Front Page Titles (by Subject) BOOK XII: MY IMMEDIATE PROGRAMME - The Comedy of Protection
The Online Library of Liberty
A project of Liberty Fund, Inc.
BOOK XII: MY IMMEDIATE PROGRAMME - Yves Guyot, The Comedy of Protection 
The Comedy of Protection, trans. M.A. Hamilton (London: Hodder and Stoughton, 1906).
About Liberty Fund:
The text is in the public domain.
Fair use statement:
MY IMMEDIATE PROGRAMME
A SIMPLE PROGRAMME
The sugar precedent—A single question—Suppression of taxes on goods of extra European origin imported from a European country.
I will now sketch the programme which I should like put in operation next session, one much simpler to realise than that for which I worked between 1897-1902. Indeed, every one told me at the time that I was breaking my head against a stone wall in attacking the sugar question; most of the delegates at the Brussels Conference thought that it would end in nothing, and yet March 5, 1902, crowned it with success.
I am not now going to fight the agrarians affected by the duties on wheat and meat; I am only trying to prepare public opinion by proving to the small owners that, far from gaining anything, they are being hoodwinked, removing the scales from the eyes to show them that while they eat wheat they do not grow and meat that they do not pasture they are paying a tax to the landowners who have monopolised their food supply.
TAXES ON EXTRA EUROPEAN GOODS IMPORTED FROM A EUROPEAN COUNTRY
Clause 2 of the Act of January 11, 1892—Inequality—Retention of differential duties—As impediments to trade—Effects on raw materials—Transit dues on Colonial produce—Delay and inaccurate appraisement of goods—Duty on oranges—The English Chamber of Commerce in Paris—Exceptions to the duties—Advantages of abolishing the duties—“Abolition of duties on extra European goods imported from a European country in return for a reduction by England of the duties on wines.”
Clause 2 of the law of January 2, 1902, establishing a general Customs tariff, runs as follows: “The surtaxes in Schedule C of this Bill apply to goods of extra-European origin imported from a European country. The surtaxes in Schedule D of this Bill apply to goods of European origin imported from a country other than that of origin.”
The first schedule comprises surtaxes d’entrepôt, the second surtaxes d’origine. As a matter of fact, the word “surtax” is quite inapplicable, since these duties, being levied on free goods, as well as on dutiable goods, are not surtaxes, but special taxes.
When a sack of coffee from Brazil touches at London or Hamburg, instead of going straight to Havre, it pays 4s. per cwt. over and above the Customs; cocoa nibs pay 10s., pepper and spice 16s., tea 24s., isinglass 2s., silk textiles 40s., furniture 12s., and other goods 1s. 4d. But this surtax is not a Customs duty; it is not proportional to value. Thus, as M. Pallain observes in his “Treatise on Customs,” “it puts the same tax on copper at 5d. a lb. and attar of roses at £15; it bears no necessary relation to the Customs duties, being levied on free and dutiable goods alike; it is not taken into account in the collection of the Customs.”
Surtaxes d’origine only apply to raw materials: raw skin and leather goods, 1s. 3d. per cwt.; raw wool, 1s. 4d.; raw and prepared hair goods, 1s. 4d.; natural fats (exc. fish), 10d.; raw cotton, 1s. 3d.; mineral essences and oils, 2s.; potash, 11d.; wax, 10d.; bones, horns, and wooden shoes, 10d.; ground dye nitrates, 1s.; plain woods, 5d.; worked woods, 5d.
The surtax d’entrepôt is a survival of the old differential duties, its object being to assure for French ships the carrying trade in certain goods. But there are some goods which French ships will not carry. The following instance is taken from the 1900 Minutes of the French Chamber of Commerce in London:—
“A dealer in Calcutta telegraphs to his London correspondent that he has two hundred tons of desiccated blood, to be sold at £6 10s. per ton c.f.i. in Havre and transmitted by a ship sailing directly to Hamburg—the total freightage from Calcutta to Havre being 30s. to 32s. The French consignee refuses to accept the goods sent by this route, since he would incur a surtax on goods d’entrepôt of 36s. a ton. There is no steamboat service between Calcutta and Havre; the packet service, which would refuse such goods on account of their odour, goes to Marseilles, and the cost of freightage from there to Havre, much higher than that from a North European port, would in itself prevent importation to France, although the goods are an ingredient in the manure needed for our agriculture. The same difficulty is found in the case of other goods of a similar class coming from Australia and Japan. The only French service from these places is the packet-boats, primarily for the use of passengers, which are obliged to refuse all odoriferous goods.”
