Part 994

"Up to the revolutionary period of 1848-50, the policy of the German Zollverein or Custom's Union was a pronounced protectionism. The general liberalization, so to speak, of political life in Western Europe through the events of the years mentioned and the larger sympathy they engendered between nations produced, however, a strong movement in Germany and German-Austria in favor of greater freedom of commercial exchange between these two countries. It resulted in the conclusion, for the term of twelve years, of the treaty of 1853 between the Zollverein and Austria, as the first of the international compacts for the promotion of commercial intercourse that formed so prominent a feature of European history during the following twenty years. The treaty was a first, but long step towards free exchange, providing, as it did, for uniform duties on imports from other countries, for a considerable free list and for largely reduced duties between the contracting countries. It also contained stipulations for its renewal on the basis of entire free trade. … A very influential association was formed, with free trade as the avowed ulterior object. Its leaders, who were also the champions of political liberalism, represented intellects of the highest order. They included the well-known economists Prince Smith, Mittermaier, Rau, Faucher, Michaelis, Wirth, Schulze and Braun. An 'Economic Congress' was held annually, the proceedings of which attracted the greatest attention, and exercised a growing influence upon the policy of the governments composing the Zollverein. … The beneficial results of the treaty of 1853 were so obvious and instantaneous that the Zollverein and Austria would have no doubt sought to bring about improved commercial relations with other nations by the same means, but for the disturbance of the peace of Europe by the Crimean war, and the conflict of 1859 between France, Italy and Austria. The bitter feelings, caused by the latter war against the two first named countries wherever the German tongue was spoken, rendered the negotiation of commercial treaties with them out of the question for a time. The great achievement of Richard Cobden and Michel Chevalier, the famous treaty of 1860 between Great Britain and France, changed this reluctance at once into eagerness to secure the same advantages that those two countries had insured to each other. The enlightened and far-seeing despot occupying the throne of France, being once won over to the cause of free exchange by Cobden's ardor and persistence and clear and convincing arguments, against the views of the majority of his ministers and with probably 90 per cent. of his subjects strongly opposed to the abandonment of protectionism, determined, with the zeal of a new convert, to make the most of his new departure. He was very willing, therefore, to meet the advances of the Zollverein, so that in the spring of 1862, after a whole year's negotiation, a formal treaty was consummated between it and the French Empire. It was a very broad measure. … It comprised a copyright and trade-mark convention, provisions for liberal modifications of the respective navigation laws and a commercial treaty proper. The latter provided for the free admission of raw materials, for the abolition of transit and export duties and for equalizing import duties as nearly as possible, and also contained a 'most favored nation' clause. … In pursuance of the terms of the treaty of 1853 with Austria, negotiations had been commenced early in the sixties with reference to its renewal upon the basis of the removal of all custom-barriers between the two countries. Austria was naturally against the conclusion of a treaty between the Zollverein and France with herself left out, and opposed its consummation with all the means at her command. … After long negotiations, accompanied by much excitement in Germany, a compromise was reached in 1864, under which the Zollverein was renewed for twelve years, that is till 1877, and the French treaty ratified on condition that a new treaty should be made with Austria. This was done in 1865, but the new convention did not provide for the complete commercial union, contemplated under that of 1853. It was only a compact between two independent nations, but on more liberal lines than the old treaty, and certainly constituting a yet nearer approach to free trade. … In other directions the Zollverein lost no time in following the example of Napoleon by entering successively in 1865 and 1866 into commercial treaties with Belgium, Italy, Great Britain and Switzerland, which were simple conventions, by which the contracting parties granted to each other the position of the most favored nation, or formal tariff regulating treaties after the model of that between the Zollverein and France. These additional treaties were no more than the latter the work of Bismarck. … The general upheaval in Germany arising from the war between Prussia and Austria and her North and South-German Allies, while temporarily delaying the farther progress of tariff reform, subsequently accelerated its forward march. … {3079} A special treaty for the reform of the constitution, so to speak, of the Zollverein was concluded in July, 1867, between the North-German Federation, the new political constellation Prussia had formed out of all Germany north of the Main, after destroying the old Diet, and Bavaria, Wuertemberg, Baden and