Front Page Titles (by Subject) BOOK II: PROTECTED AND RESTRICTED INDUSTRIES - The Comedy of Protection
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BOOK II: PROTECTED AND RESTRICTED INDUSTRIES - Yves Guyot, The Comedy of Protection 
The Comedy of Protection, trans. M.A. Hamilton (London: Hodder and Stoughton, 1906).
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PROTECTED AND RESTRICTED INDUSTRIES
THE POSTULATES OF PROTECTION
I propose to examine, in the course of the following work, the method of estimating the incidence of Customs duties levied on certain industries for the advantage of others. The theory of State interference in international exchange rests on three postulates: (1) to protect national production against foreign competition; (2) to abolish conflicting internal interests; (3) to defend the interests of the majority in a nation whose government reposes on a wide electoral basis, by ensuring employment to labour. I am going to examine if the reality corresponds with the end aimed at, and whether the means employed do not lead to the precisely contrary result.
Every one consumes in order to produce; the greatest producer is also the greatest consumer; directly, in virtue of the plant he has to supply himself with and the raw material which he purchases, indirectly in virtue of the wages which he pays. If I can prove that under the French Protectionist system the great majority of producers, employed as masters or wage-earners in the majority of industries, have to pay tribute to a few protected industries—no one can say that in denouncing such oppression, I am neglecting the interests of producers, and thinking only of a few officials and people of independent means who consume without producing. I shall not imitate Le Play in going into great detail, but draw my general conclusions from the Blue Books of the French Government. In 1897 the Board of Trade published four volumes of an “Inquiry into Wages and Hours of Employment.” Since the Census of Industries and Professions has not yet been published in its complete form, for lack of adequate information as to budgets, I shall only use the edition of 1896, while indicating in passing any important modifications which are already known.
RELATIVE IMPORTANCE OF DIFFERENT INDUSTRIES
“The greatest number”—Protected industries and labour.
I shall first examine the relative importance of different industries, to see whether Protection is an advantage to the majority. According to the 1896 census of persons employed in professions and industry in seventeen out of eighty-seven departments, more than 40 per cent. of the population is employed in industry. In order of diminishing proportion they are: The Nord, Belfort, Rhône, Loire, Seine, Ardennes, Vosges, Bouches du Rhône, Meurthe et Moselle, Seine Inférieure, Somme, Pas de Calais, l’Oise, l’Aisne, l’Aube, Seine et Oise, Marne. Taking a hundred as the total of industry properly so called, the order of importance relative to the number of persons employed is as follows:—
In France the extractive industries, e.g., coalmining and quarrying, are relatively small; the metal trade, which produces the raw material for ironworkers, engineers, and smiths, stands only seventeenth out of twenty-one; spinning and weaving is 30 per cent. below the cloth trade. The industries which produce raw materials or goods for further manufacture are protected at the expense of those which employ skilled labour.
THE PRINCIPAL GROUP OF INDUSTRIES IN FRANCE
I. Numerical importance—II. Clothes and underclothes—III. Protection and linen goods—IV. Men’s clothes—V. Women’s garments (not silk)—VI. Eloquence of two prices—VII. Millinery and artificial flowers.
It is obvious from the preceding table showing the relative importance of different industries that the manufacture of stuffs, linen goods, and articles of clothing forms 20·47 per cent., i.e., more than one-fifth of the total industry of France. Of this industry the raw materials are cloth, cotton yarn and textiles, linen, and silk; it will therefore suffer from the rebound of protective duties on textiles. The first group, comprising the manufacture of stuff, linen, and clothes, employs some 1,340,000: according to the census returns 140,000 cutters; 60,000 readymade clothes makers; 614,000 dressmakers; 75,000 makers of hats and head-dresses, including 45,000 milliners; 23,000 flower and feather makers. Paris is the centre for nearly all these industries, which have the highest standard of wages. Is this due to Protection? We shall see that they are victims of Protection.
Clothes and Underclothes.
