Front Page Titles (by Subject) BOOK I: FLUCTUATIONS IN THE FRENCH CUSTOMS TARIFF - The Comedy of Protection
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BOOK I: FLUCTUATIONS IN THE FRENCH CUSTOMS TARIFF - Yves Guyot, The Comedy of Protection 
The Comedy of Protection, trans. M.A. Hamilton (London: Hodder and Stoughton, 1906).
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FLUCTUATIONS IN THE FRENCH CUSTOMS TARIFF
COLBERTISM AND ITS EFFECTS
The Colbertist formula—Tariffs of 1664 and 1667—Colbertism and the Dutch war—The Balance of Trade: hoard up treasure and ruin others—The delegates of 1701—All except Rouen demand freedom—Melon, and the export of money abroad—Orry, the Royal Treasurer, refutes the Balance of Trade theory—How a country grows rich—“Laissez faire, laissez passer”—The Physiocrats—Mercier la Rivière’s question—Turgot, de Vergennes, and Pitt—Treaty of 1786.
In 1650, Colbert at the time assistant to Mazarin, was instructed to discover by what means commercial relations might be renewed between France and England, where, the year before, Charles I. had had his head cut off. In the memorial which he presented on this subject Colbert speaks of trade as “carrying from one province to another, and to foreign countries, the goods which the people in any place require.” In 1666, however, he formulated in the following words the system which M. Méline imagines himself to have invented: “It is advisable by raising duties to keep out articles of foreign manufacture, and to buy French goods rather than foreign ones even when they are rather inferior or more expensive, since the double advantage is secured when money does not go out of the country that it does not grow poorer, and that his Majesty’s subjects make a livelihood by stimulating industry.” He had begun in 1664 by setting up a fairly moderate tariff; but Protectionists have always been hard to satisfy, and in April, 1667, they got the duties on manufactures doubled, i.e., on English and Dutch textiles, wool, and lace, and a duty of 2s. per ton placed on foreign vessels to encourage the French navy. After some fruitless negotiations England retaliated by retroactive duties on wines and brandies. Holland threatened: in 1670 their ambassador submitted a memorandum to Louis XIV. in which, after putting commerce under the care of Providence, he said: “Those who facilitate trade, facilitate national happiness and prosperity; those who impede it, stopping its passage by taxes so heavy as to prohibit traffic in the goods on which they are levied, not only prevent their subjects from enjoying the things which grow elsewhere, but even from selling in exchange for them the things they grow at home. By one stroke they compel people to keep the goods of which they already have too much and prevent their obtaining those that they require.” Such ideas clashed with Colbertism. Holland, therefore, placed prohibitive duties on wine brandies, and very heavy ones on French silks and other manufactured goods. France retaliated by again raising the duties on herrings and groceries imported from Holland and prohibiting the export of brandies in Dutch vessels. This led to the war of 1672. Six years later, at the peace of Nymeguen, Holland enforced a return to the tariff of 1664. When hostilities broke out again in 1668, Louis XIV. reimposed the tariff of 1667, but the Peace of Riswyck in 1697 restored the tariff of 1664, which, slightly modified, formed that of 1699. At the end of the War of Succession, which, breaking out in 1702, was likewise a commercial war, England and Holland, in the Peace of Utrecht, revived the 1664 tariff, but the English Parliament threw out the Bill and the tariff applied to Holland only. Colbertism had thus produced one result—war with Holland.
In a memorandum on Colbertism, read before the Royal Economic Society of Florence in 1791, Francis Menzotti showed that in order to incline the Balance of Trade in its favour a nation must get money from others by selling to them without buying, by which means it aggrandises its own treasury at their expense. The practical application of Colbertism under Louis XIV. left France nerveless and exhausted; every treaty obliged her to abandon the tariff which had originally provoked the war.
An order of June 29, 1700, constituted a general Board of Trade, to be composed of twelve leading merchants chosen from the great trade centres of the kingdom. Nine from among the memoranda issued in 1701 have been preserved. Only one, that of the Rouen delegate, is in favour of a high restrictive tariff. The deputy from Nantes declares liberty to be the soul and substance of all trade; the deputy from Bordeaux seeks for final causes: “God has distributed His bounties in order to compel men to love one another. He has willed that the earth should not everywhere produce the same things, in order that its inhabitants should seek out and help one another by interchange of the goods which they severally possess.” The deputy from Lyons declares: “We must abandon the theory of M. Colbert that France can be independent of the rest of the world. Trade ceases to exist when in return for our commodities and manufactures we only receive coin from abroad.” In an essay on Trade, published in 1734, Melon, a former farm inspector from Bordeaux, said: “Do people imagine that a present is being made to the foreigner when they talk of the danger of sending money out of the country?” Mollien, in his Memoirs, quotes some notes made by Orry, Finance Minister and Royal Treasurer from 1736 to 1745, which contain a complete refutation of the Balance of Trade fallacy:—
“When a home product is bought at a price much above that which would be paid for the same commodity manufactured abroad, even though no money goes out of the country, there is a loss to the consumer in the fact that he has incurred a greater expense, and thereby lost the opportunity of saving the surplus or satisfying another want with it. The consumer’s money ought to go to the best producer. No industries can acquire a position and expand except in a rich country. The richness of a country is not to be measured by the high prices which it pays for its own products, but by what it has left after its needs are satisfied. True capital, which is of such advantage to a country in the development of its resources, is the result of savings gradually amassed out of yearly income. If a manufacturer grows rich because his rivals have been removed by prohibitive legislation, it must be at the expense of a much more than proportionate loss to the consumers whom he supplies, and consequently to the country at large.”
Gournay, a retired merchant, Quesnay, and the Physiocrats uttered the formulas, “Laissez faire, laissez passer”; “As much competition as possible”; “The merchants of other countries are the right people for us to trade with.” Mercier la Rivière asked those who talked about the Balance of Trade what would happen to a nation fortunate enough to exchange all its raw material and all its foodstuff for money. The edict of 1764 on the corn trade showed that, thanks to the economists, some progress had been effected; and in 1774, Turgot, who had laid down the lines of his programme in a panegyric of Gournay uttered in 1759, was made Controller-General of Finance. He said in the preceding year, in a letter to the Abbé Terray: “Those who carry on trade always try to rid themselves of competition; they always produce some sophistical arguments to prove that it is to the interest of the State to rid them at least of foreign competition, which they have no difficulty in representing as the enemy of national trade.”
Turgot tried to break the power of the corporations, and those interested in maintaining them denounced him to the King and the people as an enemy. But in 1776 Adam Smith’s great “Wealth of Nations” appeared, of which Buckle declared that there was no book in the world so important. Although Turgot had been overthrown he had left disciples, and one of them, M. de Vergennes, wrote on February 1, 1783, to the French Ambassador in London: “There is an ancient prejudice that a natural incompatibility exists between the two nations. Every nation must aim at attaining the maximum prosperity for itself, but in so far as such prosperity is exclusive it leads to its own negation. One cannot grow rich when other nations are destitute.” In 1786 he succeeded in concluding a commercial treaty with Pitt, which abolished those prohibitive duties which led to nothing but smuggling. When it was opposed in Parliament, Pitt defended the treaty in terms as valid now as they were then. “Is a good understanding between these two kingdoms so derogatory to our honour that its opprobrium is not removed even by the extension of our trade? . . . I have no hesitation in opposing the opinion, too often expressed, that France is necessarily an irreconcilable foe to England, a doctrine which my understanding rejects as monstrous and impossible.” The Rouen Chamber of Commerce, always Protectionist, protested against the invasion of English goods.
It would appear that the collection of Customs dues was singularly arbitrary. Nevertheless, in 1826 the Duke of Pasquier said that “the competition opened by the treaty of 1786 did more to encourage industry than all the prohibitions that it repealed.”
FROM 1791 TO 1814
M. Goudard’s Protectionist proposal rejected: Liberal tariff of March 15, 1791—Prohibition of English goods, March 1, 1793—Law of Brumaire 10 year V—The Continental Blockade—Licences—Check—England not ruined—Napoleon’s Continental Free Trade.
De Tocqueville has shown that in the National Assembly of 1789 considerable influence was exercised by the economists, although, according to Du Pont de Nemours, every self-respecting speaker thought it necessary to begin by reviling them.
Internal Customs dues were abolished by an order of November 4, 1790, and the question of commercial freedom versus prohibition came up before the Committee of Trade and Agriculture. M. Goulard, member for Lyons, who introduced a scheme, openly avowed himself a prohibitionist. He made all the jokes against the Free Traders which are still in vogue, declaring that one of the best planned and most successful measures of Colbert’s Ministry was the issue of a tariff based not on fiscal considerations, but on the protection and defence of national handicrafts against foreign industry. He proposed a prohibitive duty on all goods which could be made in native factories for consumption, while ready to remove all duties on food and raw materials.
This scheme was not passed by the National Assembly. Its proposer, who had at least the merit of not being infatuated by his ideas, brought forward another scheme containing only one prohibition of importance, that on new or old ships; other duties being fixed at from 5 to 15 per cent. This tariff, dated March 15, 1791, was the most liberal passed in France down to 1860.
