Chapter CXL: Section VI: Why the Protective System Was Adopted

This explains why so many nations in the periods of transition between their medieval age and their higher stages of civilization, adopted the industrial protective system.[A3-6-1] [A3-6-2] [A3-6-3] [A3-6-4] [A3-6-5] [A3-6-6]

[Footnote A3-6-1: The fact that among the ancients there was
so little thought bestowed on the protection of industry is
related to the comparative insignificance of their industry.
Compare _Roscher_, Ansichten der Volkswirthschaft, 3 ed.,
1878, vol. 1, p. 23 ff. It occasionally happened in the east
that workers in metal, especially the makers of metallic
weapons, were dragged out of the country. I _Sam._, 13, 19;
II _Kings_, 24, 14 ff.; _Jerem._, 24, 1, 29, 2. Among the
Jews, certain costly products were subjected to export
prohibitions for fear that the heathen might use them for
purposes of sacrifice. (_Mischna_, De Cultu peregr., § 6.)
Persian law, that the king should consume only home
products: _Athen._, V, p. 372; XIV, p. c. 62. The Athenians
went farthest in reducing such provisions to a system. Solon
had strictly prohibited the exportation of all raw material
save oil (_Plutarch_, Sol., 24), and a complaint was allowed
against any one who scoffed at a citizen because of the
industry he carried on in the market. (_Demosth._, adv.
Eubul., p. 1308.) The exportation of corn was always
prohibited; also that of the principal materials used in
ship-building. In war, prohibitions of the exportation of
weapons; importation from enemy countries also prohibited.
No Athenian was permitted to loan money on ships which did
not bring a return cargo to Athens (_Demosth._ adv. Lacrit.,
p. 941), nor carry wheat to any place but Athens. (_Böckh._,
Staatsh. der Ath., I, 73 ff.) In Argos and Ægina, the
importation of Athenian clay commodities and articles of
adornment, prohibited. (_Herodot._, V, 88; Athen., IV, 13;
XI, 60.)

The Athenians imposed a duty of two per cent. both on
imports and exports. Similarly, in Rome, where the higher
duties imposed on many articles of luxury served an
ethico-political purpose. We have, besides, accounts of
prohibitions of the exportation of money: _Cicero_, pro
Flacco, 28 (L., 2, Cod. Just., IV, 63). Plato's advice to
prohibit the importation of luxuries and the exportation of
the means of subsistence (_De Legg._) on ethico-political
considerations; and the Byzantine prohibition of the
exportation of certain articles of display from court
vanity. (Porph. Decaerim, p. 271 ff. Reiske.)]

[Footnote A3-6-2: In Italy's best period, the protective
system bears a specifically municipal complexion; in
democracies, a guild-complexion; the former especially
because of the many differential duties in favor of the
capital.

A very highly-developed protective system in Florence. The
exportation of the means of subsistence forbidden (Della
Decima, II, 13), and so likewise the importation of finished
cloths. (Stat Flor., 1415, V, p. 3; Rubr., 32, 39, 41, 43,
45.) In the streets devoted to the woolen industries, it was
not permitted to give the manufacturers notice to quit their
dwellings, nor to increase their rent, unless the
connoisseurs in the industry had admitted a higher rate of
profit. (Decima, II, 88.) In order to promote the silk
industry, the importation of silk-worms and of the mulberry
leaf was freed from the payment of duties in 1423, the
exportation of raw silk, cocoons and of the mulberry leaf
forbidden in 1443; and in 1440, every countryman was
commanded to plant mulberry trees. (Decima, II, 115.) When
Pisa was subdued, the Florentines reserved to themselves all
the wholesale trade, and prohibited there all silk and
woolen industries. (_Sismondi_, Gesch. der italienischen
Republic, XII, 171.) It was a principle followed by Milan in
its best period, to exempt manufacturers from taxation.
Yearly subsidies, accorded about 1442, to Florentine
silk-manufacturers, who immigrated; in 1493, a species of
_expropriation_, in case of houses which a neighbor needed
for manufacturing purposes. (_Verri_, Mem. Storiche, p. 62.)
Bolognese prohibition of the exportation of manuscripts,
because they wanted to monopolize science. (_Cibrario_, E.
polit. del. medio. Evo., III, 166.) Even in the seventeenth
century, a city like Urbino forbade the exportation of
cattle, wheat, wood, wool, skins, coal, as well as the
importation of cloth, with the exception of the very
costliest kinds. (Constitut. Due. Urbin., I, p. 388 ff., 422
ff.)]