The export of clothes and underclothes stands ninth in the total of French exports. The following are the figures reckoned on an annual average over the three years preceding the 1892 tariff:—
The tariff came into operation on February 1, 1892. Passing over this and the following year to allow for the disturbances caused by a change in system, we find:—
That is, during the period following the 1892 tariff there was a fall, relative to the preceding period, of 18 per cent., and even in the second period a fall of 10 per cent.; that the excess of the average of the three years 1900-02 over the average of 1889-91 was not due to, but in spite of, Protection; and 1903 shows a return to the figures of 1894-96.
Protection and Linen Goods.
Looking at the exports in detail, we find the following figures for made-up linen goods:—
And this fall in our exports is not solely due to their exclusion by foreign Customs tariffs, but in part to our own tariff. In the article on Linens in the “Dictionary of Commerce,” M. Julien Hayem, a great wholesale linen manufacturer, says, “The duties which burden cotton textiles are practically prohibitive in the case of linen-drapery and shirt-making. The price of material, which is 41/4 or 51/2 or less in England or Switzerland, is doubled or trebled by the effect of the duty.” The Customs Controller, whose fate it is to put into operation a Protectionist tariff of a great number of items, has to make it arbitrary and irritating for fear of being accused of Free Trade leanings. “And the result?” asks M. Hayem. “It is practically impossible for any French manufacturer to introduce any of the really new materials which are fashionable in foreign markets. Should he do in spite of the exorbitant duties, he is faced with two almost equally irritating consequences: the home consumer has to pay a much higher price than is paid for the same goods abroad; abroad the manufacturer is at a great disadvantage compared to his foreign competitors. Unable to do anything, he sees orders escape him while for lack of raw material he has to keep his workmen in idleness.”
And the yarn industry was in just the same position. The French weavers of Little Armentières and Cholet declared that they could not produce linens equal to the Irish; even enormous duties on Irish linen did not encourage French manufacturers, but, as M. Julien Hayem asserts, “they extinguished the linen-drapery manufacturer for which linen was the raw material.” These quotations sufficiently demonstrate that protection to cotton and linen did not raise wages in the linen-drapery business; they suffered from it.
That the 1892 tariff did not increase the export of men’s clothes is proved by two tables; thus export
diminished because the French maker was handicapped by the dearness of his raw materials, in competition with a low cost of production.
In the case of women’s garments the lady’s travelling trunk is a secret means of exportation, as was proved at the time of the Exhibitions of 1889 and 1900; in the latter, according to the Custom House returns, although the showrooms had been very busy, the dress exports went down 25 per cent. The export of silk dresses, which had risen considerably, fell 57 per cent. in 1903 on the preceding years; and in 1904 it continued to fall. The rise was not due to Protection, but to an increase in the wealth of other nations which caused an increased expenditure on articles of feminine elegance, which the Parisian shops were better fitted than any others in the world to meet. Then came a change in fashion; perhaps it will change again and the export of silk dresses rise again. But our shops must sell at high prices because all the materials that they use are burdened by Protection. Far from helping, it hampers them; far from raising wages, it lowers them, because in the net cost the share taken by Protection is subtracted from wages.
Eloquence of the Prices.
I call attention to the following prices. Cotton textiles, unbleached, dyed, or printed, were rated for export at 1s. 7d. to 1s. 101/2. per lb; linen textiles from 1s. 3d. to 3s. 3d. These cotton and linen fabrics, when made up into shirts, collars, and manufactured goods, were rated at 32s. 5d., the difference being the price of the taste and skill of the maker, and the labour of the men and women who executed his design.
The export price of silks was in 1903, plain silk, 27s. 3d. a yard; figured or broché, 32s.; mixtures of silk and cotton, 14s. 3d. plain and 16s. 4d. figured. Silk dresses came at £15 11s. 6d; the difference in price is in the style, and the greater part of this difference between cost of material and cost of the finished garment goes in wages.
