The Anglo-French Commercial treaty of 1860 and differences between English and French production costs of manufactured goods : An analysis of "Enquete de 1860"

Abstract

The commercial treaty concluded between England and France in 1860 stipulated the following contents regarding manufactured goods: (1) England to abolish import duties on French manufactured goods. (2) France would abolish the prohibition and diminish import duties on English manufactured goods to less than 30% (25% after 1864) ad valorem. Import duties on bar iron used in railroads, however, should be imposed at specific duty of 70 franc per ton. Accordingly, to discuss the historical significance of this treaty, it is indispensable to appreciate the range of diminution of import duties on manufactured goods by France. From this point of view, the purpose of this paper is, through examining "Enquete de 1860" (Enquete. Traite de commerce avec l'Angletene), to-make clear the differences between English and French production costs of manufactured goods in three industries - cotton, machinery and iron industries - which occupied the important position in French national economy at that time and which were obviously supposed to suffer from the severe competition with English manufactured goods. Through our analysis, it is evident that there was an interlinkage of interests among these three industries concerning the tariff reduction. In the cotton industry, one of the most important factors of high production costs in France was the higher prices of machinery than in England. Similarly, in the machine and mechanical equipment industry, the main factor of high production costs was the higher prices of pig iron and iron. And so, in the iron industry, the primary cause of high production costs in France was the high costs of transportation of ore and fuel (coal and coke). Consequently, the fact is that in France the problem of high costs of transportation in the iron industry was the main point of the issue regarding the reduction of French production costs in all these three industries. High-priced iron in France, however, was the obstacle to the solution of transportation costs because iron was the major railway material and its high price obstructed reduction of transport fees and the building of a new railway network. We can consider, therefore, that the reduction of import duties on iron was expected to afford the solution to this dilemma of high-priced iron and the problem of transportation. This solution was that of the big ironmasters and railway executives, since it would arrouse demand for iron (for railway construction) to lower the production costs of iron. The moderate reduction of tariffs on iron looked towards diminishing production costs of iron in France. Thus, these three industries could cut a path to diminishing the differences of production costs between England and France by means of the impact of the reduction of import duties on iron by means of the commercial treaty of 1860.