This section of the book is from the "Introduction To Public Finance" book, by Carl Copping Plehn.
We may now look at some examples of customs duties. Those of England are particularly instructive.1 The term " consuetudines" or customs, applied to theduties levied upon imported and exported commodities even before the Magna Charta, bespeaks their antiquity. In the time of the Norman kings, however, trade was insignificant and the duties not very productive. The original duty on wine was one cask from every cargo of between ten and twenty casks, two from twenty or more. What the original duty on wool was is not known. Finally the system settled down to a 5 per cent tax on all imports and exports. Down to 1700, these duties were entirely for revenue purposes and had no intentional protective features. At one time their yield was nearly £1,500,000. The eighteenth century saw a changed policy. Special protective and prohibitive duties were established. This was the policy of the entire century, except during the " long peace " of Walpole, 1722-1739.
1 See Hall, History of the Customs Revenue, and Dowell, History of Taxation.
By 1759, the general charges were per cent, while many commodities, like tea, coffee, sugar, wines, and spirits, paid even more. The expenses of the wars which marked the turn of the century led to a general increase of charges on revenue-yielding commodities. Yet with all the many increases in the tax charges there was not a corresponding increase in revenues. In some cases, the high duties of the war period exceeded the limit of what the goods would bear. For example, sugar paid duties ranging from 20s. to 39s. per hundredweight during the first fifteen years of the nineteenth century. But the annual income was least when the duties were highest. Consumption fell off half a million hundredweight under the higher price. It must be noted that this result was obtained in the case of a commodity not produced in the country itself. Salt, also, bore a heavy duty in this period to the lessening of the consumption. Tea, coffee, tobacco, wine, and other foreign products were also subject to revenue duties so high as to be close to, if not beyond, the limit of greatest productivity.
Interesting and instructive is the experience of England with protective duties. Export duties on raw material, or the prohibition of the exportation thereof, as in the case of wool, was originally one of the most prominent features of the English system. From the middle of the seventeenth century down to 1825 the exportation of home-grown wool was forbidden. Until 1802, however, the importation of wool was free. Then the import duty rose rapidly from 5s. 3d. per hundredweight, in 1802, to 56s. per hundredweight, in 1819. To encourage the production of raw silk, heavy duties were placed upon that commodity in 1765, and not lessened until 1825. Linen manufacture was encouraged by bounties.
The chief battles over the customs duties in England were waged around the "corn-law."1 Two things among others of minor importance seem to have contributed mainly to the establishment of protective duties on bread-stuffs.2 The first was the existence of heavy public burdens upon land, and the desire to compensate land owners and land users therefor. The other was the desire to make England as independent as possible of all foreign nations for her food supply, and to keep even the poorer lands in cultivation. According to the advocates of this policy, protection was needed to enable the proprietors and tenants to buy manufactured products. It was the political power of the proprietors that enabled the policy to be maintained. The various tariffs that prevailed may be conveniently summarised as intended generally to maintain a chosen price, which it was assumed would enable the producer to live, and would not place too heavy a burden on the consumer.
1 The American student must bear in mind that in England "corn" means wheat, or, in general, bread-stuffs.
2 See McCulloch, Taxation, p. 206 ; Wilson, National Budget, pp. 62 ff.; Levy, History of British Commerce, 2d ed., Part II., Chap. 7 ; .Rand, pp. 207 ff.
Hence the frequent recourse to a sliding scale by which a higher duty was imposed as the price fell. The best example is the scale adopted by Sir Robert Peel (5 and 6 Vict. c. 14), by which the duty was to be 20s. per quarter when the price was 50s. and 51s., and decreased 1s. per quarter for every rise of 1s. in price; so that the duty should only be 1s. per quarter when the price rose to 70s. and over. The idea was, clearly, to maintain, if possible, a price of at least 70s. A similar purpose underlay the earlier prohibition of importation, until the price rose above 80s. per quarter.
Popular agitation, headed by the Anti-Corn Law League, was based upon the hope of cheaper food supplies. It was supported by the rapidly growing manufacturing interests in the expectation that cheaper food would result in a fall in wages. After years of effort, it brought about the repeal of the corn laws in 1846. The sympathy aroused by the Irish famine of the same year contributed to this end. Just before the repeal of the corn laws Peel had, in 1842, simplified the whole tariff by eliminating many of the protective features, especially by removing duties on raw material and freeing a number of small articles. As a substitute source of revenue the income tax was restored. Gladstone, in 1860, completed the removal of protective features. Since that time it has been true, in the words of Bastable, that "the English customs system is remarkable for its vigorous adherence to the principle of purely financial duties. All traces of a political aim in the imposition of customs duties have now disappeared." Customs yielded £20,164,114 in 1894 from the following articles : —
Spirits: rum, £1,938,181; brandy, £1,364,058; gin, £154,088 ; others, £674,257 ; beer, etc., £14,582; tea, £3,493,094; tobacco, etc., £10,119,954; wine, £1,210,141; chicory, £57,130; cocoa, £102,665; coffee, £164,985; currants, £120,977; figs, plums, and prunes, £55,135 ; raisins, £189,160 ; all others, £4,886.
There are now only 40 rates in the English customs tariff. In 1875 there were 53, as against 397 in 1859, and 1046 in 1840.