[Footnote A3-6-3: In England, since the fourteenth century,
all genuinely national and popular kings always bore it in
mind both to secure emancipation from the Hanseates, to
invite foreigners skilled in industry to the country (the
Flemings since 1331, although the English people disliked to
see them come; _Rymer_, Foedd., IV, 496) and to adopt
protective measures, especially when they had reason to rely
on the bourgeoisie. (_Pauli_, Gesch. von England, V, 372.)
The precursors of the navigation act, 1381, 1390, 1440.
(_Anderson_, Origin of Commerce.) The prohibition of
exporting raw wool (1337, II Edw. III., c. 1 ff.) lasted
only one year. Wool remained a long time still so much of a
chief staple commodity that in 1354, for instance, £277,000
worth were exported; of all other commodities taken
together, only £16,400. (_Anderson._) On the other hand, the
prohibition to import foreign stuffs (1337), for instance,
was repeated in 1399, and the prohibition to export woolen
yarn and unfulled cloths in 1376, 1467, 1488. The statutes
of employment operated very generally. The statutes provided
that foreign merchants should employ the English money they
received only to purchase English commodities, and their
hosts, with whom they were obliged to live, had to become
security therefor. Thus, in 1390, 4 Henry IV., c. 15, and 15
Henry IV., c. 9; 18 Henry VI., c. 4, 1477. Prohibitions of
the exportation of money, 1335, 1344, 1381. Even in the case
of payment by the bishops to the pope, the exportation of
money was forbidden in 1391, 1406, 1414. Henry VIII. (3
Henry VIII., c. 1) threatened the exportation of money with
the penalty of double payment. Even in 1455, the importation
of all finished silk wares was prohibited for five years.
See a long list of similar prohibitions in _Anderson_. The
prohibitions relating to the exporting of raw materials, and
especially wool, were exceedingly strict in Elizabeth's
time, and stricter yet in the seventeenth century. The
penalty of death was attached to their violation, and
producers subjected to the most burthensome control.
Moderated especially by 8 Geo. I., c. 15. In the eighteenth
century we again find a series of import-premiums for raw
material from the English colonies. Compare _Adam Smith_,
IV, ch. 8.]

[Footnote A3-6-4: _Sismondi_, Histoire des Français, XIX,
126, considers as the beginning of the French industrial
protective system, the edict of 1572, by which, with a view
of promoting the woolen, hemp and linen manufactures, the
exportation of the raw material and the importation of the
finished commodities are prohibited. (_Isambert_, Recueil,
XIV, p. 241.) Yet even Philip IV., in 1302, had prohibited
the exportation of the precious metals, of corn, wine and
other means of subsistence. (Ordonn., I, 351, 372.) About
1332, the decision of the question whether the exportation
of wool also should be forbidden was made to depend on who
offered the most, the raw-producers or those engaged in
industry. (_Sismondi_, X, 67 seq.) The third estate not
unfrequently asked for protective measures from the
parliaments: thus, in 1484, a prohibition against the
importation of cloth and silk stuffs, and against the
exportation of money (_Sismondi_, XIV, 673), claims which
went much further in 1614, when freedom of trade, reform of
the guilds, etc., were desired. Opposition of Sully to the
industrial-political measures of Henry IV., whose
prohibition of foreign and gold stuffs lasted scarcely one
year. (_Forbonnais_, Finances de Fr., c. 44.) The edict of
1664, which, for the first time, created a boundary
tariff-system for the greater part of France, with the
removal of numerous export and import duties of the several
provinces, and the abolition even of the duty-liberties of
the King's court, marks an epoch. The introduction in which
Colbert lets the King speak of his services to the
taxation-system, the marine, colonies, etc., in which he
describes the chaos of those earlier duties, and
demonstrates their desirability of doing away with them, is
very interesting. Colbert, inconsistently enough, allowed a
number of export duties for industrial products to remain,
that he might not alienate any domanial rights.
(_Forbonnais_, I, 352.) The tariff, then very moderate, was,
in 1677, doubled in part, and even trebled, which provoked
retaliation, and led to the war of 1672. Hence, in 1678, the
tariff of 1664 was, for the most part, restored. Colbert
entirely prohibited these commodities, which were still
imported, spite of the tariff: thus, Venetian mirrors and
laces in 1669 and 1671. Among his characteristic measures
are the export-premiums for salt-meats which went to the
colonies in order to draw this business away from Holland to
France. (_Forbonnais_, I, 465.) He caused the transit
between Portugal and Flanders to be made through France by
providing that it should be carried on by means of royal
ships at any price. (_Forbonnais_, I, 438.) Compare
_Clement_, Histoire de la vie et de l'Administration de C.
(1846). _Jonbleau_, Études sur C. ou Exposition du Système
d'Économie Politique suivi de 1661 à 1683 (II, 1856).
Lettres, Instructions et Mémoires de C. publiés par Clément
(1861 ff.).]

