The Online Library of Liberty

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• Preface
• The Comedy of Protection
• Book I: Fluctuations In the French Customs Tariff
• Chapter I: Colbertism and Its Effects
• Chapter II: From 1791 to 1814
• Chapter III: The Revenge of the ÉmigrÉs
• Chapter IV: The “feudatories” of the July Government
• Chapter V: Universal Suffrage—rampant Protectionism
• Chapter VI: Cobden and the 1860 Treaty
• Chapter VII: Submission of the Republicans to the Fiscal Policy of Their Adversaries
• Chapter VIII: Results of the 1860 Treaties
• Chapter IX: Economic Reaction of 1881
• Chapter X: Bargain Between Landlords and Manufacturers
• Chapter XI: Tariff Freedom
• Chapter XII: Breach In the Minimum Tariff
• Chapter XIII: Socialism and Dear Bread
• Chapter XIV: Deception
• Chapter XV: The Panacea of Bimetallism
• Chapter XVI: Underselling In Wines
• Chapter XVII: Tariff War Between France and Italy
• Chapter XVIII: Bounties to the Merchant Service
• Chapter XIX: Sugar Bounties
• Chapter XX: Import Bonds
• Chapter XXI: Temporary Admissions
• Chapter XXII: Foreign Trade Between 1860 and 1903—france and England
• Chapter XXIII: Thiers’ Agricultural Forecasts
• Chapter XXIV: Definite Results of the 1860 Treaty
• Chapter XXV: Reaction and the Protectionist Fever
• Book II: Protected and Restricted Industries
• Chapter I: The Postulates of Protection
• Chapter II: Relative Importance of Different Industries
• Chapter III: The Principal Group of Industries In France
• Chapter IV: The Textile Industries
• Chapter V: The Metal Trades
• Chapter VI: Skin and Leather Trade
• Chapter VII: Conclusion
• Book III: Bread and Meat In France
• Chapter I: Claims of the French Landed Proprietors
• Chapter II: Physiological Determination of the Standard Ration
• Chapter III: Bread In France
• Chapter IV: Protection and the Price of Bread
• Chapter V: Meat In France
• Chapter VI: Food In France, According to the Labour Bureau
• Chapter VII: French Agriculture and the Incidence of the Customs—deficiency In Production
• Book IV: The Protectionist Oligarchy
• Chapter I
• Book V: The Work of Death
• Chapter I: Food and Effort
• Chapter II: Nutrition and Evolution
• Chapter III: Nourishment and Mortality
• Chapter IV: Justice and Charity
• Book VI: Mr. Chamberlain’s Programme
• Chapter I: The Protectionist Tradition In England
• Chapter II: Mr. Chamberlain’s Programme
• Chapter III: Mr. Chamberlain’s Statements and the Customs House Returns
• Chapter IV: Export of Manufactures
• Chapter V: Food
• Chapter VI: Mr. Chamberlain and Imperial Unity
• Chapter VII: Arguments For Fiscal Reform
• Chapter VIII: Reasons For Mr. Chamberlain’s Defeat
• Book VII: Protection In the United States
• Chapter I: The American Tariff
• Chapter II: Protectionist Arguments
• Chapter III: Protection and Industrial Advance
• Chapter IV: The Burden of Protection
• Chapter V: Assessment of the Tariff
• Chapter VI: American Trade
• Chapter VII: Conclusions
• Book VIII: German National Economy
• Chapter I: National Political Economy
• Chapter II: Two Contradictory Fiscal Systems
• Chapter III: German Foreign Trade
• Chapter IV: Export Bounties and Cartels
• Chapter V: France and the New Tariff
• Chapter VI: Conclusions
• Book IX: Customs Statistics—the Balance of Trade, and the Balance of Indebtedness
• Chapter I: Customs Statistics
• Chapter II: The Balance of Trade and the Balance of Indebtedness
• Book X: MÉline’s Confession
• Chapter I: Conception—dramatising By M. MÉline
• Book XI: Protectionist Postulates and Economic Realities
• Chapter I: Protectionist Postulates
• Chapter II: Economic Realities
• Book XII: My Immediate Programme
• Chapter I: A Simple Programme
• Chapter II: Taxes On Extra European Goods Imported From a European Country
• Chapter III: The Export of Wines
• Chapter IV: Conditions of Export

CHAPTER IV

PROTECTION AND THE PRICE OF BREAD

The following table taken from the Memoranda of the Board of Trade proves what I have stated:—

In the last year of the Liberal régime of 1861 English and German prices rose above French. In 1883 the duty was raised to 3 francs; then:—

A fall in the price of corn sends down prices in England, the United States, and Germany; in 1882 the difference relative to Great Britain was in our favour—it is now nearly 3s. against us. In 1887 the duty was raised to 5 francs in France and 5 marks in Germany.

