SmallStates,TariffsandWar–Danish
andSwedishTradePolicy1780-1800
Paper presented at the XXXIII APHES Meeting
Braga, Portugal, 15-16 November 2013
Author: Henric Häggqvist, PhD-candidate, Uppsala University
SUMMARY
Conventional wisdom has held it that most European countries were protectionist during the
late 18th and early 19th centuries. The only exceptions to the rule would have been the
Netherlands and Denmark. Sweden has in contrast to its Scandinavian neighbor been seen
as having a rather invariable mercantilist trade policy with tariff levels regarded as
protectionist. This paper investigates and compares Swedish and Danish tariff rates between
1780 and 1800 to put the trade policies of the two countries in perspective. It shows that
Sweden had a lower general tariff level for the most part of the two decades, but that the
renown Danish tariff revision of 1797 brought down its import duties well below the
Swedish. Sweden’s relative reliance on tariff revenue for government income is also noted
and can be attributed with some explanatory power for its generally immovable trade policy.
It is further shown that the economic and military warfare of the Napoleonic Wars
temporarily changed both countries policies.
KEYWORDS
Foreign trade; tariffs; trade policy; industry policy; fiscal policy; protectionism; mercantilism;
Sweden; Denmark; Napoleonic Wars
CONTACT DETAILS
Henric Häggqvist
Dept. of Economic History, Uppsala University
Box 513
75120 Uppsala, Sweden
Email: [email protected]
-2-
Introduction
Economic theory has often stated that free trade should be the best economic and political
alternative for any country that wishes to conduct a successful trade policy. Harry Johnson
has perhaps put it most clearly when he argued: “[t]he proposition that freedom of trade is
on the whole economically more beneficial than protection is one of the most fundamental
propositions economic theory has to offer for the guidance of economic policy.”1 Still,
historic evidence has shown that most nations have favored using tariffs or other obstacles
to trade such as quotas or trade bans to varying extents. This divide between economic
theory and political reality continues to puzzle the academic community. Frank Taussig
touched on this issue already in the beginning of the 20th century when he claimed that “the
doctrine of free trade, however widely rejected in the world of politics, hold its own in the
sphere of the intellect.”2
Two main reasons are usually given when trying to explain why nations would want to tax
their imports, or less commonly exports, instead of allowing their flow duty-free. The first is
the main ingredient of protectionism and simply spells out as a wish to protect one’s own
industries. It can come in the shape of infant industry protectionism which states that
domestic industries can receive support by putting high tariffs on imports from the same
sector that the state wishes to shelter from international competition. What separates infant
industry from “ordinary” protectionism is that it is supposed to be put in place during a
limited time period, until the industries can compete on international markets without the
assistance of sitting behind a tariff wall. John Stuart Mill formulated parts of the argument in
the middle of the 19th century when he stated that “protection should be confined to cases
in which there is good ground of assurance that the industry which it fosters will after a time
be able to dispense with it; nor should the domestic producers ever be allowed to expect
that it will be continued to them beyond the time necessary for a fair trial of what they are
capable of accomplishing.”3
1
Johnson, H. G. (1971). Aspects of the theory of tariffs. London: Allen & Unwin., p. 187.
Taussig, F. W. (1905). The Present Position of the Doctrine of Free Trade. Publications of the American
Economic Association 6, 29-65., p. 65.
3
Mill, J. S. (1848). Principles of political economy: with some of their applications to social philosophy. London:
J.W. Parker., p. 403-404.
2
-3-
The second main reason for using tariffs has to do with fiscal policy. Since a tariff is
essentially a tax put on a nations’ foreign trade it was often used as an easy way of securing
income for states during the 18th and 19th centuries. This has been seen as an almost
omnipresent part of trade policies around the globe: “taxation of trade for revenue purposes
has been a hardy perennial throughout recorded history (…) revenue considerations prevail
almost universally – even free-trade Britain imposed significant revenue tariffs.”4 Fiscal
tariffs have the implication that they do not by natural extension mean that a trade policy is
protectionist. As mentioned in the quote above, even Britain during its free-trade period in
the second half of the 19th century taxed certain imports for the purpose of bringing in
revenue to the public treasury. This also invokes the issue of which commodities the state
usually tax higher than others. Adam Smith for instance stated that taxing “life necessities”
such as salt, bread, and linen was a bad economic policy since it would raise the price of
those goods and risk “widespread hardship”. Smith instead suggested that “luxury products”
such as alcohol, tobacco, sugar and coffee could be taxed for revenue purposes. Therefore
“’colonial goods’ were ‘fiscal goods’, appropriate targets for taxation.”5 States have usually
also put comparatively higher tariffs on luxury goods, such as Britain did during its free-trade
period.6 Tariffs were usually such a big part of most nations’ tax-base that their removal
often coincided with the introduction of other taxes. Both in Britain in the 1840s and in USA
during the 1910s the lowering of tariff rates occurred with the establishment of taxes on
income.7
4
Hoekman, B. M. and Kostecki, M. M. (2001). The political economy of the world trading system : the WTO and
beyond. Oxford: Oxford University Press., p. 21-22.
5
Dormois, J.-P., Foreman-Peck, J. and Lains, P. (2006). Introduction. In Classical Trade Protectionism 18151914(Eds, Dormois, J.-P. and Lains, P.). Milton Park, Abingdon, Oxon: Routledge., p. 3.
6
Irwin, D. A. (1993). Free Trade and Protection in Nineteenth-Century Britain and France Revisited: A Comment
on Nye. The Journal of Economic History 53, 146-152.
