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Liberal Perspective On Britains Trade Policies

.. ce was capable to compete in a free market. Nevertheless, he was concerned about protectionist policies of foreign governments. He believed that they imposed unfair obstacles for British trade (Halstead 17). However, John V. Nye expressed opposing view on this issue in his article.

He argued that the notion of Britain being the only European country engaging in free trade while the rest of states maintain protectionist policies is wrong. For his argument Nye uses trade policy of France. He claims that according to analysis of British and French trade statistics, average tariff levels in France were below of those in Britain throughout the nineteenth century. That means that French commercial policies were more liberal that those of Great Britains. The author suggests that the error was made because very little attention has been paid to the commercial interaction between Britain and France.

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Also, most economists focus on the volume of trade in the two nations while ignoring changing tariffs. John V. Nye even offers his own table of data portraying the average tariff levels of Britain and France throughout the nineteenth century. Based on this data Nye reject the idea that while Great Britain adopted free trade policy, the rest of Europe developed a system of defensive, protectionist pollicies, directed especially against British manufactured goods (Nye 2-4). Further, Douglas A. Irwin criticizes John V. Nyes position in his article Free Trade and Protection in Nineteenth Century Britain and France Revisited: A Comment on Nye.

Irwin argues that Nye bases his analysis primarily on figures for tariff revenue as a percentage of the value of imports, calculated using various weights (Irwin 1). The author claims that: The rate of tariff revenue is an inadequate and potentially misleading indicator of whether a countrys commercial policy tends toward free trade or protection. In examining the structure of Britains tariff in the second half of the nineteenth century, when those problems were particularly acute, I found that the tariff was carefully constructed to avoid protecting domestic producers. A cursory examination of French policy, by contrast, indicates that domestic producers were protected by substantial tariff barriers (1). In support of his claim Irwin also provides a table of tariffs on manufactured goods in 1877. For example, while paper was admitted free by Britain, France charged 6-11 percent, Germany charged 5 percent, Sweden charged 7-19 percent. Britain admitted chemicals with absolutely no charge; France taxed it at 15-19 percent, Germany taxed it at 7-22 percent. This data clearly indicates that French tariffs on Britains products ranked highest among the Europe (Irwin 6).

Judging by both, Nyes and Irwins data, Great Britain was dramatically lowering its tariffs and eventually eliminating them in the end of nineteenth century while other European countries were raising its tariffs. Therefore, it is clear that Great Britain was the great trading nation while the rest of the European powers maintained protectionist policies. Right after abolition of Corn Laws and final adjustment of free trade policies in Britain, it seemed that other countries followed Britain and lowered their trade barriers. For example, in 1860 France made a treaty with Britain (Anglo-French Commercial Treaty of 1860). Substantial reforms were maid in French tariff code; nevertheless, it was not even close to Britains reforms. Britain eliminated all tariff barriers on manufacture goods while France maintained a tariff code that covered hundreds of items.

Moreover, France extended protection of its agriculture, which Britain refused to do. In particular, protection of livestock and grain producers grew tremendously in several times in the 1870s. Along with France, all European countries raised their tariff barriers dramatically with onset of Depression in the end of nineteenth century. Such conduct put an end to all hopes for free trade in Europe. Even at this critical point Britain was not discouraged. British Liberal economists did not change their optimistic views on trade.

They felt competent about Great Britains capability to stand against foreign competition. Liberals were very little concerned with the fact that only Britain supported free trade while other foreign states maintained protectionist policies. They were still convinced that free trade was ideal trade policy for Great Britain. Although Britain experienced some benefits from its free trade, it lasted for only twenty-five years. The major factor contributing to trade liberalization was British hegemony in the nineteenth century.

British hegemony declined in 1870s, the first depression occurred in 1870s, which consequently resulted in decline of free trade. In addition, with rapid industrialization of Germany, America and other countries, British trade policies became disadvantageous. Even the middle-class businessmen, who previously supported free trade in 1840s and 1850s, now were proposing to raise tariff barriers (Rubinstein 79-80). The greatest harm in maintaining liberal trade policies was done to British agriculture. Throughout the whole nineteenth century, agriculture was still fundamental industry in Great Britain.

