ACTA UNIVERSITATIS UPSALIENSIS Uppsala Studies in Economic History, 103 Cover picture: Dutch galiot. D. de Bajt. 1824. Sjöhistoriska museet. Henric Häggqvist On the Ocean of Protectionism The Structure of Swedish Tariffs and Trade 1780–1830 Dissertation presented at Uppsala University to be publicly examined in Hörsal 2, Ekonomikum, Kyrkogårdsgatan 10, Uppsala, Friday, 4 December 2015 at 10:15 for the degree of Doctor of Philosophy. The examination will be conducted in Swedish. Faculty examiner: Professor Leos Müller (Stockholm University, Department of History). Abstract Häggqvist, H. 2015. On the Ocean of Protectionism. The Structure of Swedish Tariffs and Trade 1780–1830. Uppsala Studies in Economic History 103. 190 pp. Uppsala: Acta Universitatis Upsaliensis. ISBN 978-91-554-9370-7. In the field of international trade there is an intriguing tension between the ideological allure of free trade and the political reality of protectionism. Typically, the former is favored by scholars while the latter has been more historically prevalent. Protectionism in the form of tariffs and other obstacles trade was generally a preferred trade policy around the globe in the 18th and early 19th centuries. Sweden was no exception and has been seen as highly protectionist and mercantilist during this period. This thesis has sought to shed new light on Swedish trade policy between 1780 and 1830. It has done so by quantifying and homogenizing tariffs and import bans in order to be able to analyze the structure of tariffs. The thesis stands on a theoretical ground which takes into account the different plausible reasons for setting tariffs. It has placed some emphasis on the possible tension between the desire to shelter one’s own industry from foreign competition and the need to use tariffs for fiscal purposes, as an important source of government revenue. It is therefore argued that tariffs need to be separated theoretically and empirically. A simple model is presented which aims to discern three types of tariffs. The model takes into account the tariff rate itself, and also the structure of trade and the presence of domestic substitution. The thesis has found that Swedish tariffs were generally high over the period and that protectionism was prevalent in a large number of economic sectors. There is tentative evidence that protectionist tariffs also distorted trade in certain types of goods, even if they didn’t have an impact on total import levels. Tariffs were also set so as to separate between raw materials and more processed goods, what is called mercantilist differentiation. Substantial empirical support is given to the claim that certain tariffs on inelastic consumption goods were of great fiscal importance, and increasingly so as the period progressed. The fiscal pressure maintained or even increased the import tariffs, which made it possible to decrease tariffs on exports. Keywords: foreign trade, international trade, tariffs, trade policy, fiscal policy, protectionism, mercantilism, taxes, Sweden, Napoleonic Wars Henric Häggqvist, Department of Economic History, Box 513, Uppsala University, SE-75120 Uppsala, Sweden. © Henric Häggqvist 2015 ISSN 0346-6493 ISBN 978-91-554-9370-7 urn:nbn:se:uu:diva-264482 (http://urn.kb.se/resolve?urn=urn:nbn:se:uu:diva-264482) Printed in Sweden by Kph Trycksaksbolaget AB, 2015 Contents List of Tables .................................................................................................. 8 List of Figures ................................................................................................. 9 Acknowledgements ....................................................................................... 13 CHAPTER 1. Introduction ............................................................................ 15 1.1 Purpose of the Thesis ......................................................................... 17 1.2 Perspectives on Pre-industrial Swedish Trade Policy ........................ 19 1.3 A Theoretical Introduction to Tariffs ................................................. 21 1.3.1 Protectionism and Free Trade .................................................... 22 1.3.2 Varieties of Protectionism – Infant Industry .............................. 24 1.3.3 Distortionary Tariffs and Degree of Protectionism .................... 26 1.3.4 Mercantilism and Protectionism ................................................ 28 1.3.5 Tariffs as a Source of Revenue .................................................. 30 1.3.6. Fiscal Tariffs or Protectionist Tariffs? ...................................... 31 1.3.7 Import Substitution and Export Promotion ............................... 34 1.3.8 A Simple Model of How to Interpret Tariffs ............................. 35 1.4 Research Questions and Scope .......................................................... 37 1.5 General Methodology and Sources .................................................... 40 1.6 Outline of the Thesis .......................................................................... 42 CHAPTER 2. International Trade and Trade Policy from the Age of Mercantilism to 19th Century Liberalism ...................................................... 44 2.1 Tariffs and Trade Policy around the Turn of the 18th Century ........... 44 2.2 International Trade around the Turn of the 18th Century ................... 50 2.3 Summary ............................................................................................ 53 CHAPTER 3. Swedish Political and Economic Landscape 1780–1830 ...... 54 3.1 Political Changes Around the Turn of the 18th Century ..................... 54 3.2 Economic Policy Around the Turn of the 18th Century ...................... 56 3.3 The State of the Swedish Economy 1780–1830 ................................ 58 3.3 Summary ............................................................................................ 63 CHAPTER 4. Swedish Foreign Trade 1780–1830 ....................................... 65 4.1 Background – Swedish Trade and Shipping During the 18th Century .................................................................................................... 65 4.2 Swedish Trade Statistics – The Need for a Revision ......................... 66 4.2.1 Smuggling and Trade Statistics ................................................. 68 4.2.2 Re-Estimating Swedish Foreign Trade ...................................... 69 4.2.3 Trade Figures Measured as FOB or CIF .................................... 72 4.3 The Structure of Swedish Foreign Trade 1780–1830 ........................ 74 4.3.1 The Structure of Swedish Exports 1780–1830 .......................... 78 4.3.2 The Structure of Swedish Imports 1780–1830 .......................... 80 4.3.3 The Structure of Swedish Re-exports 1780–1830 ..................... 84 4.4 Summary ............................................................................................ 85 CHAPTER 5. Tariff Structure in Sweden 1783–1830 .................................. 87 5.1 Background – Swedish Tariffs and Trade Policy during the 18th Century .................................................................................................... 87 5.2 The Political Control over Tariffs ...................................................... 89 5.3 Estimating Swedish Tariffs ................................................................ 94 5.3.1 Which Tariffs Are Included ....................................................... 94 5.3.2 How Tariffs Are Measured ........................................................ 95 5.3.3 Some Notes on Prices and Specific Tariffs ................................ 99 5.4 Swedish Tariffs 1783–1830 ............................................................. 102 5.4.1 Export Tariffs ........................................................................... 102 5.4.2 Import Tariffs ........................................................................... 104 5.4.3 Tariffs as a Tax Base – Customs Revenue 1783–1830 ............ 118 5.5 Summary .......................................................................................... 124 CHAPTER 6. Tariffs and Trade – Testing Protectionist Mechanisms ........ 126 6.1 Assessing the Distortionary Impact of Tariffs ................................. 126 6.2 Specifying a Model .......................................................................... 132 6.3 The Test ............................................................................................ 134 6.4 Possible Impact of Tariffs on Trade ................................................. 136 6.5 Disaggregated Tests ......................................................................... 144 6.6 Summary .......................................................................................... 147 CHAPTER 7. Concluding Analysis ............................................................ 149 7.1 Swedish Trade Policy in a Domestic Perspective ............................ 150 7.2 Swedish Trade Policy in an International Perspective ..................... 153 7.3 The Relationship between Tariffs and Trade ................................... 154 7.4 Explaining Swedish Tariff Structure ................................................ 155 7.5 Final Remarks .................................................................................. 157 8. APPENDIX ............................................................................................. 158 A. Price Sources ..............................................................................