Popular Science Monthly/Volume 53/May 1898/The Question of Wheat: Continental Europe: France II
|THE QUESTION OF WHEAT.|
CHIEF OF THE BUREAU OF STATISTICS, TREASURY DEPARTMENT, WASHINGTON, D. C.
IN passing from a market where no customs duties are imposed upon foreign breadstuffs to markets where such duties play an important part in controlling competition from abroad, a political rather than a commercial question is encountered. The form of protection which seeks to encourage the home production of food, and especially of grain, is of very early origin and of very wide application. It ranges from the almost brutal disregard of the wants of a neighboring nation implied by an embargo on exports of cereals to the light and insignificant registration duty, intended to assure a good quality of imported wheat. It runs from duties on imports so high as to permit of a commerce only in the face of actual famine, to the revenue duty that has no immediate purpose in hindering purchases abroad, but regards the necessities of the treasury. History offers a remarkable collection of experience in attempts to regulate the grain trade; but it offers a record of a far larger number of failures than of successes attending these attempts.
Throughout continental Europe wheat is generally subject to customs duties on importation, and the prevailing tendency in recent years has been toward higher duties. In five countries no duties are imposed; three are importers—Denmark, Belgium, and Holland—and two are exporters—Russia and Roumania. Of countries taxing wheat only one is an exporter, Austria-Hungary, where the duty is about seventy-five cents a metric quintal. Germany collects under her general tariff about one dollar and twenty cents the quintal, and under her conventional tariff 84.3 cents the quintal. Norway and Sweden, although both are dependent upon foreign supplies of wheat, pursue different policies. Norway levies a merely nominal duty of sixteen cents a quintal, but Sweden, importing a much larger quantity, collects one dollar a quintal. Switzerland, being in the same condition of dependence on imports, has a duty of only six cents a quintal, a purely revenue duty. Spain, a large importer, has framed a tariff on agricultural imports, particularly burdensome on wheat, the duty, both general and conventional, being two dollars per quintal. In the last year this high duty has brought increased revenue to the Spanish treasury, because the home supplies were deficient, and heavy importations necessitated. Italy, also a large importer, and a state whose treasury is in difficulties, imposes nearly as high a duty on wheat as Spain—one dollar and forty-five cents a quintal.
There are five countries in Europe producing an excess of wheat beyond their own needs: Russia, Hungary, Roumania, Bulgaria, and Servia. All these countries combined, it has been estimated, have in an ordinary year a surplus product of 26,500,000 hectolitres (75,000,000 bushels) available for export, or only what would make good the needs of Belgium, Switzerland, Holland, and the Scandinavian countries, leaving unsatisfied the far larger wants of the great consumers of wheat—the United Kingdom, France, Germany, Austria, and Italy—whose combined demand is placed at 152,000,000 hectolitres (430,700,000 bushels) beyond their own production. Even in the best of years Europe, then, is not self-sufficient in wheat.
Merely to compare supply and demand will not give a proper idea of the importance of the wheat question to Europe. From the measures of two of the leading commercial nations—France and Germany—the political aspect is made clear. To be supplied as far as is possible from their own production is the aim of their statesmen, and the problem of accomplishing this end has been enormously complicated by the rise of wheat-growing countries over the sea. Instead of accepting the situation as England did, and welcoming supplies of the highest grades of food produced at a very low cost, France and Germany have sought to neutralize this outside competition by customs duties more or less protective in their effect. As these duties were intended to quiet political restlessness at home, the non-economic aspects are important. Indeed, agrarianism in these two countries suggests silver and prohibitive duties rather than a movement to improve the condition of the farming population.
The economic position of France is peculiar. It is the land of the small proprietor, and in no neighboring country has the division of land (petit morcellement) been carried so far. It claims to be agriculturally independent. Its population has ceased to grow in due proportion to its own need or to the surrounding peoples, and this indication of some social distemper is disquieting the economists and statesmen of the nation. The people are industrious, frugal, and on the whole prosperous. Yet France depends, and must depend, upon foreign supplies of coal, iron, lead, petroleum, or copper. More than fifty-six per cent of its exports are of manufactured articles, and only fifteen per cent of its imports answer that description. The imports of raw materials constitute 56.5 per cent of the total imports, and on them is based the great industries of France.