On February 1, 1793, the Convention declared war on England, and on March 1st it annulled all commercial treaties. Any one introducing, selling, or advertising English goods was punished by twenty years’ penal servitude. Little attention, however, was paid to their orders as long as privateers succeeded in selling their captures. At the time of the discussion of the law of 10th Brumaire year V, it was stated that in the last three years more than £1,600,000 worth of English commodities and manufactured goods had been sold. And the new law, passed to make the prohibition more stringent, was equally ineffective. On June 16, 1801, the First Consul reopened the frontiers to the passage of English goods, and on the advice of Cambacérès, who declared that the last cause of division would then be removed, considered the possibility of a commercial treaty. War, however, broke out in May, 1803. Napoleon tried to renew, on a more extensive scale, the prohibitions of the Convention and the Directory: in the Berlin Decree of November 21, 1806, he forbade any exchange or communication with England; in the Milan Decree of November 23, 1807, he declared any vessel which had touched English soil contraband of war; and in the Decree of the following September he put the British Isles under blockade. Smuggling increased with the increased duties. In the Order of October 8, 1810, he created County Courts which could in the last resort condemn smugglers to ten years’ penal servitude and branding. He himself, however, broke the Continental Blockade by conceding by means of licences the more or less imaginary obligation of exporting an amount equal to the quantity imported; and he dressed the soldiers who were to enforce the blockade on Europe in smuggled cloth. Nevertheless, the Continental Blockade was the main object of his policy. He tried to conquer Spain in 1808 in order to close it against English goods; he invaded Russia in 1812 because it would not accede to the policy which he wished to extend as far as India. When he refused in 1813 to hand over the Hanseatic towns to Austria, it was because of his designs on English trade. He aimed at ruining England. In 1813 he saw that, far from having attained that end, he had extended her markets. The drafts of English business men enabled her to pay her own troops and finance allied powers: they transmitted to their correspondents commodities and manufactures which liquidated the drafts. By 1813 Napoleon realised so clearly that he must abandon the idea of ruining England that, according to M. Thiers, he had issued enough licences “practically to re-establish trade with England, on which the import dues brought in some £4,000,000. The parts were thus reversed. Whereas two years ago Napoleon had tortured Europe to break off its commercial intercourse with England, England now, seeing the advantage her enemy reaped by licensing trade with her, tried to render it impossible.”
Napoleon had established Free Trade on the Continent. Between France and the Low Countries, North and Central Italy, and the greater part of Germany, Customs had been abolished. The experiment proved that French industries could stand the competition of the industries of the rest of Europe.
THE REVENGE OF THE ÉMIGRÉS
Liberal policy of 1814—Famine of 1816-1817—The great landowners—The great electors—Maintenance of famine prices—Humblot Conti against the low price of corn—Governmental anarchy—Live stock—The ironmasters—Landed owners against manufacturers—Theory of vested interests—Right to the maintenance of the tariff.
Since 1793 England had been the sole object of all the commercial measures taken by France. With the Restoration there came a complete change. Louis XVIII., knowing how much he owed to England, was unwilling to maintain the hostile provisions of the law of the 6th Brumaire. The prohibitionists, however, regarded him with suspicion, and the law of December, 1814, forbade any alteration of the tariff by royal decrees except in the direction of an increase, with a reservation, however, in the case of raw material. It permitted the export of corn when the price of wheat was not above 5s. 31/2d. to 6s. 4d. per bushel, according to the district, while on import there was merely a 41/2d. duty per cwt. of grain or flour.
Between 1816-1817 there was a famine. M. Voyer d’Argenson describes its effects when he says that he collected in his herbal twenty-two different species of plant used as food by the people of the Vosges, who, taught by old traditions, pulled them up in the fields.
The landed proprietors who paid £12 in direct taxes, for the most part émigrés who had either returned to such of their estates as had not been sold or bought extensive properties out of the four million pounds compensation, made a great to-do about the danger from Russian wheat, whose net cost at Marseilles they declared to be 3s. 9d., 4s. 1d., and 4s. 41/2d. per bushel. This was not accurate.
The harvest had been bad. At the time of the debate on the Budget of 1819 prices were at famine height. M. Lainé, in introducing the measure, stated that the price of wheat at Marseilles was 5s. 91/2d. per bushel. The Home Secretary, the Duke of Decazes, abandoning all pretence, openly admitted that “the scheme had been drawn up solely in the interests of the landlords and the farmers”; and the large proprietors paying £12 got the sliding scale established to maintain the famine prices. By the irony of facts low prices followed, instead of preceding, the tariff. The reaction that followed on the death of the Duc de Berry still further increased the preponderance of the landed interest by giving them cumulative votes in the electoral congress. In order to raise prices still further they forced on the Ministry a new project, which, however, did not satisfy them; M. Humblot Conti went so far as to demand a prohibitive tax on wheat. “Cheap corn,” he said, “makes the labourers idle; labour is dear and difficult to get.”
A proposition was introduced for making provision for bad years by filling granaries in the good, and the Government scheme was carried further in Committee. The Finance Minister, Villèle, represented the great landowners of the Upper Garonne. “The Home Secretary,” said M. Amé, “fights with the Finance Minister, and he in his turn has to face the Chief Director of Customs and M. Hély d’Oissel, the royal agent.” The Committee’s scheme was passed. “What justification was there,” asked M. Voyer d’Argenson, “for disturbing the happy equilibrium between producer and consumer established in 1815, simply because the landowners who paid £12 were considered the only qualified representatives of the nation, and for making a monopoly of what was before only preference?” Facts remained ironic: the harvest was comparatively good, and prices went down in 1822. Protection for corn was not enough; cattle must be protected. In 1664 Colbert had only taxed cattle 2s. 6d. per head; neither the Republic nor the Empire had placed any duty on food; the law of 1816 taxed fat cattle 2s. 8d. and medium stock in proportion. M. de Bourrienne declaimed against “the fatal superabundance of meat”; an amendment suggested raising the duty to 26s. 1d., the Committee to 40s.; and M. de Bourrienne declared that were that not enough a provisional decree could set things right. A Western deputy, indeed, asked for a duty of 88s. Germany threatened to retaliate. Threats and an aggravation of the tariff was the only reply. The Revolution had abolished the privileges and exemptions of the nobles; the émigrés and their descendants were taking their revenge. If they paid taxes they recouped themselves by private dues levied on all their countrymen who had to buy bread or meat; they satisfied their ancient grudges and at the same time looked after themselves with great success. They completed their work by heavy charges on industry. When smelting was done by means of charcoal the ironmasters were owners of the forests. Since 1814 they had insisted on the iron tax of 1794 and 1806 being raised, and meantime, by means of the royal decree of 1814, which ordered iron to be put in bonded warehouses, they put a stop to importation. The projected tax of 12s. on a product which sold at 24s. to 28s. raised the price 50 per cent., but the ironmasters clamoured for prohibition. The Government, however, introduced their tariff as a provisional measure, and in compliance with the will of Louis XVIII. announced that they should demand its gradual reduction. In spite of this, however, the duties on iron steadily rose. In 1822 the Commission’s scheme was passed by 217 votes to 78, in spite of M. Laborde’s protests: “The law which you are about to pass is a law of partial privilege: all France is to pay a bounty to the ironmasters and the Norman cattle-breeders.” The law of 1826 marks the zenith of Restoration Protectionism. The landowners, pretending that they were always being sacrificed to the manufacturers, demanded the exclusion of foreign wools and obtained a tariff as complicated as it was oppressive. In spite of the Government the tax on fat cattle was made to apply to lean; the duty on vegetables was doubled. Raw cotton had been penalised, as competing with flax. In 1820 Leclerc de Beaulieu, declaring cotton textiles “a plague to France,” demanded their prohibition, and Saint Chamans wanted the duty on silk and cotton mixtures raised from 32s. to 120s.; Kergariou asked that linen and hemp should be absolutely prohibited, and Saint Cricq himself had to put in a warning voice—“We must not prohibit everything.”
The Commission raised the duty on cast steel from 40s. to 48s. per cwt., and that on sheet iron and wire to 56s. per cwt. The discussion of the Bill showed the enormous profits of the ironmasters. In 1790 they sold their iron profitably at 12s. 10d. per cwt.; in 1822 they declared the price must be 20s. per cwt., a figure which represented an excess of £1,200,000 on the production of 1825. The 1822 tariff was maintained without increase. Under a pretext of giving drawbacks, bounties were granted; they were given on woollen threads and textiles so as to maintain for the benefit of the manufactures the profit assured by protection to wool.
As a Protectionist, Count Jaubert admitted later, “each branch of industry was in a state of recrimination to the others.” In 1828 a majority of the Chamber, in an address to the Throne, declared freedom to be the first essential for trade and industry. In 1828 a Commission of Inquiry of twenty-eight members was appointed, and at once attacked the rights gained by Protectionist duties. “There are rights wherever there are interests created by the law.” In virtue of this theory the Protectionists could always demand new tariffs and deny the right of Parliament ever to reduce or abolish any.
THE “FEUDATORIES” OF THE JULY GOVERNMENT
Efforts of M. d’Argout—Alliance of the landowners and manufacturers—Count Duchâtel against privileges—Struggle of the Ministry against the Protectionists—The sliding scale in 1832: Commission of Inquiry in 1834—Tumults in Rouen and Roubaix—Discussion of 1836—Thiers and Holland—Guizot and England—and Piedmont—Programme of the Free Trade League—Committee of Labour Defence—Anglophobia—“Be strong and we stand by you”—Scheme of 1847—The copyholders—Count Jaubert and the feudatories.
