Modern Tariff History : Germany, United States, France
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OF UNIVERSITY CALIFORNIA IRVINE MODERN TARIFF HISTORY First Edition . Octobe , 1904 Second Edition . April, 1910 Third Edition . August 1920 MODERN TARIFF HISTORY GERMANY UNITED STATES- FRANCE BY PERCY ASHLEY, C.B. THIRD EDITION LONDON JOHN MURRAY, ALBEMARLE STREET, W. i. 1920 All tights rained 4 tto MY WIFE DORIS PREFATORY NOTE TO THE SECOND EDITION THE first edition of this book, published in 1904, was based upon lectures delivered to the students of the London School of Economics and Political Science in the course of that year. They were an attempt to provide a brief and, so far as possible, unpartisan sketch of the development of tariff policy in Germany, the United States, and France, and of the forces, political and economic, which have determined its course. The opportunity offered by a second edition has been utilised for an extensive revision. Besides the correc- tion of some errors, typographical and other, the statistics have been re-cast and extended; some additions have been made to the original narrative and the foot-notes; further references have been added, and the biblio- graphies enlarged. Moreover, since 1904 there have been important developments of tariff policy in all three countries: the new German Commercial Treaties and Tariff entered into effect in 1906, the United States Tariff was remodelled in 1908, and a new French Tariff has come into force in the present year. Fortunately the proceedings in all these cases have taken place in full publicity this was especially so in regard to the tariff revisions in the United States and France and it has consequently been possible to give in additional chapters some account of these developments, recent as they are. vii viii PREFATORY NOTE It is hoped that in its new form the work may prove to have retained its original character, and to be even more useful to students of economic problems. P. A. LONDON, April, 1910. PREFATORY NOTE TO THE THIRD EDITION IN the present edition the chamber and form of the work remains unchanged, but the narrative has been carried up to the outbreak of the European War of 1914-1918, by the addition of a chapter on the United States Tariff of 1913, and the inclusion of statistics relating to the years 1909-1913. A few notes have been added and a few passages rewritten, and minor changes made in consequence of the time which has elapsed since the publication of the second edition. The narrative necessarily ends with the commencement of the Great War, which suspended altogether the normal economic life of two of the States whose tariff policy is considered in this book, and for the United States, as for the rest of the world, created trade conditions in which tariff policy played no part. P. A. LONDON, June, 1920. CONTENTS PREFATORY NOTE TO THE SECOND EDITION - - VU PREFATORY NOTE TO THE THIRD EDITION - viii PART I GERMANY CHAPTER I. THE FORMATION OF THE ZOLLVEREIN . 3 II. THE BEGINNINGS OF PROTECTION AND THE FIRST CRISIS - 1 6 III. THE SECOND CRISIS AND THE COMMERCIAL TREATIES 27 IV. THE ZOLLVEREIN AFTER THE TREATIES THE COM- PLETION OF FREE TRADE AND THE REACTION 37 V. THE ATTITUDE OF THE ECONOMISTS - - 49 VI. GERMAN COMMERCIAL POLICY TO 1894 - 60 VII. THE REVIVAL OF THE PROTECTIONIST MOVEMENT, AND THE NEW GENERAL TARIFF - - 77 VIII. THE ECONOMISTS AND THE NEW TARIFF POLICY - QI IX. THE COMMERCIAL TREATIES AND THE CONVENTIONAL TARIFF OF 1906 ECONOMIC DEVELOPMENT OF GERMANY TO THE EUROPEAN WAR CONCLUSION - 109 A BRIEF BIBLIOGRAPHY - - 128 PART II THE UNITED STATES - I. THE ORIGINS OF AMERICAN COMMERCIAL POLICY 133 II. THE GROWTH OF PROTECTION AND THE COMPROMISE OF 1833 4 - 149 ix x CONTENTS CHAPTER PAGK III. COMPROMISE, PROTECTION AND REACTION ECONOMIC DEVELOPMENT OF THE UNITED STATES TO i860 - l6l IV. WAR TAXATION AND ITS RETENTION FOR PROTECTIVE PURPOSES - - 176 V. POLITICAL PARTIES AND THE TARIFF ECONOMIC PRO- GRESS OF THE UNITED STATES TO 1890 -.- - IQ2 VI. THE NEW THEORY OF PROTECTION AND THE McKINLEY TARIFF ... - 202 VII. THE WILSON AND DINGLEY TARIFFS - -213 VIII. THE UNITED STATES AND RECIPROCITY ECONOMIC PROGRESS OF THE UNITED STATES, 1 890-! 908 - 224 - IX. THE TARIFF OF 1909 . 