While industrially dependent upon foreign supplies, France is in a better condition as to food. About one third of the value of all imports is represented by articles thus described. Of the $230,000,000 represented, almost one half is composed of coffee, wines, sugars, and tropical fruits, and only one eighth of grain, meats, and dairy products which could compete with the domestic product. While the proportion varies slightly from year to year, it is remarkable how uniform the demand for foreign wheat has been. Since 1875 in only three years have great differences from the average movement been shown. In 1879 and 1880 the effects of six bad seasons were reflected in the largest imports ever made—22,000,000 and 20,000,000 metric quintals respectively—and in 1891 with its 19,000,000 quintals. Throughout this period the extent of territory under wheat was almost unchanged, the year 1891 alone giving a notable decrease, which was made good in the following year, but the product naturally varied with the good and bad seasons. This uniformity of area has arisen from two causes: the conservatism of the French peasant, and the liberal encouragement from government. Not only has this combination maintained domestic production so far as that can be measured by mere extent of land devoted to wheat, but it has also restrained foreign competition in the French markets.
The table on the following page shows the area, product, and imports of wheat from 1875 to 1896. In 1897 the area sown was 6,294,490 hectares, and the crop gathered was only 88,120,840 hectolitres.
If the entire period be equally divided into two periods of eleven years each, it is seen that the average area in the first eleven years was 6,920,690 hectares, and in the second 6,879,790 hectares, a reduction of only 0.6 or six tenths per cent, evidently due to the exceptional year 1891. The production in the first period was 101,556,000 hectolitres on an average, and in the second 108,262,000 hectolitres, an increase of more than six per cent. The higher average was brought about by the remarkable returns of 1894, 1895, and 1896. The fair promise thus held out was not maintained, as the country suffered heavily from the bad season of 1897.
The agriculture of France presents an interesting study because of a steady and continuous effort on the part of the Government to make it sufficiently profitable to assure adequate home supply. As the only means of giving profit to one industry is through a restriction on foreign competition, it is the Government that has intervened to ward off this competition; and as the cost of foreign wheat has tended steadily downward, the interference of the Government has become more frequent and extreme. In this policy it has been supported and encouraged by two very large elements of the agricultural interest—the grain and the wine growers. At first glance the interests of these elements might seem to be opposed to one another, as the one exports and the other is facing an importation. The vineyards of France long possessed a position which fashion and prejudice almost made a monopoly. French wines constituted one of the leading items in the export trade. In 1873 more than 398,000,000 litres of wine were sent to foreign countries, representing a value of 281,300,000 francs. This was the highest return ever made, before or since that year. The visitation of the phylloxera, which impaired the wine industry of entire provinces, and the introduction of Spanish and Italian wines under commercial arrangements believed to be more favorable to the foreign than to the domestic producer, brought the wine growers to the aid of the farmer in demanding higher protection against the encroachments of foreign grain, meat, and wine products. For nine years the joint efforts were made to effect this, resulting in the denouncement of commercial treaties and the framing of a tariff in 1892. “Accordingly, the Government constructed two tariffs, a maximum tariff for the countries with whom France should have no convention, and a minimum tariff, about twenty per cent lower, for the countries with whom France should conclude one. Duties upon agricultural produce were never to be subject of a convention or to be admitted into the conventional tariff. And it was laid down as a principle that the conventions of the future should be conventions for a short period, and that they should be terminable at a year’s notice. By this device the Government hoped to secure more industrial control, more stability, more elasticity. It would go, for instance, to the Government of Switzerland and say, ‘Reduce your duties and take our minimum tariff.’ There would be no complicated haggling; the brilliant diplomat could not sacrifice the commercial interests of the country to a political coup. Switzerland would have to choose between either the minimum or the maximum rate, and both rates were fixed by the Chambers.” In practice this scheme has not been found practicable, as under the constitution the President could conclude a commercial treaty on his own authority.
This policy of expressly excluding agricultural products from any concessions in duty by treaty was significant of the feeling of the agricultural population of France, and a fair measure of its immense political influence. Before 1884 the “agrarians” had hardly sufficient strength to make themselves felt locally. The question of wheat growing in France had even then become important, for prices began to fall in 1882. The peasant had noticed that wheat had shrunk in value from twenty-two francs a hectolitre in 1881 to eighteen francs in 1883, and 17.7 francs in 1884. But it was as yet an economic problem, and not connected with political factors.
