French Wine and the Fable of Free-Trade Britain

A new book challenges the economic conventional wisdom and helps explain the rise of big government.

Nick Gillespie | October 9, 2007

If economics is often a dry and dusty affair, the new book War, Wine, and Taxes: The Political Economy of Anglo-French Trade, 1689-1900, is a wet and wild ride—and not simply because it's about alcohol.

John V.C. Nye debunks the conventional wisdom that Britain was a free-trade nation during the 19th century. If you look at actual trade policy rather than the self-aggrandizing pronouncements of politicians and ideologues, argues Nye, Britain remained a bastion of protectionism and mercantilism throughout the century. In comparison, France, often derided by contemporary free-marketers, was wide open to trade. In concise and eminently readable prose, he tells a story in which well-connected special interests and government officials joined forces to line their own pockets while reducing the choices available to consumers.

In answering the question, "Why do the British drink beer and not wine?," Nye not only advances our understanding of the past, he shows how economic policy can often have a major effect not just on trade but on national identity.

The 48-year-old Nye was born and raised in the Philippines and educated at Caltech and Northwestern. The married father of two sons, he and his family recently relocated to Northern Virginia, where he teaches at George Mason University and holds the Frederic Bastiat chair in Political Economy at the Mercatus Center.

In late September, he spoke with reason Editor-in-Chief Nick Gillespie via AOL Instant Messenger. What follows is an edited transcript of their interview. Comments can be sent to [e-mail].

reason: You open your book with this line: "The idea that Britain was the leading free trader of the nineteenth century is one of those rare stylized facts in economic history...." Your book is dedicated to proving this wrong. How is that conventional view wrong?

John V.C. Nye: No one had ever bothered to examine in detail what the overall tariff burden of British policy was in the 19th century. When you used standard measures to compare average tariffs in Britain with those of France—supposedly Britain's opposite number in trade—what you find is that the French were clearly much closer to being free traders than were the British for most of the 19th century. Most of the different ways we can slice the data make clear that the British had higher average tariffs than the French even after their supposed move to abolish all protection from the 1840s on. Britain had tariffs on fewer items than did France, but British tariffs were on items that were such a substantial part of British trade that the impact was more serious.

reason: Speaking of specific tariffs, explain the significance of the one part of your title everyone can get behind: Wine. You ask the question, "Why do the British drink beer and not wine?" Give the short version of your answer (hiccup) with regard to tariffs.

Nye: The core of British tariffs was directed against the French and specifically against French wine. This policy dated back to the late 1600s, when the two countries were at war for a quarter century. Tariffs designed to exclude all but the best French wine—and to a large extent depress imports from most other wine-exporting nations—were matched with policies targeted to assist brewers and domestic producers of spirits. Over time, the exclusion of cheaper French wine—especially during the Industrial Revolution—meant that lower- and middle-class drinkers had to settle almost exclusively for beer, gin, whiskey, and rum.

reason: My god! The horror!

Nye: We probably have no idea how bad some of that stuff actually was!

reason: That's speaking as someone who has obviously never drank anti-freeze. Your book is in many ways a primer on public choice economics and how officials respond to the demands of the very people they are supposed to be regulating in the name of the public good. Talk about the brewers in England as a special interest group and their relationship to the state.

Nye: During the quarter century (from 1689 to 1715) when French wine was excluded from the British market, the beer industry experienced what historian Peter Mathias refers to as the Brewing Industrial Revolution. Technology made it possible to produce beer (initially porter) in quantity. At the same time, protection meant these guys were earning money hand over fist.

When war ended, domestic beverage interests successfully lobbied to have very high tariffs placed on wine, and extra high tariffs on French wine. But a cynical public choice scholar would argue that the government would not be content with handing out goodies to the brewers. Now the state had the brewers over a barrel (so to speak). They were able to impose excise taxes on the industry and expect to collect them. The latter point is very important. In previous times, high excise taxes were not always accompanied by high revenues because of evasion.

Now the government had both a carrot and a stick...

Comments

Syloson of Samos|10.9.07 @ 1:39PM|#

Given the lack of free trade policy between Britain and its colonies, particularly India, this isn't very surprising.

|10.9.07 @ 1:45PM|#

...the conventional wisdom that Britain was a free-trade nation during the 19th century.

Damn, I'm stupid. I've always though it was a mercantilist nation back then.

Syloson of Samos|10.9.07 @ 1:47PM|#

I mean really, the British (or at least the colonial governments of Britain's colonies) were the ones to introduce the Hut Tax.

GinSlinger|10.9.07 @ 2:16PM|#

SoS,
Yes, that's true. But how, exactly does a tax on occupancy relate to questions of trade. (Hint: you won't find your answer in the Chimney Tax.)

Also, since when are internal economies sed to measure a country's attitude to "free trade"? Remember, colonies are essentially part of a country's internal economy. The assertion was not that the Btitish were practicing laissez faire capitalism, but that it was engaged in free trade.

I recomend that you read some Cobden before you embarass yourself further. Even proponents of liberal free-trade economics allowed for a certain degree of governmental interference in the internal economy.

|10.9.07 @ 2:29PM|#

"Why do the British drink beer and not wine?"

If you think the Brits don't drink wine, offer a British girl some Port.

Also, do this if you like British women.

Syloson of Samos|10.9.07 @ 2:43PM|#

GinSlinger,

Because the Hut Tax was a way to induce laborers to traffic between the various colonies, in particular to certain favored industries. I suppose the issue depends on what one considers "internal," but government efforts to induce laborers to travel hundreds or more miles doesn't sound like an "internal" issue to me.