7
McLean, I. (2001). Irish Potatoes, Indian Corn and British Policies: interests, ideology, heresthetic and the
Repal of the Corn Laws. In International Trade and Political Institutions: Instituting Trade in the Long Nineteenth
Century(Eds, McGillivray, F., McLean, I., Pahre, R. and Schonhardt-Bailey, C.). Cheltenham: Edward Elgar.;
Rodrik, D. (1995). Political economy of trade policy. In Handbook of International Economics, Vol. 3 (Ed,
Grossman, G. M. R., Kenneth). Elsevier.
-4-
Small States and Tariffs
This paper intends to investigate the tariffs of two small states during the early modern
period – Sweden and Denmark.8 The term “small states” do here not primarily refer to
geographical size or relative political and military power. In the economic sense small states
denote nations that are regarded as price-takers on the world market, meaning that they
cannot affect world prices by their own trade volumes alone and instead have to take
international prices as given. In regards to tariffs economic theory has it that the optimal
tariff for a small state should be zero since “a trade tax necessarily deteriorates the country’s
potential welfare” by adding to the price of imported goods.9 Taxing luxury commodities for
revenue purposes can be ideal for an economical small country if the duty as a proportion of
the price of a certain commodity, an ad-valorem tariff, is equal to the absolute value of the
price elasticity of demand.10
With this being said I still regard both Denmark and Sweden to have been relatively
small states politically and militarily during the period in question here. The Danish empire
did indeed have a geographical vastness which included Norway, Iceland and Greenland and
had the fourth largest naval fleet in Europe at the outbreak of the Napoleonic Wars in 1792,
while Sweden’s territory included the realm of Finland until 1809 and contained the fifth
largest naval fleet in Europe in 1792.11 Still, in relation to nations such as England, France,
Russia and the Netherlands the Scandinavian duo were small-time players during the
Napoleonic Wars (1792-1815) which is proven by their increasingly difficult position during
the war as they both were wedged between the major powers.12 The war ultimately also
caused Denmark and Sweden to have to surrender big parts of their realms due to military
defeats.
8
Even though the Danish empire consisted of more territories than Denmark proper I will here simply use
Denmark to denote the realm of Denmark-Norway. The same goes for Sweden-Finland which will be termed
Sweden.
9
Chacholiades, M. (1978). International trade theory and policy. New York: McGraw-Hill., p. 497.
10
Dormois, Foreman-Peck, and Lains, (2006), p.4.
11
Johansen, H. C. (1992). Scandinavian Shipping in the Late Eighteenth Century in a European Perspective. The
Economic History Review 45, 479-493.; Högberg, S. (1969). Utrikeshandel och sjöfart på 1700-talet : stapelvaror
i svensk export och import 1738-1808. Stockholm: Bonnier.
12
See for instance Voelcker, T. (2008). Admiral Saumarez versus Napoleon : the Baltic, 1807-12. Woodbridge ;:
Boydell Press.
-5-
Foundations of Danish and Swedish Trade Policy
European trade policy was almost universally protectionist during and right after the end of
the Napoleonic Wars. Conventional wisdom tends to state that the only exceptions to the
rule were found in the Netherlands and Denmark.13 The latter is pointed to as having
removed most of its import bans and reduced tariffs in its policy revision of 1797. Eli
Heckscher described the Danish policy as having conducted the “most radical tariff-reform
known at the time.”14 Other accounts have considered the policy as fairly liberal for its time
and a “clear break with Mercantilist thinking”.15 According to Hansen in his work on Danish
economic history the tariff revision of 1797 came “halfway” and bore signs of a moderate
protection policy which was “as far from mercantilism as it was from free trade.”16 According
to Becker-Christensen the new tariff law ended a period of “high-protectionism”, and it was
a result of a gradual transition towards a more liberal policy where Danish economic thinkers
had started proposing changes to the prevailing system already during the 1770s. The
commission which put forth the new law had also had ten years to prepare it.17
The general rationale behind the Danish trade policy change was that the mercantilist
regulatory system had become too stiff to fully allow a successful economic and industrial
development. Policy-makers thought that a less intense regulation of trade would set the
wheels in motion. The earlier tariff policy from the 1760s had been clearly protectionist
where the export of raw materials such as copper, oak timber and wool was prohibited and
high tariffs were set on the import of wine and spirits, while the government spent “vast
sums” to support domestic industries.18 Aage Rasch concludes that when tariff reform came
to happen in 1797 it was much due to the failure of the older protectionist system, for
instance in safeguarding a positive balance of payments. The reduction of import duties and
the removal of several import bans would also deal with the issue of rampant smuggling, it
13
See for instance Findlay, R. and O'Rourke, K. H. (2007). Power and plenty : trade, war, and the world economy
in the second millennium. Princeton, N.J.: Princeton University Press.; Williamson, J. G. (2011). Trade and
poverty : when the Third World fell behind. Cambridge, Mass.: MIT Press.
14
Heckscher, E. F. (1949). Sveriges ekonomiska historia från Gustav Vasa. D. 2, Det moderna Sveriges
grundläggning, Halvbd 2. Stockholm: Bonnier., p. 668.
15
Lampe, M. and Sharp, P. (2011). Something rational in the state of Denmark? The case of an outsider in the
Cobden-Chevalier network, 1860–1875. Scandinavian Economic History Review 59, 128-148., p. 130.
16
Hansen, S. A. (1972). Økonomisk vækst i Danmark. København., p. 71.
17
Becker-Christensen, H. (1988). Dansk toldhistorie. 2, Protektionisme og reformer : 1660-1814. København:
Toldhistorisk selskab., p. 493-496.
18
Rasch, A. (1955). Dansk toldpolitik : 1760-1797 = Danish tariff policy, 1760-1797. Aarhus: Universitetsforl., p.
308.