Millinery and Artificial Flowers.
This manufacture employs some 100,000 persons; and it stands tenth in the list of French exports at £54,400,000. Dependent altogether on the protected industries, it pays duty on the flour used for making paste, on the wire on which the flowers are fixed which are made of dutiable paper. In the Seine Department there is a falling off in the number of employés; 18,207 in 1896, it was only 16,865 in 1901. From the above statistics the conclusion can be drawn that Protection, restricting the choice of materials, injures these industries. They need free scope, and their expansion is hindered by Protection to those textiles on which they depend.
THE TEXTILE INDUSTRIES
I. Wool—II. Cotton—III. Linen—IV. Silk—V. Conclusion.
Wool is the most important of the textile industries, employing more than 200,000 persons, to 150,000 employed in cotton, and 55,000 in linen; its plant can produce twice as much as is consumed in France. M. Gaston Grandgeorge estimates the output of French woollen yarn at £20,000,000, and assessing woollen cloth at a price of 4s. per lb.—a rather low figure—values it at £31,080,000 a year.1 The export for 1903 was £5,920,000 worth of textiles, £3,780,000 of wool combings, a net total of £12,680,000; for several years the industry has been stationary, enduring rather than demanding Protection.
The cotton industry is found in three districts, Normandy, the North, and the Vosges; and the cotton spinners and weavers, especially in Normandy, have been for three-quarters of a century ardent Protectionists. 37,500 persons are employed in spinning, 122,000 in weaving. The report of the Commission on Customs for 1891 declares, “The output in cotton spinning and weaving can actually be said to balance demand. The industry is this year in a thoroughly sound condition, as is proved by extreme commercial and industrial activity, and the firmness of the market for cotton.” In 1892 this prosperous industry obtained an almost prohibitive rise in duties on thread and textiles; according to the Blue Book on Direct Taxation, the number of spindles in spinning mills was some 3,799,400 in 1891; after that year there are no official statistics, but the Cotton-spinners’ Union fixed the number in 1904 at 6,150,000, a 62 per cent. increase, while the increase in consumption for the same period was only 31 per cent.
If the last sum were exact it would prove a consumption of 77 lbs. per spindle, showing that the greater part of the French output is of high numbers. High as the tariff walls were raised they did not prevent the importation of cotton yarn.
The export of cotton textiles has increased.
The main cause of this export is the protective duties instituted in the colonies at the expense of their own inhabitants for the advantage of the capital.
It is also due to the extended market which England offers for our cottons, equal to that of Madagascar and Indo-China put together.
But this export trade with England is to be considered rather as a payment of debts than as a sign of prosperity. The surcharges on cotton goods were so heavy that when the manufacturers tried to extend their sales by sending them to Manchester they lost a day a week. In 1904 a Congress was held at which M. Méline made two confessions—“It is sad to have to confess that our exports of cotton tend to diminish, while those of England and Germany increase”; and “It is true” that the protective duties led to the establishment of new factories. The Congress nominated a permanent committee, empowered to enforce the closing of mills and factories on receipt of an indemnity—but it was not stipulated that this indemnity should be extended to the employés.1 In the article on Cotton in the “Dictionary of Commerce,” a manufacturer, M. Gustav Roy, says: “The Protectionist system must be made responsible for a great part of the considerable difference existing between the price of cotton in France and of the same goods in England; price had to be reckoned plus the addition of interest on capital sunk in the paying of duties (1) on the materials, (2) on the machines and workmen employed—of annual charges necessitated by the Customs dues on the raw material, cotton; and secondly, on all the plant needed for the working of the factory, such as coal, oil, metals, and woods of different kinds, and various other goods; finally, of expenses caused by the bounties paid to certain industries, and of the rise in cost of transport due to the protection given to the merchant service. Moreover, since the sales can only be extended over a strictly limited market, there is a constant need to guard against the danger of over-production.”
