What Were The Effects Of Tariffs And

Essay, Research Paper

Historians of the 19th century

have traditionally linked economic growth with a move to free trade.. The mid-Victorian boom in Britain for

example has been attributed to the significant moves to free trade in the

period 1840 . 1860.. Typically this

British characteristic has been compared to the free trading stance of

France.. The supposedly higher levels of

protection in France have been linked, often in a post hoc ergo propter

fashion, to its. economic retardation..

The debate on the relative economic merits of free trade is by no means

original.. The political environment in

Britain during the 19th century was dominated by free trade

arguments.. The free traders of the

Anti-Corn Law League saw free trade in a much broader context.. It was Cobden who rather dramatically said

that: .In the Free Trade principle which shall act on the moral. world as the principle of gravitation in the

universe. -drawing men together,

thrusting aside the antagonism of race and creed, and language, and uniting us

in bonds of eternal peace... Clearly

it is not in the remit of this essay to analyse and discuss these potential effects of

free trade, but Cobden.s quotes highlights the importance and passion that contemporaries,

and historians, have placed on the question of free trade.. Initially I shall attempt to compare the

level of free trade in Britain and France in the 19th century.. I will then begin to assess the effects of

tariffs and free trade during this period.Historians have often seen Britain as

leading the world in implementation of free trading policies.. It is argued that Britain.s move to free

trade accentuated its. already pronounced economic lead over her continental

competitors.. France and the other hand

is viewed as highly protectionist and adopting free trade polices only in the

later stages of the 19th century. Nye, however, has empirically

criticized the assumption that Britain had more open economy than France.. In his study Nye calculates tariff revenue

as a percentage of total imports.. His

figures show us that France.s average rate of tariff was 50% lower than

Britain.s during the 1820s, and that Britain.s tariffs were only comparable to

those of France after the great free trade reforms of the 1840s.. Nye admits that British tariffs were based

primarily on consumption goods such as tea, wine and tobacco, but he argues

against discounting these products as indicators of protection.. He suggests that, whilst not protecting

domestic industries, these tariffs still distorted the efficient allocation of

resources.. In short Nye.s empirical

study finds a paradoxical gap between the historical perception and commercial

reality.. Nye bemoans the seemingly

obligatory over-emphasis on leading sectors, such as textiles where Britain was

clearly less protectionist, and points out that economic development should not

be confused with industrialization.. Irwin reasserts the

view that the French economy was more protectionist than Britain.. Irwin states that Nye.s rate of tariff

revenue indicator is a poor indicator of levels of protectionism.. Crucially Irwin is quick to differentiate

between protectionist tariffs and consumption tariffs.. Yes, tariffs on the consumption of a few

luxury items were high, but, unlike Nye, Irwin finds little evidence for the

availability of substitutes..

Contemporary opinion is used to reinforce Irwin.s argument.. It was Cobden himself who stated that: .We

have many duties . such as that, for example on tea . which are too heavy, but

they are not maintained in the interest of any British producer... The structure of the British tariff is

examined in detail and we see that Gladstone.s budget of 1860 removed all

protectionist tariffs, whilst half of the remaining items were .solely for the

purpose of countervailing duties of excise on the like articles produced in the

UK... In this way we see the British

government normalising domestic excise duties on imported goods.. This can hardly be seen as a protectionist

policy.. Indeed by 1897 95% of tariff

revenue is generated by tobacco, tea, spirits and wine.. If one takes Irwin.s position it is safe to

say that there was virtually no protection in Britain after 1860.. This contrasts markedly with that of

France.. Even after the Cobden-Chevalier

treaty of 1860 there was a 10-15% tariff on most goods.. Tariffs in the latter half of the 19th

century were successively ratcheted up and culminated in the highly

protectionist Meline tariff of 1892.. To

Irwin the real test of the relative protectionism of a tariff system lies in

the principles that underlie that system..

In Britain we see an extension of the excise system and in France we see

a system designed to keep goods out.. It

is difficult to accommodate both Irwin.s and Nye.s arguments.. However Irwin.s mor

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