Tariffs

France.

The tariff history of France during the 19th century, like that of England, is divided into two parts, one running to the year 186o, and the other beginning after 186o. France emerged from the revolutionary wars with a cumbrous system, resting partly upon the highly complicated measures left over from the mercantilism of the i8th century, and for a part upon complete prohibition of importation (directed primarily against England) which had been adopted during the war period and was left in force, largely through inertia, for almost half a century there after. The tariff system of France, in other words, from 1815 until 186o, was rigidly protectionist. In 186o the Cobden-Chevalier treaty made an abrupt change, to which the Emperor Napoleon III. was led in some part by intellectual conviction, but much more by the desire to get on good terms with Great Britain. The treaty provided for great reductions on manufactured goods im ported from England, while England in her turn not only conceded the free admission of silks, but also reduced duties on French wines. After 186o France virtually universalized these lower du ties, extending them by a series of commercial treaties to almost all the countries of the Continent. These treaties commonly con tained the most-favoured-nation clause, and were in turn forti fied by treaties which the various countries concluded between themselves as well as with France. The result was an interlacing network of commercial engagements which covered almost the whole of Europe, and brought about not indeed a system of free trade, but one of nearer approach to free trade than had ever be fore been widely practised. Such, at all events, was the situation for two decades from 186o. The French people, however, had always been restive under the treaty system imposed upon them by the will of Napoleon III. The English treaty, which was termi nable after the lapse of ten years, was at first renewed with reluc tance, and finally terminated for good in 1891. The protectionist revival culminated in the great Meline Act of 1892. By that France established a double system : maximum duties which were not to be exceeded, and specified minimum duties which the gov ernment might concede to other countries in return for concessions supposed to be equivalent. The maximum duties, however, were in no case to be reduced on agricultural products ; for in France, as in England, agriculturLl producers were hard hit by the decline in prices. One important purpose of the act was to deprive the ministry of discretionary power as regards reductions through commercial negotiation ; the minimum duties which might be con ceded to other countries were specified by the legislature. The system was maintained in essentials, though not without some modification, until the outbreak of the war in 1914. The revival of high protection in France did not run its course without serious difficulties, especially in the way of controversy on rates with other countries. There was a tariff war with Italy in 1888-90 and one in 1892-95 with Switzerland. In 1910 there was again a revision upward, which, however, left the general system intact.

One further factor in French tariff policy during this period was the Treaty of Frankfurt (1871) terminating the war of 187o-71. By that treaty France and Germany had guaranteed each other most-favoured-nation treatment,—not complete, but almost com plete, in that they guaranteed to each other the same rates as they conceded to the important neighbouring countries of central Eu rope. Being incorporated in the general treaty, these provisions, un like the special commercial treaty of 1860 with England, could not be denounced; and they were felt by both countries to hamper their commercial negotiations, being the more unwelcome because of the constantly growing national antagonism. When all treaties and engagements with Germany, and practically those with other countries also, were swept away with the World War, France was able to proceed untrammelled with a new course of policy. It rested upon the maintenance of a high protective system, suscep tible of some liberalization through special bargains with other countries, by which these were to be induced to admit French goods at lowered rates in exchange for specified concessions in the French duties, varying from country to country. In 192o the

maximum and minimum system was virtually given up and the government given free hand in commercial negotiations. The result was a highly complicated series of engagements, which brought into vivid contrast two essentially different lines of policy: that of special bargaining, and that of equal treatment under a most-favoured-nation clause. The second policy was unpopular in France, partly because of its association with the Treaty of Frank furt, but partly for other reasons connected with peculiarities of French foreign trade. Not only as regards France, but as re gards Europe at large, the alignment was marked by one or the other of these two ways of procedure. Those in favour of closer commercial relations preferred the most-favoured-nation method, while high protectionists looked to the policy of specific bargain ings. On the whole France was not successful in securing what she wished by bargaining, even though she had political advan tages in dealing with States like Czechoslovakia, Hungary, Yugo slavia, and even Belgium. In 1927 she was compelled to arrange with Germany a treaty virtually upon most-favoured-nation basis, a change which marked a halt in the other policy, and perhaps the beginning of a general trend the other way.

Germany.

The tariff history of Germany, like that of Ger man history in general, is closely connected with Prussia. Prussia took the lead in the creation of the German customs union (Zoll verein). She arranged a partial union in 1819 which was followed by the Zollverein of 1834, including practically the whole of the later Empire. Prussia was then a grain exporting country, and favoured a liberal tariff system. As time went on, manufacturing industries developed, especially in the west and south of Germany, and contests arose within the Zollverein between the free trade and protectionist parties. In these, upon the whole, the anti-pro tectionists were victorious until after the establishment of the Empire. A commercial treaty with France in 1862, a sequel of the Anglo-French treaty of 186o, confirmed the liberal tendency.

But after 1871 Germany, like France, and at about the same time, turned the other way. Under Bismarck's lead, and in consequence of an alliance between the industrialists of the west and south and the agricultural interests of the east (now threatened by imports), Germany returned in 1879 to protection. Grain duties were imposed, and proved an important source of revenue, be cause imports continued on a large scale ; at the same time the continuing imports made the landed interest firmly protectionist At the beginning of 1892 Germany entered upon a policy of com mercial treaties which were based upon special negotiation with each particular country ; though they were prevented by the treaty of Frankfurt from having as much effect in the way of dis criminations between countries as might otherwise have been the case. This policy of specialization was continued in the legisla tion of 5902, when rates were further increased and further com mercial treaties were initiated. As in the case of France, the policy of specialized commercial negotiations led to quarrels and retali ations, there being tariff wars with Russia, Spain and Canada. After the World War, Germany for a while was restricted by cer tain provisions of the Versailles Treaty. These required her for five years from the date of the treaty (that is, during 1919-24) to give most-favoured-nation treatment to the Allies, while at the same time leaving the Allies free. With the termination of this arrangement in 1924 Germany proceeded more freely, and in 1925 adopted a new tariff. A protectionist regime was established both for agricultural products and for manufactured goods, with an ex pectation, however, that the duties might be reduced through bar gaining for lower duties by other countries on German goods. Success in this direction was achieved in 1927 by the commercial treaty with France, which provided for certain reductions upon French goods, and also secured for German goods imported into France treatment virtually on a most-favoured-nation basis. Other treaties contained similar provisions, and emphasized the acceptance by Germany of the most-favoured-nation policy and disposition to moderate the protectionist regime.