The centre of political gravity had been changed. Since the double vote had been taken from the great landowners, the electoral basis made a property qualification of £8, and the hereditary peerage abolished, the July Government had not to depend exclusively on the landed interest, which was for the most part in the hands of the Legitimists, its worst enemies. In 1834 M. d’Argout, the Minister of Commerce, proposed to modify the sliding scale. His scheme was tentative enough, but the Committee of the House found it too advanced. It was, however, energetically supported by M. de Laborde, the Duke d’Harcourt, and Duvergier de Hauranne, who asked whether the Customs were intended to secure a remunerative price, relative to the cost price of corn, to the owners of good land or bad. The eternal M. de Saint Cricq replied with a political argument which brought the capitalist manufacturers in line with the landed interest, prophesying that the next step to the abandonment of agricultural Protection by the Government would be its removal from every sort of manufactured product. The effect of this statement was heightened by a remark made by Count Duchâtel to a deputation of cloth manufacturers from Elbœuf in 1832: “The object of the Revolution was the destruction of privilege; you must accustom yourselves to the idea that the destruction of the privileges that protect you is only an affair of time: they cannot shelter you for ever.” Certainly neither d’Argout, Minister of Commerce in 1830, nor Thiers in 1832, nor Duchâtel in 1834, was a Free Trader; yet each of them perceived the necessity of at least exchanging prohibitive taxes for Customs dues, and the prohibitive for a protective tariff. Their object as members of the Ministry was the furtherance of public interests: They encountered the determined opposition of a coalition of private interests. When M. d’Argout proposed to admit for re-exportation certain prohibited goods, among them plain silk, which had been admitted since 1818, M. Fulchiron cried out, “That spells ruin for Lyons.” When Paris demanded an emporium, M. Roux, member for Marseilles, cried, “That is the end of our maritime trade, sacrificed to the insatiable ambition of the capital!” M. Jair threatened a social revolution. However, d’Argout got his Bill passed by 190 votes to 76. The sliding scale set up in 1819 and 1821 ended by creating the most inequitable system possible. The price of corn varied between 6s. per cwt. in Marne and 10s. 9d. in Gard. In October, 1831, d’Argout proposed to repeal prohibition and in every case replace it by graduated duties: to create instead of a crowd of small zones two main divisions, one comprising the sea coast from Dunkirk to Bayonne with a piece of land frontier from the North to the Upper Rhine Department; to replace the hectolitre by a measure of weight; to abolish all taxes on foreign vessels when prices rose very high; and to calculate the scale of duties at the rate of 8s. per cwt. for the first district and 9s. 7d. for the second. But M. Laurence’s amendment reduced the Bill to the level of the Act of 1821. The people of the southern non-corn-growing departments had to endure higher duties to secure for the North a monopoly of their food supply. In September, 1835, the duties stood, according to the scale, at 6s. 7d., 5s., 3s. 1d. per cwt. for the first, third, and fourth classes respectively. In 1847, a year of bad harvests, the sliding scale was suspended, but too late; French buyers had to wait until foreigners had already taken the best. Prices rose to famine height. In February, 1848, the scale was re-established; suspended again from 1853 to 1859; but then the Emperor was obliged to revive the Act of 1832, not finally repealed until 1861. In 1832 the Ministry demanded from Parliament the repeal of prohibitions and the reduction of certain duties. The proposal was not even discussed, but the Government got some of the suggested modifications effected by means of a royal decree, which it was in 1834 proposed to legalise in two Bills. For the decree Thiers was responsible: he entered a protest against prohibition and the aggravation of the tariff. M. Duchâtel, his successor, was more courageous. He nominated a Commission of Inquiry into prohibitive duties affecting the manufacture of glass, pottery, plated metal goods, wool and cotton textiles.
With the exception of Marseilles the seaport towns demanded the repeal of prohibition; the County Council of Arras argued against Protection, and petitions in favour of a gradual diminution of duties were sent up by the Chambers of Commerce of Strassburg, Tours, Clermont Ferrand, Givet, Metz, Orleans, and the County Councils of Niort, Valenciennes, Bar le Duc, Nevers, Rennes, d’Alençon, Limoges, Rethel, Vire, Grenoble, Saumur Rouen, however, was loud in support of prohibition; the burgesses denounced “secret agents from England.” Roubaix put down the Revolution of 1830 to the fact that the printers were afraid of being deprived of their work by royal decree, and said, “Remember that two risings in Lyons have been caused by reduction of wages.”
Nevertheless, Duchâtel got the Act of 1834 passed, empowering the Government to convert the prohibitions on the following articles into duties: Unbleached cotton thread of high numbers, cashmere shawls, lace made by hand or with a distaff, silk handkerchiefs, new ready-made clothes, naval iron cables, watches and clocks, spun silk, Russia leather, rum, &c. To legalise this measure he drew up a Bill for February 1, 1836, which gave rise to a long debate reopening the whole question of Free Trade versus Protection. Ducos, introducing the Bill, pronounced definitely against the restrictive system, and demanded sweeping reductions of the duties on iron. Thiers opposed him on the ground that “five miles of railroad would not be made in a year.” M. David, the Director of Customs, opposed temporary importation. “There has never been any question of admitting prohibited textiles for printing—as, for example, calico and other cotton fabrics.” When the consumption of meat was stated to have diminished, General Bugeaud declared that he preferred an invasion of Cossacks to that of a herd of oxen.
In 1840 Thiers made a treaty with Holland which, in spite of opposition from the seaports, lasted till 1860. Formidable opposition compelled Guizot to abandon a projected commercial treaty with England. Louis Philippe had an idea of opposing the German Zollverein, definitely constituted in 1833, by a Customs union with Belgium, but the sole outcome was the treaty of 1842, established for four years. When Guizot proposed a treaty with Piedmont, even on a four years’ basis, he had to demand a vote of confidence. The Free Trade Association, with the Duc d’Harcourt as its president and Frederic Bastiat as general secretary, did not aim at complete Free Trade, but the substitution for prohibition of a 20 per cent. duty; a 91/2d. duty on corn instead of the sliding scale; the 1816 tariff of 2s. 7d. per head on oxen; repeal of the duties on coal and pig-iron; steel to be brought under the imperial tariff at 79s. per ton; abolition of duties on some hundreds of minor articles only bringing in an insignificant return, of zones and classes and all right of exportation. They did not demand immediate repeal, but gradual reduction of duties on raw material, e.g., raw cotton, fleeces, hemp, flax, iron and steel bars, and dyestuffs.
The Committee of Labour Defence, with MM. Odier, Mimerel, Périer, Lebeuf, at its head, declared that those who benefited by Protection bore the heaviest part of the dues, and that on them national existence depended. They denounced the Journal des Débats and “certain paid professors” for being impertinent enough not to be Protectionists, and they described those who thought their privileges too great as English emissaries; they put up placards to warn factory employés against Free Traders, “whose only aim was to help England to ruin and then rule over France.” Their anger was, of course, increased by the triumph of Free Trade in England. M. Duchâtel, the Home Secretary, had said to the Free Trade Association, “Be strong and we stand by you.” The Government was besieged by the arrogant claims of the Protectionists. In March, 1847, M. Cunin-Gridaine brought in a Bill (1) to repeal five prohibitive taxes; (2) to reconsider some minor duties; (3) to free 298 of the 666 articles of the tariff which would have reduced the revenue £1,200,000; (4) to repeal altogether the duty on shipbuilding materials. The Chamber of Commerce opposed these propositions in a vast report drawn up by M. Lanyer. Discussion was prevented by the Revolution of 1848.
Under the government of Louis Philippe, there were only 166,000 electors in 1831, 171,000 in 1834, 199,000 in 1837, 201,000 in 1839, 220,000 in 1842.
In 1836 Count Jaubert had declared, “No society can outgrow aristocracy: the aristocracy of the July Government is composed of great manufacturers and employers: they are the feudatories of the new dynasty.” Thus they had the right to demand privileges. But the 1848 Revolution replaced a system based on property qualification by one of political equality, and substituted universal for restricted suffrage. Was the policy of universal suffrage to be the same as that dictated by the electors of the Restoration with their dual vote, and by the 200,000 copyholders of the Louis Philippe Government?
UNIVERSAL SUFFRAGE—RAMPANT PROTECTIONISM
Landowners and Socialists in agreement on competition—Protection of universal suffrage—Imperial policy of economic freedom—Violent opposition—Railroad coalition—The Emperor impotent before his legislature—Opposes it by a treaty.
After the Revolution of 1848 the Socialists followed in the steps of the landed proprietors of the Restoration and the capitalist employers of Louis Philippe, in denouncing competition, and M. Victor Grandin, a manufacturer from the Lower Seine, who had distinguished himself under the late régime by his passionate ardour for Protection, became the spokesman of the Committee of Commerce in the Constituent Assembly. He got the duty on glass raised to 27 per cent. and the import of nankeen in foreign vessels prohibited. In 1850 the Legislative Assembly took the opportunity afforded by the introduction of a liberal bill by Sainte-Beuve to express Protectionist sentiments, Thiers being much less moderate in his views than he had been in 1832 and 1834. After the coup d’état the Emperor aimed at gradually working round to Free Trade. Between 1853 and 1855 M. Magne lowered the duties on coal, cast iron, sheet iron, steel, wool, oil seeds, and dye-woods, and substituted a 10 per cent. duty on live stock, meat, cereals, and wines for the prohibitive duty on foreign-built vessels.
At this time the Empire was practically a dictatorship; the legislative body, composed of candidates for office, was dumb. So soon, however, as 1856 it ventured to resist the Emperor by nominating a Protectionist Commission. This did not check him; in a scheme issued June, 1856, he proposed the repeal of all prohibitions. In defiance of articles 471 and 472 of the Penal Code the Protectionists had a central committee in Paris, connected with local branches. Roubaix, as violent as in 1834, declared that without prohibition the working classes would be reduced to misery and beggary. Duties of 30 to 40 per cent. did not satisfy the manufacturers. They threatened to provoke risings by closing their factories. The Government scheme had to be withdrawn.
However, the Minister of Public Works failed in a railway contract for rails for the line between Paris and Chartres. He offered £13 16s. per ton of rail; the ironmasters could have executed the contract at £10 or £12 per ton; but at the time the duty being £8 5s., foreigners could not deliver for less than £16, and the Ironmasters’ Union would not take less. The Government had to establish a special duty on rails, which permitted their importation at 40 per cent. below the official tariff.
The Emperor had frequently extended the operation of the decree of 1853 suspending the sliding scale, but in 1857 he was obliged to restore the Act of 1832 in full force. The Constitution of 1852, however, gave him the power of concluding commercial treaties; and to paralyse the opposition he must make alliances abroad which should enable him to meet it with a non possumus.
COBDEN AND THE 1860 TREATY
Corn Laws in England—Free Trade Movement from 1820—Act of 1846—Progressive reduction—Moderation of Mr. Chamberlain’s proposals—Purification of the tariff—High and low duties in 1840—Michael Chevalier and Cobden—Gladstone—Napoleon III.—Fears of the Protectionists—Treaty of January 23, 1860—Reciprocal freedom—Other treaties—Most favoured nation clause—Spontaneous reduction in England—Commercial treaties are hand-rails.