In 1892 very high tariffs were set up for flax spinning and linen weaving. The stimulus of Protection led to over-production. In the 1902 Reports of the Customs Commission, edited by M. Widmer, President of the Linen Committee, it runs as follows: “Exports passed the high total of 1900, and rose to more than twenty-two million pounds. Such an unprecedented total shows that something is wrong at home, for such sales abroad could only be effected at a heavy loss—an evil that must be endured in order to clear the market, but still an evil.”
Linen, hemp, and jute spinning employ 86,000 people, to 96,000 employed in weaving, rope-making, &c.
The weaving and spinning of silk stands next in importance to wool, giving employment to some 136,000 persons, 80,000 in weaving, 20,000 in silk-throwing, and 26,000 in spinning. The weavers of Lyons are Free Trade, but the spinners who supply them with the silk, that is, their raw material, are Protectionists, who, though they failed to get Customs dues on raw silk, had got bounties on a pretence of defending the French cocoon. This splendid system led in 1902 to the production of 1,254,000 lbs. out of a European production of 11,943,800, and a world production of 41,005,800 lbs., which fell in 1903 to 1,042,800 out of a European production of 9,605,200, and a world production of 39,681,400. In 1902 16,627,600 lbs. were put on the French market, of which total the home produce was only 7 per cent.; in 1903 15,250,400 lbs., of which the home produce was only 6 per cent. The bounty system had not increased the number of silk-growers. There were 148,971 in 1893 with 225,000 oz. of eggs; in 1902 only 128,199 with 198,427, and 120,266 in 1903 with 262,145. In his report to the Customs Commissioners for 1902, M. Baumlin, President of the Committee on Silk, said that the bounty system was of no use in encouraging the production of silk; it did not attract the peasants to plant mulberries. The bounties on spinning have only assisted a few big firms. In 1898 there were 273 manufacturers with 11,823 vats; in 1901 there were 247 with 11,250 vats.
In 1892 a duty of 1s. 41/2d. per lb. was placed on thrown silk, the raw material for weaving. The production of silk fabrics was £18,080,000 in 1902, of which £17,760,000 came from Lyons and its neighbourhood; £16,819,000 in 1903, of which Lyons claimed £16,520,000. The export was 8,166,400 lbs. at £8,302,280, of which £3,633,600 worth went to England in 1902; and in 1903 8,296,200 lbs. at £10,030,400, of which England took £5,962,440.
Out of a total production of £17,760,000 in 1902, and £1,680,000 in 1903, £4,000,000 and £3,560,000 respectively go to silk and cotton mixtures, whose price was raised by the French Customs duties on cotton yarn, especially in the high numbers.
Of the 8,166,440 lbs. exported in 1902, 54 per cent. and 56 per cent. of the 8,296,200 lbs. exported in 1903, was composed of cotton mixtures, whose prices were raised and sales restricted by protection to cotton yarn.
This statistical examination of the textile industry proves: (i.) That such industries as the wool and silk trade are tributary to the protected cotton-spinners; (ii.) textiles being the raw material of all the clothing trades as well as of linen-drapery and millinery, all protection to spinners and weavers is at the expense of their trades; (iii.) since labour is a much more important element in the latter than in the textile trades, protection to them falls especially upon the wages of those employed in the clothing trades, linendrapery, and millinery, who stand in the ratio of seven to one to those employed in cotton and linen manufacture; (iv.) such protection, by raising the price of goods, restricts or closes their market; (v.) protected industries, stimulated to over-production, end after short periods of fictitious prosperity in crisis and stoppage.
THE METAL TRADES
Pursuing the same inquiry with regard to other industries, the Blue Book on Occupations divides the metal workers into two groups: (1) Mining properly so called, the production of metals, stands seventeenth among industries, and represents ·88 of the total, while (2) in the manufacture of iron, steel, and other metals, engineering and smiths’ work, of these five groups the first employs 50,000, the second about 650,000 persons. In all there are 31 firms with more than 500 men, and it is for the benefit of those among the 31 engaged in the production of cast iron, wrought iron, and steel that duties of 28s. to 60s. per ton have been imposed on steel and iron.
