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In Mr. Carlyle's earlier works he accepts the results of the Dismal
Science — as he was the first to nickname Political Economy — as a
" Divine Message," though "perhaps as small a message as ever ther6
was such noise made about before," {Latter Day Pamphlet*, 1850). He
seems to have now got beyond that, converted by the evidence of facts.

§ 302. Frederick's unfriend, the Empress Maria Theresa, and
her son and successor, Joseph II., labored much the same way
for the promotion of industry in Austria. They all made the
mistake of leaving domestic industry under manifold restrictions,
which went far to balance the protection against foreign inva-
sions. The practice of trade was confined to limited corpora-
tions ; heavy excise duties and monopolies kept back home pro-
duction ; instead of one national Prussian tariff there were sixty-
seven, for every boundary line that divided province from prov-
ince was a line of custom duties, shutting out the home manu-
facturer from his rightful market. Equally unwise, but quite in
keeping with this, was the prohibition of the importation of
certain manufactured goods, and of the export of raw materials.
The numerous privileged classes were exempt from the action of



FROM BAD TO WORSE. 335

these laws, and could bring in what they pleased. Smuggling
was made a science, and supported by public opinion ; of the
great mass of officials required by the system, very few were
above taking bribes. These mischiefs came to a head under
Frederick's worthless successors, who intensified all the faults
and neglected all the good points of his system. Adam Smith's
doctriues were becoming popular in Germany ; Kraus of Koenigs-
berg and others taught them from professional chairs. A new
generation of officials grew up under this teaching, who detested
their country's meddlesome and vexatious fiscal policy for its
faults, without understanding its merits.

At last free trade became a recognised maxim of Prussian
policy. The king proclaimed, during the struggle with Napoleon,
that all prohibitions were cancelled, and all duties were reduced to
8J per cent, in the provinces not in possession of the enemy, and
when the " War of Liberation " broke out in 1813, the proclama-
tion was renewed. In the meantime the Continental system had
been extended to Germany; British and Colonial goods were ex-
cluded from her markets, while those of France came thither
free of duty " by right of conquest," without any grant of reci-
procity. " German industry made admirable progress during
that time, not only in the different manufacturing branches, but
iu all branches of agriculture, though laboring under all the dis-
advantages of the wars and of French despotic measures. All
kinds of produce were in demand, and bore high prices ; and
wages, rent, interest of capital, prices of land, of all sorts of
property, were enhanced" (List). The lower Rhine, as hav-
ing been longest under the French rule, made the greatest
advance. Perhaps Saxony, hitherto a free trade country, and
the great depot for the dispersion of British goods over Central
Europe, came next in point of industrial progress. Germany en-
joyed prosperity without example at the very time when her
people were drinking the bitter cup of national humiliation.
The victories that restored the independence of European
nationalities brought disaster to their material interests ; it threw
open their markets to the competition of their insular ally, and



336 SOCIAL SCIENCE AND NATIONAL ECONOMY.

set up all the old lines of demarcation that divided Germany
into a few large states and a host of microscopic despotisms.
Twenty-seven of these custom-house lines — one-third of the
whole number — lay across the Rhine, and at each of them com-
merce was impeded with duties and delays. The German mer-
chant had no field of activity outside his own little principality;
Germany enjoyed protection in each of its members from all the
rest, and at the same time virtual free trade with the foreigner.
The cry of ruined merchants and unemployed workmen led
Prussia to undertake an elaborate investigation of her own indus-
trial needs. The ministry of Hardenberg and Van Bulow had
proposed to keep up the present low tariff, but make it specific
in the nature of the duties imposed, and to abolish all provincial
restrictions on commerce. The matter was referred to the
Council of State, who recommended the appointment of a spe-
cial commission of inquiry, and the king selected one under the
presidency of Wilhelm von Humboldt. After a prolonged in-
vestigation, in which all interests had a hearing, the commission
decided in favor of a moderately protective system, with the
removal of all prohibitions on exportation or importation, and
of all local restrictions upon trade. There were only two dis-
senting voices — both disciples of Adam Smith — in the commis-
sion ; only three in the Council of State; the results were em-
bodied in the Prussian tariff of 1818.