The transit dues raise the price of raw materials needed by French agriculture, and they hamper industry by raising the prices of its materials. Like the majority of the existing protective and revenue taxes, they act as a bounty to the great manufacturers and traders at the expense of the small men; they fall heavily on our imports from our colonies, since London is their principal market. Burdensome in themselves, they are very difficult to collect and a disturbing element in commercial transactions.
Yet the Protectionist fever is such that two or three years ago transit duty was imposed on oranges, at 1s. 4d., in order to give a monopoly to a firm at Boulogne and one at Dunkirk, although the total turnover involved was very small. England imports £2,000,000 worth and sends us £500 worth.
Mr. Pollock, of the English Chamber of Commerce in Paris, got the Associated English Chambers to pass the two following resolutions in 1898:—
1. That the Foreign Office make representations to the French Government in view of obtaining that goods coming viâ an English port with a bill of lading from an English colony possessing no direct service with France, be considered as coming directly and admitted without the surtaxes on the goods in course of transit which are imposed on commodities of extra-European origin not coming through a French port.
2. That the Foreign Office arrive at an agreement with the French Government with regard to the value of certificates of origin delivered in England for France.
These propositions were certainly modest enough: the partial abolition of “surtaxes” d’entrepôt, in so far as they affected English colonies, would have been of advantage to France, since from them she gets the raw materials of her industry. Indeed, the duties had proved so inconvenient and difficult to apply that exceptions had already been made to them—e.g., in the case of Persian carpets coming through Constantinople, and goods from beyond the Caspian Sea. On Schedule D. Russian products coming through Königsberg pay no surtax; nor does Russian wood imported from Dantzig, nor Bulgarian products coming from Amsterdam and Rotterdam. And there are many other exceptions.
Why, then, keep the surtaxes at all? From the revenue point of view they hinder commercial transactions, and therefore cannot be productive. Between 1900-1904 their average yield was £62,080. There is no reason for their maintenance, every reason for their abolition. The future of free zones is bound up with their abolition. Their abolition would mean increased facility in the importation of the raw materials of industry. Finally, since they hamper the shipping industry and carrying trade of Great Britain, their abolition would enable us to negotiate with Great Britain for the reduction of the duties on wines which were raised at the time of the Transvaal war. This is my modest programme of reform. It need not alarm the terrible metal manufacturers, the even more terrible cotton kings; it does not affect the agrarians. I have no longer to face the serried ranks of the sugar-makers, masters since 1869 of a political industry; and all wine-growers ought to be on my side, since it is to their interest to extend the English market for their wines.
Summing it up in two words it is this: “After Mr. Chamberlain’s defeat at the coming election to obtain from the Liberal Government a remission of the duties on wines, or at least a reduction to what they were before the war, in return for the abolition in France of the surtaxes on extra European goods imported from a European country, and of the surtaxes on goods of European origin imported from a country other than that of origin.”
THE EXPORT OF WINES
Diminution in Quantity—Exports of cheap wines in the last five years—Export to England—Comparison of two quinquennial periods—Loss on the second—The 1899 duties—“Reduction of the English duties on wines in return for the abolition of the surtaxes on extra European goods imported from a European country.
Since the reconstruction of the French vineyards export has been at a standstill.
Here is the export of vin ordinaire for the last five years:—
The quantity is not great relatively to our total production, but when its value is looked at it is worth considering.
£3,400,000 must be added for champagne, and between £3,200,000 and £3,600,000 for liqueurs. Our average export of vin ordinaire for the last five years has been £5,120,000; both as to amount and value a downward tendency is apparent.
Taking our export of wine to England for the last two periods of five years, we find:—
There is thus an annual difference of £740,000, amounting to £3,692,000 over the five years. Such a falling off cannot be regarded with equanimity, the less so that England is still our best customer.
