Anglo-french Commercial Treaty of 1786 (Eden Treaty)

The author of this departure from the century-old commercial policy was the Comte de Vergennes. He was quelque peu disciple des philosophes, and it was especially because of the physiocratic views he shared with certain politically influential circles in France that he was able to accomplish his purpose. For as physiocracy attached foremost importance to agriculture, it was only natural that French statesmen were able to create substantial facilities for the importation of the industrial products which England was eager to sell, in return for facilities for the exportation of the agricultural products which she was no less eager to buy. Vergennes, undoubtedly of set purpose, neglected to find out the opinion of French industrial circles; and there is no doubt that this was later on one of the starting-points of the disapproval of his work. In England the efforts to establish better trade connexions between the two countries met with great sympathy, and that, too, precisely among those elements of the population which had brought to naught the commercial treaty of 1713. As was shown by a far-reaching inquiry conducted in Great Britain, the representatives of almost all industries were eager for increased sales in the French market, especially because of their desire to make up for the loss which they believed themselves—incorrectly, as a matter of fact—to have sustained through the cutting off of the American market by the secession of the colonies; and with very few exceptions they scoffed at the idea of danger arising from French competition in the home market. The British statesmen were naturally much impressed by this attitude, but at the same time they were by no means uninfluenced by the views of the economic theorists.

It was in England that the new ideas, which had gradually gained more and more predominance in both countries in the course of the eighteenth century, received their for all time classical synthesis in Adam Smith's The Wealth of Nations (1776), which riddled with criticism the unreasonableness and inconsistency of the old system that existed on paper, especially in the form it assumed in the commercial relations between Great Britain and France. Adam Smith's thesis was that 'a nation that would enrich itself by foreign trade is certainly most likely to do so when its neighbours are all rich, industrious, and commercial nations', inasmuch as the international exchange of goods was thereby rendered all the more profitable. The applicability of this to France is apparent, and of special interest is the comparison drawn between the trade with the large and near-by French market, on the one hand, which permitted a turnover of business capital several times a year, and the boasted and until then in every way favoured trade with the thinly populated and remote North American colonies, on the other, where the return from invested capital was not made until after the lapse of several years. Through the American War of Independence this comparison received an appositeness which Adam Smith himself certainly did not foresee.

There can be no doubt that Adam Smith's book exerted great influence on William Pitt, who was the leading statesman of Great Britain from 1783. According to a famous anecdote, Smith once arrived at a dinner somewhat later than the other guests, who rose to receive him. He begged them to remain seated, whereupon Pitt remarked that it was only right for them to rise, since they were all his pupils. While this anecdote is perhaps just as little deserving of unqualified belief as are other similar anecdotes, yet one may place implicit confidence in a statement which Pitt is authentically credited with having made in Parliament after the death of Adam Smith, namely, that he (Smith) had offered the world the best solution of all economic and commercial questions.

The result of these new forces was the Anglo-French commercial treaty of 1786 (often called the Eden Treaty, after the name of its English negotiator), which put an end to the hundred years' commercial war between the two western powers. During the negotiations Pitt had stood firmly on his ground, with the result that in the final settlement the British forced compliance with practically all their demands, while the French allowed nearly all theirs to drop. Customs duties were lowered all along the line, usually down to 10 or 15 per cent. of the value of the goods, and prohibitions on imports were abolished. On the other hand, almost the only British industry which was still uneasy about French competition, namely, the silk industry, had its demands respected to the extent of nothing less than a total prohibition on the importation of French silks into England.