I shall not here relate the history of the Free Trade Movement in England, or pause to praise Cobden and John Bright, great as is my admiration for them—that has been often and eloquently done already; I have only to speak of the results of their work, and for that purpose borrow my information from the Blue Book on the Customs Tariff of the United Kingdom from 1800 to 1897. 53 George III. (1815) prohibited the importation of foreign corn when the price of English wheat was less than 80s. a quarter. After 1828 the prohibition ceased, but the duty stood at 20s. 8d. when the price was 67s.; when it fell to 66s. or below, the duty rose by 1s. for every shilling fall in price. In 1820 a petition was presented by the merchants of the city; drawn up by Tooke, it is an admirable demonstration of the need for Free Trade, and from it dates the beginning of the Free Trade Movement. Fourteen times Pelham Villiers proposed the repeal of the Corn Laws. He was supported by Colonel Thompson, in conjunction with whom Cobden founded the Anti-Corn Law League in 1839. To discount the importance of the League, the Government lowered to 51s. a quarter the price above which the duty was to be no more than 20s. This assessment was maintained in 1842, but levied at 51s. a quarter and below. The tariff was preferential; on corn from a British possession outside Europe the duty was 5s. when the price was below 55s. In 1846 Sir Robert Peel’s Bill definitely broke with the policy of Protection. Now people are apt to believe that the Free Traders effected a sudden revolution; as a matter of fact the transition was to take two and a half years; a sliding scale was maintained. The Act provided that on wheat at 48s. a quarter the duty should be 10s., falling to 4s. a quarter when the price rose to 53s. and upwards. This duty remained in force until Feb. 1, 1849, when it fell to 1s. a quarter. This was practically Free Trade. In 1864 it was fixed at 3d. a hundredweight for convenience of assessment, and in 1869 the last tax on corn was abolished. In 1902 the duty of 3d. per hundredweight was reimposed as a war tax, and removed the next year by Mr. Ritchie. And Mr. Chamberlain’s attack on Cobdenism is the merest nibble; in the Glasgow speech of October 6, 1903, he proposed the modest duty of 2s. a quarter, which would be a Free Trade triumph in France.
Free Trade is in line with the revolution in the means of transport; it allows the full benefit to be obtained from railways, steamships, and electric telegraphy instead of trying to fight against them. English fiscal policy has been a consistent attempt to remove from the tariff those small and vexatious duties which are useless from the point of view of revenue. After 1846 the Government continued to simplify the tariff. The expiration of the funded annuities of the National Debt put some fifty-three millions at its disposal.
Michel Chevalier approached Cobden with a proposal for a commercial treaty; Cobden replied that Parliament would not hear of it. Chevalier stuck to his point; he went to see Gladstone, and while admitting that he spoke without official mandate, pledged himself to obtain in return for a sweeping reduction in the duties on wines the abolition of all prohibitions and a merely conventional tariff containing no duty above 30 per cent. Gladstone agreed. The Emperor gave audience to Cobden and Chevalier, and authorised them to draw up, with all possible secrecy, a tariff treaty. The Constitution empowered the sovereign to conclude commercial treaties, but the Emperor was in such dread of the efforts of the Protectionists that not a single member of the Ministry was let into the secret. Copies of the tariff were made by Madame Chevalier, and by the end of the year 1859 the terms of the agreement were fixed, and on January 23, 1860, it was published. It had been laid down as a principle that the tariff was not to exceed an ad valorem duty of 30 per cent., falling in 1864 to 25 per cent.; the final ratification of October 12th and November 16th lowered the duty on threads to between 8 and 10 per cent., on cotton, linen, and woollen textiles to 15 per cent., and at the end of 1864 to 10 per cent. The average duty was 15 per cent., except in the case of certain mineral products, on which it was nearly 30 per cent. As a consequence the French Government, in spite of lively opposition, passed Bills permitting the free importation of wool and other raw materials, and facilitating temporary admission. England went further. The duty was removed from forty-two articles still paying 10 per cent., and Cobden said in a letter to John Bright, “We are making no concessions to France which do not equally apply to every other nation.” As Morley says in his “Life of Cobden,” instead of reciprocal monopoly there was reciprocal freedom—or at least partial freedom.
France made this the model of further treaties, conceding to other nations the advantages which it gave to England. Within the next five years treaties were made with Belgium (1861), Italy and the Zollverein (1862), Switzerland, Sweden, Norway, the Hansa and the Low Countries (1864), Spain (1865), Portugal and Austria (1866). Each treaty was safeguarded by the most favoured nation clause, otherwise one of the contracting parties could at any time annul it to make more favourable terms with a competing nation. This clause facilitates negotiations by rendering it possible to specialise questions by leaving existing preferences out of account; thanks to it all treaties are connected. It always operates in the direction of tariff reduction, never, by any possibility, of aggravation.
At the beginning of the century there were 1,550 articles in the English Customs Tariff, 2,900 in the Irish; they were reduced to twenty-six, of which ten were excise duties, equivalent to inland duties, while the others were merely revenue taxes, reduced still further in the following years. In 1897 there were only nine of them; after the war about a dozen.
England is the only nation which can have been said to have voluntarily repealed or reduced Customs duties; the others did so only under external pressure. For twenty years the treaty of 1860 preserved France and Europe from economic reaction. One great advantage of a commercial treaty to a country like France is the freedom from Protectionist attacks which it secures for the Government.
SUBMISSION OF THE REPUBLICANS TO THE FISCAL POLICY OF THEIR ADVERSARIES
Thiers attempts Protection—Sixty-two Chambers of Commerce to fourteen vote for Free Trade—Projected tariff of April, 1877—May 16—Twenty-four per cent. increase—Fiscal triumph of the defeated party.
The treaty of 1860 was anything but pleasing to the agrarians of the Faubourg Saint-Germain and the feudal manufacturers or their successors of the time of Louis Philippe, and M. Pouyer-Quertier made speeches in the Chamber on the fatal consequences of commercial treaties that were as false as they were grandiloquent: that France was not ruined by them was proved by her recovery from the fearful crisis of 1870-1871. When Thiers came into office, however, he showed that he had not abandoned the reactionary economic views he held in 1851. Dutiable articles were hunted out; a tax on raw materials was proposed, but even Thiers with all his position and prestige, could not get it passed. His suggestion to Mr. Gladstone to compromise with Free Trade principles so far as to permit him to apply the old Protectionist doctrines in spite of the treaty, was naïve enough, and in February, 1872, the National Assembly actually passed a resolution which pledged the French Government to repudiate the commercial treaties with England and Belgium. Nevertheless, the majority in the country remained true to economic freedom; when the Minister of Commerce, M. de Meaux, put the question to the vote in the Chamber there were sixty-two votes to fourteen for renewal, a result which certain speakers went so far as to say that they regarded as a step towards complete freedom. The Higher Board of Agriculture, Commerce, and Industry, composed of men with Protectionist interests, was timid, and even the Protectionist leaders, both great cotton-spinners, Pouyer-Quertier and Feray, were satisfied with a rise of 20 to 25 per cent. on the conventional tariff. On April 9, 1877, M. Teisserenc de Bort, Minister of Commerce and Agriculture, introduced a general tariff scheme, reproducing the conventional tariff, except for a 10 per cent. rise in the duties on cotton threads and textiles—a step towards freedom. Then came the political crisis, known as May 16. Marshal MacMahon having a majority in the Chamber, at the command of the Vatican dismissed the Ministry, and dissolved the Chamber with the aid of a reactionary Cabinet.1 The capitalists, mine-owners, and cotton-spinners, who have always almost, without exception, been at the head of the Protectionist party, seized the opportunity of showing their sympathy with MacMahon, to demand in return for their support a rise in the tariff, already on the table of the House. The mine-owners joined together in the issue of a manifesto. When MacMahon went down to Normandy, Pouyer-Quertier, at the head of the cotton-spinners and weavers, presented him with a Protectionist address. But the leaders of May 16th and their partisans were defeated. Political defeat ought to have brought economic defeat in its train, but the very reverse was the case. Teisserenc de Bort returned to the Ministry of Commerce and Agriculture, and instead of maintaining the tariff already on the table, he produced a new one drawn up in accordance with the petitions of Pouyer-Quertier and his allies, which contained, instead of a 10 per cent. increase on the conventional tariff for cottons, a rise of almost 24 per cent. on all manufactured goods. What was the cause of this fiscal concession to defeated opponents? And when M. Tirard, a staunch Republican with Free Trade ideas, succeeded him in office, instead of reverting to the tariff antecedent to May 16th, he adopted the later tariff. In future the Republican party made it its business to fulfil the fiscal ideals of its most pronounced opponents—those capitalist manufacturers of Orleanist or Bonapartist creation, who used their authority and their economic influence against Republicanism and Republican institutions; those landowners, legitimists almost to a man, who, descended from the émigrés, had had rich wives found for them by Jesuits in girls greedy for titles; men who spent most of the year on their estates, hand in glove with the priest, busy founding Congregation Schools for girls, and actively engaged in those conspiracies against the Republic, representing free parliamentary government, which are called Boulangism, Anti-semitism, or Nationalism.
RESULTS OF THE 1860 TREATIES
Development of cotton-spinning—Funds for the unemployed—Tables from 1859 to 1879—Growth in wealth.
The justification of economic reaction, urged in season and out of season by those who encouraged it, was that France had been ruined by the commercial treaties of 1860, although ten years after their conclusion she had been able to sustain the disasters of the war of 1870. The lamentations of the cotton-spinners were the loudest of all: had they been justified they must have closed their factories and ceased to import raw cotton; as a matter of fact, in spite of the loss of Alsace-Lorraine, importation increased, as the table shows:—
It is worth notice that the War of Secession took place during the years following the treaty, and made it difficult to obtain a supply of cotton. In 1863 the Government handed to the manufacturers a sum of £40,000, to be used in assisting the unemployed cotton hands. In his evidence before the Senate’s Committee of Inquiry, M. Delessalle admitted frankly that the motive used to obtain this sum was a mere pretex. “M. Pouyer-Quertier, president of a society for assisting the unemployed, knows as well as I do that for want of people to assist another use has been found for a large portion of the fund.” It would be interesting to know the use made with so little ceremony of funds diverted from their proper purpose. The cotton-spinners resented the treaty because it had forced them to improve their plant, and had hastened the substitution of mechanical for manual labour. Since, however, the number of factories had increased, and the horse-power of the engines employed, it is not easy to draw, with M. Pouyer-Quertier, the conclusion that the industry has been ruined. Figures disprove it:—
There was an immense expansion in all trades:—
It is true that the rise in imports was greater in proportion than the rise in exports; but the latter had kept up even after deducting the exceptional years after the war, 1872 to 1875.
In spite of the loss of Alsace-Lorraine, the heavy war indemnity, and the losses of every sort that followed the campaign, the succession dues show a rise of 95 per cent. It is safe to conclude that the treaties had not ruined France.
ECONOMIC REACTION OF 1881
Competing industries in Parliament—M. Marc Maurel turned out as a consumer—Demagogic agitation—Breaking off the Treaty with England.