-6-
was widely believed by contemporaries. Danish economic policy was generally quite heavily
influenced by thinking in the Netherlands, but according to Rasch inspiration from other
countries had no decisive effect on those who formed the new policy.19 The tariff of 1797
would come to form Danish trade policy well into the 19th century, and in Norway it was
even the foundation of trade policy into the 20th century.
It was also believed that the reform would support the Danish efforts to increase its
share in the neutral trade whose opportunities had surfaced due to the outbreak of war
between England and France in 1792. Danish foreign trade and shipping had seen grim years
since the end of the American Revolutionary War in 1783, but now virtually boomed and
continued to do so until 1807 when England and France initiated their trade war against one
another in the form of mutual blockades. Denmark was also drawn into warfare which surely
hurt its neutral trade and shipping. Andersen and Voth have shown that particularly during
the first years of war Danish shipping soared, until the peak-year 1797.20 The majority of
Danish exports during this time were Norwegian timber and fish sold to Western Europe,
while certain colonial commodities were re-exported from Copenhagen to Baltic ports. Most
imports were brought into the Danish capital as well as the provinces in the Duchies
Schleswig and Holstein and were often luxury items such as wine, sugar and fruits.21 Exports
oftentimes outweighed imports, which meant that Denmark would have had a positive
balance of trade during this time.
The foundation of Swedish trade policy during the 18th century was the Navigation Act
(Produktplakatet) from 1724 which would remain until the 1820s when it started to become
gradually dismantled. The main aim of the act was to encourage domestic shipping, much
like the Dutch and British navigation acts it was modelled after. This was done by setting
differentiated tariffs between Swedish and non-Swedish vessels, where the latter would pay
a 50 per cent higher duty. Later the system would mean different rates for different goods.
In 1782 the export of boards had a tariff that was 280 per cent higher on foreign vessels,
19
Rasch, (1955), p. 317-318.
Andersen, D. H. and Voth, H.-J. (1997). The grapes of war: neutrality and Mediterranean shipping under the
Danish flag, 1750-1807. Oxford: University of Oxford.
21
Johansen, (1992), p. 485. Note however that Schleswig and Holstein are usually excluded when speaking of
Danish tariffs during this time since they had their own (and usually lower) trade taxes.
20
-7-
while the equivalent difference for bar iron was around 50 per cent. The export of herring
wasn’t differentiated at all.22
Sweden’s general trade policy of the 18th century has usually been termed mercantilist
where the tariffs within that policy were of protectionist character.23 The generally stated
aim was to keep import-levels down through high tariffs and import-bans while furthering
exports, hence creating a positive balance of trade. According to Heckscher mercantilism
was at its height during the century and wouldn’t really disappear until the 1860s. Heckscher
also meant that Swedish trade policy was fairly immovable during the late 18th century, in
contrast to Danish trade policy. Lars Magnusson has partly questioned Heckscher’s
statement and instead argued that some liberal ideas were accepted by Swedish economists
during the first half of the 19th century.24 Arthur Montgomery has on his part meant that
liberal polices made a brief breakthrough during the Napoleonic Wars and that
protectionism would gain ground again in 1816 with the resumption of peace.25
Swedish shipping increased dramatically during the 18th century, where both Heckscher
and Högberg have found that Swedish shipping was twice as high in 1805 compared to 1734
in terms of incoming and outgoing cargo. This would mean an average increase of about one
per cent per year. In fixed prices both Swedish imports and exports decreased heavily
towards the end of the century. In 1800 it was about half of what it had been only ten years
earlier. Imports soared to record levels after 1807, while exports gained some of what they
had lost earlier. Iron was without doubt Sweden’s single most important export, occasionally
making up 60 per cent of total exports. Copper, brass, tar and pitch, sawn battens and
timber were also significant exports, where the two latter rose particularly after 1780.
Among imports agricultural goods such as grain were important throughout the period.
Various textiles were most often second, while commodities such as salt, sugar, coffee and
alcohol were also imported in significant numbers.26
22
Högberg, (1969), p. 28-30.
Heckscher, (1949); Gerentz, S. (1951). Kommerskollegium och näringslivet : minnesskrift. Stockholm.; Ohlin,
B. (1962). Utrikeshandel och handelspolitik. Stockholm: Natur och kultur.
24
Magnusson, L. (2004). The tradition of free trade. London: Routledge., p. 146.
25
Montgomery, A. (1921). Svensk tullpolitik 1816-1911 : översikt. Stockholm.
26
Swedish trade statistics have been compiled from the National Archives, Riksarkivet.
23
-8-
Danish and Swedish Tariffs 1780-1800
A tariff is the tax put on imports, and less commonly exports, and it is often used as an
indication of trade policy, to denote levels of protection. Prior to World War I tariffs were
the most common trade policy tool states had at their disposal, while their significance have
decreased after World War II.
A tariff is most commonly expressed ad-valorem, meaning that it has been related to an
estimated value, or actual price, of a commodity. It can also be expressed nominally and is
then related to the weight, quantitative or liquid measure of the good. When comparing
tariff rates across time, space and/or different commodities there really is no better
alternative than the ad-valorem. Unfortunately for my purpose here there were some
differences in the Danish and Swedish ways of measuring tariffs. Danish tariffs were almost
always noted nominally, not related to any estimated value or price, and are hence not
available as pure ad-valorem tariffs. Swedish tariffs on the other hand were related both to
an estimated price as well as to the weight or quantity of the commodity. I have decided to
solve this by taking the nominal tariff and measure it as a percentage of the actual market
price of the same good, hence creating an ad-valorem equivalent alternative. This has really
been the only viable option to fully be able to compare Danish and Swedish tariff rates. It
mostly circumvents the problem of having different measurements of weight and liquids in
the two countries, as well as creates possibilities to compare across different types of
commodities. The use of an ad-valorem equivalent, instead of the preferred pure advalorem, has been employed in earlier research on Danish tariffs in the 19th century. I
basically make use of the methodology therein.27 In practice this means that the tariff rates
in this paper are not necessarily those as intended by the policy-makers in Denmark and
Sweden, but rather the tariff rates in relation to the actual market price of the commodities.