As if with a view of illustrating both sides of the case at once, Prussia
in 1822 demanded reciprocity with England in the matter of the Naviga-
tion laws, and in 1824 Mr. Huskisson granted it. " The effect of reci-
procity upon the Prussian mercantile navy," says an ardent free trader,
"has been to diminish it most materially in amount, while British ship-
ping gains an ever-increasing share in her carrying trade. This case is
quite sufficient to show what would inevitably be the result of a fair and
free competition between British shipping and the shipping of any other
country (in this hemisphere at least), with which it comes in contact,"
(W. P. Adam : The Policy of Retaliation ; London, 1852). The Prussian
shipping fell oft" 44 per cent, in the number of vessels and 27 per cent, in
their tonnage between 1806 and 1839, although the commerce of the
country increased vastly. See Porter's Pruyress of the English Nation,
p. 396.



THE ZOLLVEREIN. 337

§ 303. At the same time a movement in favor of protection
to German industry and the removal of all custom-houses to the
German frontier was going on in the ceutre and south of Germany.
Friedrich List, then a professor in the University of Tuebin-
gen, was put forward as its spokesman. It aimed at a national
tariff system for all Germany, and in 1820 succeeded in securing
a preliminary treaty at a conference of German ministers at
Vienna, and then a special conference at Darmstadt. Then fol-
lowed the establishment of three Zollvereins, — one for North-
western and Central Germany, headed by Saxony, Brunswick
and Hanover, with low revenue tariff; one for Southern Ger-
many, including Bavaria, Wurtemberg, and some minor states;
a third in the North, consisting of Prussia and the minor states
in her immediate neighborhood (Hesse, Nassau, &c), who adopt-
ed the tariff of 1818. At last, in 1833, the last two and those
of the first that lay in Central Germany united on the basis of
that tariff, including in this great Zollverein about twenty -six
millions of the German people. Austria on the south, and
Hanover, Brunswick, Oldenburg, Mecklenburg and the Free
Cities on the north, alone stood out. Hanover, Brunswick and
Oldenburg, under English influence, formed in 1828 a Stcucr-
veret'n with a tariff of low duties for revenue ; as they shut out
the Zollverein from the North Sea, the latter attempted a union
with them in 1841, but found that it could only be secured at
the sacrifice of protection to native industry. In 1857 the an-
nexation was secured, on condition that Hanover should receive
seventy-five per cent, more than the share of the revenue to
which her population would otherwise entitle her. From 1849
Austria strove to either break up the Zollverein or get admission
to it with all her dependencies. Many of the minor states favored
this latter proposal, and it seemed likely that Prussia, in resist-
ing it, would bring on war. But in 1853 a reciprocity treaty
between the two powers put an end to the struggle.

Zollverein menus Customs' Union; Steuerveniti. Imposts' Union. The
latter was an imitation of the former, without its protective purpose.

In the Zollverein each state has an equal vote, although

22



338 SOCIAL SCIENCE AND NATIONAL ECONOMY.

Prussia had till 1852 more than half the population. Another
sacrifice made by Prussia for the general interest was in the
distribution of the customs' receipts on the basis of population ;
small states with a farming population, got far more than their
true share; Prussia got half a million thalers a year less,
and asked no more, although Frankfort-on-Main in joining the
Zollverein in 1835 received a larger share than her population
would justify. The duties are assessed on the basis of the ta-
riffof ISIS, subject to modification at the conference of repre-
sentatives. These modifications are of a sort to show the Pro-
tectionist purpose of that tariff, and of the Zollverein itself.
Thus in 18-13-5, the duty on cotton goods fixed in 1818 at 12 \ per
cent., was very decidedly increased to meet English competition ;
in 1844 the duties on iron were increased for the same reason.
The duties on all importations are estimated to average 12 per
cent., but as a great part of these are low duties on the raw ma-
terials of manufacture, the duties on manufactured goods must
be sufficiently high. Dr. Bowring, who was sent out by the
British Government to examine and report upon the Zollverein
in 1841, clearly showed the Protective character of the tariff.
Professor List estimated the duties on manufactured articles in
common use at from 20 to 60 per cent. " The most popular ob-
ject of this great social movement is, by a prudent and well
constructed tariff of duties, to protect and encourage German
manufactures, to exclude by duties the foreign producer from
the German market [?], and to extend the exportation of the
products of their own industry to foreign markets" (S. Laing).
One of the best and most protective features of the system is
its imposition of specific duties, changed in their amount ac-
cording to a periodical observation of the market prices. No
room was left for false invoices ; none for the foreign exporter
to throw foreign goods on the market at a merely nominal
price, after paying merely nominal duties, so as to undersell the
German maker at a small sacrifice. At the same time the
duties fell more heavily upon the cheaper and more
commonly used articles, whose production at home is of the