The Chamber of Deputies had nominated a Commission of Inquiry. The necessary basis of political morality is the understanding that members are not to use their seats to further private interests. The principle is clear. No one remembers it, however, when the question of Protection comes to the fore. Those whose interests are bound up with Protection, the great landowners, mine-owners, cotton-spinners, manufacturers of every description, get themselves elected as members of the Customs Commission, undertake the reports, take part in discussion. They say: “I am a competitor; empower me to make you vote for Customs duties which will benefit me at the expense of the rest of the electorate.” The members acquiesce. It is true, he is a competitor; and therefore the Government assigns a prominent part in discussion and on commissions to these men, who look after their private interest at the expense of the general good. The Customs Commission thus composed recognised so clearly that it represented the interests of producers as opposed to consumers that it refused to listen to M. Marc Maurel, a prominent Free Trade manufacturer from Bordeaux, when he demanded a hearing on behalf of the consumers. Had he, as a manufacturer, demanded Customs duties he would have been heard at once. When he tried to raise a voice on behalf of that “forgotten man” whom Mr. Graham Sumner has so wittily described, he was shown the door.1 Of course the manufacturers, following the recognised tradition, cloaked their claims with democratic pretexts. They pretended to be defending “Home Industry”; and they brought up gangs of workmen whom they induced—short-sighted men!—to say to the Commission, “If you do not pass the highest duties demanded by our masters, we shall riot.” Thus they gave their men an excellent introduction to striking and Socialism. The Republicans gave way to a policy of mingled bribery and threats. Ad valorem were replaced by specific duties: thus cheap products could be taxed and their price was raised, not as in the projected tariff 24 per cent., but 70 and 80 per cent. Under such conditions England refused to renew the commercial treaty. Belgium did renew on the understanding that England should enjoy most favoured nation treatment.
BARGAIN BETWEEN LANDLORDS AND MANUFACTURERS
Timidity of the agrarians—“Marquis of Dear Bread”—Agricultural products left out of the agreements—Trichina.
The problem remains: How had the great manufacturers, a weak minority, succeeded in forcing the Republican majority to endorse their claims? The majority of the population was rural, according to the 1876 census, 19,000,000 being employed in agriculture; how could members representing this majority consent to duties of 20 to 40 per cent. on iron and steel; 40 to 300 per cent. on cotton thread, and textiles; to taxes which weighed so heavily on the labourer’s plough and threshing machine, on the shoes, coats, smock-frocks, dresses, and linen of the whole population? The tax on wheat, indeed, remained at 31/2d. a hundredweight; but the tax on cattle had been raised to 12s. on an ox worth £16 to £24—that is, about 3 per cent. protection. This protection was much less than that given to the manufacturers; how did the agriculturists allow themselves to be fleeced to support the claims of the manufacturers? Although M. Pouyer-Quertier was called the “Marquis of Dear Bread,” he did not dare to raise the tax on corn; the agrarians were afraid of rousing a violent change of opinion; they modestly contented themselves with a 12s. duty on live stock. But the manufacturers said to them, “Support us, vote for our duties. In the name of Free Trade we will get agricultural products off the conventional tariff. If you support us, we will support you in our turn.” The bargain was struck. When the 1881 tariff was put in operation the landlords recalled the promise, but the manufacturers were not very anxious to carry it out. They waited till the eve of the 1885 elections. May 28th the 3d. duty per hundredweight on wheat was raised to 1s. 21/2d.
Since 1881, one class, the pig breeders, had been satisfied—not by any rise of duties framed in Parliament, but by an administrative prohibition based on sanitary regulations. A doctor declared before the Hygienic Society that American hams caused trichina. No case of it had ever been known in France, but what matter! A governmental decree of 1881 laid down regulations regarding the importation of American bacon and hams that practically amounted to prohibition, operative until 1890. These hygienic pretexts are a disgrace to the men who prostituted science to Protectionist interests.
Two tariffs—Law of January 11, 1892—Saving raw materials.
When it was clear that the landowners had profited by tariff freedom, the manufacturers asked for it too. For a longer or shorter period, the commercial treaties stood in the way of the Protectionist dreams: they must go. M. Méline had succeeded M. Pouyer-Quertier as Protectionist leader. A man devoid of all general ideas, he was ready to promise an equal amount of protection to industries representing diametrically opposite interests. It was decided to replace the commercial treaties by a maximum and minimum tariff; the Government would apply the minimum tariff to the countries giving France most favoured nation treatment, but in no case could the duties be lowered below the scale fixed by the tariff; to other nations the maximum tariff applied.
This system was inaugurated by the law of January 11, 1892, and passed by the Chamber elected in 1889. The Protectionists had left no stone unturned to ensure a majority; in every district reactionaries bargained with the Republican candidates. “Vote for the duties, and we will support you.” Some Protectionists ran labour candidates, paying their expenses in return for their promise of support. Very few Republicans were strong enough to resist; the majority salved their consciences by saying, “After all, unless we vote Protectionist we shan’t get in; and we must not let an enemy of the Republic win the seat.” To keep their seats they guaranteed the rent of the landlord and the profits of the manufacturer. It was a wonderful sight to see a large majority whose interests were entirely opposed to Protection enthusiastically overwhelming with presents an insignificant majority consisting almost exclusively of their political opponents.
The Free Traders had to concentrate all their energies to keep the so-called raw materials duty free—wool, raw cotton, undressed skins, &c. To keep raw silk free, bounties had to be given to silk-growers and spinners. On all manufactured articles duties were raised. It was a triumph for the reaction.
BREACH IN THE MINIMUM TARIFF
But the structure that looked so solid was really very fragile. M. Méline himself was the first to shake it. The minimum tariff was to be inviolate, but the tariffs of 1892 were hardly established when an agreement had to be concluded with Switzerland, involving a reduction on 55 articles of the minimum tariff. The first agreement was rejected, but the Act of 1895, though only reducing duties on 30 articles, began the work of demolition. M. Méline, who introduced the measure, admitted that the agreement made a breach in the minimum tariff. For the agreement the existing tariff was used by introducing two Bills—one, numbered 2,339, proposing reductions in the French tariff, the other, 2,338, ratifying the agreement with Switzerland on the basis of the reduced tariff.
SOCIALISM AND DEAR BREAD
The tariff of January 11, 1892, replaced the minimum tariff affecting agricultural produce by a duty of 4s. per hundredweight on live oxen, 6s. on sheep, and 3s. 2d. on pigs, while the duty on fresh beef was 10s., pork 4s. 10d., and mutton 14s. Public health regulations only permitted the importation of mutton in quarters, the entrails attached to one of the forequarters; and thus kept out Hungarian and La Plata mutton. To avoid rousing public opinion, the 1889-1891 Ministry shelved the question of a higher duty on corn, leaving that responsibility to its successor. In 1894 the question came up. The 1893 election had returned some forty Socialists. They behaved strangely enough. With M. Jaurès at their head they made it their aim to win over the small peasant proprietor by outbidding the Protectionists in making bread dear for the workmen who had returned them, and whose interests they pretended to represent. A Bill of February 27, 1894, raised the duty to 2s. 10d. per hundredweight. Most of the Protectionists were not satisfied; they declared that farmers must grow their corn at a loss. This is the usual argument; the poor things always work for loss, not gain.
But the Customs duties were far from producing the effects promised by Méline and the other Protectionists; facts gave the lie to their prophecies. Encouraged by high protective duties capital had been poured into certain industries with the result of over-production. In spite of the 2s. per hundred-weight on wheat imposed in March, 1887, the price went on falling till 1890, when a bad harvest compelled the reduction of the duty to 1s. 2d. A series of good harvests sent prices down, but the 2s. 10d. duty failed to produce its full effect.
THE PANACEA OF BIMETALLISM
Advantages of depreciated currency—M. Méline and Edmond Théry—Aberrations of the agrarians—Bimetallist agitation—Saved by England—Example of Spain—Bad money is not wealth.
In the eighteenth century David Hume’s “Essay on the Balance of Trade” demonstrated the absurdity of the means employed to encourage the exportation of goods and the importation of precious metals. His theory, completed by Ricardo and John Stuart Mill, may be briefly summarised: If one nation, A, imports more from another nation, B, than it exports to it, the balance must be adjusted by the transference of coin; then A having less coin, prices in A will go up, while the importation of coin causes prices in B to go down. A will then buy from B until equilibrium is re-established. The transport of the precious metals is troublesome; as far as possible it is superseded by the use of credit notes or bills of exchange. Between countries with a sound currency the limit to the price of these notes is fixed by the gold point, the cost of transporting coin. Some countries, however, employ a depreciated currency. Mexico, for example, uses silver, Spain paper. In such a case the price of a sovereign or Louis-d’or has to be reckoned in silver or paper pesetas. The limit of profitable exchange between countries with a sound currency is the cost of the actual transmission of bullion from one to the other; the limit does not exist between them and countries with a depreciated currency (as was the case in Mexico and still is in Spain). A depreciated currency has no fixed value, steady or liable only to slight fluctuations, after it leaves the country; the price of an English sovereign or French twenty-franc piece in silver or paper varies in amount—it is difficult to state it beforehand.
Economic doctrine thus enunciated did not suit the owners of silver mines all over the world, exporting more and more every year. The United States, which produced more than a third of the world’s silver, convened a currency Congress to meet at Brussels with the idea of establishing an international agreement on a fixed ratio of 151/2 between gold and silver, and then throwing open the mints of the world to the latter. This Conference, like others previously held in Paris, ended in nothing. But the silvermen were not discouraged by this check, and they found enthusiastic partisans in the French agrarian party, inspired by the twofold hope of explaining the failure of the Customs tariff and discovering an expedient for again raising the price of agricultural produce. MM. Méline and Théry proclaimed that the fall in prices was due to the advantage possessed by countries with a depreciated currency in competition with a country with a sound currency. Their theory was this: a Spanish merchant sells 1,000 francs’ worth of oranges in France and draws a bill for 1,000 francs. Then he goes to his banker and says, “1,000 francs are worth 1,300 pesetas, give me 1,300 pesetas,” and thus he gets over and above his profit on the sale a bounty of 300 pesetas. On the other hand, a Frenchman sells 1,000 francs’ worth of silk in Spain, and when he presents to his banker the bill for 1,000 francs he only gets 700 francs’ worth of pesetas. This theory was hailed with delight by Méline and such Protectionist professors as M. Cauwès.