Even though this is not ideal, I believe it still gives a rather good indication of the intended
tariffs from the two states point of view. It further means that the tariff rates could fluctuate
as an effect of changing prices, rather than from a change in the tariff itself.
As far as possible I have tried to compare the same commodities that the two countries
traded in. However, for natural reasons this has not always been ideal. Particularly with the
27
See Henriksen, I., Lampe, M. and Sharp, P. (2012). The strange birth of liberal Denmark: Danish trade
protection and the growth of the dairy industry since the mid-nineteenth century. The Economic History Review
65, 770-788., as well as Lampe and Sharp, (2011).
-9-
export tariffs since the countries’ main exports were not exactly the same. Here I have
chosen from the vantage point of what were the largest export-commodities, as well as if
tariff rates and prices have been available for those commodities.
I have used three sources for my price-data: Swedish prices from Jörberg, Danish prices
from Friis and Glamann, and for certain “colonial” goods I have used English market prices
from Clark. I would have been ideal to use the same source to compute import-prices for
both Denmark and Sweden, but since this would have severely limited the number of
commodities included I chose this methodology. For further explanation I refer the reader to
the appendix.
Commodities have been composed into different categories depending on their origin
and use: agricultural imports, luxury imports, industrial imports, textile imports. Salt has
been included as a stand-alone category to denote a “good of necessity” in contrast to the
luxury imports. The export tariffs are put in just one category since there weren’t enough
commodities to create more categories. Where tariff rates are put together in groups I have
used their un-weighted averages. It might have been more fitting to weight the rates by each
commodity’s trade level, but as Anderson and Neary have pointed to this is also a crude
tariff measurement which might even create new problems.28
Due to limitations in available Danish price data the time series here unfortunately end
in the year 1800. My idea for the continuation of this research is to extend the series to
around 1830. Major revisions of Danish tariffs were done in 1768 and in 1797, while grain
tariffs were changed in 1788. The tariffs from 1768 are here used from 1780 to 1796 (1788
for grains). Swedish tariffs were revised in 1782 (hence that start year for the Swedish tariff
rates), in 1794 (imports only) and in 1799. Note that in Sweden grain tariffs could be
changed more often, occasionally with mere months in between, but here they are included
only when they appear in the major revisions.
28
See the discussion in Anderson, J. E. and Neary, J. P. (2005). Measuring the restrictiveness of international
trade policy. Cambridge, Mass. ;: MIT Press.
- 10 -
Figure 1. Average Danish and Swedish export tariffs, ad valorem equivalents
30,0
25,0
20,0
DK Export
15,0
SE Export
10,0
5,0
0,0
1780 1782 1784 1786 1788 1790 1792 1794 1796 1798 1800
Source: See appendix
Note: Figures are in per cent
Danish export tariffs were markedly lower than the Swedish equivalents during these two
decades. Beneath the average rates lay certain important differences. In Denmark exports
(such as bar iron, beer, dairy, train oil and split cod) were with the exception of tar not taxed
at more than 10 per cent, and usually below 5 per cent. Note that the Danish export tariffs
are only slightly affected by the revision of 1797. Swedish exports in this measurement were
more differentiated where pitch and tar had tariffs around 10 per cent, while bar iron was
taxed lower. Here forestry exports really stand out as sawn battens had tariffs of 25-30 per
cent and timber of 80-90 per cent. Whether this is a result of a bad measurement or
incoherent data or not I cannot assure, but it was the case that the Swedish forestry tariffs
were set quite high, although not as extreme as they appear here. In Sweden export tariffs
were in place pretty much only for fiscal reasons. Particularly major exports, such as bar iron,
brought in significant revenue when they were taxed, and it was argued well into the 1840s
that the export tariffs needed to be kept for the sake of securing government revenue.29 It
should be added that not all states even had export tariffs in this period. The newly
29
Montgomery, (1921).
- 11 -
established American republic for instance banned the use of tariffs on exports in the
constitution.30
Figure 2. Average Danish and Swedish import tariffs, ad valorem equivalents
30
25
20
DK Import
15
SE Import
10
5
0
1780 1782 1784 1786 1788 1790 1792 1794 1796 1798 1800
Source: See appendix
Note: Figures are in per cent
Looking at the aggregate import tariff rates they were quite equal between the two nations
for longest part of the period, and at quite a high protective rate of around 20 per cent. The
Swedish rate was slightly lower until the first augmentation in 1794. The most radical change
occurred when the Danes revised their tariffs in 1797, as has been heavily noted in previous
research, which meant that the average import tariff dropped from 19 per cent to 7 – a
radical change by any measure. It should be noted that the Danish tariff on imported sugar is
what brings up the average rate. If sugar would have been excluded the Danish rate would
have been lower than the average Swedish before 1797 as well. This graph also highlights
the fixed nature of the average Swedish tariff rate which was pretty much the same during
the two decades, at slightly below 20 per cent.
30
Northrup, C. C. and Prange Turney, E. C. (Eds.) (2003). Tariffs and Trade in U.S. History: An Encyclopedia.
Greenwood.