I recomend that you read up on British colonialism in Africa worked before you embarass yourself further.

|10.9.07 @ 2:44PM|#

I always thought the story was: The French bankrolled the American Revolution. Then having won independence the United States didn't payback the loan because we didn't feel like it. France went belly up. Cue La Revolucion, Storm the Bastille, Liberte Egalite Eraternite, Madam Guillotine, The horror the horror, Napoleon, Empire, War etc etc etc.

or maybe that's a different story.

Syloson of Samos|10.9.07 @ 2:50PM|#

Warren,

Well, one could lay it at the feet of the personal rule imposed by the Bourbons, particularly from Louis XIV onward. It helped to create a quite fragile political order.

|10.9.07 @ 2:52PM|#

Me so dumb...

FMAFM?
Frequency-Modulation Atomic Force Microscopy

|10.9.07 @ 2:54PM|#

Ken Shultz - Happy Birthday. I figured of all the articles listed here on this "site" today, this may be one you'd be interested in and run across my congratulations on making it to the big one. Brits, wine and economics... it already sounds like your kind of party.

GinSlinger|10.9.07 @ 2:54PM|#

SoS,

You're right, my studies on Africa have a decidedly 17th and 18th century flair, you know the factory system and all. My point is that the coloies represent an internal economy. You are familiar with the last fifty plus years of Atlantic Studies, right? The Chimnet Tax, which you failed to address, also served to relocate labor within the realm, as did tithes, as did the various Parish taxes, and let's not forget what the Elizabethan Poor Laws did for the rise of industry. As Cobden points out, it's the trade between empires/nations that must be relaxed, not internal regulations, which he allowed to be within the power of the state (grudgingly).

Read the Acts of Trade and Navigation, even in the seventeenth century, England clearly defined her colonies as part of the internal economy.

GinSlinger|10.9.07 @ 2:56PM|#

SoS,

Failed to mention this, but the forced removal of convicts to Georgia, North Carolina, and Australia were all felt to be "internal" movements at the time.

Syloson of Samos|10.9.07 @ 2:56PM|#

GinSlinger,

In point of fact the British government (particularly after the abolition of slavery) created a number of schemes to control, foster, etc. the labor markets between their colonies. Probably the most prominent example of this is that of Indian indentures - labelled a "New System of Slavery" by some.

GinSlinger|10.9.07 @ 2:57PM|#

To all: Sorry about the typos, poor quality keyboard + failure to preview = makes me look ignorant

Syloson of Samos|10.9.07 @ 3:02PM|#

GinSlinger,

So basically your chief beef with my statement is that I don't necessarily agree with the way you view, "internal trade," correct?

Syloson of Samos|10.9.07 @ 3:06PM|#

Anyway, given that controlling the economic resources, trade, etc. of a now subject nation was a primary factor in the generally haphazard creation of the various European empires framing it as at least partly a "free trade" issue seems appropriate. Others can of course disagree.

Syloson of Samos|10.9.07 @ 3:19PM|#

BTW, I should state more explicitly what a hut tax was:

They were a means in part to induce (force?) African laborers to become part of what one might call the "settler" or "colonial economy." That is to work on farms, in mines, etc. These African peoples had of course their own economies pre-dating conquest, but they weren't as snugly tied into the settler economy as the colonists would have liked. So a tax was levied as a means to compel these people to earn money on the farms, etc. to pay the tax. As far as I know the taxes provided little to no benefit to those paying them and very few asked why these people didn't want to work on the farms, mines, etc. in the first place.

Syloson of Samos|10.9.07 @ 3:40PM|#

The more I think about it the more I wonder why issues like consent, etc. don't play into the definition as well. So did Cobden address that GinSlinger?

|10.9.07 @ 4:17PM|#

What does this due to Mr. Nice Guy's "we got all of our important institutions from the English" premise?

Assuming, of course, that we consider a Free-trade orientation to be central to the American creed (a highly dubious assumption).

Syloson of Samos|10.9.07 @ 4:22PM|#

Neu Mejican,

I don't know how popular it is any more, but if I recall correctly there used to be group of American historians who argued that most American government institutions, etc. were basically home grown.

However, I can say without a doubt that the most oft quoted man during the Revolution and particularly during the period prior to the Constitutional Convention was a Frenchman - namely Montesquieu. Which has always prompted me to ask if Locke's influence was overrated. Then of course there are other influential writers like Harrington, Algernon Sidney, etc.

|10.9.07 @ 4:33PM|#

I really enjoyed reading this article. It was especially interesting hearing about his background in college and how he navigated the unsure waters.

Keep up these good interviews of late.

|10.9.07 @ 6:00PM|#

S of S,

You would have been a nice addition to the overflowing Friday Political Thread on the topic of American institutions.

http://www.reason.com/blog/show/122860.html#802361

MNG was in the "WASP" institutions are the core of America camp...some others (me) argued that our institutions have grown out of the unique American experience.

|10.10.07 @ 5:07AM|#

肺癌 肝癌 胃癌

|10.10.07 @ 12:54PM|#

Sounds to me like Britain accidentally figured out how to generate that "hidden wealth" that economists and the World Bank keep talking about that is arguably created by stable and equitable institutions, and proceeded to tax the holy hell out of it. That's very relevant to Nye's experiences with the corruption of the Philippines (and the fear of the horrible responses to it). That also allows me to keep a firm hold on my Francophobia.

By the way, what's up with Nick's gonzo journalism on this one? It read like this interview partly about wine began with a chugging contest? Just how high off the ground was he during this interview, even disregarding the (hiccup)?