In 1894 M. Edmond Théry published a book called the “Currency Crisis.” In it he declared that “a crisis in the foreign credit market, a rise in the rate of exchange, is favourable to the country in which it takes place,” and this became an article of faith in the creed of those bimetallists who involved the Spanish and the Mexican bogeys. They proposed a tariff which should vary with the rate of exchange to protect France against the bounties given to Spanish exporters by the depreciation of their currency. The landed and farming interest, and even thoughtful men, in their own opinion able, and indeed accustomed, to reason, men who despised what they would call adventurers or Bohemians, declared solemnly—and men who stood high in business and politics agreed with them—that a country grows rich in proportion as the inferiority of its currency gives a greater or less bounty to its exports. The system of assignats is ideal. In 1894 the Agricultural Society of France, whose members were as a matter of fact rich proprietors who let out their estates instead of working them themselves, issued a memoir in favour of bimetallism. Their action was imitated by the French Association of Agriculture and Industry, a society dedicated to Protectionist propaganda, and the Society for the Encouragement of Agriculture. These three societies, in February, 1895, approached the Government with a view to the creation of an international agreement for the following objects: (i.) The establishment of a fixed ratio between the standards; (ii.) free coinage of silver by every national mint. Should this attempt fail, the Agricultural Society “drew the attention of the French Government to the possible economic consequences for France of a return to the free coinage of silver.”
The National Bimetallic League was founded on March 25, 1895, with the Cashier of the Bank of France as its treasurer, and it summoned a preliminary meeting of the English and German leagues for December 10, 1895. The resolutions then passed led to a discussion in the House on March 17, 1896. M. Méline laid a projected resolution on the table which was signed by 348 members out of 581; but in the Chamber of Commerce the discussion went against him, the resolution not being so much as considered. In 1897, when McKinley sent envoys to Europe to consider the possibility of summoning an international conference, the bimetallists thought that their case was won. But at the very time of the arrival of the envoys from France in England, silver, by a curious coincidence, fell to 2s. in the London market, while the price of wheat in Paris rose to 30 francs—a convincing proof that the fall in the price of wheat did not depend on a fall in the price of silver. On the refusal of the English Government, the American envoys did not trouble to go to Germany, and it was left for M. Méline and the bimetallists to deplore that English blindness refused to throw overboard half her foreign bills of exchange. The death of bimetallism was celebrated by a dinner in Paris on January 28, 1903, the result of a wager I made with Edmond Théry in 1897; but if England had not saved us, M. Méline and his friends would have imposed on France the system of silver assignats. In a book called “Prices and the Foreign Exchanges,” M. Jacques Pallain proves, with the aid of irrefutable documents, the absurdity of the contention of the French bimetallists. The example of Spain certainly shows that prices rise in a country where there is very little currency; but they rise not because of the lowness of the currency, but because of the quantity of paper money in the hands of people who distrust their power of converting it into coin.
M. Jacques Pallain’s conclusions are based on fact. The rise in the exchanges which denotes a depreciated currency does not create an important or lasting bounty to the exporters from that country. In such a case the high rate of exchange only shows the variableness of the ratio between two currencies. The depreciated money cannot be exported; it increases daily in amount, and remains in circulation at home, where it is absorbed by a gradual rise in the price of all commodities. Currency depreciation cannot be looked upon as a means of developing trade, or as a menace to countries with an appreciated standard.
The founders of the Bimetallic League of 1894, MM. Méline and Edmond Théry, and the agrarians who followed in their train, declared the more depreciated the currency the larger is the bounty to exporters, the more rapid the development of the country. But all recent experience comes to reinforce the experience of the past, that bad money is not a source of wealth.
UNDERSELLING IN WINES
Renunciation of a natural monopoly—Protection to Medoc: M. Méline’s advice—Aramon—No underselling of good wines.
The Free Trade Movement had been headed by the southern departments of France—the great wine-growing district of Gironde to the west, and Hérault to the east. When the French wine-harvest was reduced by phylloxera, it was necessary to turn to Spanish and Italian wines. In proportion as the vineyards of the 1,900,000 wine-growers recovered, the exclusion of foreign wines was demanded, and the law of January 11, 1892, placed them on the maximum tariff at a duty of 1s., and on the minimum tariff at 1d. per degree of alcohol for the first 10 degrees, with a Customs duty proportionate to the rise in the consumption of alcohol for each degree over and above. Until the wine-growers began to demand Protection people had imagined that wine only came from Bordeaux. They renounced this traditional monopoly by showing that such good and cheap wines could be got from Spain and Italy that the French growers needed Protection against them. It was strange enough to see the wine-growers of Medoc become fervent believers in Customs duties, nominating an ardent Protectionist as their member; but as a matter of fact it was not Protection but expansion that was needed by the great vineyards of Bordeaux, Château Yquem, Haut-Brion, Château Margaux, Château-Larose, Château-Lafitte, &c. At the warehouses they had been in the habit of making an excellent blend of French and Spanish or Italian wines, which commanded a large market in France; when it was suppressed the blending was done at Pasages, in Spain. Méline had said to the wine-growers, “I will give you Protection; you can then make as much wine and of such quality as you want, and your countrymen will be obliged to drink it.” Acting on this advice the growers of Hérault and the other southern departments planted a vineyard called Aramon, from which a great quantity of wine was made, containing 4, 5, or 6 degrees of alcohol, which would not keep at all. Formerly the strong wines of the south had been used to enrich the thin wines of the centres; now they needed enriching themselves, and for this purpose some 132 to 198 million gallons were imported annually. A series of abundant harvests caused complaints on every side of the small sale of wine. The south shook, as a contemporary wit declared. But in spite of all the efforts of the Government and the indignant protests of the deputies, the consumption of weak wines that would not keep could not be forced either at home or abroad.
The result of the duties on wine is a striking example of the illusions and deceptions resulting from a Protectionist policy. There is never any difficulty in selling wine which the producer can keep, for the indifferent years, both as to quantity and quality, are far more numerous than the good years.
TARIFF WAR BETWEEN FRANCE AND ITALY
Exchange of blunders takes the place of exchange of goods—Denationalisation of industry.
On the morrow of the Franco-Prussian war the reactionary majority in the National Assembly dreamed of repairing military disaster by declaring war on Italy for the re-establishment of the temporal power of the Pope.1 The Republican party made the mistake of combining its anticlerical policy at home with hostility to Italy, and the result was the Triple Alliance, by which his most Catholic Majesty the Emperor of Austria guaranteed keeping the Italian capital at Rome against the secular French Republic—a startling enough paradox. And economic relations followed political ones. On November 15, 1886, the Italian ambassador in Paris declared that the Commercial Treaty of November 3, 1881, must terminate on January 1, 1888. The Italian Government’s proposal of negotiations delayed the final breach till February 2, 1888. On February 28th the French Government levied differential duties on certain Italian goods, and on the 29th the Italian Government retaliated. Surcharges were laid on the navies; and the exchange of goods was replaced by the exchange of reprisals. The effect of this was immediately perceived. The total volume of trade, which had risen in 1887 to £20,000,000, fell in 1888 to £12,000,000. Such a fall was excessive, and in January, 1890, tariff war ended in favour of the application to each country of a general or maximum tariff. In May, 1897, the Italian Government approached the French with a view to the re-establishment of the most favoured nation clause. France excepted silks and wines from the minimum tariff, retaining differential duties on them, and demanded a reduction of the Italian Customs tariff on certain goods. Italy consented, and the agreement was signed on November 21, 1898. The Bill ratifying it was passed almost unanimously in Senate and Chamber by the end of January, 1899.
The result of this tariff war was, from the statistics of the French Customs House, that Italian exports to France, representing in 1887 a total value of £12,308,360, fell in 1888 to £5,269,520, a net fall of 57 per cent., while the total of French exports to Italy fell 50 per cent., namely, from £13,047,520 in 1887 to £6,220,560 in 1888, and £6,433,320 in 1897. The export of French woollens fell from £803,280 to £203,240; the export of Italian wines from £3,900,160 to £41,720, and of silks from £2,874,000 to £1,691,320. It is easy to close a market, but much more difficult to open it again.
The exports from France into Italy were in 1902 £6,992,250, and in 1903, £6,639,000. Those from Italy into France were £5,965,290 and £6,779,520. So the exports from France only slightly exceeded those of 1897, and the exports from Italy to France were about £6,000,000 less than they were in 1887.
One phenomenon resulting from Protection which has been insufficiently observed is the denationalisation of industry. To escape Customs duties foreign traders remove their industry to the country in which or against which they are protected. Thus Milan finally outstripped Lyons as a silk market, as a result of the influx of Lyons merchants, who transferred their capital and their business ability thither and then competed with their native town.
On the other hand, the tariff war led to the creation of local industries in Italy, which now drive French goods from the market.
BOUNTIES TO THE MERCHANT SERVICE
Law of 1893—Suppression of steamboats and encouragement to sailing ships—Result—Dockyards idle—The law of 1902.
The tariffs of 1892 were completed by the Act of 1893 dealing with the merchant service. In compensation for expenses resulting from the Customs tariff the law of 1893 established a system of bounties to shipbuilders so arranged as to reduce the construction of steam ships and encourage sailing vessels, which indeed made voyages not so much for the purpose of transportation as of collection of bounties. The law was, in fact, the death-blow to the construction of the vessels which it was designed to encourage. French dockyards having a monopoly, demanded such extravagant prices that the class of shipbuilders disappeared, and if there was any development in the building of sailing ships, that of steam ships sank to a negligible quantity. The following table gives the tonnage of vessels constructed under the system of the law of 1893:—
And to reach this result the State paid between 1893-1902 in
without counting the postal subventions, which amounted to some £1,040,000 a year. As for the result to navigation:—
The results are even poorer when one considers the coasting trade with its monopoly, the bounties to the fishing trade on a large scale, and the expense of registering the smaller fishing-boats.
