Part 989

Colbert, the great minister of Louis XIV., was the first among statesmen who had an economic system, "settled, complete and consistent in all its parts; and it is to the eternal honor of his name that he made it triumph in spite of obstacles of every kind. Although this system was far from being irreproachable in all its parts, it was an immense progress at the time of its appearance; and we have had nothing since then which can be compared with it, for breadth and penetration. … It was … the need of restoring order in the finances which gave rise to the attempts at amelioration made by Colbert. This illustrious minister soon comprehended that the surest way to increase public fortune was to favor private fortune, and to open to production the broadest and freest ways. … One of the first acts of his ministry, the reestablishment of the taxes on a uniform basis, is an homage rendered to true principles; and one cannot doubt that all the others would have been in conformity with this glorious precedent, if the science of wealth had been, at that time, as advanced as it is to-day. Colbert would certainly have carried out in France what Mr. Huskisson had begun in England at the time of his sudden death. … The edict of September, 1664, reduced the import and export duties on merchandise to suitable limits, and suppressed the most onerous. 'It is our intention,' said the king, 'to make known to all our governors and intendants in what consideration we hold at present everything that may concern commerce. … As the most solid and most essential means for the reestablishment of commerce are the diminution and the regulation of the duties which are levied on all commodities, we have arranged to reduce all these duties to one single import and one export duty, and also to diminish these considerably, in order to encourage navigation, reestablish the ancient manufactures, banish idleness.' … At the same time Colbert prohibited the seizure for the tailles (villein-tax) [see TAILLE AND GABELLE] of beds, clothes, bread, horses and cattle serving for labor; or the tools by which artisans and manual laborers gained their livelihood. The register of the survey of lands was revised, so that property should be taxed only in proportion to its value and the actual extent of the land. The great highways of the kingdom and all the rivers were then guarded by armies of receivers of tolls, who stopped merchandise on its passage and burdened its transportation with a multitude of abusive charges, to say nothing of the delays and exactions of every kind. An edict was issued ordering the investigation of these degrading charges; and most of them were abolished or reduced to just limits. … The lease of Customs duties being about to expire, Colbert improved this occasion to revise the tariff; and although this fatal measure has since been considered as the finest monument of his administration, we think we should present it in its true aspect, which seems to us to have been invariably misapprehended. Colbert's aim in revising the customs was to make them a means of protection for national manufactures, in the place of a simple financial resource, as they formerly were. Most articles of foreign manufacture had duties imposed upon them, so as to secure to similar French merchandise the home market. At the same time, Colbert spared neither sacrifices nor encouragement to give activity to the manufacturing spirit in our country. He caused the most skilful workmen of every kind to come from abroad; and he subjected manufactures to a severe discipline, that they should not lose their vigilance, relying on the tariffs. Heavy fines were inflicted on the manufacturers of an article recognized as inferior in quality to what it should be. For the first offence, the products of the delinquents were attached to a stake, with a carcan and the name of the manufacturer; in case of a second offence, the manufacturer himself was fastened to it. These draconian rigors would have led to results entirely contrary to those Colbert expected, if his enlightened solicitude had not tempered by other measures what was cruel in them. {3065} Thus, he appointed inspectors of the manufactures, who often directed the workmen into the best way, and brought them information of the newest processes, purchased from foreign manufacturers, or secretly obtained at great expense. Colbert was far from attaching to the customs the idea of exclusive and blind protection that has ever been attributed to them since his ministry. He knew very well that these tariffs would engender reprisals, and that, while encouraging manufactures, they would seriously hinder commerce. Moreover, all his efforts tended to weaken their evil effects. His instructions to consuls and ambassadors testify strongly to his prepossessions in this regard. … The more one studies the administrative acts of this great minister, the more one is convinced of his lofty sense of justice; and of the liberal tendencies of his system, which has hitherto been generally extolled as hostile to the principle of commercial liberty. In vain the Italians have hailed it by the name of 'Colbertism,' to designate the exclusive system invented by themselves and honored by the Spanish: Colbert never approved the sacrifice of the greater part of his fellow citizens to a few privileged ones, nor the creation of endless monopolies for the profit of certain branches of industry. We may reproach him with having been excessively inclined to make regulations, but not with having enfeoffed France to a few spinners of wool and cotton. He had himself summed up in a few words his system in the memorial he presented to the king: 'To reduce export duties on provisions and manufactures of the kingdom; to diminish import duties on everything which is of use in manufactures; and to repel the products of foreign manufactures, by raising the duties.' Such was the spirit of his first tariff, published in September, 1664. He had especially aimed at facilitating the supply of raw materials in France, and promoting the interests of her home trade by the abolition of provincial barriers, and by the establishment of lines of customs-houses at the extreme frontiers. … The only reproach that can be justly made against him is the abuse of the protective instrument he had just created, by increasing in the tariff of 1667 the exclusive measures directed against foreign manufactures in that of 1664. It was no longer then a question of manufactures, but of war, namely, with Holland; and this war broke out in 1672. … From the same epoch date the first wars of commercial reprisals between France and England, hostilities which were to cost both nations so much blood and so many tears. Manufactures were then seen to prosper and agriculture to languish in France under the influence of this system."