A government commission was constituted, and from one of the reports presented in 1884 may be taken some bits of prophecy as gratuitous as that already quoted from the English presentation. M. Rissler, director of the National Agricultural Institute, expressed an opinion that the wheat trade of America had arrived at the extreme limit of its development, because the fertility of virgin soils is becoming exhausted, and more expensive farming is necessary; and because wheat is now grown in more remote districts, and could not continue to be carried at unremunerative freights. India, like America, was unable to produce wheat profitably at current prices. In Australasia he thought labor was too high priced to permit it to be turned to wheat cultivation at the prevailing price. Although the home price of wheat had fallen below the minimum rate returning a profit to the farmer twenty francs the hectolitre, he did not look for a continuance of that rate.
After fifteen years it is simple to test such predictions, but it is only necessary to say that in only one year since 1884 has the price of wheat in France touched twenty francs the hectolitre—in 1891—and for the other fourteen years has ruled much under that rate. Nor did the Government accept the conclusions of its commission, for it imposed a higher duty on imported wheat, raising the rate from sixty centimes the quintal, at which rate it was prior to 1884, to three francs a quintal, and in 1887 to five francs a quintal. These moves were based upon the growing restlessness of the peasant proprietor, on whom fell the brunt of competition in wheat growing from Russia and the United States. He had seen the price falling, and had been subject to bad seasons as well as a loss of market from importations. He had run into debt through the failure of his crop, and he had incurred losses by entering speculative “companies” of one kind or another, that promised high returns and then failed disastrously. He found it difficult to accommodate himself to wheat selling from nineteen to seventeen francs a hectolitre, but was successful in the attempt, as was proved by his refusal to obtain a further increase of duty on wheat in 1892, when a revision of the tariff occurred. Secure in his own holding, and protected from any concession by way of reciprocity to his neighbors and rivals, he was yet slowly fomenting an agitation that was to plead now for higher duties on all agricultural products and now for a rehabilitation of silver. The year of famine (1891) led to a temporary reduction in the duty from five francs to three, but the exceptional conditions leading to this concession to the consumer of wheat soon passed.
A glance at the table of production and imports given above does not betray any influence of these successive changes in the rates of duty on imported wheat. The price of wheat was controlled not by conditions in France, but by conditions acting throughout the commercial world. It was even asserted that the cost of producing a hectolitre of wheat in France had risen in recent years, and now stood at the high figure of twenty-six francs. The market price obtainable was only 17.87 francs in 1892, 16.55 francs in 1893, and 15.21 francs in 1894, and abundant crops at home and abroad threatened even lower prices. With such pressure of competition the agrarian party acquired strength and influence, and in February, 1894, obtained an increase in the duty on foreign wheat to seven francs the quintal. In less than fifteen years the duty had thus been raised from a nominal rate of sixty centimes to seven francs the quintal.
M. Charles Lesage proves that when wheat paid an import duty of three francs, the Frenchman paid three francs seventy centimes more on his wheat than did his neighbor of England; and when the duty was raised to five francs, the price of wheat in France was again six francs ten centimes higher than in England. “Thus the three-franc duty cost the country 300,000,000, and the five-franc duty 500,000,000, while it brought in 60,000,000 only to the treasury.” In a country where the cost of government is advancing by leaps and bounds, and the population is stationary or nearly so, the question of additional burdens of indirect taxation is a serious one for the legislator. But this form of taxation is one of the simplest and readiest means of offering encouragement to agriculture through a restriction of foreign competition, and the remarkable stability of wheat area in France is at once proof of the conservative qualities of the peasant and the general distribution of wheat cultivation throughout the country. Of the eighty-seven departments into which France is divided only four produced more than 2,500,000 hectolitres of wheat. Reporting in 1896, the official representative of the agricultural districts complacently remarked that the home crop was about equal to the home consumption—a complacency rudely disturbed in 1897, when large importations became necessary.
France is an excellent example of a combination of circumstances favoring the culture of wheat in the face of unfavorable conditions. Wheat is a necessity, and is grown everywhere as a usual and almost necessary crop, apart from its commercial aspect. The farmer puts down each year a certain amount of land under wheat for his own consumption, and would continue to do so even if it happened (a most unlikely supposition) that wheat should sell for one third its present price. With this personal and necessary crop the farmer obtains food, a stock for seed, and usually a small surplus for sale, even from the smallest of wheat farms. It has occurred many times that a slightly higher price for wheat has called out unexpectedly large quantities from the hands of the small farmers of France, quantities that have been saved through indifference to sales or through supposed necessities, .now set aside by the chance of reaping a profit. And what has happened before will happen again among so thrifty a nation of land cultivators as are the French.
