By the middle of the nineteenth century the doctrine of Adam Smith had conquered the whole of Europe. Former theories were forgotten and no rival had appeared to challenge its supremacy. But during the course of its triumphant march it had undergone many changes and had been subjected to much criticism. Even disciples like Say and Malthus, and Ricardo especially, had contributed many important additions and effected much improvement. Through the influence of Sismondi and the socialists new points of view had been gained, involving a departure from the narrow outlook of the master in the direction of newer and broader horizons.
Of the principles of the Classical school the Free Trade theory was the only one which still remained intact. This, however, was the most important of all. Here the triumph had been complete. Freedom of international trade was accepted as a sacred doctrine by the economists of every country. In Germany as in England, in France as in Russia, there was complete unanimity among scientific authorities. The socialists at first neglected this topic, and when they did mention it it was to express their complete approval of the orthodox view.[566] A few isolated authors might have hinted at reservations or objections, but they never caught the public ear.[567] It is true that Parliaments and Governments in many countries hesitated to put these new ideas into practice. But even here, despite the strength of the opposing forces, one can see the growing influence of Smith’s doctrine. The liberal tariff of Prussia in 1818, the reforms of Huskisson in England (1824-27), were expressly conceived by their authors as partial applications of those principles.
However, there arose in Germany a new doctrine for which the peculiar economic and political conditions of that country at the beginning of the nineteenth century afforded a favourable environment. Although the development was slow it was none the less startling. Friedrich List, in his work entitled Das Nationale System der Politischen Oekonomie, promulgated the theory of the new Protection. “The history of my book,” he remarks in his preface, “is the history of half my life.” He might have added that it was also the history of Germany from 1800 to 1840. It was no mere coincidence that led to the creation of an economic system based exclusively upon the conception of nationality in that country, where the dominant political note throughout the nineteenth century was the realisation of national unity. List’s work was a product of circumstances, and these circumstances we must understand if we are to judge of the author and his work.
I: LIST’S IDEAS IN RELATION TO THE ECONOMIC CONDITIONS IN GERMANY
The Germany of the nineteenth century presents a unique spectacle. Her population was at first essentially agricultural, and the various states politically and economically isolated. Her industry was fettered by the corporative régime, and her agriculture was still in feudal thraldom. Freed from these encumbrances, and having established first her economic and then her political unity, she took her place during the last three decades of the century among the foremost of industrial Powers.
The Act of Union of 1800 had ensured the economic unity of the British Isles. The union of England and Scotland was already a century old, and Smith regarded it as “one of the chief causes of the prosperity of Great Britain.”[568] France had accomplished the same end by the suppression of domestic tariffs in 1791. But Germany even in 1815 was still a congeries of provinces, varying in importance and separated from one another by tariff walls. List, in the petition which he addressed in 1819 to the Federal Assembly in the name of the General Federation of German Trade and Commerce, could reckon no less than thirty-eight kinds of tariffs within the German Confederacy, without mentioning other barriers to commerce. In Prussia alone there were no fewer than sixty-seven different tariffs.[569] “In short,” says List in another petition, “while other nations cultivate the sciences and the arts whereby commerce and industry are extended, German merchants and manufacturers must devote a great part of their time to the study of domestic tariffs and taxes.”[570]
These inconveniences were still further aggravated by the complete absence of import duties. The German states were closed to one another, but, owing to the absence of effective central control, were open to other nations—a peculiarly galling situation on the morrow of the Continental Blockade. The peace treaty was scarcely signed when England—so long cut off from her markets and forced to over-stock her warehouses with her manufactured goods—began to flood the Continent with her products. Driven from France by the protective tariff established by the Restoration Government, these goods, offered at ridiculously low prices, found a ready market in Germany.
The German merchants and manufacturers became thoroughly alarmed, and there arose a general demand for economic unity and a uniform tariff. Public opinion urged a reform which appeared to be the first step in the movement towards national unity. In 1818 Prussia secured her own commercial unity by abolishing all internal taxation, retaining only those duties which were levied at the frontier. Her new tariff of 10 per cent. on manufactured goods, with free entrance for raw material, was not regarded as prohibitive, and was actually approved of by Huskisson as a model which the British Parliament might well imitate. But this reform, confined as it was to Prussia alone, did nothing to improve the lot of the German merchants elsewhere, for the Prussian tariff applied just as much to them as to foreigners.
This particular reform, far from staying the movement towards uniform import duties, only accelerated it. A General Association of German Manufacturers and Merchants was founded at Frankfort in 1819 to urge confederation upon the Government. The agitation was inspired by Friedrich List. He had been for a short time professor at Tübingen and was already well known as a journalist. He was nominated general secretary of the association, and became the soul of the movement. He wrote endless petitions and articles, and made personal application to the various Governments at Munich, Stuttgart, Berlin, and Vienna. He was anxious that Austria should take the lead. But all in vain. The Federal Assembly, hostile as it was to every manifestation of public opinion, refused to reply to the petition of the merchants and manufacturers. List himself was soon taken up with other interests. He was named as the deputy for Reutlingen, his native town, in the state of Würtemberg, in 1820, but was banished from the Assembly and condemned to ten months’ imprisonment for criticising the bureaucracy of his own country. After seeking refuge in France he spent a few years travelling in England and Switzerland, and then returned to Würtemberg, where he again suffered imprisonment. Upon his release from prison he resolved to emigrate to America, where Lafayette, whom he had met in Paris, promised him a warm welcome.