Many different explanations for the downward tendency might be discovered; there is one, however, obvious and indisputable, if not the sole cause.
In 1900, to meet the expenses of the Transvaal War, the taxes on wines were raised in the following manner:—
Since the imposition of these duties the export of French wine to England has diminished; it is therefore logical to conclude that were the duties suppressed the consumption of wines would rise to its old level or above it. Consequently all wine-growers should support my programme: “The reduction of English duties on wines in return for the abolition of surtaxes on extra European goods imported from a European country, and of the surtaxes on goods of European origin imported from a country other than that of origin.”
CONDITIONS OF EXPORT
Export to England—High-class wines—Champagne—Belgium—Need of commercial honesty—The wine-growers ought to support my immediate programme.
In the export of so-called vin ordinaire to England, Gironde bears the predominant share, as the figures for 1903, an average year, prove.
The gross total is 1,628,000 gallons, worth £1,480,000, for the champagne wines.
The followers of Méline, dreading any breach in Protectionist régime, are very contemptuous of the over-production of inferior wines which they have caused. “What does a tax of 2s. 6d. on sparkling wines and 1s. on still wines in bottles matter? It cannot affect the exporters of expensive wines, e.g., Champagne, Bordeaux, and Burgundy. Or, if it does, at the price at which they are sold, 2s. 6d. on champagne or 1s. more or less per gallon, cannot make much difference.
Even if the premises on which this reasoning is based were correct, its conclusions would be false. If a modification in the tax creates an English demand for Gironde wines, the wines of lower quality will profit by the opening of the home market Nothing can be more fallacious than the attempt to shut up different sorts of products in watertight compartments; such divisions do not exist in a free state of commerce: there is a continual endosmosis and exosmosis between different qualities of the same commodity, which varies supply by means of countless ingenious combinations to meet the demand of consumers on the one hand and the eagerness of producers to sell on the other. Combinations must be honest; that is understood. My long and varied experience in England, Belgium, and the United States has proved to me again and again that there is nothing so sure to extend the market of our high-class products, and especially of our brandies and expensive wines, as the belief in the honesty of French traders. Any suspicion excited by the mere appearance of incorrectness produces effects that act harmfully on our whole production.
The popularity of champagne is not merely due to the fact that it is a delightful, exciting, soul-stirring wine, capable of rousing the most sluggish and cold-blooded of men. The brand is inviolate; when the cork is out the bottle must be drunk, and if you ask for Pommery Greno you are sure that you get what you pay for. Champagne inspires complete confidence, and a great deal of its popularity is due to that.
The best customers of our most expensive wines are the Belgian connoisseurs, men of exquisite taste in wines. Honesty is the best, the necessary policy in the French wine trade, above all others. But for our best wines we must go further than that; must sacrifice the mediocre harvests of the best vineyards, sell them off under some other undistinguished name, keep the true name for the really good years. They must be sold for their value: it is not their cheapness, but the reliability of their quality, that makes customers believe in them. “Then,” says one follower of M. Méline, “what difference can a 2s. duty make? None at all, surely.” On the contrary. However small the duty, it produces an effect, and an effect which people try to escape. They send out wine in casks instead of bottles, and then they are liable to all sorts of miscarriage.
And moreover, we have not got to consider our best wines only. The exportation of Gironde wines in casks is more important than that in bottles, which proves that the larger part of its clientèle want wines of moderate price. With the existing duties it is impossible to extend its consumption, and leads people who take port or whiskey to enjoy French wine. And yet to ensure the market for our best wines we must teach people the habit of drinking vin ordinaire!
They must be taught by drinking wines which are what they profess to be, so that they can come to really good wine with confident appreciation. For any one who drinks wine daily a Customs duty cannot be matter of indifference; and vice versâ to wine-growers who want to extend their custom. That is why I count on their support for the realisation of my programme: “Abolition of the surtaxes on extra European goods imported from a European country, and of the surtaxes on goods of European origin imported from a country other than that of origin, in return for a reduction of English duties on wines.”
The Gresham Press,
UNWIN BROTHERS, LIMITED,
WOKING AND LONDON.