THE EFFECT OF THE ZOLLVEREIN. 339

first importance, and though requiring less of skill in the work-
ingman, gradually educates in him in the skill and taste neces-
sary for the production of finer wares.

§ 304. The carefully prepared statistics of the business of the
Zollverein, in home production and consumption as well as im-
portation, give us the data for estimating the effects of the sys-
tem. We find (1) That protection has vastly increased the
power of the German people to command the services of other
peoples. The importations have risen steadily in amount and
quality, instead of decreasing. " If we look at its practical ef-
fects upon British industry, we are warranted in the conclusion
that the wealthier and more industrious our neighbors become,
the better customers they are in the world's markets, in supply-
ing which British industry and capital are embarked" (Laing.")

(2) The wages of labor have been very largely raised, for both
farm hands and factory hands. Not only has more money been
paid for a day's work, but so much more as enables the working-
men to command a much larger amount of material comfort.

(3) The farmer has not lost what the manufacturer has gained,
but has gained equally with him ; the price of raw materials
and of manufactured goods have steadily approximated, as the
market has been brought nearer the farm. (4.) The total con-
sumption of articles of prime necessity has increased in a ratio
that far exceeds the growth of the population. (5) The enormous
difference between rich and poor has been diminished and the
middle class of prosperous and intelligent people has gained
greatly in number. (G) The development of home industry
has not been effected at the expense of that unhappy victim of
tariff legislation, " the consumer." Even the small class of
consumers, who are not also — directly or indirectly — producers,
find their profit in it. As Dr. Bowring shows, the home mar-
ket is supplied with better and cheaper goods than England
could furnish, and Prussia is now competing for the possession
of even the English markets.

" The Zollverein, according to the census of 1867, comprises a territory
of more than 90,000 geographical square miles, with a population computed



340 SOCIAL SCIENCE AND NATIONAL ECONOMY.

at over thirty-eight millions. Since the realization of commercial freedom"
between the parts of the empire, " German industry has increased in an un-
precedented degree, and, to a certain extent, competes successfully with
that of Great Britain. The character of the foreign commerce of Germany
has entirely changed. Instead of exporting raw materials only, she sends
out the products of her own manufacturing industry, creating a market
abroad which keeps her actively employed at home. The German wool-
len manufacture has recovered the ground lost in the middle ages, and
its fabrics at present form the chief part of the Zollvercin exports. The
manufacture of cotton and silk has made equal progress, although the
materials have to be imported. The linen trade has not yet begun to
compete with that of England, but in steel and iron goods, in glass,
paper and silk manufactures, in pottery, stoneware and porcelain, in
chemicals, in the refining of sugar and beer, Germany abundantly sup-
plies her own wants, and yet reserves a surplus for foreign interchange"
(Yeates's Recent and Existing Commerce — Free Trader). The linen trade,
also, has become of importance, in later years.

(7) The German people, once dissevered by the frontiers of
petty principalities, have been mightily drawn into national and
political unity by the industrial policy that recognised the iden-
tity of the material interests of these severed parts. It was the
Zollverein that made the ideal of German unity popular, though
it did not originate it. It was the public sentiment thus created
that enabled Prussia in 1866 and 1870 to put herself at the
head of a united Germany, and reduce the petty sovereigns of
the country to the rank of a landed aristocracy. It was, as
Mr. Laing points out, the same growth of public sentiment in
power and control over the government, that compelled Prussia
to replace her autocratic institutions by a representative system,
in which the popular will finds a free and regular expression.
Since that time, Dr. Bowring tells us in 1810 " the sentiment of
German unity has been brought out of the regions of hope and
fancy into those of the positive and material interests." " Ger-
many in the course of ten years," says List in 1811, " has ad-
vanced a century in prosperity and industry, in national self-
respect and power." ' ; The German people," says Mr. S. Laing
in 1812, " are for the first time united in one great object of ma-
terial interest; . . . and for the first time they have made the
influence of public opinion an effective state power in their in