The most workers were employed in agriculture comparing to other parts of economy. For example, in the middle of nineteenth century 1,434,000 male workers were employed in agriculture while only 525,000 were employed in textiles and 218,000 were employed in mining. A complete removal of tariff barriers from agriculture created great unemployment. As a result, agricultural laborers suffered the most. These people were poorest and worst paid in the whole economy. While the whole country was run by aristocracy, poor were not taken into account.

In addition to the distractions brought by the free trade to British agriculture, it altered British industry. Industry was struck by foreign competition. The most serious competitors were America and Germany. British commodities were substituted by other countries own goods. Britain had to face not only competition in overseas markets, but also foreign penetration of its domestic market.

Moreover, other states erected tariff barriers against British goods. Britain was beginning that languorous industrial decline which has continued uninterrupted to the present day (Frieden & Lake 100). In conclusion, early in nineteenth century Britain began its journey on the way to free trade. British political thinkers and economists were greatly affected by writings of Adam Smith. Their believes were even more strengthened by works of David Ricardo.

Most statesmen and people in government were wealthy landowners and businessmen who dictated how British policies would be conducted and which ones would be enacted. Lower classes had little to do with British transition to free trade. Therefore, since wealthy landowners and middle-class businessmen were supportive of free trade, it was adopted by the country even though it was harming the rest of the population. Free trade caused great unemployment levels in Britain infringing its agriculture and industry. Moreover, British politicians were preoccupied with the idea of world peace and stability.

In their view, free trade was a necessary condition for world peace. Treaties were made in order to improve Britains foreign relations with other European countries. Much attention was paid to well beings of other states in the world free trade. As it turned out, many of the treaties negotiated by Britain were not to its advantage. For instance, France had a treaty with Britain, which obliged France to lower tariffs. In reality, Britain held its part of the contract while France kept its protectionist policies, which eventually led to termination of this treaty. Thus, Great Britains commitment to free trade was not of a great benefit to the country.

Britain maintained free trade because of its ideologies, and clearly, not because of rational reasoning. Therefore, Liberal economic theory cannot be applied to this phenomenon of the late nineteenth century. Bibliography Bibliography Cohn, Theodor H. Global Political Economy, Theory and Practice. Logman, Inc.: New York, 2000. Frieden, Jeffry A.

and David A. Lake. International Political Economy: Perspectives on Global Power and Wealth, 4th Edition. Bedford/St. Martins: Boston, 2000. Halstead, John P. The Second British Empire: Trade, Philanthropy, and Good Government, 1820-1890.

Grenwood Press: Westport, Connecticut, 1983. International Trade. Comptons Interactive Encyclopedia. CD-ROM. Comptons New Media: A Tribune Publishing Company, 1995 Irwin, Douglas A. Free Trade and Protection in Nineteenth-Century Britain and France Revisited: a Comment on Nye. The Journal of Economic History, Vol.

53, No.1. (March 1993): 146-152. – – – – – – – – – – – -. Retrospectives: Challenges to Free Trade. The Journal of Economic Perspectives, Vol.

5, No.2 (Spring, 1991): 201-208. Levi, Leone. The History of British Commerce and of the Economic Progress of The British Nation 1763-1878. Irish University Press: Shannon Ireland: 1971. Nye, John V.

The Myth of Free-Trade Britain and Fortress France: Tariff and Trade in the Nineteenth Century. Journal of Economic History, Vol. 51, No.1 (March, 1991): 23-46. Platt, D. G.

M. Finance, Trade and Politics in British Foreign Policy 1815-1914. Clarendon Press: Oxford, 1968. Protectionism. Encyclopedia Britannica Online.

Encyclopedia Britannica, 1994-1999: 1-2. Available at: http:/search.eb.com Rubinstein, W. D. Britains Century: A Political and Social History 1815-1905. Arnold:New York, 1998.

Stein, Arthur A. The Hegemons Dilemma: Great Britain, the United States, and the International Economic Order. International Organization, Vol. 38, No.2. (Spring, 1984): 355-386. Political Science.

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