The East India Company controlled and limited the supply of tea by fixing the prices artificially high to protect profits and to ensure demand (Tea Smuggling, np). This made tea prohibitively expensive for the middle and lower classes, increased its appeal with the upper class, and brought in more money for the Crown. Every time the British Empire went to war, the amount of taxes on tea would rise (Ukers, 124).