There are times throughout the history of man where greed has replaced common sense to the point of absolute madness. It often starts with a few people becoming wealthy or finding success in a certain industry or field. Others soon jump in perhaps finding their own success. Finally, the average citizen that knows nothing of the industry and only knows of untold sums of wealth invests his entire life savings only to end up losing it all as the bottom falls out.
We have a great example of this in recent times being the 2007/2008 collapse. In the years leading up to 2008 everyone was making money in real estate, I mean stupid stuff like people buying homes in the morning only to sell them in the afternoon at a profit! Billionaire investor Warren Buffet has a saying that I think is just perfect for these type of manias… “When the tide goes out you can tell who has been skinny dipping.”
Tea Mania
The Tea Mania was no different. It was a time when the British empire controlled the vast land of India and fortunes were seemingly just waiting to be made. As with any bubble throughout history, things don’t just explode overnight. While much of the early Tea Plantations were formed in the early 1840’s it wasn’t until around 1851 that money began to be seriously invested in the tea industry. The British government eager to see a tea industry develop initially granted large tracts of land at great terms to those willing to jump in. By 1853 there were 10 different private businesses with tea estates operating in India with around 2,500 acres under cultivation.
The Assam Company, founded in 1839 and The Jorehaut Company, founded in 1859 (both still in business today) were two of the early tea companies that found real success during the years leading up to the tea mania and it is that success that drew in speculators and those looking to get rich.
By 1859 there were around 50 private tea enterprises in India, this growth in the industry in just a few years quickly drew the attention of the public who didn’t want to be left out of this “once in a lifetime opportunity.”
The Mighty Tea Garden
How would you like to own your own tea garden? Endless rows of tea that practically jump off the plant and into your wallet in the form of cash! As travel between England and India was a long and expensive journey in the mid-1800’s many new investors simply relied on the “honest” word of those selling tea gardens (plantations) or investments in them. As with any mania that grips the world no one wants to be left out and if you don’t buy in as quickly as possible you will likely miss out, caution was literally thrown to the wind.
A very telling account of what was going on at the time comes from Papers Regarding the Tea Industry in Bengal from 1874…
“The chief object of speculators during the tea mania was to get possession of one or more lots of wasteland, and the suspension of the clauses in the Waste Land Rules providing for demarcation and survey previous to sale made it very easy of attainment. The next step taken by the more honest among them was to try and bring portions of their lots under some sort of resemblance to tea cultivation in as short a time as practicable. Local labor was hired at any rate which the laborers chose to ask. Tea seed was purchased at extravagant prices. The earth was scratched up and the seed being laid down, the speculator considered himself free to form a company, which was started by selling the lands he had scarcely finished clearing and sowing as accomplished tea gardens, and what still remained of undesirable waste at a cost out of all proportion to the amount he had contracted to pay for it to the state, and to what it was worth. But in time even such a pretense of cultivation was thought too slow, and more enterprising traders found their account in persuading shareholders to invest in tea gardens that were actually not in existence at all. A remarkable instance of the occurred in the Nowgong district, where the Indian manager of a promoter of companies in London was advised by his employer to clear and plant a certain area of wasteland for delivery to a company to who he had just sold it as a tea garden.”
The tea seeds mentioned in the account above were sold mainly by the older established tea plantations such as Assam Company and Jorehaut, and were an enormous source of profit for them during this time as those rushing in were willing to pay almost any price to start their own tea garden. There was one problem, however, tea seeds can tend to be fickle unless you know how to properly germinate them. The newly cleared jungles of India were not easily traveled in those days making it often very difficult to transport the seeds to the new plantation. It is said that in almost every instance the majority of the newly purchased seeds never produced and were wasted.
Much land that was completely unsuitable for tea growing, such as paddy fields formerly used to grow rice were sold and re-sold many times over at massive profits. The tea-plant survives in well-drained soil and will die if water doesn’t drain from the soil in a short amount of time. This is why you see many tea plantations on hillsides or if on flat land with drainage ditches located throughout.
The lands that were suitable for tea cultivation and where tea plants were actually grown produced tea of which the plantation managers often had no clue how to process. Knowledge wasn’t exactly the first thing on everyone’s mind at this time so much of the tea produced was simply poor in quality.
Buy! Buy! Buy! (or is it bye, bye, bye?)
The years of the most excitement and frenzied activity were from 1862-1864. This was a time where everyone, even government officers quit their jobs to become tea planters. So many lower-level officials quit their posts that the business of many public offices was brought to a near complete halt.
In The Cultivation and Manufacture of Tea, written a little more than a decade after the collapse of tea mania Edward Money states…
“…People who failed in everything else were thought quite competent to make tea plantations. ‘Tis true Tea was so entirely a new thing at the time, but few could be found who had any knowledge of it…”
“…Anyone was taken. Tea planters were a strange medley of retired or cashiered army and navy officers, medical men, engineers, veterinary surgeons, steamer captains, chemists, shopkeepers, stable men, used-up policemen, clerks, and goodness knows who besides. Is it strange the enterprise failed in their hands?”
During these mania years, anyone who held ownership in “tea gardens,” much of which was nothing more than wasteland felt that they possessed what would amount to riches beyond measure “A veritable El Dorado” is how it was described. The thinking literally was that if you owned even just a few tea bushes you would realize wealth.
This 500 Acre looks awful small?!
There is a story of an investor who was sold 500 acres of tea land only to have it surveyed to find that the land he actually bought was 100 acres. This was possible due to the suspension of the clauses in the Waste Land Rules, which was mentioned earlier. The deal had already been done, this investor had paid for 400 acres that didn’t exist and this was by no means an isolated incident.
Proper surveys were apparently quite expensive at this time, and from my research despite the expense charged to the landowner they were not always done. Instead, the boundaries were often copied from old government maps and passed off as newly completed and accurate. Record keeping was another issue, with India being such a vast land often times proper records of sale were not kept which along with the issues of surveying the land created problems for many investors that left them in an awful legal mess.
500 acres, or 100 however you choose to look at it could be considered tiny to some investors from this time who purchased tracts of land of five, ten, fifteen or twenty thousand acres. The idea was that if you could become wealthy with say 500 acres of tea then 1,000 acres would make you doubly wealthy. What then if you could cultivate even more! Prideful men with no knowledge of tea cultivation and manufacture felt that nothing could stop them from attaining enormous wealth.
Collapse
Of course, something did stop them. Nothing lasts forever in this world, and bubbles always burst. Toward the end of 1864, the end had begun and the mad rush to get out of the tea industry was now on. In a little less than two years (1866) most of the companies that formed during the mania were gone, a footnote to history. Despite all of the apparent fraud during the mania, only one or two cases of fraudulent activity were ever brought against any promoters of tea plantations.
The rush to sell reached a peak in 1865 with tea gardens selling for literal pennies on the dollar. Many gardens that could not find buyers were simply abandoned. Countless numbers of men went bankrupt after having borrowed money they could never dream of paying back. Families faced ruin, this was not supposed to happen yet it did. The very mention of tea during the collapse and a time after was cause for scorn.
It would not be until the early 1870’s that confidence began to slowly return to the tea industry and new companies were formed, although not quite at the frenzied pace of a decade earlier. The real players in the tea industry survived the boom and bust and continued to grow in the years beyond, they were proof that despite the great tea mania the industry would survive and eventually begin to thrive in ways no one could have imagined.
Sources:
Papers Regarding the Tea Industry in Bengal (1874)
The Cultivation and Manufacture of Tea (1878)
Journal of the Royal Society of Arts, Volume 35 (1887)