Has this system led to what is called “dumping” in England, i.e., that sale of goods abroad at very low prices which is made possible by the high prices which a protected industry can command for its products at home? No. Foreign trade in cast iron, iron, and steel only stands twenty-first in the list of exports. Taking the triennial averages, calculated on the three years before the 1892 tariff, and the last three years:—
Thus during a period of ten years, in spite of Customs duties, imports rose 309 per cent. in quantity, while exports only rose 12 per cent., including the exceptional year 1902, which raised the annual average to its total export of 376,468 tons. This result, however, the Commission declared to be “due to a falling off in internal consumption.”
Foreign trade for 1903 was:—
But the 1903 Blue Book is not enthusiastic. “Exports have increased considerably, and imports diminished to a notable extent, but home consumption is being reduced and prices are falling; to maintain production it is necessary to go abroad for a market.” And these admissions come from the representative of one of the most strongly Protectionist trades in France. Iron and steel are raw materials; their production is controlled by a small number of firms; their consumption is an essential of a great number of different industries. In 1901 M. Millerand, at that time Minister of Commerce, estimated that the bounty granted to those among the thirty-one great firms which produced cast iron, iron, and steel had risen to 33 per cent. of the price of railway carriages, 9 per cent. on carriages and tramways, 6 per cent. on hydraulic machines, 33 per cent. on electric dynamos, from 31/2 to 12 per cent. on spinning and weaving machines, 4 per cent. on printing presses, 6 per cent. on agricultural machines, and more than 50 per cent. on naval works, of which the price was £18 a ton.
Structural ironwork and builders’ ironmongery gives employment to 60,000 persons, 68,000 engineers are employed in general engineering, 4,600 may be added as employed on locomotive building, 4,000 more on machine tool-making, 4,000 on printing and weaving machines—in round numbers a total of 80,000. There are 18,000 cutlers and 80,000 smiths. All these trades are taxed for the benefit of 31 steel and iron factories employing more than 500 men.
SKIN AND LEATHER TRADE
This group employs about 335,000 persons—tanning and leather-dressing, 48,000; boot-making, 220,000; saddlery, 54,000; gloves, 20,000. All industries employing leather feel the effect of Customs duties varying from 8s. to £5 on prepared skins. Between 1888-1890 our average export of shoes was 45,600 cwt. at £2,560,000; it fell between 1901-1903 to 30,000 cwt. at £680,000. Our average export of gloves was worth £2,096,000 from 1880-1890; between 1901-1903 it fell to below £1,400,000. The duties on the goods which serve as raw materials for our finished manufactures compel us to sell dear and export dear.
Every year from 1900-1903 France has imported about 12,000,000 tons of coal, 6,800,000 coming from England. The duty of 1s. per ton on coal affects all the industries which use it. The result of the close connection between the clothing and textile trades, between the manufacture of iron and steel goods and the mining industry, between the manufacture of leather goods and the tanning trade, is that all these trades, employing a large number of hands, trades in which labour is relatively the most important element in the value of the product, are affected by the protective duties obtained by the industries supplying their raw material, industries which represent a much smaller number of workmen, and are for the most part concentrated in the hands of a few big firms. Our inquiry enables us to say that from the point of view of consumers and of the makers of semi-manufactured goods Protection means the profit of a few at the expense of everybody; it is at the same time clear that it leads to over-production and unemployment and organises commercial crises.
A protective tariff does not prevent necessaries from coming into a country, but it raises the price of all similar goods on the market and the cost price of all the products into which they enter, penalising all production and all exportation. The statistics in cotton and iron show that it cannot possibly increase normal exportation. A rise in the export of protected goods means the liquidation of debts.
“Dictionary of Trade Industry and Banking,” published under the direction of Y. Guyot and A. Raffalovich.
La Réforme Économique, June 26, 1904.