The Indemnity Act 1767
This act was the (joint) third Townshend act, passed on 29 June 1767, the same day as the Commissioners of Customs Act. ‘Indemnity’ means ‘security or protection against a loss or other financial burden’. The Indemnity Act 1767 reduced taxes on the British East India Company when they imported tea into England. This allowed them to re-export the tea to the colonies more cheaply and resell it to the colonists. Until this time, all items had to be shipped to England first from wherever they were made and then re-exported to their destination, including to the colonies. This followed from the principle of mercantilism in England, which meant the colonies were forced to trade only with England.
The British East India Company was one of England’s largest companies but was on the verge of collapse due to much cheaper smuggled Dutch tea. Part of the purpose of the entire series of Townshend Acts was to save the company from imploding. Since tea smuggling had become a common and successful practice, Parliament realized how difficult it was to enforce the taxing of tea. The Act stated that no more taxes would be placed on tea, and it made the cost of the East India Company’s tea less than tea that was smuggled via Holland. It was an incentive for the colonists to purchase the East India Company tea.
The Commissioners of Customs Act 1767
This Townshend act was passed on 29 June 1767 also. It created a new Customs Board for the North American colonies, to be headquartered in Boston with five customs commissioners. New offices were eventually opened in other ports as well. The Board was created to enforce shipping regulations and increase tax revenue. Previously, customs enforcement was handled by the Customs Board back in England. Due to the distance, enforcement was poor, taxes were avoided and smuggling was rampant. Once the new Customs Board was in operation, enforcement increased, leading to a confrontation with smuggling colonists. Incidents between customs officials, military personnel and colonists broke out across the colonies, eventually leading to the occupation of Boston by British troops. This led to the Boston Massacre.