The shipbuilders, for whom the Act of 1893 had been passed, did not need to build for the merchant service; they preferred to serve the Government which paid them highly. In 1898 among the 117 million orders received by the Mediterranean ironworks and shipyards, not a single one applied to the merchant service. If the ships of the companies subventioned for the postal service had not been obliged to be built in France, the effect of the Act of 1893 would have been the complete disappearance of the shipbuilding which it aimed at developing. Speaking on November 9, 1901, M. Guillain declared that out of nine companies which built sea-going ships, three owned 37 out of a total of 67 ships; and for the last twenty years they had executed no private order except for some twenty packet boats, while the other six did almost no building except of sailing ships. When the Merchant Marine Bill of 1902, designed to rearrange the bounty system, was under discussion, the tonnage of sailing ships on the stocks rose between January 1, 1901, and July to 99 vessels, with a gauge of more than 237,438 tons. The Finance Minister, M. Cailloux, calculated in December, 1901, that were the Act of 1893 allowed its full effect until the Bill now before the House became law, the total cost would be £6,000,000 for vessels whose building had cost from £3,600,000 to £4,000,000. Thus the Treasury, by buying and destroying them, would gain some £2,000,000. The Bill of April 7, 1902, which replaced the law of 1893, limited for twelve years the bounties on the construction of the 270,000 tons of steam ships and 90,000 tons of sailing ships contemplated in the Act to £2,000,000 to be expended on a maximum annual construction of 47,260 tons of steam and 114,778 tons of sailing vessels. On January 8, 1903, the Journal Officiel published the names of the vessels on the list, and for twelve years there was to be no building beyond this number. In 1905 the Government introduced a new resolution to correct this anomaly at the expense of the taxpayers. The private iron shipbuilding-yards employed 15,000 men in 1896, and the number was fixed at that. In 1902 France imported 47,857 tons of ships valued at £505,160, and exported 48,025 valued at £429,840—old ships, some as old as 1856, most of them of English make and dating 1881-1886. Such are the results of the bounty system in the shipbuilding industry.
A political industry—In the workmen’s interest—Results—Profits to the sugar-refiners—Cost to the consumer—Production not for sale but for bounties—Results of the Brussels Conference.
Without going back so far as the ancien régime since 1819, the sugar industry had been a political one, owing its very existence to the Legislature. The law of 1884 was of the same character as all those passed during the nineteenth century, its objects being (1) to extend the consumption of sugar, (2) to limit internal consumption, (3) to encourage foreign consumption at the expense of French consumers. The tax was levied on account, but assessed at less than the real amount, the sugar produced over and above being exempt in whole or part; the difference between the amount taxed and the total output constituting a bonus on manufacture. Almost immediately on the passing of the Bill the excess was 21 to 31 per cent. of the output. The bounty ate up the tax.1 In bringing forward the Bill of 1884 giving bounties to the sugar industry, M. Méline declared that he was acting in the workmen’s interests; but the results for the workmen are shown in the Blue Books:—
proving that the number employed diminished instead of increasing; and the fall in numbers was not balanced by a rise in wages.
while the total expenditure on wages was:—
showing a diminution of £96,880. For the workmen the results were purely negative. In 1902-3 there were only 332 sugar manufacturers, and these in the eighteen years after 1884 obtained in bonuses on excess of output £41,360,000, to which must be added, since 1897, £3,000,000 in export bounties and £6,720,000 to the Colonial sugar trade. In all £51,080,000 went to the sugar manufacturers. Thus in France a few hundred sugar manufacturers—only 322 in 1902—received £41,360,000 for a plant not worth £14,000,000, while the number of workmen employed diminished.
The result of such a defence of national labour was that the consumer had to bear the burden of 52s. 9d. in duties, bonuses, and bounties on a hundred-weight of sugar, from which the Treasury only got 35s. The consumer thus paid 45 per cent. more than the Treasury received, and it went into the pockets of private individuals, a small group of manufacturers, instead of going to assist expenditure for public benefit. It was a private due like the old feudal due.
In 1901 the French consumer paid for sugar, native and colonial, more than £4,400,000 of bonuses, bounties, and rebates for export on £6,080,000 worth of sugar.
I took an active part in the negotiations which resulted in the Brussels Sugar Convention of March 5, 1902. Had England, however, not threatened the sugar-refining nations who should retain their bounties with countervailing duties, the Conference would have ended in nothing, and a fearful sugar crisis would have followed in France, Austria-Hungary, Belgium, and Holland. A manufacture cannot be carried on with impunity which aims at realising bounties rather than sales.
The Brussels Convention was a complete success. It was put in operation September, 1903, and down to the end of August, 1904, the results were: Consumption in France rose from 365,634 tons in 1902-3 to 688,700 tons in refined sugar, i.e., an increase of 83 per cent.; and in Germany raw sugar rose from 366,538 to 729,255 tons, and in Austria-Hungary from 501,977 to 1,109,470 tons.
Such a success proves the utility of reducing duties. In future the Convention is unassailable. French manufacturers who accused me of plotting their ruin admit that it has saved them. No one dared to propose the rejection of the Bill of Ratification when introduced into the House.
An ingenious system—Its effects—Cost to the State—Law adding to the deficit—The permanent deficit.
The years 1899-1901 were marked by a series of attempts in Senate and Chamber at the creation of import, or rather export, bonds. For every cwt. of wheat brought from abroad the exporter might claim a bond for 2s. 10d., limited in every case to a depreciation of three months’ interest and a deduction of 4 per cent., payable on demand by the Treasury. The Higher Board of Agriculture threw out the scheme as extravagant, but on July 7th it was passed in the Chamber in spite of the opposition of Méline, who was frightened by the boldness of his disciples, one of whom, M. Viger, introduced the project in the Senate. Thus, at the very time when the failure of the sugar bounties was most glaring, an attempt was made to apply the same system to wheat: the 2s. 10d. duty was to encourage the landowners to produce and to restrict home consumption, while the high bounty in the Budget was to induce foreigners, and especially England, to consume French wheat. The effects of such a system would have been as follows: In 1897 the harvest failed; on May 4, 1898, on the eve of the election, Méline, as President of the Chamber of Commerce, followed exactly the opposite policy to that of 1885: then a duty of 1s. 3d. had been imposed, now the 2s. 10d. duty was suspended until July. Some 38 to 40 million cwt. of wheat came in, an excess of about 8 millions over what was needed:—
Estimating the annual consumption at 9,620,000 tons, that is for the two years 17,240,000 tons, there was a surplus in 1900 of 1,116,260. Had the law voted in the Chamber of July 7th come into operation, these 1,166,260 tons would have been exported and the State would have had to pay 1,116,260 × 55s. = £3,070,000. Two months later it was found that the harvest was 1,000,000 tons below the normal. The State would then have received £2,750,000, and the loss, if it had not been necessary to suspend the duties, would have been reduced to £1,640,000. And the wonderful effect of the law would have been to add a failure in the harvest equivalent to 1,000,000 tons to the 1,116,260 tons whose exportation it had encouraged, and £4,520,000 would have gone into the pockets of skilful traders for having sent corn out of the country and paid nothing to bring it back.
The chapter of Budget history dedicated to what were paradoxically called import bonds would have been one of permanent deficit, its statistics would have depended on the excess of the selling price in foreign markets increased by 2s. 10d. per cwt. over the buying price in France, including cost of transport, &c. To satisfy the fears of men more far-seeing than themselves the authors of the scheme limited the experiment to 1901-1904. This fine system was supported by M. Viger, former Minister of Agriculture, and opposed by M. Durand Savoyat, of the Bounties Commission, M. Couteaux, an intelligent farmer, and M. Caillaux, Minister of Finance. It was rejected, but I have dealt with it here to show the aberrations to which Protection leads.
Customs permits—Diminution of the 2s. 10d. duty—Corn-producing districts—Law of 1902—Mills of the north.
The question of import bonds had been raised in connection with that of temporary admission. The landowners had begun by declaring that if the corn duties did not raise prices as much as their promoters had promised the suspension of silver coinage was to blame for it. In 1900 they blamed the temporary admission which allowed millers to re-export wheat imported by means of a Customs’ permit involving repayment of the 2s. 10d. duty. The corn-growing departments of the south produced less, those of the north more, than they could consume; the southern millers imported grain from Odessa without exporting flour; the northern millers exported flour without importing wheat. A certificate of temporary admission only benefited the southern miller in so far as he could sell it to a colleague in the north; and since 1873 it had been necessary for a northern miller who wanted to send flour to London to send first from Dunkirk to Marseilles for a Customs’ permit. A decree of 1897 allowed the sending of permits by post.
The result was extraordinarily unhappy. A northern miller could not fight against foreign markets by buying corn at a price which included 2s. 10d. per cwt. of duty; by getting a Customs’ permit, which lessened the differentiation, he could try to export his flour. The Marseilles miller, on the other hand, selling him it for 2s. 6d. or 3s. 4d., reduced pro tanto the duty on foreign corn consumed in the south.
According to the Blue Book on Agriculture, the northern and north-western districts produced 268 cwt. of corn for every 100 cwt. produced in the south. The Act of February, 1902, forced the miller to pay duty immediately the wheat was brought in, and prevented his alienating the right of collection, the amount of which would be refunded to him on reexportation. The aim of the landowners was to force the south to buy the wheat it needed exclusively from the north, and thus pay the whole duty, i.e., 2s. 10d. From one point of view this was logical, but it was illogical to lower the price of wheat in the wheat-growing districts by making it impossible for the northern miller to export flour.
FOREIGN TRADE BETWEEN 1860 AND 1903—FRANCE AND ENGLAND
Trade in 1855-1859 and 1861-1865—1876-1880 and 1882-1886—1882-1886 and 1899-1903—Stagnation—Comparison with the United Kingdom—Verification of Free Trade prophecies.
I have already adduced facts which prove that the commercial treaties of 1860 had not ruined even those manufacturers who made the loudest outcry against them. Looking at our specifically foreign trade as a whole during the quinquennial period preceding and following them, we can state—
These results were produced by the silent labour of two economists, who had gradually cancelled some tariffs and modified others, with the result that the annual average of French imports rose £28,600,000, or 41 per cent.; exports £26,800,000, or 35 per cent.—a total increase of £55,440,000, 38 per cent.; results which may well be compared with those noisy enterprises which pretend to find expansion for trade with muskets and cannons. Every advantage is on the side of those who free the natural outlets for trade from the barriers by which they have been shut off. It is hardly necessary to say that the disasters of 1870, the loss of Alsace and Lorraine, did not assist the development of French industry and wealth. During the last quinquennial period—1876-1880—following the treaty these are the figures—
which represents an increase of £106,200,000, or 52 per cent., over the period 1861-1865.