Hesse, under the provisions of which the tariff and revenue policy of all Germany was to be managed by the 'Zollparlament,' consisting of an upper house, made up of representatives of the governments, and of a lower house of representatives of the people elected by universal suffrage on a population basis. Thus tariff reform was actually the chain that bound up, as it were, the material interests of all Germans outside of Austria for the first time, as those of one nation. Negotiations for a new commercial treaty with the dual monarchy of Austria-Hungary—into which Austria had changed in consequence of the events of 1866—commenced immediately after the restoration of peace, and were brought to a satisfactory conclusion in March, 1868. The treaty was to run nine years, and provided for still lower duties than under the old treaty, the principal reductions being on all agricultural products, wines and iron. … The Franco-German war put an end to the treaty of 1862 between France and the Zollverein. As a substitute for the commercial part of it, article II of the treaty of peace of 1871 provided simply that France and Germany should be bound for an indefinite period to allow each other the most favorable tariff rates either of them had granted or might grant to Great Britain, Belgium, Holland, Switzerland, Austria-Hungary and Russia. … A large majority of the members of the first Reichstag [under the newly created Empire] favored further legislation in the direction of free trade, and the work of tariff reform was vigorously taken in hand, as soon as the constitution and the essential organic laws of the Empire had been framed. … In the session of 1873 the National Liberals brought in a motion asking the Government to present measures for the abolition of all duties on raw and manufactured iron, salt and other articles. The Government responded very readily. … Prince Bismarck was no less pronounced for a strict revenue tariff than any of the other government speakers. Up to the end of 1875, there was not the slightest indication of a change of views on his part upon this general subject. … The climax of the free trade movement in Germany can be said to have been reached about the time last stated. But a few months later, suspicious signs of a new inspiration on the part of the Prince became manifest. Rumors of dissensions between him and Minister Delbrück began to circulate, and gradually gained strength. In May, 1876, all Germany was startled by the announcement that the latter and his principal co-workers had resigned. Soon it was known that their retirement was due to a disagreement with the Prince over tariff reform matters. A crisis had evidently set in that was a great puzzle at first to everybody. Gradually it became clear that the cause of it was really a sudden abandonment of the past policy by the Prince. The new course, upon which the mighty helmsman was starting the ship of state, was signalized in various ways, but the full extent of his change of front was disclosed only in a communication addressed by him to the Federal Council, under date of December 15, 1878. It was a most extraordinary document. It condemned boldly all that had been done by the government under his own eyes and with his full consent in relation to tariff reform ever since the Franco-German treaty of 1862. … As the principal reason for the new departure, he assigned the necessity of reforming the public finances in order to increase the revenues of the Government. The will of the Chancellor had become the law for the federal council, and, accordingly, the tariff-committee began the work of devising a general protective tariff in hot haste. It was submitted to the Reichstag by the Prince in May, 1879. … Thus Germany was started on the downward plain of protectionism, on which it continued for twelve years. Beyond all question, the Chancellor was solely responsible for it. … The tariff bill of 1879 met with vigorous opposition under the lead of ex-Minister Delbrück, but was passed by the large majority of 217 to 117 —showing the readiness with which the 'bon plaisir' of the master had made converts to his new faith. It was a sweeping measure, establishing large duties on cereals, iron, lumber and petroleum, increasing existing duties on textile goods, coffee, wines, rice, tea, and a great number of other minor articles and also on cattle. The protectionist current came to a temporary stop from 1880-1883, inasmuch as in the new Reichstag, elected in 1881, the protection and anti-protection parties were so evenly balanced that the Government failed to carry its proposals for still higher duties. The elections of 1884, in which the Government brought every influence to bear against the opposition, resulted, however, in the return of a protectionist majority. Accordingly, there followed in 1885 a new screwing up of duties, tripling those on grain, doubling those on lumber, and raising most others. In 1887 the duties on grain were even again increased. But now the insatiateness of protection and especially the duties put on the necessaries of life produced a strong reaction, as evidenced by the largely increased membership of the opposition parties in the present Reichstag. … The Imperial Government, shortly after the retirement of Prince Bismarck had untied its hands, entered upon negotiations with Austria-Hungary, Italy, Switzerland and Belgium, which resulted in … reciprocity treaties."