[Footnote A3-6-5: In Germany, the tariff projects of the
empire of 1522, contemplated no protection, inasmuch as
imports and exports were equally taxed, but the importation
of the most necessary means of subsistence was left free.
Prohibition of the exportation of the precious metals in
1524; of the exportation of raw wool _mit grossen Haufen_
(R. P. O., of 1548, art. 21; 1566, and in the R. P. O. of
1577, limited to the pleasure of the several districts).
Hence, in Brandenburg, 1572 and 1578, the Saxons,
Pommeranians and Mecklenburghers were prohibited to export
wool and to import cloth, in retaliation. Individual states
had much earlier adopted protective measures: Göttingen, in
1430, prohibited the exportation of yarn, and in 1438, the
wearing of foreign woolen stuffs. (_Havemann_, Gesch. von
Braunschweig und Luneburg, I, 780 seq.) Hanseatic politics
recall in many respects the Venetian. After 1426, the sale
of Prussian ships to non-Hanseates was made as difficult as
possible; and in 1433, the importation of Spanish wool was
prohibited in order to compel the payment of debts by Spain.
(_Hirsch_, Gesch. des Danziger, H. 87, 268.) Prohibition of
the exportation of the precious metals to Russia at the end
of the thirteenth century. _Sartorius_, II, 444, 453, III,
191. The elector, Augustus of Saxony, forbade the
exportation of corn, wool, hemp and flax (Cod. Aug. I.,
1414). The Bavarian L. O., of 1553, prohibits generally the
sale of corn, cattle, malt, tallow, leather or other
_Plennwerthe_ to foreigners; which prohibition was, in 1557,
limited to cattle, malt, tallow, wool and yarn.

The protective system received its most important
development in Prussia. Prohibition by the margrave, about
the end of the thirteenth century, of the exportation of
woolen yarn. (_Stengel_, Pr. Gesch., I, 84.) In the
privilege accorded to the weavers of woolen wares, in 1414,
the importation of the less important cloths is forbidden
for two years. (_Droysen_, Preuss. Gesch. I, 323.) The
prohibition of the exportation of wool of 1582 assigns as a
reason of the prohibition, that the numerous leading weavers
should not be ruined for the sake of a few unmarried
journeymen and sellers. (_Mylius_, C. C. M., V, 2, 207.) In
the prohibitions of 1611 and 1629, the domains, the estates
of prelates and knights were exempted; similarly, in Saxony,
1613-1626; which is one of the many symptoms of the then
growing _Junkerthum_. The great elector, who attached, both
in war and peace, great value to the possession of coasts,
men-of-war and colonies, forbade, for instance, the
importation of copper and brass wares (1654), of glass
(1658), of steel and iron (1666), of tin (1687); farther,
the exportation of wool (1644), leather (1669), skins and
furs (1678), silver (1683), rags (1685). Home commodities
were, for the most part, stamped with the elector's arms,
and all which were not so stamped were prohibited. The
prohibition was generally preceded by a notice that the
elector had himself established or improved a manufactory,
or that the guilds (_Innungen_) had entered complaints
against foreign competition. Not till 1682 did the idea
occur to impose a moderate excise on the home product to be
favored, and a much higher duty on the foreign one; thus in
the case of sugar. (_Mylius_, IV, 3, 2, 16.) Frederick I.
continued this system especially for the forty-three
branches of industry hitherto unknown, and the introduction
of which was contemporaneous with the reception of the
Huguenots. (_Stengel_, 3, 48, 208.) Frederick William I., in
1719 and 1723, threatened the exportation of wool, under
certain circumstances, with death. (_Mylius_, V, 2, 4, 64,
80.) The severity with which he insisted that his officials
and officers should wear only home cloth is characteristic;
and the fact that in 1719 he threatened tailors who worked
foreign cloth, with heavy money fines and the loss of their
guild-rights. At the same time all workers in wool were
freed from military duty, and capitalists who had loaned
money to wool manufacturers were given a preference (1729).
Frederick the Great, who continued nearly all this,
prohibited the exportation of Silesian yarn, with the
exception of the very coarsest and finest, as well as of
that which had been bleached. Its exportation was allowed to
Bohemia only, because from here the linen went back again to
Silesia to be bleached and sold there. (_Mirabeau_, De la
Monarchie Pruss., II, 54.)]

[Footnote A3-6-6: Important beginnings of a protective
system in Sweden, under Gustavus Wasa, and again under
Charles IX., the violent opponent of the supremacy of the
nobility (_Geijer_, Schwed. Gesch. II, 118 ff., 346); while
Christian II., of Denmark, failed in all such endeavors. The
founder of the Russian industrial protection was Peter the
Great, who was in complete accordance with the native
theorist, _I. Possoschkow_: Compare _Brückner_, in the
Baltische Monatschrift, Bd. VI (1862), and VI (1863). Spain
first adopted a real protective system under the Bourbons.
The export prohibitions issued mostly at the request of the
cortes between 1550 and 1560 (_Ranke_, Fürsten und Völker,
I, 400 ff.) must be considered as a remnant of the medieval
scarcity-policy, induced principally by a misunderstood
depreciation of the precious metals.]