- 12 -
Figure 3. Danish and Swedish agricultural tariffs, ad valorem equivalents
35,0
30,0
25,0
20,0
DK Agri
15,0
SE Agri
10,0
5,0
0,0
1780 1782 1784 1786 1788 1790 1792 1794 1796 1798 1800
Source: See appendix
Note: Figures are in per cent
If we turn our attention to more specific import tariffs we see two completely different
trajectories here. Swedish agricultural tariffs (for grains, dairy and meat) started out slightly
below the Danish but were increased by some 10 percentage points in 1794. The Danish on
the other hand saw a cut first in 1788 when the tariffs on grains were lowered, and then
slightly again in 1797 when the duties on cheese and butter were decreased. The Danish
economy was by and large an agricultural one during this time, so it might be surprising that
the protection of that sector decreased so radically.31 Becker-Christensen however meant
that the liberalization of the grain trade in 1788 had little to with any embrace of free trade,
but that it was rather a way of dealing with grain shortages. There was for instance severe
rye shortage in Norway which was felt by the public.32 It should be noted that Henriksen et al
have showed that the Danish agricultural sector became heavily protected as the 19th
century progressed, quite at odds with the prevalent story of liberal Denmark.33 Swedish
trade policy during this time usually favored those farmers who wanted to export rather
31
Hansen, (1972).
Becker-Christensen, (1988), p. 497-500.
33
Henriksen, Lampe and Sharp, (2012).
32
- 13 -
than those who needed to import, which might explain the high Swedish agricultural
tariffs.34
Figure 4. Danish and Swedish textile tariffs, ad valorem equivalents
7,0
6,0
5,0
4,0
DK Text
3,0
SE Text
2,0
1,0
0,0
1780 1782 1784 1786 1788 1790 1792 1794 1796 1798 1800
Source: See appendix
Note: Figures are in per cent
There wasn’t much difference in average textile tariffs, even though the Swedish were
slightly higher throughout here. Textile raw materials were usually brought in at low rates in
both countries to be processed and sold, while more finished textiles were usually taxed
higher or were banned from import completely. The figures above denote the un-processed
textiles where that was noted in the tariffs. For Sweden, Heckscher saw this as heavy
economic support of the domestic textile manufactures, although he regarded them as
having been largely ineffective since there weren’t much demand in Europe for Swedishmade textiles.35
Note that Denmark imported silk (throughout the period) and wool (until 1797)
completely duty-free. Sweden equally imported silk virtually duty-free, at 0,2 per cent ad
valorem.
34
Dahlgren, S. (1991). Skatterna och jordbruket under 1700- och 1800-talen. In Statens jordbrukspolitik under
200 år, Vol. S. 18-32, 118-121 (Ed, Myrdal, J.). Stockholm: Nordiska museet.
35
Heckscher, (1949), p. 585-586.
- 14 -
Figure 5. Danish and Swedish industrial tariffs, ad valorem equivalents
35,0
30,0
25,0
20,0
DK Ind
15,0
SE Ind
10,0
5,0
0,0
1780 1782 1784 1786 1788 1790 1792 1794 1796 1798 1800
Source: See appendix
Note: Figures are in per cent
What I have termed industrial imports here denote such commodities as iron, tar, pitch and
charcoal. Since Sweden was a producer and net-exporter of pitch and tar, these
commodities were hardly imported at all, meaning that they were not given tariffs. The tariff
on bar iron was similarly set at a protectionist level of 55 per cent, decreased to 50 in 1799.
Denmark had iron tariffs set fixed at 24 per cent until 1797 when they were given unfixed
rates below 8 per cent.36 Again, the major difference between the countries is marked by
1797 when Danish protective tariffs are removed, but Sweden kept its system of trying to
keep down import levels of those commodities that were big exports. Both countries
imported charcoal at low duties.
36
Iron works were however set differently with higher duties of 40-50 per cent of the price until 1797 when
they were at slightly over 15 per cent.
- 15 -
Figure 6. Danish and Swedish luxury commodities tariffs, ad valorem equivalents
100,0
90,0
80,0
70,0
60,0
50,0
DK Lux
40,0
SE Lux
30,0
20,0
10,0
1780
1781
1782
1783
1784
1785
1786
1787
1788
1789
1790
1791
1792
1793
1794
1795
1796
1797
1798
1799
1800
0,0
Source: See appendix
Note: Figures are in per cent
Both Denmark and Sweden imported “colonial” foodstuffs and stimulants to quite great
extents. Alcohol (wine, brandy, rum, beer, etc.) sugar, coffee and tobacco are usually termed
luxury products in this sense, while they were also called “commodities of abundance” in
both countries during this time. What explains the high Danish tariff here is the fact the duty
on sugar was set very high, over 200 per cent with this measure. What then took place in
1797 was that the import of sugar was completely banned by Danish decision-makers,
meaning that the commodity no longer had a tariff. This explains a great part of the drastic
drop in the rate that year. However, Denmark taxed alcohol significantly lower, and even
more so after 1797, than Sweden did – around 30 per cent compared to Swedish duties
which were protective from the usual 50 per cent occasionally up to 100 per cent for certain
wines and rum. The Swedish alcohol tariffs were relieved somewhat over time, but they still
remained highly protective. It seems then that Denmark had a slightly more liberal view
toward luxury imports, even though it should be noted that domestic production of beer was
heavily protected by high import duties, being no lower than 57 per cent during these 20
years.37
37
Rasch, (1955).