_H. Villard, German Tariff Policy (Yale Review, May, 1892)._

ALSO IN: _W. H. Dawson, Bismarck and State Socialism._

TARIFF: (United States and Canada): A. D. 1854-1866. The Reciprocity Treaty.

The Treaty commonly known in America as the Canadian Reciprocity Treaty of 1854, between the governments of Great Britain and the United States, was concluded on the 5th of June, 1854, and ratifications were exchanged on the 9th of September following. The negotiators were the Earl of Elgin and Kincardine, on the part of the British Government, and William L. Marcy, Secretary of State of the United States, acting for the latter. {3080} By the first article of the treaty it was agreed that, "in addition to the liberty secured to the United States fishermen by the … convention of October 20, 1818, of taking, curing, and drying fish on certain coasts of the British North American Colonies therein defined, the inhabitants of the United States shall have, in common with the subjects of Her Britannic Majesty, the liberty to take fish of every kind, except shell-fish, on the sea-coasts and shores, and in the bays, harbors, and creeks of Canada, New Brunswick, Nova Scotia, Prince Edward's Island, and of the several islands thereunto adjacent, without being restricted to any distance from the shore, with permission to land upon the coasts and shores of those colonies and the islands thereof, and also upon the Magdalen Islands, for the purpose of drying their nets and curing their fish; provided that, in so doing, they do not interfere with the rights of private property, or with British fishermen, in the peaceable use of any part of the said coast in their occupancy for the same purpose. It is understood that the above-mentioned liberty applies solely to the sea-fishery, and that the salmon and shad fisheries, and all fisheries in rivers and the mouths of rivers, are hereby reserved exclusively for British fishermen." The same article provided for the appointment of commissioners and an arbitrator or umpire to settle any disputes that might arise "as to the places to which the reservation of exclusive right to British fishermen contained in this article, and that of fishermen of the United States contained in the next succeeding article, apply." By the second article of the treaty British subjects received privileges on the eastern sea-coasts and shores of the United States north of the 36th parallel of north latitude, identical with those given by the first article to citizens of the United States on the coasts and shores mentioned above. Article 3 was as follows: "It is agreed that the articles enumerated in the schedule hereunto annexed, being the growth and produce of the aforesaid British colonies or of the United States, shall be admitted into each country respectively free of duty: Schedule: Grain, flour, and breadstuffs, of all kinds. Animals of all kinds. Fresh, smoked, and salted meats. Cotton-wool, seeds, and vegetables. Undried fruits, dried fruits. Fish of all kinds. Products of fish, and of all other creatures living in the water. Poultry, eggs. Hides, furs, skins, or tails, undressed. Stone or marble, in its crude or unwrought state. Slate. Butter, cheese, tallow. Lard, horns, manures. Ores of metals, of all kinds. Coal. Pitch, tar, turpentine, ashes. Timber and lumber of all kinds, round, hewed, and sawed, unmanufactured in whole or in part. Firewood. Plants, shrubs, and trees. Pelts, wool. Fish-oil. Rice, broom-corn, and bark. Gypsum, ground or unground. Hewn, or wrought, or unwrought burr or grindstones. Dye-stuffs. Flax, hemp, and tow, unmanufactured. Unmanufactured tobacco. Rags." Article 4 secured to the citizens and inhabitants of the United States the right to navigate the River St. Lawrence and the canals in Canada between the ocean and the great lakes, subject to the same tolls and charges that might be exacted from Her Majesty's subjects, but the British Government retained the right to suspend this privilege, on due notice given, in which case the Government of the United States might suspend the operations of Article 3. Reciprocally, British subjects were given the right to navigate Lake Michigan, and the Government of the United States engaged itself to urge the State governments to open the several State canals to British subjects on terms of equality. It was further agreed that no export or other duty should be levied on lumber or timber floated down the river St. John to the sea, "when the same is shipped to the United States from the province of New Brunswick." Article 5 provided that the treaty should take effect whenever the necessary laws were passed by the Imperial Parliament, the Provincial Parliaments, and the Congress of the United States, and that it should "remain in force for ten years from the date at which it may come into operation, and further until the expiration of twelve months after either of the high contracting parties shall give notice to the other of its wish to terminate the same." Article 6 extended the provisions of the treaty to the island of Newfoundland, so far as applicable, provided the Imperial Parliament, the Parliament of Newfoundland and the Congress of the United States should embrace the island in their laws for carrying the treaty into effect; but not otherwise.

_Treaties and Conventions between the United States and other Powers, edition of 1889, pages 448-452._

The Treaty was abrogated in 1866, the United States having given the required notice in 1865.

_F. E. Haynes, The Reciprocity Treaty with Canada of 1854 (American Economic Association Publications, volume 7, number 6)._

TARIFF: (United States): A. D. 1861-1864. The Morrill Tariff and the War Tariffs.