In 1881 came reaction; the ad valorem were replaced by specific duties, and some duties were raised. England refused under these conditions to renew the commercial treaty. In the following period—1882-1886—the annual average was for—
and taking the last quinquennial period for which exact figures can be given, we find—1899-1903—the annual average to be—
These figures for our foreign trade ought to inspire serious reflection. They remained, during the last quinquennial period, within four millions of those for 1876-1880, and exactly equal to those for 1882-1886. While foreign trade was thus stagnant, the total trade of France had increased 52 per cent. between 1861-1865 and 1876-1880. Those who upheld the Balance of Trade theory said with enthusiasm: “All the better, for imports have diminished and exports increased.” But how much? Ten per cent. There is stagnation here also, for the increase in exports between 1861-1865 and 1876-1880 had been 24 per cent. I know some one will say, “Prices have fallen,’ and so they have, but relatively to the preceding period they had fallen in 1876-1880; and if they fell in France they also fell in England, while England remained true to Free Trade. Compare the results:—
Then comparing the development per cent. in the two countries—
These figures lead to the following conclusions: England, already possessing a greater measure of liberty, received during the first quinquennial period less stimulus than France from the commercial treaty, In the last period—1876-1880—the increase in the percentage of imports is greater in France than in England, and in the percentage of exports rather less; but France had lost Alsace and Lorraine. After the 1881 tariff, French exports show, at first, a falling off, while English continue to increase. For the last five years the figures show that French imports are stagnant, while exports have only developed 18 per cent. relatively to the period 1876-1880, whereas English exports have developed 38 per cent. Thus events have not given the lie to the confidence of the Free Traders; can the same be said of Protectionist prophecies?
THIERS’ AGRICULTURAL FORECASTS
Thiers had declared in a speech made June 27-8, 1851, that to abolish the sliding scale and the Customs duties, then 3s. 7d. per bushel, would mean that no more seed was sown or corn produced in France; he threatened an inundation of corn from Russia, Naples, and Seville. In 1861 the Customs duty was converted into a registration duty of 21/2d., and the number of acres sown with wheat, which was 14,400,000, rose to 16,560,000 in 1865, 16,800,000 in 1869, and after the war, in 1880, under the same fiscal policy, the acreage remained the same. With the sliding scale in the single year 1857 the harvest had been 303,600,000 bushels. While the duty was only 21/2d. the following are the figures:—
Thus M. Thiers’ forecast did not come true. After the war, in spite of the reduction of French territory and the invasion by that American wheat which had succeeded Russian as a Protectionist argument, we find:—
A duty of 1s. 3d. was imposed in the following year, when the state of agriculture had proved it unnecessary; in 1887 a duty of 2s., and in 1904 one of 2s. 10d. The harvest of 1882 was not equalled till 1894; that of 1874 in 1898 and 1899, when it was 352,000,000 bushels. The last great harvest was that of 1902 with 341,000,000 bushels.
Thus the Liberal régime, marked by the registration tax of 1860, had not destroyed French corn. In spite of the advance of agricultural science, the harvest of 1874 has never been equalled since.
DEFINITE RESULTS OF THE 1860 TREATY
The two classes of Free Trader—Buddhistic and active—Effects of 1860—Prohibitions existing in 1860—Their definite repeal—Experience gained.
I have sometimes heard Free Traders of the passive, non-resisting type regret that the treaty of 1860 was ever signed; it seemed to them that an Act of such unusual authority directed against the Protectionists was passed in advance of public opinion, and therefore provoked reaction. I am not a Free Trader of the Buddhistic type; I did not hesitate to join issue with my friends of the Cobden Club when it was necessary to oppose bounties given to Continental sugars by countervailing duties. The Brussels Convention demolished the stronghold of the worst form of Protection—aggressive Protection, as M. Smet de Naeyer has so aptly qualified it; and the efforts to rebuild it could not restore its lost strength and stability. The effect of experience in human affairs is not the same as in a laboratory: it always modifies things so that no reconstruction can restore them exactly to their original form. And so with the 1860 treaties. In Europe their effects were profoundly felt for twenty years; in France they so transformed public opinion that the Protectionists were driven to the base subterfuges I have described in the attempt to win it again to their side, without succeeding, in spite of all their efforts, in re-establishing a régime such as had existed before the treaty. Before the treaty the following articles were absolutely prohibited in France: Woollen and cotton thread and textiles, linen textiles embroidered in cotton, hair thread and cloth (with the exception of cashmere shawls and scarves), ready-made clothes, prepared hides, manufactured goods in skin or leather, plated metal, cutlery, manufactured metal goods, cast iron in pieces of less than 32 lbs. in weight, wrought iron, polished brass wire, refined sugar, unscented soap, dye-wood extracts, madder, all chemicals not specifically excepted, rough earthenware and fine stoneware, glass and crystal, foreign molasses, powdered curcuma, patent medicines not specifically excepted, extract of quinine, ground chicory, goods made of hair or cork, carriages on springs, seagoing ships, and fancy turned goods. In not one of these cases was the prohibition re-established.
Sulphuric acid at 6s. 5d. was protected by a duty of 16s. 5d., and is now free; nitric acid at 19s. 2d., with a duty of 36s., is taxed on the maximum tariff at 1s. and is free on the minimum; hydrochloric acid at 3s. 7d. paid 24s. 10d. duty; it now pays 11/2d. on the general tariff and is free on the minimum. Raw cotton, raw wool, linen, hemp, and raw silk are now duty free, and the French agrarians have not succeeded in reimposing the 3s. 7d. duty on wheat and the sliding scale which existed before 1861.
This twenty years’ experience of a moderate tariff is a forcible argument for Free Trade.
REACTION AND THE PROTECTIONIST FEVER
Revenge of the émigrés—War policy of the Protectionists—Property in tariffs—Tyranny of protected interests over the Government—The 1860 treaty—An economic policy worse than Colbert’s—Universal suffrage hoodwinked.
The experience of the commercial treaty of 1860 entitles one to repeat with even greater force the arguments used by the early members of the Free Trade League and to ask, How does the majority in France come to be Protectionist? How do statesmen in a Republic based upon universal suffrage come to have exchanged a really Liberal fiscal system for one more thoroughly reactionary than that of Colbert or even of Napoleon? From the middle of the seventeenth century down to 1791 duties on food were very moderate; there was no duty on corn and only one of 3s. per head on live stock. Between 1791-1816 wheat and cattle were altogether exempt. It was left for the great capitalist landowners, whose influence was predominant at the Restoration, to establish the sliding scale in order to maintain wheat at the famine prices of 1819 and cattle with a duty of 44s. per head.
The Revolution abolished the privileges of the nobility. At the Restoration the survivors and descendants of the nobility acquired the privilege of enriching themselves at the expense of the bread and meat of their poorer fellow-citizens.
Colbert, indeed, expounded and applied the theory which bears his name, but he applied it with moderation. Even in the tariff of 1667, which cost France a war with the Low Countries, there were no prohibitions, and the duty on iron and other necessaries was only 1s. the thousand pounds. The tariff of 1791 was very liberal, with the exception of certain prohibitive clauses—for example, that applying to foreign-built vessels hitherto admitted free, and even encouraged by bounties.
The prohibitions of 18 Vendemiare year II., completed by the Act of 10 Brumaire year V., were mere war measures specially aimed at England; Napoleon maintained them as a temporary sacrifice demanded by the safety of the country, and while he established the Continental Blockade he at the same time established Free Trade in Western Europe.
After the Restoration the political necessity for prohibition against England had gone; nevertheless, most of the prohibitions were retained or replaced by prohibitive tariffs. In order to get the duties of 1822 and 1827 passed they were declared to be temporary; in 1828, however, when a Governmental Commission of Inquiry was nominated, they were loudly proclaimed to be vested interests; any modification was denounced as a violation of property granted by the law. A coalition of the industrial and agricultural interests asserted the same claims under the Government of Louis Philippe, in spite of the attempt made by the Ministry, and especially by Count Duchâtel, to reduce the excessive duties and abolish prohibitions.
Napoleon III. only succeeded in defeating the insolent Protectionist coalitions by using his constitutional right of making commercial treaties to conclude an international agreement against them. But after an experience of twenty years of complete success, the democratic Republic, based on manhood suffrage, returned to a Customs system more rigid than that of Colbert—a system which placed heavy duties on food. This was the policy of the great landowners with their cumulative vote and the 200,000 copyholders—and the democratic Republic took it over as the inheritance of the revenge of the émigrés and the feudatories of the July Government, with their traditional privileges. A majority of the eleven million French voters enthusiastically returned candidates who, if they were courageous enough to express, and intelligent enough to understand what they were doing, ought to have said to them, “We promise to increase your burdens by making you pay taxes on necessaries and private imposts which are to go into the pockets of the Restoration Legitimists, the descendants of the great manufacturers of the time of Louis Philippe, these political adversaries whom you would not dream of electing—and rightly not. But give us seats in the Palais Bourbon or in the Luxembourg, and we promise to put in force a fiscal system which will give them the biggest revenue and the largest profit at your expense.” If hardly this language, yet the policy which it represented was acclaimed by peasants, whether proprietors or not, by workmen, even in the great cities, even by the most impassioned assailants of every form of property among the socialists; this was the policy which they sent a majority to the Senate and Chamber to execute. And yet, taken individually, these men were ready enough to look after their own interests; they knew how to measure their own advantage when immediately presented to them; they like to buy cheap; they were passionately devoted to freedom. How, then, did they come to support a fiscal policy opposed to these interests, opinions, and ideals? It was because, being full of prejudices, the outcome of their ignorance of economics, they were skilfully exploited by people whose interest was to deceive them.
Yves Guyot. Introduction to the “History of Italian Unity,” by Bolton King.
“Protectionism,” by Graham Sumner.
Cf. Yves Guyot, “The Separation of Church and State.”
See Yves Guyot, “The Sugar Question in 1901” (Journal of the Royal Statistical Society, Sept. and Oct., 1902).