THE ZOLLVEREIN AND THE UNITY OF GERMANY. 341

ternal affairs. . . . The German commercial league is, in its re-
sult, the most important and interesting event of this half cen-
tury." " Their exaggerated expectations are that Germany is
to run the same career as England ; to attain the same national
wealth ; to force or persuade Holland, Belgium, Hanover, Ham-
burg, Denmark, to become members of the league; to exclude
all but their own goods and manufactures from the Continent;
to become an acknowledged political power; to have a common
flag, common revenues; to have fleets, armies, colonies, and to
be a great naval power on the ocean." " According to every
true German, the league is to be the grand restorer of nationality
to. Germany, of national character, of national mind, national
greatness, national everything to a new, regenerated German
nation. They are to spin and weave themselves into national
spirit, patriotism, and united effort as a great people."

See Dieterici: Der Volkswohlstand in Preussichen Staat ; Berlin, 1846.
(French translation in La Prusse, son Progres Politique et Social, par
A. Moreau de Jonnes, fils; Paris, 1848). Friedrich List's Gesammelte
Schrifteit ; III. Theile; Stuttgart and Tuebingen, 1850-51. La Nourais
et Bores : L' Association ties Duuanes Allemandes, son Passe et son Avenir;
Paris, 1841. Thieriot : De I'lufiuence exercSe sur la Commerce et /'In-
dustrie vie la Sare Poi/alc par la Accession u lo Grande Association des
Douanes Allemandes-Prussiennes ; Traduction Francaise; Paris. 1840.
La Nourais and Beres frequently refer to a valuable historical disserta-
tion in Ranke's Historisch-Politische Zeitschrift for 1833. A. Legoyt Has
an article on the " Zollverein " in Coquclin and Guillamin's Dietionnaire
de I'Economie Politique. Dr. Jno. Yeates : Recent ami Existing Com-
merce; London, 1S72. (" England and France viewed the institution with
dislike, and would have exercised a more powerful influence against it,
had not public opinion in the German States pronounced in its favor." i
See also S. Laing's Notes of a Traveller; London, r842 (Chap. V). Mr.
Laing says that the first Zollverein was formed in 1816 by the small Thu-
ringian principalities, to save the expense of separate custom-houses.
Richelot's work — L' Association Douaniere Allemande ; Paris, 1S15 — I
not seen.

§ 305. (3) Russia became a European power in the time of
Peter the Great. He and some of his successors — notahly
Catharine II. — labored to foster industry by their patronage,
but as the people were too unskilful, it was largely by the im-



3-42 SOCIAL SCIENCE AND NATIONAL ECONOMY.

portation of foreign artisans. The merchants being mostly old
believers (or Raskolniks) did their utmost to keep foreign manu-
factures out of holy Russia, but large quantities were brought
in, especially from the Leipsic fairs. The peace of Tilsit in-
cluded Russia in the Continental System, until the war broke out
again in 1812. At the return of peace and the restoration of
ordinary relations with Western Europe, Russia had an extra-
ordinary season of prosperity. The failure of the crops in the
West made a great demand for her grain, and money flowed into
the country. Under the influence of Storch, a Russian disciple
of Adam Smith, the Emperor Alexander adopted the free trade
policy. The ruin of a great part of the Russian manufactures
speedily followed. " It is only the first shock of free competi-
tion," said the theorists ; " wait a little and you will see the tide
turn." But the tide did not turn; England shut out Russian
corn to protect her own farmers, and the ruin grew worse. Count
Nesselrode came to the conclusion that Russia must keep her-
self. In a ministerial circular of 1821, he says: "Russia sees
herself compelled b} 1- circumstances to adopt an independent in-
dustrial system ; the products of the empire find no access to
foreign markets ; domestic manufactures are either ruined or
on the point of ruin ; all the moneys of the empire flow abroad ;
and the most solid business houses are on the brink of fail-
ure." The tariffs of 1820 and 1822 put an end to this period
of dependence, when, as Mr. Cobden told his countrymen, a ces-
sation of English exports would have the effect " to doom a por-
tion of her" Russia's "people to absolute nakedness." Since
that date every year has seen great industrial advances. " In no
country in Europe has the march of civilization and progress
in modern times been more rapid, decided and systematic ;" all
this " having been effected by the energy and wisdom of a few
master minds." " The manufacturing industry is not yet fifty
years old. It required nursing under a system of protection,
but is now so far developed as to admit a great deal of competi-
tion " (Barry's Russia in 1870).