In 1894 the duty was 7 francs. Germany lowered her tariff to 3 marks 90. Result:—

The 7-franc duty per quintal (i.e., 2s. 10d. per cwt.) represents 12s. 21/2d. per imperial quarter. In 1897, when the harvest failed, the duty had more than its full effect, raising the price from 30s. 2d. to 43s. 9d., i.e., 13s. 7d. On May 4, 1898, M. Méline was obliged to suspend it—declaring “in a few days prices had risen from 12s. to 13s. 21/2d. and even 13s. 71/2d.”

On May 1, 1903, the price of wheat was 20s. (25 francs) in Paris; 13s. 2d. (16·50) in London; 13s. 31/2d. (16·80) in Vienna; 13s. 11/2d. (16·40) in Buda Pesth; 13s. 2d. (16·50) in Antwerp; 12s. 10d. (15·94) in New York. The difference between London and Paris was, therefore, 6s. 10d. instead of 5s. 61/2d. (8·50 instead of 7 francs).

Experience, then, justifies the conclusion that wheat duties cannot raise the price to its full extent in years of good harvest, while they raise them by more than the full amount in years of scarcity. Dealers in the protected country wait, not daring to buy; in France they are always afraid that the duties will be suspended, and so by not supplying the market they invite the high prices which lead to suspension. On May 4, 1898, the day after the suspension of the duties, there was a rush on the market; coinciding with Leiter’s speculations at Chicago, this sent prices up with a bound; by May 10th the export price in New York was nearly 8s. per bushel. When the full effect of a duty of 2s. 10d. per cwt. is felt, it raises the price of a pound of bread 3/10d.

I am aware that in 1887, when the duty on corn was 2s. a cwt., Méline refused to put a tax on bread, stating that the middlemen, i.e., the bakers, would bear the burden of the duty. This involved the supposition that, if the 2s. 10d. duty produced its full effect on the 14,000,000 cwt. on the market, the bakers—small tradesmen for the most part—were to make a present of £19,600,000 to the landowners. If they had been inspired by any such altruistic sentiments, the prospect of bankruptcy would in most cases have prevented their acting upon them. But M. Méline’s delightful theory was immediately disproved by the action of the Belgian bakers in sending bread to France, and by the French bakers who removed to Belgium. Bread was sent in in tons to an ever-widening circle. M. Méline had to accept the evidence of his senses and impose a tax on bread equal to that on corn.

The baker then transfers to his customers the price of the corn plus the duty. When the price of bread was raised 1/4d. to 1/2d. per pound, every family in France was affected. They turned to the Government—and rightly enough, for it was responsible for the dearness due to the Customs. Instead, however, of demanding no more intervention, they asked for more; they asked that the bakers should be forbidden to raise the price of bread by the amount of the rise in the price of corn; in the country they implored the mayors, in Paris the Prefect, to put in force Article 30 of the Law of July 19-22, 1791. This Article, provisionally inserted in the law guaranteeing freedom to labour, had stood for 115 years; it gave to mayors the right of taxing bread and meat; and mayors were now found ready to force the bakers to sell their products cheaper than the raw material of which they were made. But no tradesman exercises his trade to ruin himself; when the mayors prepared to put these suggestions into operation the bakers lowered the quality of their flour; and, knowing that a sphere, as presenting the smallest surface for its size, delays evaporation, they made their loaves round.

Farmers and consumers denounced the bakers for starving them; but what were their profits? In the Agricultural Returns for 1903 the price of a hundredweight of corn is 8s. 11d., and that of white bread—a 1-lb. loaf—is 11/4d.; the 3/10d. per lb. difference—29 per cent.—has to cover the cost of grinding, general expenses of the milling and baking, the bakers’ risks, which are very considerable, since, in times of crises, the baker is the poor man’s banker. It can be said, then, that while the duty is incapable of affording complete protection to corn in times of abundance, it becomes a crushing burden when prices rise, and a burden that falls upon the working classes, the least able to bear it, whose diet is the least varied, and who, since they are employed in manual labour, require a diet not only adequate for supporting life but to sustain effort.