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Thus the wine industry flourished in the Colony during the first quarter of the 19th century, because of the fact that on July 2, 1813, England had reduced the duties on Cape wines to one-third those on Portuguese and Spanish wines on importation into England. The usual customs duty paid was reduced from 43 pounds 1s. to 14 pounds 7s., and the excise duty to 17 pounds 10s. on every 250 gallons, or a tun as it was called. Large premiums were offered to those who made the best and the most wine. This had the result, as was seen above, that while in 1814 a little over 7,000 leggers were produced, there were produced in 1824 over 20,000 leggers. The farmers did their best to improve their wine in quality, and in order to see that good wine was exported, a man, called a wine-taster to whose testimony there did not attach much worth as subsequent events proved — was appointed in 1811. He had to see that wines exported had the right flavour. By all these encouragements the wine industry held the first place among the Cape export industries. Besides other encouragements the climate of the Cape was pre-eminently suited for the wine industry.
After 1831, when the duty on Cape wine entering England was fixed at 2s. 9d. per gallon, the export of this article rapidly declined. However, as to the good results of this preferential duty on Cape wines in England, opinions differ. Maculloch states that “large quantities of wine, and of what is called brandy is produced at the Cape, but with the exception of Constantia (wine) they are very inferior. The effect of allowing the importation of Cape wines into the United Kingdom at a comparatively low duty is not to occasion their direct consumption, but cause them to be employed as a convenient means of adulterating others. So that, besides being injurious to the revenue, such reduction of duty promotes fraudulent practices, and detracts from the comforts of the public.” (1). Another criticism along the same lines is the following: (2). “Another striking principle of the absurdity of preference is to be found in the preferential treatment accorded Cape wines... During and after the Napoleonic wars we thought it better to make the Empire self-sustaining in wine as in other things. By an Act passed in 1813, Cape wine was admitted here at one-third the duty on Spanish and Portuguese wines. The result was of course, a great stimulus to the Cape wine trade; and even in 1846, when the duty on Cape wines almost equalled
1. Maculloch: Dictionary of Commerce, 1855 edition, p. 259.
2. Quoted from, a lecture by J. St. Leo Strachey, on “Free Trade and the Empire” in The Empire and the Century, p. 150.
that of wines from France. But the trade was a purely artificial one. When differential duties were abolished and the importation of Cape wine fell to its natural level, the trade almost disappeared. This was in fact the most ridiculous preference of all. It chiefly benefited the fraudulent wine merchant in Great Britain, for it supplied him with cheap and inferior grape-juice wherewith to adulterate foreign wine. It did not encourage him to improve his methods of manufacture. It only gave him a safe market for a bad product.”
This is, of course, a very delicate question. Though Strachey is not justified in calling Cape wine “inferior grapejuice,” these criticisms contain some truth at least. It might be added, however, that it was not only to the advantage of the English manufacturer to have these preferential duties on Cape wines, but also to the advantage of the Cape exporter perhaps more so than to the advantage of the wine producers at the Cape. Even if it were to the advantage of the wine producers to have this preference on their goods in the English market, it worked mischievously the other way, because it prompted them to look on the quantity more than on the quality of their wines. Nobody can deny that this was an artificial bolstering-up of the Cape wine trade: any preference works just this way. If their produce were good, there would have been no necessity of fearing a falling-off in their trade after the preferences were disallowed, or reduced. Any preferential system in trade is likely to harm independent and self-reliant enterprise. It did in Canada, Mr. Porritt tells us, and it did likewise in South Africa. As a matter of fact it seems that the wheat farmers of Ontario gained nothing by preference. (1).
In England the colonial preferences, i.e. preferences to colonies in English markets, were never popular. The English did not like a policy which cost them annually according to the Report of the Committee on Import Duties, 1840, from 5,000,000 to 8,500,000 pounds sterling. Many times it was even said by those who favoured the abolition of these preferences, that they did not want to stand for a connection which cost them such sacrifices. (2). And the English people have remained fairly staunch in their conviction ever since. Not even the eloquence of a Chamberlain could induce them to return to a policy of preference to the colonies.
With the abolition of the preferences Canada tried to become prosperous by relying on her own efforts, rather than by
1. Porritt: Sixty Years of Protection in Canada, pp. 51 – 56.
2. See J. Davidson: Commercial Federation and Colonial Trade, p. 14.
asking any more favours from England. The people expected ruin, but it never came, because they briskly adapted themselves to their new circumstances, and by so doing they averted the expected disaster. “The human mind... will not depart from routine nor make full use of its powers until it has seen all other hope of safety disappear.” (1).
But it was with protected Cape wine as with any other protected industry. A protected industry rarely becomes fullgrown; it is like "the fatted calf, always sucking," and it
will never get weaned.”' (2). Such an industry is seldom brought to the level of excellence to which an industry is brought that has to look after itself. There is always a sure market for the protected industry - whether protected by preferences or by a tariff-wall in the producing country. These same objections against the preferential system of the first half of the 19th century apply to the present system of Imperial preference, both from the side of the artificial conditions created by it as well as from the revenue point of view, as we shall see later.
