Teas Trending

Trends relating to Quantities Sold

In my earlier post, ‘Charting the East India Company’s Tea Trade‘, I introduced a body of data comprising sales figures reported by the Company to a Parliamentary Enquiry of 1845. I promised to return to these figures with some examples of the trends observed… but first a reminder of the caveats that I observed:

  1. the patterns we might observe are only as reliable as the data on which they are based (though there seems every reason to trust its veracity)
  2. using the figures as a guide for overall domestic tea consumption is problematic, as they relate only to legal tea sales by the state-sanctioned monopoly importer (and don’t account for smuggled tea)
  3. the figures make no discrimination between tea destined for retail in Britain, and that ultimately re-exported (most commonly to America and Ireland)
Figure 1 - Sales by Weight of all Tea Varieties
Figure 1 – Sales by Weight of all Tea Varieties

Notwithstanding these cautions, the hard statistics allow us to finesse the otherwise somewhat generalised accounts of the unremitting growth of the East India Company’s tea trade. Figure 1 (click for a larger view, as with any of the charts in this post) demonstrates that tea imports were increasing, though not remarkably, in the period 1740-1770. But growth stalled and became increasingly volatile in the 1770s, as it did again in the first decade of the nineteenth century. The sudden increase in sales in 1784 – perhaps the most noticeable feature of the chart – is almost wholly accounted for by the expansion of the red section of each bar, representing sales of the higher quality black tea, Congou. This abrupt alteration demonstrates the immediate consequence of a dramatic reduction in the revenue which the government raised on tea, embodied in the Commutation Act of 1784. As smuggling was effectively ended with this provision, the figures for the later 1780s are probably much more indicative of nationwide patterns of consumption, lending credence to contemporary reports that most tea smuggled in the 1770s was of the Congou variety, rather than the basic-standard Bohea which the Company had previously favoured. Tempting though it may be to read into this trend a refinement of the British palate, the real reason may have been domestic economy: tea dealers testifying to a Parliamentary Enquiry of 1834 stated that it was well known that those of straightened financial circumstances preferred Congou as the leaves could be dried and re-used several times.

Figure 2 - Black and Green Teas as proportion of total sales
Figure 2 – Black and Green Teas as proportion of total sales

A closer look at the sales of varieties of green tea demonstrate that the basic-standard Singlo tea (gradually replaced by the similar quality Twankay from 1790, a name change which may have derived from an alteration in the geographical area of south-eastern China from which the green tea offered to British supercargoes was generally sourced) suffered no such reduction in popularity, with the premium rate Hyson at best accounting for only a quarter of all green tea sold. The overall proportion of green teas within the total sales nevertheless remained remarkably consistent, Figure 2 demonstrating that its sales reckoned against black teas declined only slightly from around a 1:3 ratio in the earlier decades to about 1:4 by 1800. Green tea clearly maintained a significant position within practices of British tea consumption in the later eighteenth and early nineteenth centuries, and certainly does not disappear during this period (as is often assumed).

Trends relating to the value of Sales

Figure 3 - Average Sale Price of  Black Tea Varieties
Figure 3 – Average Sale Price of Black Tea Varieties

The average sales prices for all tea varieties (see Figure 3 for a breakdown of the black teas) show a clear downward trend across the period covered by the returns provided to the House of Commons. In general, the figures suggest the degree to which periods of war tended to drive market prices higher. This is certainly true for the mid-1740s (the War of the Austrian Succession), and 1758-1764 (associated with the Seven Years War). This relationship may indicate the effect of the nervousness which war occasioned in the marketplace, with dealers keen to secure tea stocks ahead of anticipated disruptions to trade; but it may also reflect the lower quantities of smuggled tea entering the country. These particular conflicts impinged more severely on the trade in contraband Dutch and Swedish teas than they did on the East India Company’s own shipping (which benefited from naval protection in the English Channel). Greater competition for the legal stocks available may have consequently sent prices higher. Later periods of price increase appear to correlate with Napoleonic conflicts, and these – together with market jitters relating to British defeats in the Anglo-American War of 1812-1815 – might explain the sudden peak observed in the price of many tea varieties in 1814.

Value of Teas sold compared with Weight Sold
Figure 4: Total Value of Tea Sales plotted alongside Total Weight Sold

The basic information provided on the 1845 ‘Statement’ can be manipulated quickly to calculate the total value of all sales for each variety, in each year. Whilst the patterns indicated by charting the value sold are similar to those elicited by charting weight, comparative analysis yields some intriguing disparities. In Figure 4, the total weight sold (the blue line) is plotted alongside the total value sold (the red bars). The shape of the two graphs differs at two key moments: in the aftermath of the Commutation Act of 1784 (when the increased volume of sales was offset, in terms of its value to the Company, by a falling sale price), and a much more obvious period 1816-1832, during which the total value of sales declined notwithstanding the increasing volumes sold (perhaps suggestive of the Company’s dwindling control over the market prices for tea in the face of the increasing restrictions placed upon it under the terms of the renewals of its Charter).

Trends relating to the Tea Excise

Figure 5 - Average Excise Due on 1 Ton of Tea
Figure 5 – Average Excise Due on 1 Ton of Tea

The state raised revenue on tea sales through much of the eighteenth century via a small customs charge levied at the port of entry (included in the sale price), and a much larger excise duty levied on purchasers that was collected after each sale (not included in the sale price). Adding this data allows a new series of analyses which gesture towards the value of the tea trade for the Exchequer across the period. A new caveat must be introduced here, however; because the Company’s 1845 returns don’t discriminate between tea destined for home consumption or for re-export, no easy correction can be made for the ‘drawback’ (that is, the refund of customs and excise duties) available at various periods to dealers involved in the export trade. With that caution in mind, the data analysis is nevertheless intriguing. Figure 5, which shows the average Excise due on a single ton of tea, depicts graphically a century of the tea excise. When the data begins, the excise was a flat four shillings per pound on any tea sold (a rate set by legislation of 1723), the highest rate on the chart. From 1745, however, the flat rate was reduced to one shilling per pound, and an ad valorem component introduced set at 25% of the sale price. It’s clear that this measure effectively halved the tax raised on tea. The effect of a five-year excise relaxation under the Indemnity Act of 1767 is clear, as is the slashing of excise rates following the Commutation Act of 1784. It’s also evident that, by the early nineteenth century, rates had returned to levels not seen since the mid-1740s.

Figure 6 - Excise Payable as a Percentage of Basic Sales Price
Figure 6 – Excise Payable as a Percentage of Basic Sales Price

Perhaps more interesting is the impingement of the excise on the effective cost price for a tea dealer making purchases at the East India Sale. Figure 6 shows the excise due on each variety of tea in each year covered by the data, expressed as a percentage of the sale price. By the nineteenth century, all tea varieties are effectively taxed at 100%; but the situation is less stable, and more differentiated between varieties, in the earlier decades. In particular, the regressive impact of flat rate taxation is clear. Bohea is effectively taxed at over 120% of its sale value in the early 1740s, compared with 67% for the premium black Souchong. The cheapest green tea – Singlo – is taxed at about 90% of its value, in comparison with around 33% for the premium green tea, Hyson. Pound for pound, sales of cheap teas were thus more valuable to the state than the more fashionable high-value varieties. This disparity, albeit less pronounced after the tax reforms of 1745, is perpetuated until the flat rate was abolished as part of the sweeping reforms of 1784.

Readers of this blog can refer to the ‘EIC Sales Data’ page to get their hands on the raw data. Additional charts are available on the second, third, and fourth worksheets (click the tabs at the bottom of the spreadsheet).

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