- 16 -
Figure 7. Danish and Swedish salt tariffs, ad valorem equivalents
18,0
16,0
14,0
12,0
10,0
DK Salt
8,0
SE Salt
6,0
4,0
2,0
0,0
1780 1782 1784 1786 1788 1790 1792 1794 1796 1798 1800
Source: See appendix
Note: Figures are in per cent
Salt was perhaps the single most important “good of necessity” during the 18th century. A
cornerstone of most states’ trade policies during the century was to achieve a steady supply
of salt for its citizens, mostly for food preservation.38 If we take Adam Smith’s words as a
truth, it was a commodity that should have been taxed rather low in order to safeguard
citizens’ welfare and societal order. Swedish salt tariffs could however be rather high, not
uncommonly between 20 and 30 per cent. It is not entirely evident why this was, but it could
be that the government believed that trade ties with the Mediterranean (where much of the
salt was brought from) were sufficient to secure a steady import.39 In such reasoning even a
high import tariff would not affect trade levels, but could instead be viewed as a fiscal tariff.
Since salt was one of the major Swedish imports, it should have meant that it was a
significant source of income for the state. Since each individual bought relatively little
38
Carlén, S. (1997). Staten som marknadens salt : en studie i institutionsbildning, kollektivt handlande och tidig
välfärdspolitik på en strategisk varumarknad i övergången mellan merkantilism och liberalism 1720-1862.
Stockholm: Almqvist & Wiksell International.
39
On Swedish trade and shipping in the Mediterranean see for instance Müller, L. (2004). Consuls, corsairs, and
commerce : the Swedish consular service and long-distance shipping, 1720-1815. Uppsala: Acta Universitatis
Upsaliensis :.
- 17 -
amounts of salt, it should have meant that the higher price of the commodity because of the
tariff was not noted by consumers.40 As noted in figure 7 the Danish salt tariff was low
during the period, and most likely kept around only for fiscal reasons.
Fiscal Gains from Trade
As mentioned earlier tariffs have been an important source of revenue for governments
throughout recorded history. Trade taxes have been viewed as a reliable way of securing
well-needed income in the lack of a steady tax-base and in the face of possibly quick rising
military spending due to the risk of warfare.41 For many states tariffs were the single most
important source of government income during the 19th century, as trade volumes steadily
increased. For Sweden it constituted mostly around 50-55 per cent of government income
between 1880 and 1910, and even over 60 per cent between 1875 and 1880. The same
figures for Norway were slightly smaller, between 30 and 40 per cent during the same
period.42 But tariffs mattered significantly for fiscal reasons also during the 18th century. I
have attempted to show to what extent Sweden had to rely on duties for government
income between 1783 and 1802 (for which years there is complete data). I have chosen to
include Britain as a point of comparison, but due to limitations in available in data I have not
been able to include Denmark or any other point of comparison. Johansen has however
shown that the Danish income from tariffs increased by over 30 per cent during the years
1797 to 1802 compared to the earlier 1790s, from an annual average of 1,1 million riksdaler
to over 1,4 million.43
40
Individual salt consumption in Sweden has been estimated at around 13 kilo per person and year towards the
end of the 18th century. See Carlén, (1997), p. 77-79.
41
See for instance Brewer, J. (1989). The sinews of power : war, money and the English state, 1688-1783.
London: Unwin Hyman.
42
Gårestad, P. (1985). Industrialisering och beskattning i Sverige 1861-1914 : [Industrialization and taxation in
Sweden 1861-1914]. Uppsala.; Pahre, R. (2001). Agreeable duties: the tariff treaty regime in the nineteenth
century. In International Trade and Political Institutions: Instituting Trade in the Long Nineteenth Century(Eds,
McGillivray, F., McLean, I., Pahre, R. and Schonhardt-Bailey, C.). Cheltenham: Edward Elgar.
43
Johansen, H. C. (1968). Dansk økonomisk politik i årene efter 1784. Bd 1, Reformår 1784-1788. Århus:
Universitetsforl.
- 18 -
Figure 8. British and Swedish dependency on tariff revenue for government income
45
40
35
30
25
SWE
20
UK
15
10
5
1780
1781
1782
1783
1784
1785
1786
1787
1788
1789
1790
1791
1792
1793
1794
1795
1796
1797
1798
1799
1800
1801
1802
0
Source: Sweden: tariff revenue from Sjökontoret, Bokslutskontoret, RA. Government income from
(Åmark, 1961). UK: (Mitchell, 1975)
Note: Figures in per cent
Tariffs made up on average around 23 per cent of total government income in Sweden
between 1783 and 1802. The average figure for Britain these years is only slightly lower,
around 21 per cent. Even though the figures are not close to those for the late 19th century
they can still be regarded as significant. There are heavier fluctuations in the Swedish
figures, and as far as I’ve been able to see it has a lot to do with the war against Russia 17881790 when government income skyrockets, from about 4 million riksdaler to over 10, while
tariff revenue remain fairly steady. Hence we can see a relatively low level of tariff revenue
in 1790 particularly.
Since the Swedish government was fairly reliant on tariff revenue it could explain why
average Swedish tariffs were higher than the neighbouring Danish. Patrik Winton has shown
that the Swedish king during this time was more restrained in his possibilities to raise
revenue quickly, for instance in the face of war, as he had to find approval from the
parliamentary Diet (Ståndsriksdagen).44 His Danish counterpart was freer to raise revenue
when necessary and not bound by the same institutional constraint, meaning that other
sources of income could have been less important. Since it is usually stated that tariffs are
44
Winton, P. (2012). The political economy of Swedish absolutism, 1789–1809. European Review of Economic
History 16, 430-448.
- 19 -
generally lower when there are other reliable sources of government income, this could also
have influenced the Danish tariff-setting, and particularly the partly liberal tariff of 1797.