"In 1861 the Morrill tariff act began a change toward a higher range of duties and a stronger application of protection. The Morrill act is often spoken of as if it were the basis of the present protective system. But this is by no means the case. The tariff act of 1861 was passed by the House of Representatives in the session of 1859-60, the session preceding the election of President Lincoln. It was passed, undoubtedly, with the intention of attracting to the Republican party, at the approaching Presidential election, votes in Pennsylvania and other States that had protectionist leanings. In the Senate the tariff bill was not taken up in the same session in which it was passed in the House. Its consideration was postponed, and it was not until the next session—that of 1860-61—that it received the assent of the Senate and became law. It is clear that the Morrill tariff was carried in the House before any serious expectation of war was entertained; and it was accepted by the Senate in the session of 1861 without material change. It therefore forms no part of the financial legislation of the war, which gave rise in time to a series of measures that entirely superseded the Morrill tariff. Indeed, Mr. Morrill and the other supporters of the act of 1861 declared that their intention was simply to restore the rates of 1846. The important change which they proposed to make from the provisions of the tariff of 1846 was to substitute specific for ad-valorem duties. … The specific duties … established were in many cases considerably above the ad-valorem duties of 1846. The most important direct changes made by the act of 1861 were in the increased duties on iron and on wool, by which it was hoped to attach to the Republican party Pennsylvania and some of the Western States. Most of the manufacturing States at this time still stood aloof from the movement toward higher rates. … Mr. Rice, of Massachusetts, said in 1860: 'The manufacturer asks no additional protection. He has learned, among other things, that the greatest evil, next to a ruinous competition from foreign sources, is an excessive protection, which stimulates a like ruinous and irresponsible competition at home'.

_Congressional Globe, 1859-60, page 1867._

{3081}

Mr. Sherman said: … 'The manufacturers have asked over and over again to be let alone. The tariff of 1857 is the manufacturers' bill; but the present bill is more beneficial to the agricultural interest than the tariff of 1857.'

_Congressional Globe, 1859-60, p. 2053._

_C. F. Hunter's speech, Congressional Globe, 1859-60, p. 3010._

In later years Mr. Morrill himself said that the tariff of 1861 'was not asked for, and but coldly welcomed, by manufacturers, who always and justly fear instability.' …

Congressional Globe, 1869-70, p. 3295.

Hardly had the Morrill tariff been passed when Fort Sumter was fired on. The Civil War began. The need of additional revenue for carrying on the great struggle was immediately felt; and as early as the extra session of the summer of 1861, additional customs duties were imposed. In the next regular session, in December, 1861, a still further increase of duties was made. From that time till 1865 no session, indeed hardly a month of any session, passed in which some increase of duties on imports was not made. … The great acts, of 1862 and 1864 are typical of the whole course of the war measures; and the latter is of particular importance, because it became the foundation of the existing tariff system. … The three revenue acts of June 30, 1864, practically form one measure, and that probably the greatest measure of taxation which the world has seen. The first of the acts provided for an enormous extension of the internal-tax system; the second for a corresponding increase of the duties on imports; the third authorized a loan of $400,000,000. … Like the tariff act of 1862, that of 1864 was introduced, explained, amended, and passed under the management of Mr. Morrill, who was chairman of the Committee on Ways and Means. That gentleman again stated, as he had done in 1862, that the passage of the tariff act was rendered necessary in order to put domestic producers in the same situation, so far as foreign competition was concerned, as if the internal taxes had not been raised. This was one great object of the new tariff. … But it explains only in part the measure which in fact was proposed and passed. The tariff of 1864 was a characteristic result of that veritable furor of taxation which had become fixed in the minds of the men who were then managing the national finances. Mr. Morrill, and those who with him made our revenue laws, seem to have had but one principle: to tax every possible article indiscriminately, and to tax it at the highest rates that anyone had the courage to suggest. They carried this method out to its fullest extent in the tariff act of 1864, as well as in the tax act of that year. At the same time these statesmen were protectionists. … Every domestic producer who came before Congress got what he wanted in the way of duties. Protection ran riot; and this, moreover, not merely for the time being. The whole tone of the public mind toward the question of import duties became distorted. … The average rate on dutiable commodities, which had been 37.2 per cent. under the act of 1862, became 47.06 per cent. under that of 1864. … In regard to the duties as they stood before 1883, it is literally true, in regard to almost all protected articles, that the tariff act of 1864 remained in force for twenty years without reductions."

_F. W. Taussig, Tariff History of the United States, pages 158-169, with foot-note._

Under the Morrill Tariff, which went into effect April 1, 1861, the imposts which had averaged about 19 per cent. on dutiable articles were raised to 36 per cent.

_J. G. Blaine, Twenty Years of Congress, volume 1, page 400._

TARIFF: (Australia): A. D. 1862-1892. Contrasted policy of Victoria and New South Wales.