As the Colony was, however, rapidly becoming a cattleraising country, due to the fact that it had a fine climate and fine pasture fields, hides and skins soon rivalled wine as an article of export. Hunters also brought many skins of wild animals to market. At the same time people started producing wool. Very little wool was produced at first, and an attempt was made by some of the British settlers who had brought with them a loom and some spinning jennies from England, to produce some coarse blankets. But this industry was soon discarded. The mohair industry was also started at this time.
Between 1806 and 1825 the principal items of export from the Colony were: wine, hides and skins, grain, horses and mules, whalebone, dried fruit, butter and oil. The trade of Port Elizabeth grew rapidly. On April 13, 1836, it became a free warehousing port for all goods legally imported into it, according to an Order-in-Council issued on that day. (3). At Port Elizabeth wine and then hides and skins had the major shares by far in the exports for the period 1836 to 1840; for the period 1841 to 1845 wool; while for the period 1846 to 1850 wool exports per annum were valued at 201,932 pounds sterling on the average out of the total exports of 380,467 pounds sterling on the average per annum, while wine had dropped from 92,111 pounds sterling in the first period to
1. Leroy-Beaulieu: De la Colonization, 2me Edition, p. 203.
41,227 pounds in the third period when its preference in the “home” market was reduced and it had to pay half the duty foreign wines had to pay. (1).
All the restrictive enactments relative to the trade of the Cape of Good Hope, and in recompense for which this preferential treatment of Cape wine was allowed, (2), were abolished by Order-in-Council in 1832. By this step an attempt was made to make the trade regulations of the Cape more simple and effective. (3). And, to be sure, simplicity is to be observed in the provisions of this important Order-in-Council. The duty on British goods from British possessions anywhere, except the East Indies, paid 3 per cent. ad valorem. Here is an important modification: for the first time we have “British goods from British possessions anywhere" coming in for equal treatment. The only pity is that the East Indies were excluded; this was, of course, a concession to the Company. East India and foreign produce still had to pay 10 per cent. ad valorem. Ships belonging to countries at amity with Great Britain could convey to the Colony any goods the growth, produce or manufacture of their own countries, and could convey Cape produce to any part of the world on the same terms as British ships. Here, too, no conditions had to be fulfilled. Hoops, staves and casks used in the wine trade, were to be duty-free. (4).
We have now reached a definite break in the rigidness of British commercial policy relative to the trade of the Cape Colony. We have passed through two distinct phases of commercial policy. The first phase covered the time of the Napoleonic wars. This period was one of restriction and exclusion. A second phase followed the Napoleonic wars. The regulations were made less severe, but they still served the purpose of safe-guarding British interests, as will be seen when the respective figures for the imports of the Cape for the two periods are compared. During the first British occupation of the Cape, 1795 — 1803, everybody at the Cape felt that sooner or later the Cape would be handed back to its original owners. With this in mind nothing serious was done for the improve
1. Theal: History of South Africa since 1795, Volume 2, p. 207.
2. See Marshall : Industry and Trade, Appendix D, p. 732: “In partial recompense for almost every hardship inflicted on the Colony, there was some sort of set-off in the shape of a special privilege granted to the Colony in its trade with the mother country.”
3. State Papers, Volume 32, pp. 1263 — 1267.
ment of the Colony and its trade. (1). Even after the second occupation — beginning 1806 -- the British merchants were not at all sure whether they would ultimately be able to hold the Cape or not. They thus adopted a half-hearted trade policy. They imported just sufficient goods to meet the most pressing needs. After peace was concluded British goods were poured out of their over-crowded warehouses into the Cape, in the same way as they were poured into the United States of America a fact which started the first movement there in favour of protection to their young industries. A comparison of the average annual imports will testify to this — and it must be remembered, the lion's share of the trade was done with England. Between 1806 and 1814 the average annual imports into the Cape amounted to 105,026 pounds sterling. Those between 1815 and 1825 amounted to 336,647 pounds sterling on the average per year, while the discriminations against foreign vessels had the result that nearly all goods imported were carried in British ships (2).
With the Order-in-Council of 1832 there started third or transition phase in British commercial policy relative to the Cape. It was during this period that the last mercantilistic tendencies in British commercial policy disappeared, until in 1855 reciprocal preferential treatment between the Colony and the mother country was stopped. The steps which lead us across this “transition period in British commercial policy, and which will lead us from this “external protection” to the establishment of fiscal autonomy at the Cape, will be briefly traced in the next chapter. After all people came to understand that “to found a great Empire for the sole purpose of raising up a people of customers, might at first sight appear a project fit only for a nation of shopkeepers." (3).
1. Cf. Lady Anne Barnard: The Cape a Century ago.
2. Theal: History of South Africa since 1795, Volume 2, Chapter 18.
3. Adam Smith: Wealth of Nations, Book 4, Chapter 7, Part 3.
Footnote to Chapter 2. To give an idea of the importance of the Order-in-Council of 1832, and at the same time bring out clearly the frequency with which the trade regulations of the Cape were changed, the following list of the more important regulations repealed by the said Order will be to the point. (This does not include the merely administrative regulations, but only the most important of those indicating the commercial policy of the time):
1. On June 11, 1806, an Order-in-Council was issued respecting goods imported into the Colony from any part of His Majesty's Dominions.