Prime Minister Lord North.
The Tea Act was an act of the Parliament of Great Britain that was supported by Prime Minister Lord North and given the assent of King George III on 10 May 1773. The primary purpose of the Tea Act was to prevent the bankruptcy of the British East India Company by allowing the company to sell tea directly to Britain's American colonies.
The need for the Tea Act arose in 1772 when legislation replacing the Indemnity Act of 1767 drove up the price of tea in Great Britain. The East India Company continued to import tea into the country, but due to the high price it was unable to sell it, and a growing surplus of tea threatened to bankrupt the company. Lord North's solution was the Tea Act, which permitted the company, for the first time, to export tea to the colonies on its own account. This would allow the company to reduce costs by eliminating the middlemen who bought the tea at wholesale auctions in London. Instead of selling to middlemen, the company now appointed colonial merchants to receive the tea on consignment; the consignees would in turn sell the tea for a commission.
The most controversial aspect of the Tea Act was that it retained a duty on tea imported to the American colonies that had first been imposed in 1767 by the Townshend Acts and had been retained by Lord North in 1770 when the rest of the Townshend duties were repealed. By creating a monopoly for American tea imports, the Tea Act threatened to put both legitimate tea merchants and smugglers in America out of business, as well as treating America as a captive market. Another aspect of the Tea Act that displeased Americans was that the revenue from the Townshend duty was used to pay royal governors and judges in America, placing them beyond the power of the colonial legislatures.
The American response to the Tea Act was to coerce the East India Company's American consignees into resigning, and refusing to allow tea from the company to be unloaded in American ports. This strategy worked in the ports of Charleston, Philadelphia, and New York City, but not in Boston. The Royal Governor of Massachusetts, Thomas Hutchinson, had a vested interest in the Tea Act, since two of his sons were company consignees. He did not allow his sons to resign, and he also refused to allow the people of Boston to prevent the tea from being unloaded. The result was the Boston Tea Party of 16 December 1773, when dozens of Bostonians, some disguised as Indians, boarded three tea ships in Boston Harbor and threw their cargoes of tea overboard.
In Great Britain, the destruction of the company's tea turned opinion against the American colonists, and Lord North decided to punish the people of Massachusetts by passing the Coercive Acts in early 1774. This set in motion a chain of events that led to the outbreak of the North American Rebellion a year later.