_J. A. Blanqui, History of Political Economy in Europe, chapter 26._

ALSO IN, _H. Martin, History of France: The Age of Louis XIV., volume 1, chapter 2._

_J. B. Perkins, France under the Regency, chapter 4._

See, also, FRANCE: A. D. 1661-1683.

TARIFF: (Pennsylvania): A. D. 1785. Beginning of "Protection" in Pennsylvania.

"Before the Revolution Pennsylvania had always been slow to impose burdens on trade. While Massachusetts, New York and South Carolina were raising considerable sums from imposts, Pennsylvania commerce was free from restrictions. In 1780, however, the need of revenue overcame the predilection of the Quakers for free trade and they decided 'that considerable sums can be raised by a small impost on goods and merchandise imported into this state without burdening commerce.' Accordingly, low duties were laid on wines, liquors, molasses, sugar, cocoa and tea, with 1 per cent. on all other imports. In 1782 the duties were doubled and the revenue was appropriated to the defence of commerce on the Delaware river and bay. This was done at the request of the merchants who wished to have their interests protected and 'signified their willingness to submit to a further impost on the importation of goods for that purpose.' When peace came, however, the merchants at once represented it as detrimental to the interests of the state to continue the duties, and they were repealed. In 1784 low duties were again imposed, and later in the same year increased. Early in 1785 more careful provisions were made for their collection. September 20, came the important act 'to encourage and protect the manufactures of this state by laying additional duties on certain manufactures which interfere with them.' … More than forty of the articles which Pennsylvania had begun to make were taxed at high specific rates. Coaches and carriages, paid £10 to £20; clocks, 30s.; scythes, 15s. per dozen; beer, ale and porter, 6d. per gallon; soap or candles, 1d. per pound; shoes and boots, 1s. to 6s. per pair; cordage and ropes, 8s. 4d. per hundred weight; and so on. The ten per cent. schedule included manufactures of iron and steel, hats, clothing, books and papers, whips, canes, musical instruments and jewelry. … The Pennsylvania act is of importance because it shows the nature of commodities which the country was then producing, as well as because it formed the basis of the tariff of 1789."

_W. Hill, First Stages of the Tariff Policy of the United States, pages 53-54._

The preamble of the Pennsylvania act of 1785 set forth its reasons as follows: "Whereas, divers useful and beneficial arts and manufactures have been gradually introduced into Pennsylvania, and the same have at length risen to a very considerable extent and perfection, insomuch that in the late war between the United States of America and Great Britain, when the importation of European goods was much interrupted, and often very difficult and uncertain, the artizans and mechanics of this state were able to supply in the hours of need, not only large quantities of weapons and other implements, but also ammunition and clothing, without which the war could not have been carried on, whereby their oppressed country was greatly assisted and relieved. And whereas, although the fabrics and manufactures of Europe, and other foreign parts, imported into this country in times of peace, may be afforded at cheaper rates than they can be made here, yet good policy and a regard to the wellbeing of divers useful and industrious citizens, who are employed in the making of like goods, in this state, demand of us that moderate duties be laid on certain fabrics and manufactures imported, which do most interfere with, and which (if no relief be given) will undermine and destroy the useful manufactures of the like kind in this country, for this purpose. Be it enacted" &c.

_Pennsylvania Laws, 1785._

The duties enacted, which were additional to the then existing impost of 2½ per cent., were generally specific, but ad valorem on some commodities as on British steel, 10 per cent.; earthen ware, the same; glass and glass-ware, 2½ per cent.; linens the same. Looked at in the light of recent American tariffs, they would hardly be recognized as "protective" in their character; but the protective purpose was plainly enough declared.

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TARIFF: (United States): A. D. 1789-1791. The first tariff enactment. Hamilton's Report on Manufactures. The "American System" proposed.

"The immediate necessity of raising some ready money led to the passage of a tariff bill at the first session of Congress. It was prepared and carried through the House chiefly by Madison; and its contents, no less than the general tone of the debate in which it was discussed, showed a decided leaning towards the protective system. But this legislation was temporary, and was at the time known to be so. The permanent system of the country was left for subsequent and more leisurely development. When at last Congress felt able to give the subject due attention, it applied as usual to Hamilton to furnish information and opinions. A topic so important and so congenial to his tastes called forth his best exertions. A series of extensive investigations conducted by every feasible kind of inquiry and research, both in foreign parts and in the United States, furnished the material for his reflections. He took abundant time to digest as well as to collect the great mass of information thus acquired, and it was not until nearly two years had elapsed since the order for the report was passed that he sent in the document to the House of Representatives. … The inferences and arguments constituted as able a presentation of the protectionist theory as has ever been made. … It is, however, an incorrect construction of that report to regard it as a vindication of the general or abstract doctrine of protection. Hamilton was very far from assuming any such position; protection always and everywhere was not his theory; protection was not his ideal principle of commercial regulation. … So far from entertaining any predilection for protection in the abstract, it would seem that in a perfect commercial world he would have expected to find free trade the prevalent custom. … If free trade were the rule of the whole commercial world, Hamilton was not prepared to say that the United States would find it for her interest to be singular. But such were not the premises from which he had to draw a conclusion. … The report of Hamilton determined the policy of the country. For good or for evil protection was resorted to, with the avowed purpose of encouraging domestic manufacturing as well as of raising a revenue. … The principles upon which Hamilton based his tariff were not quite those of pure protection, but constituted what was known as the 'American System'; a system which has been believed in by former generations with a warmth of conviction not easy to withstand."