237 - X. REACTION AND THE TARIFF OF 1913 - 252 A BRIEF BIBLIOGRAPHY - - . ; -\ 265 PART III FRANCE I. FRENCH COMMERCIAL POLICY FROM 1789 TO 1830 - 269 II. THE MONARCHY OF JULY - - 282 III. THE SECOND REPUBLIC AND THE SECOND EMPIRE - - *' - THE COMMERCIAL TREATIES ; 293 '": IV. COMMERCIAL POLICY, 1870-81 - - - 307 V. PROTECTION FOR AGRICULTURE THE FRANCO-ITALIAN TARIFF WAR SUBSEQUENT ECONOMIC PROGRESS - 319 VI- THE TARIFF OF 1892 AND SUBSEQUENT DEVELOP- MENTS - - 331 VII. THE TARIFF OF igiO - 347 A BRIEF BIBLIOGRAPHY - 356 INDEX - 357 PART I GERMANY MODERN TARIFF HISTORY CHAPTER I THE FORMATION OF THE ZOLLVEREIN Ax the close of the Napoleonic wars Germany was in a state of the utmost political and economic confusion, and the Congress of Vienna did little to remedy the evil. It gave the new Germanic Confederation a constitution vague and impracticable, and it offered no effective means of dealing with the most pressing problem, that of economic reorganisation. One of the worst results of German particularism was the existence of a separate customs system in each of the thirty-nine states, many of them very small, which composed the Confederation; and, moreover, commerce was hampered in every con- ceivable way, not merely within the boundaries of the Confederation, but also within the larger of its constituent states, such as Prussia. In that kingdom there were nearly sixty different local tariffs with a total of nearly 1 two thousand eight hundred classes of goods: in some of its provinces, particularly in the western part of the monarchy, the importation of foreign manufactures and products was allowed free or on payment of only moderate duties, in others it was either absolutely prohibited or subject to extremely heavy duties. The multiplicity of customs barriers made administration costly and inefficient, and there was much petty smug- 2 gling. The first reforms came in Prussia with the Tariff Act of 1818. Its authors Biilow, the Minister of Finances, and Maassen, who was responsible for the details of the tariff were greatly influenced by the 1 a Zimmermann, i. p. i. Bowring, p. 2. 3 4 THE FORMATION OF THE ZOLLVEREIN economic ideas of Adam Smith, which were at that time making their way in Germany; the internal customs barriers were abolished, and the whole tariff policy reformed in the direction of the establishment of greater liberty of trade and commerce. Under the new system the of raw materials was to be free importation ; an average duty of 10 per cent, was imposed on manufactured " " goods, whilst colonial produce and wine were to pay up to 30 per cent.; and there were to be moderate duties on the transit of goods passing through Prussia to other states. The general level of duties was some- what higher in the eastern provinces than in the western. There was also to be an excise levied on the consumption of certain goods in Prussia itself. The tariff so adopted was more liberal than any continental tariff of the time, and in some ways the new policy was more advanced 1 than that even of Great Britain. Germany was pre- dominantly agrarian, and the north-eastern part (the country of the great landowners), in particular exported substantial quantities of agricultural produce to foreign markets. A considerable part of the agricultural popu- lation of Prussia was therefore directly interested in the promotion of foreign trade, and so were also the coast towns on the Baltic with their extensive carrying trade. Manufactures were developing slowly; they had received " " some stimulus from the continental system of Napoleon, but the new tariff gave only a moderate protection to the home manufacturers, who were by satisfied with it and it contained no means ; no prohibitions of import except in regard to salt and playing-cards, which were Government monopolies. It had one peculi- arity the new duties were not levied on the value of the imported goods, but consisted of a fixed charge on a 1 Schmoller, Grundriss, ii. p. 611, observes that such a reform was rendered possible only by the fact that Prussia was then an absolute monarchy; in a constitutional state the protectionist influences would have been too strong. He ascribes the new policy to the position of foreign affairs, which rendered anything like a tariff war inadvisable ; a desire to avoid causes of friction with the other German states ; financial needs ; and the influence of the new economic ideas. THE PRUSSIAN TARIFF OF 1818 5 given weight or measure of each commodity. These " " specific duties were at first on the average about 10 per cent, on the estimated value of the goods, and remained not at the same percentage, but at the same actual amount, whatever changes occurred in respect of the value. This procedure had the advantage of simplicity; it was not necessary to provide a staff of expert valuers at all the customs stations. On the other hand, there was the distinct disadvantage, which later was severely- felt, that there came to be no particular relation between the value of the commodity and the duty; if the value of the given quantity of a particular article declined for any reason, the old duty might become extremely heavy; whilst, on the other hand, if the quality improved, and with it the value, the duty became proportionately so much smaller. So that the duties tended to become much more protective for goods of inferior quality than for the better class of commodities.