Conclusions
This paper has attempted to find out whether there is any truth to the characterizations of
“protectionist Sweden” and “liberal Denmark” when it came to trade policy during the late
18th century. It can from the preceding pages be concluded that there is some validity to
these labels as Sweden generally had higher tariffs than Denmark for exports, agricultural
imports, industrial imports, textiles, and salt for most of the period in question here. Average
Swedish import tariffs were slightly lower than the Danish before 1794, but this can almost
solely be attributed to the extreme Danish tariff on sugar. After the infamous Danish tariff
law of 1797 the differences between the countries became even more accentuated.
Certain important questions remain unresolved, particularly why the countries chose
different paths for their respective trade policy and what it meant for their economies. The
Danish case shows that lower tariffs do not necessarily mean less revenue, since their levies
actually increased after tariff rates were reduced in 1797.45 In this sense Denmark was more
successful than Sweden, which had incomes from tariffs between 800,000 and 1 million
riksdaler for most of the period from 1783 to 1802. In the Danish literature it is also stressed
that the economy and industrial development did not really flourish at all as a result of trade
liberalization.46 Economic growth was moderate and Danish industrialization wouldn’t be
initiated until half a century later. Swedish economic growth was equally moderate, so the
question is which role trade policy and tariffs really played for the economy at large during
this time.
The liberal Danish trade policy of 1797 would come to an abrupt halt in 1807 as the country
was thrown into the Napoleonic Wars when Copenhagen was attacked by British ships. It
meant that certain tariffs and other trade fees were increased again and new bans on trade
were set in. These trade obstacles would be removed only once the war was over in April of
45
Rasch, (1955), also came to the conclusion that Danish tariff revenue increased after 1797 as had been
intended by the government’s proposal.
46
Hansen, (1972), p. 75 means that there were ”as many examples of success as there were recessions” in
Danish industries after 1797.
- 20 -
1814.47 During the same time Sweden suspended its Navigation Act, which meant that the
tariff differentiation was removed and certain exports, such as sawn battens, in effect got
relieved tariffs.48 The Napoleonic Wars therefore did not only mean a disruption of trade but
also of trade policy as usual.
47
48
Becker-Christensen, (1988), p. 531-537.
Högberg, (1969).
- 21 -
Appendix
Sources for Danish tariffs have been collected from Aage Rasch’s “Dansk Toldpolitik 17601797”. Danish prices have been accessed in Friis and Glamann’s “History of Prices in
Denmark 1660-1800 Vol. 1”.49 Where prices were available for each month the yearly
averages have been used. If prices were non-existent for a year then the average between
the previous and the following year has been used.
Swedish tariffs have been taken from a collection of royal decrees and laws, “Kongliga
placater, resolut och förordningar”, available in Carolina Redviva, Uppsala. Swedish prices
were found in Lennart Jörberg’s “A History of Prices in Sweden 1732-1914: Volume One”.50
For Swedish prices I have used the national average each year since certain commodities had
prices from several different regions. Jörberg’s price series have been used for Swedish
exports, while the prices from Copenhagen have been used as a proxy for import prices
(except for the commodities below).
For a couple of commodities, sugar, coffee, tobacco, cotton and wool, English market prices
were used and converted into Swedish and Danish prices using the conversion rate from
Edvinsson et. al.51 English prices are from Gregory Clark – English Prices and Wages, 12091914. Datafile available at www.iisg.nl (accessed 2013-09-03).
Content of each commodity category:
Swedish exports: bar iron, tar, pitch, sawn battens, timber, herring. Note that the pitch tariff
was related to the price of tar as there was no pitch price data available.
Danish exports: bar iron, pitch, tar, beer, butter, cheese, meat, split cod, train oil. Note that
the pitch tariff was related to the price of tar as there was no pitch price data available.
Agricultural imports: grains (rye, barley, wheat, oats), butter, cheese, meats. Meats denote
beef, lamb and veal for Denmark. For Sweden this category is unspecified in the toll-lists.
Textile imports: flax, cotton, hemp, silk, wool.
49
Friis, A. and Glamann, K. (1958). A history of prices and wages in Denmark : 1660-1800. Vol. 1. London.
Jörberg, L. (1972). A history of prices in Sweden 1732-1914. Vol. 1, Sources, methods, tables. Lund: Gleerup.
51
Edvinsson, R., Jacobson, T. and Waldenström, D. (2010). Exchange rates, prices, and wages, 1277-2008.
Stockholm: Ekerlid :.
50
- 22 -
Industrial imports: For Denmark: Bar iron, sheet iron, iron works, charcoal, pitch, tar. For
Sweden: bar iron, charcoal.
Luxury imports: sugar, coffee, tobacco, wine, brandy, beer. Wine and brandy are of French
origin.
Salt import: Danish import includes tariff and price for Spanish salt. Swedish import includes
tariffs and prices for Spanish salt and Lüneberg salt.
Average import: includes the un-weighted average tariff for all of the above imports. For
Denmark the import tariffs on herring, cod, split-cod and stockfish are also included,
although not in any of the categories above.
- 23 -
References
Andersen, D. H. and Voth, H.-J. (1997). The grapes of war: neutrality and Mediterranean shipping
under the Danish flag, 1750-1807. Oxford: University of Oxford.
Anderson, J. E. and Neary, J. P. (2005). Measuring the restrictiveness of international trade policy.
Cambridge, Mass. ;: MIT Press.
Becker-Christensen, H. (1988). Dansk toldhistorie. 2, Protektionisme og reformer : 1660-1814.
København: Toldhistorisk selskab.
Brewer, J. (1989). The sinews of power : war, money and the English state, 1688-1783. London:
Unwin Hyman.
Carlén, S. (1997). Staten som marknadens salt : en studie i institutionsbildning, kollektivt handlande
och tidig välfärdspolitik på en strategisk varumarknad i övergången mellan merkantilism och
liberalism 1720-1862. Stockholm: Almqvist & Wiksell International.
