During the period Scottish foreign trade rested upon three pillars, which attained similar dimensions in value terms: (1) The colonial trades, which expanded since 1736

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The Introduction of the English Customs System in Scotland in 1707 and the Rise of Scottish Foreign Trade thereafter (1700/1707-1760) – New Approaches
Between 1700 and 1760 Scottish foreign trade underwent a formidable transformation. Imports and exports grew at previously inexperienced rates, roughly tripling between 1700 and 1760 and quintupling between 1736 and 1776. New commodities gained in importance. Scholars have usually focused on the Glaswegian tobacco trades and their micro-economic, as well as geographical advantages in explaining Scottish commercial success. It is suggested here that this explanation is valid yet incomplete, as it disregards certain branches of the trades that evaded recording, but can nevertheless be shown to have been as substantial as the colonial trades. Furthermore there were certain technicalities built into the English taxation system, without which – i.e. had the English Reformation Customs System (1660seq.) not been introduced in Scottish ports by virtue of the Union 1707 – Scotland would most certainly have fared differently. These technicalities co-determined the emergence of a peculiarly Scottish trade pattern after 1707.

During the period Scottish foreign trade rested upon three pillars, which attained similar dimensions in value terms: (1) The colonial trades, which expanded since 1736; (2) the “traditional” trades with England, which expanded at similar rates and in 1760 still surpassed the colonial trades in value terms; and finally (3) the smuggling trades. It will be argued that this commercial pattern was conditioned by the institutional change taking place qua the Union 1707 and the introduction of the English customs system in Scottish ports in the following way. (1) The legal colonial trades were stimulated in particular by the draw-back on customs duties paid on tobacco, as well as the bonding scheme operated under the same schedule. This system effectively granted long-term credit on liabilities that were excessively high, particularly within a commercial environment that had yet to get accommodated to large-scale and capital-intensive foreign commerce. Furthermore, by the opportunity of shipping tobacco effectively duty free if it was re-exported, an option enjoyed by no other taxable import in eighteenth-century British trade, this system laid the foundations of an overseas trade pattern geared towards tobacco. (2) The overland trades to England were stimulated by the abolition of customs duties on Anglo-Scottish traffic in 1707. Whilst the absence of reliable quantitative sources capturing Anglo-Scottish trade post-1707 does not permit a full discussion of the problem, contemporary estimates suggest that Scotland’s overseas trade statistics only capture about 50 to 60 per cent of her total “foreign” trade at best. The remainder was trade with the old rival to the south, which continued to thrive after 1707, as much as it had in the six previous decades. As late as 1765 for instance, exports to England of cattle and linen, in value terms surpassed imports from and exports to the American colonies, as well as re-exports of tobacco, sugar and rice from Scottish ports to European destinations (“the colonial trades”). These primary and low value-added secondary goods accurately reflected Scotland’s stage of economic development and comparative advantage. Again, the change in the institutional superstructure in 1707 is the key to the problem: the abolition of customs duties upon cross-border traffic between England and Scotland in 1707. Under the legislation established by the English restoration customs system (1660), which remained largely unaltered and applicable throughout the eighteenth century, cattle imported into England had until 1707 been liable to a duty of 7s 1d 2 farthings Sterling per head, or about 24 per cent of its f.o.b. value (at average prices for cattle, c.1700–1760). Obviously the abolition of this duty on Scotland’s main export to England (alongside linen) further stimulated the rise of the English market for Scots produce. (3) The third pillar of Scottish commercial activity was the supply of illicit goods to the domestic market. Whilst the dimensions of the illegal market in tobacco are reasonably well-researched, the illicit tea trades, which have almost completely evaded scholarly attention as yet, attained monetary dimensions similar to the legal and illegal tobacco trades after 1740. Taking tea and tobacco together, and adding illicit trading activities in spirits and other non-essentials such as Indian textiles, all of which prevailed in eighteenth-century Scotland, this yields the third pillar of Scottish commercial activity in the period: trade through the black market sector. A taxation system (English customs system 1660/1707) that either employed tax rates well in the excess of 240 per cent of the products’ prime cost (tobacco), or which monopolized the importation of certain non-essentials to certain channels (tea), led to retail prices quoted for legally traded items, that were far in excess of what this economy could bear. Accordingly, alongside a flourishing re-export business, this also caused the rise of a black market sector in Scotland the dimensions of which were spectacular. Evidence will be presented, suggesting that the tea business attained considerable dimensions after 1707, so as to approach or match Scotland’s colonial trades (“first pillar of Scottish commerce”), as well as the English link (“second pillar of Scottish commerce”) in value terms.

Thus the change in the framework of taxation in 1707 proves an important key to the explanation of the quite spectacular rise of Scotland’s foreign trade 1700/1707-1760. The above results will be placed into a European perspective by adding evidence on the trading patterns of the major trading nations of contemporary Europe.

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