In addition to this necessity for growing wheat the division of land must be counted as a favoring factor. Recent returns on this head show that in France the total area under cultivation is 49,561,-861 hectares, divided into 5,672,000 plots or farms. Even on a general average this area and division will afford a small farm to each holder, one suited to intensive operations only. But nearly thirty-eight per cent of the number of farms are of less than one hectare, and this thirty-eight per cent includes only 2.2 per cent of the entire area, mere dots of land, more suited for residences than farming. The holdings from one to ten hectares included 46.5 per cent of the number and 22.9 per cent of the area; those from ten to forty hectares, 12.8 per cent of the number and 29.9 per cent of the surface; and the larger farms, of more than forty hectares, only 2.5 per cent in number and forty-five per cent of the area. So that 84.7 per cent of the number of farms covers just one fourth of the total area under cultivation. When this feature of land holding is combined with very careful and intelligent agricultural methods, another proof of strength is developed. Stress is laid by observers on the continued increase of the yield per acre of wheat, due to the application of better methods and science, and, as is believed, to the use of better fertilizers, which had rendered the soil less sensitive to atmospheric variations. To this march of scientific agriculture there is no end, and with the more general use of discoveries it is possible to conceive that France in wheat will be able to hold her own.
In the production of wheat the position of France is peculiar. Other countries of Europe, like Holland and Belgium, obtain a larger yield per acre, and even Germany gives a higher yield; but no country produces so many bushels in proportion to its population, or approaches the record of France—more than seven bushels per capita. The second in rank is Italy, with only five bushels, and the neighbors of France on the north, Belgium and the Netherlands, grow only 3.5 and 1.3 bushels respectively. France is therefore more independent of foreign supplies of wheat than her continental rivals in trade and industry, Russia and Hungary excepted. It has been a conviction with French statesmen that, possessing no command over the sea, it would be suicidal to permit France to become dependent for food upon foreign and possibly rival powers. This conviction has influenced the commercial policy of France, for the Government has ever given a ready ear to the demands of the agriculturist, and has now adopted protection to the farmer as a settled policy. Where duties on imports have not been granted, bounties on production are given, and only in the great raw materials of industry, like wool, have the proposals of duties, revenue or protective, been set aside. It remains to be seen whether the colonial policy of France will modify this tendency of legislation. In Algeria she holds a country capable of great development in wheat, but Algeria is not tempting to the French farmer, who prefers his smaller holding at home. The more distant colonies as yet play no part in supplying France with this important grain, but are rather dependent upon the mother country for everything—a penalty involved in the exploiting of a country for purely commercial advantage. As yet in no year has so large a quantity as 1,250,000 metric quintals been obtained from Algeria, and the import shows little tendency to increase. It may be noted that even England obtains little assistance from her colonies in the supply of this one article. In 1896 only one twelfth of the wheat imported came from her possessions, and, eliminating India and Canada, she could obtain hardly enough to meet her wants for a single day. Nowhere is colonial empire closely connected with the question of wheat raising and supply.
There is no more instructive lesson in history than a government struggling with the economic inevitable. That this experience is more fraught with failure than with success is not surprising, for the social problems come slowly forward and are well under way to accomplishment before the symptoms are noticed or a diagnosis attempted. The discovery is made by those who have no proper appreciation of the true remedy. It is some interest that feels the pinch, the increasing pressure of the change that always accompanies a social movement. The wish and effort are directed to maintain the conditions as they were, conditions to which the operations of industry or commerce were accommodated by long usage. This interested effort, ever conservative, opposes the progress of development on new lines, and too often makes a blind use of whatever instrument of defense is at hand. The protection of Government is invoked to stave off the inevitable, and a greater and greater exercise of that protection is invoked as the weight of the necessary change becomes greater. Industries have been wiped out, commerce destroyed, governments overturned, and peoples impoverished by this unreasonable contest with what is inevitable. Natural conditions, the product of land tenures, habits, and national character, have thus far been sufficient to preserve the French farmer from that intense crisis through which the English landlord has passed; but the end is not yet. France to-day holds an almost unique position in wheat among the nations of Europe, and it is only misapplied political agencies from within or more intense competition from without that can shake her in this eminence.
- Fisher. The Protectionist Reaction in France. Economic Journal, September, 1896.
- Economic Journal, September, 1896.