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Subject Area: Economics
Topic: Free Trade

CHAPTER VI: COBDEN AND THE 1860 TREATY - Yves Guyot, The Comedy of Protection [1906]

Edition used:

The Comedy of Protection, trans. M.A. Hamilton (London: Hodder and Stoughton, 1906).

About Liberty Fund:

Liberty Fund, Inc. is a private, educational foundation established to encourage the study of the ideal of a society of free and responsible individuals.


CHAPTER VI

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.