_J. T. Morse, Jr., Life of Alexander Hamilton, chapter 11._

Hamilton's celebrated report opens with an elaborate argument to prove the desirability of manufacturing industries in the country, and then proceeds: "A full view having now been taken of the inducements to the promotion of manufactures in the United States, accompanied with an examination of the principal objections which are commonly urged in opposition, it is proper, in the next place, to consider the means by which it may be effected, as introductory to a specification of the objects which in the present state of things appear the most fit to be encouraged, and of the particular measures which it may be advisable to adopt in respect to each. In order to a better judgment of the means proper to be resorted to by the United States, it will be of use to advert to those which have been employed with success in other countries. The principle of these are:

I. Protecting duties, or duties on those foreign articles which are the rivals of the domestic ones intended to be encouraged. Duties of this nature evidently amount to a virtual bounty on the domestic fabrics, since by enhancing the charges on foreign articles they enable the national manufacturers to undersell all their foreign competitors. The propriety of this species of encouragement need not be dwelt upon, as it is not only a clear result from the numerous topics which have been suggested, but is sanctioned by the laws of the United States in a variety of instances; it has the additional recommendation of being a resource of revenue. Indeed, all the duties imposed on imported articles, though with an exclusive view to revenue, have the effect in contemplation; and, except where they fall on raw materials, wear a beneficent aspect towards the manufacturers of the country.

II. Prohibitions of rival articles, or duties equivalent to prohibitions. This is another and an efficacious mean of encouraging manufactures; but in general it is only fit to be employed when a manufacture has made such a progress, and is in so many hands, as to insure a due competition and an adequate supply on reasonable terms. Of duties equivalent to prohibitions there are examples in the laws of the United States; and there are other cases to which the principle may be advantageously extended, but they are not numerous. Considering a monopoly of the domestic market to its own manufacturers as the reigning policy of manufacturing nations, a similar policy on the part of the United States, in every proper instance, is dictated, it might almost be said, by the principles of distributive justice; certainly by the duty of endeavoring to secure to their own citizens a reciprocity of advantages.

III. Prohibitions of the exportation of materials of manufactures. The desire of securing a cheap and plentiful supply for the national workmen; and, where the article is either peculiar to the country, or of peculiar quality there, the jealousy of enabling foreign workmen to rival those of the nation with its own materials, are the leading motives to this species of regulation. It ought not to be affirmed that it is in no instance proper, but it is certainly one which ought to be adopted with great circumspection and only in very plain cases.

IV. Pecuniary bounties. This has been found one of the most efficacious means of encouraging manufactures, and it is, in some views, the best, though it has not yet been practiced upon the government of the United States,—unless the allowance on the exportation of dried and pickled fish and salted meat could be considered as a bounty—and though it is less favored by public opinion than some other modes. Its advantages are these:

1. It is a species of encouragement more positive and direct than any other, and for that very reason has a more immediate tendency to stimulate and uphold new enterprises, increasing the chances of profit, and diminishing the risks of loss in the first attempts.

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2. It avoids the inconvenience of a temporary augmentation of price, which is incident to some other modes, or it produces it to a less degree, either by making no addition to the charges on the rival foreign article, as in the case of protecting duties, or by making a smaller addition. The first happens when the fund for the bounty is derived from a different object (which may or may not increase the price of some other article according to the nature of that object); the second when the fund is derived from the same or a similar object of foreign manufacture. One per cent. duty on the foreign article, converted into a bounty on the domestic, will have an equal effect with a duty of 2% exclusive of such bounty; and the price of the foreign commodity is liable to be raised in the one case in the proportion of 1%, in the other in that of 2%. Indeed, the bounty when drawn from another source, is calculated to promote a reduction of price, because, without laying any new charge on the foreign article, it serves to introduce a competition with it, and to increase the total quantity of the article in the market.

3. Bounties have not, like high protecting duties, a tendency to produce scarcity. An increase of price is not always the immediate, though where the progress of a domestic manufacture does not counteract a rise, it is commonly the ultimate effect of an additional duty. In the interval between the laying of the duty and a proportional increase of price, it may discourage importation by interfering with the profits to be expected from the sale of the article.