The cotton manufacture doubled in a few years after the



RUSSIAN MANUFACTURES AS THEY ARE. 343

tariff; its products are now worth 8125,000,000. At first it im-
ported four-fifths of the thread used ; hut since England re-
moved her prohibition on the export of spinning-machinery, the
proportion has changed, and only one-sixteenth of the yarn used
is imported. The amount is seven times what it was in 1822,
and employs 175,000 people. Native cottons have driven the im-
ported out of the great Russian fairs, and the export is much
greater than the import. They are "capital in quality and neat
in design ; far prettier and neater, I think, than our own "
(Barry). Since 1830 the silk manufacture has been protected,
and two-thirds of the silks used are now made at home, and
compete in excellence with any foreign goods, while, like all
home-made Russian fabrics, they are much better adapted to
the popular taste. . . There are also 800 woollen factories, em-
ploying 110,000 workmen and making goods of the value of
$50,000,000 annually. The absence of large capital, the lack
of popular education, the low grade of intelligence, the large
use — as in Germany — of fabrics spun and woven in the house-
holds, all tend to keep back Russian manufactures; the Russian
workman does as he is bid, or as he sees others do, but cannot
be left with any range of responsibility. But the people are
making large advances, especially since the emancipation of the
serfs, and in the absence, of other teachers, the discipline and
the work of the factory is of itself sharpening their faculties and
quickening their perceptive powers. The somewhat lower tariff
of 1869 imposes duties of at least thirty-five per cent, on foreign
manufactures. " Everything is now done to stimulate trade ;
every inducement held out to encourage manufactures ; factories
now springing up fitted with native-made machinery. Branches of
industry are started, which before were thought to be impossible
for Russian ingenuity to master, and trade flourishes as it never
flourished before. Ever since the Crimean war the amount of
interchange of commodities has been increasing" (Barry).

§ 306. (4) Sweden was almost the only country that re-
sponded to the proposal — reciprocity as to navigation laws — made
thirty years ago by England. English authority describes her



344 SOCIAL SCIENCE AND NATIONAL ECONOMY.

present tariff on goods as "having the unfortunate distinction
of disputing with Spain the debatable honor of being the high-
est in the world, the Russian only excepted." Till 182-4 the
prohibition policy was followed, under il a more liberal but tho-
roughly protective (t res-protect eur) system," her manufactures
were more than trebled in thirty years, and her agriculture so
much improved that she now has large quantities of grain for
export, instead of depending, as was once the case, upon the
granaries of Finland.

La Suede et son Commerce, par le Baron Knut Bonde ; Paris, 1852.
(5) Denmark is and was a protectionist country. " She
stands alone in her corner of the world, exchamnno; her loaf of
bread, which she can spare, for articles she cannot provide for
herself, but still providing for herself everything she can by her
own industry. . . . This home industry of hers is protected by
heavy import duties on all foreign articles which could compete
with her own manufactures; and these are avowedly imposed,
not for revenue, while a lower duty would be more productive,
but for protection. . . . The object is simply to secure a living
to that portion of the population which is not engaged in hus-
bandry, and which, without protective duties on all that inter-
feres with their branches of industry, would become a burden
on the rest of the community."

See S. Laing's Denmark and the Duchies ; London, 1852.

§ 307. (G) Spain was one of the first to adopt the prohibitory
system, and that by which revenue was raised by duties on the
commerce between the different provinces of the kingdom ; she
was also one of the last to give these up. The system was often
as ruinous to home industry as it was meddlesome ; thus in 1720
she adopted a tariff which was ingeniously mischievous. " Its
provisions discriminated against the export of Spanish goods to
the colonies, and in favor of foreign manufactures and of con-
traband trade. The industry of the nation, arrested first of all



Online LibraryRobert Ellis ThompsonSocial science and national economy → online text (page 31 of 38)