Chacholiades, M. (1978). International trade theory and policy. New York: McGraw-Hill.
Dahlgren, S. (1991). Skatterna och jordbruket under 1700- och 1800-talen. In Statens jordbrukspolitik
under 200 år, Vol. S. 18-32, 118-121 (Ed, Myrdal, J.). Stockholm: Nordiska museet.
Dormois, J.-P., Foreman-Peck, J. and Lains, P. (2006). Introduction. In Classical Trade Protectionism
1815-1914(Eds, Dormois, J.-P. and Lains, P.). Milton Park, Abingdon, Oxon: Routledge.
Edvinsson, R., Jacobson, T. and Waldenström, D. (2010). Exchange rates, prices, and wages, 12772008. Stockholm: Ekerlid :.
Findlay, R. and O'Rourke, K. H. (2007). Power and plenty : trade, war, and the world economy in the
second millennium. Princeton, N.J.: Princeton University Press.
Friis, A. and Glamann, K. (1958). A history of prices and wages in Denmark : 1660-1800. Vol. 1.
London.
Gerentz, S. (1951). Kommerskollegium och näringslivet : minnesskrift. Stockholm.
Gårestad, P. (1985). Industrialisering och beskattning i Sverige 1861-1914 : [Industrialization and
taxation in Sweden 1861-1914]. Uppsala.
Hansen, S. A. (1972). Økonomisk vækst i Danmark. København.
Heckscher, E. F. (1949). Sveriges ekonomiska historia från Gustav Vasa. D. 2, Det moderna Sveriges
grundläggning, Halvbd 2. Stockholm: Bonnier.
Henriksen, I., Lampe, M. and Sharp, P. (2012). The strange birth of liberal Denmark: Danish trade
protection and the growth of the dairy industry since the mid-nineteenth century. The
Economic History Review 65, 770-788.
Hoekman, B. M. and Kostecki, M. M. (2001). The political economy of the world trading system : the
WTO and beyond. Oxford: Oxford University Press.
Högberg, S. (1969). Utrikeshandel och sjöfart på 1700-talet : stapelvaror i svensk export och import
1738-1808. Stockholm: Bonnier.
Irwin, D. A. (1993). Free Trade and Protection in Nineteenth-Century Britain and France Revisited: A
Comment on Nye. The Journal of Economic History 53, 146-152.
Johansen, H. C. (1968). Dansk økonomisk politik i årene efter 1784. Bd 1, Reformår 1784-1788. Århus:
Universitetsforl.
Johansen, H. C. (1992). Scandinavian Shipping in the Late Eighteenth Century in a European
Perspective. The Economic History Review 45, 479-493.
Johnson, H. G. (1971). Aspects of the theory of tariffs. London: Allen & Unwin.
Jörberg, L. (1972). A history of prices in Sweden 1732-1914. Vol. 1, Sources, methods, tables. Lund:
Gleerup.
Lampe, M. and Sharp, P. (2011). Something rational in the state of Denmark? The case of an outsider
in the Cobden-Chevalier network, 1860–1875. Scandinavian Economic History Review 59,
128-148.
Magnusson, L. (2004). The tradition of free trade. London: Routledge.
McLean, I. (2001). Irish Potatoes, Indian Corn and British Policies: interests, ideology, heresthetic and
the Repal of the Corn Laws. In International Trade and Political Institutions: Instituting Trade
- 24 -
in the Long Nineteenth Century(Eds, McGillivray, F., McLean, I., Pahre, R. and SchonhardtBailey, C.). Cheltenham: Edward Elgar.
Mill, J. S. (1848). Principles of political economy: with some of their applications to social philosophy.
London: J.W. Parker.
Mitchell, B. R. (1975). European historical statistics 1750-1970. London: Macmillan.
Montgomery, A. (1921). Svensk tullpolitik 1816-1911 : översikt. Stockholm.
Müller, L. (2004). Consuls, corsairs, and commerce : the Swedish consular service and long-distance
shipping, 1720-1815. Uppsala: Acta Universitatis Upsaliensis :.
Northrup, C. C. and Prange Turney, E. C. (Eds.) (2003). Tariffs and Trade in U.S. History: An
Encyclopedia. Greenwood.
Ohlin, B. (1962). Utrikeshandel och handelspolitik. Stockholm: Natur och kultur.
Pahre, R. (2001). Agreeable duties: the tariff treaty regime in the nineteenth century. In International
Trade and Political Institutions: Instituting Trade in the Long Nineteenth Century(Eds,
McGillivray, F., McLean, I., Pahre, R. and Schonhardt-Bailey, C.). Cheltenham: Edward Elgar.
Rasch, A. (1955). Dansk toldpolitik : 1760-1797 = Danish tariff policy, 1760-1797. Aarhus:
Universitetsforl.
Rodrik, D. (1995). Political economy of trade policy. In Handbook of International Economics, Vol. 3
(Ed, Grossman, G. M. R., Kenneth). Elsevier.
Taussig, F. W. (1905). The Present Position of the Doctrine of Free Trade. Publications of the
American Economic Association 6, 29-65.
Williamson, J. G. (2011). Trade and poverty : when the Third World fell behind. Cambridge, Mass.: MIT
Press.
Winton, P. (2012). The political economy of Swedish absolutism, 1789–1809. European Review of
Economic History 16, 430-448.
Voelcker, T. (2008). Admiral Saumarez versus Napoleon : the Baltic, 1807-12. Woodbridge ;: Boydell
Press.
Åmark, K. (1961). Sveriges statsfinanser 1719-1809. Stockholm: Norstedt (distr.).
- 25 -