Kindleberger: The Rise of Free Trade in Western Europe

CP Kindleberger, The Rise of Free Trade in Western Europe, 1820-1875 (MIT, 1974).

The piece begins by exploring exactly what the effects of an imposed tariff on trade are for a given country. There are ten, but not all of these need to be taken into consideration for this study ("...on price, trade, production..., consumption, revenue, terms of trade, internal income distribution, monopoly, employment and the balance of payments" (20)).

A tariff increases domestic prices above world prices. This reduces domestic demand, spurns domestic production and reduces domestic consumption.

As a note on collective action: "That diffuse interests are less well served than concentrated ones in the legislative process is widely accepted in the theory of tariff formation in comparing producers and final consumers. Households count for little in tariff-making since the interest of any one is too small to stir it to the political effort and financial cost necessary to achieve results" (22).

There are a variety of explanations for why free trade took hold when it did. Some claim that it was promoted by vested interests. Others claim it was a result of increasing democratization. Kindleberger tells the story in great detail on a case-study basis, of which, I skimmed.

"My first conclusion reached from this survey was that free trade in Europe in the period from 1820 to 1875 had many different causes. Whereas after 1879, various countries reacted quite differently to the single stimulus of the fall in the price of wheat...before that the countries of Europe all responded to different stimuli in the same way. Free trade was a part of a general response to the breakdown of the manor and guild system" (49-50).