But it was soon to prove that this somewhat belated breach with the century-old restrictive policy had no support in French public opinion, least of all in industrial circles. Indeed, one may go so far as to say that it was precisely this departure from the tradition of commercial war that led to a renewal of the old policy after the French Revolution. The Eden Treaty, which was signed less than three years before the convening of the French States General on May 5, 1789, in fact occupied almost from the very beginning a foremost place in the long list of sins imputable to the ancien régime. The French textile industries, especially the cotton industry, had as early as the 'eighties managed to benefit by the great technical revolution in England, mainly by attracting British foremen and machinery to French mills; but, naturally enough, they were not yet anything like equal to their teacher. Besides this, it was alleged by the French that the value of British wares declared at the customs was so much understated that the duty fell from the nominal 10 or 15 per cent. to an actual 2 or 3 per cent.; and at the same time British manufacturers were said to increase the prices of raw materials in France through the making of extensive purchases there. The French calico, woollen, pottery, steel, and leather industries complained bitterly of British competition and of the general unemployment for which it was held responsible. Even the Lyons silk industry worked under great difficulties, which could not be attributed to any British competition, to be sure, but which at all events were in no manner lessened by the treaty with its retention of the British prohibitions. Bitterest of all were the complaints that emanated from the textile towns in the north of France—Amiens, Abbeville, Sedan, Rouen, Rheims, Châlons-sur-Marne. Their protests were also embodied in the famous cahiers, in which the French people in 1789 gave expression to their feelings in all branches of activity. Moreover, it has been observed that Robespierre, one of the sworn enemies of Great Britain during the Revolution, was a representative of the province of Artois and in such capacity voiced the dislike that was there fostered against British competition. But the feeling against the Eden Treaty was by no means confined to these regions. It is really only with regard to the wine district that we meet with any attitude of satisfaction toward the new policy; and it is highly significant that the cahiers of the city of Paris, for instance, contained a demand that the treaty should be submitted to the States General because of the revolutionary changes it had involved and the vigorous protests it had evoked from all parts of the country. Public opinion, indeed, was unanimous in attributing the severe industrial crisis of 1788 to the Eden Treaty, which was called the death-warrant of French industry. An inspector of manufactures even went so far as to compare its detrimental effects with those that had followed the revocation of the Edict of Nantes in 1685, which had played havoc with a great deal of the work done by Colbert and his predecessors.

Thus there could be scarcely any doubt as to the political effects of this first departure from the policy of commercial war; and it is this aspect of the matter which is of prime importance in this connexion. It is quite another question whether the Eden Treaty, even for the moment, was actually responsible for the placing of French economic life upon the low level where it was destined to remain, with a short interruption, during the revolutionary and Napoleonic periods. Severe as was the crisis to which it gave rise, there can be little doubt that precisely the last years of the ancien régime were characterized by exceptional prosperity especially, but by no means exclusively, for French trade, and that during the following ten or fifteen years Frenchmen looked back to this period as the zenith of their country's economic development. Even as regards industry, it is a fact that not even the flourishing period of the Consulate (1799-1804) elevated it to anything like the same height that it had attained under the ancien régime. Moreover, the difficulties created by free intercourse consequently appear to have been exaggerated. There are positive evidences of certain wholesome effects on French industry which must be connected with the increased intercourse with Great Britain. Thus, in 1787, the year of the ratification of the treaty, there was set up in France (Orléans)—naturally by an Englishman—the first steam-driven cotton spinning mill. Moreover, in the Constituent Assembly we find a muslin manufacturer from Versailles (1790), as well as a silk manufacturer from Lyons (1791), stating that the development of French industry, after the difficulties of the first years, had increased apace under the stimulus of British competition, and that in many cases French manufacturers had succeeded in imitating and, by means of cheaper labour, in actually underselling their British competitors. This may or may not be a more faithful picture of the actual situation than that created by the innumerable complaints; but at all events it seems only natural that a more lively intercourse with Great Britain should have facilitated the spread of new ideas and inventions. But to this, as to other things, there applies a truth which is far too often overlooked, namely, that the economic policy of a country is not determined by actual economic conditions but by the popular ideas concerning those conditions—which is manifestly quite another matter.

The commercial policy of the Revolution, therefore, very soon returned to the traditions established before 1786. Of recent investigators we may refer especially to M. Albert Sorel, who in his monumental work, L'Europe et la révolution française (1885-1904), seeks with exhaustive, though somewhat exhausting, persistence to maintain and emphasize the consistency of French policy before and after the Revolution. In nearly all the departments of foreign policy he represents the French revolutionaries of different shades as unconscious successors of Richelieu, Mazarin, and Louis XIV, and as equally unconscious predecessors of Napoleon, whose ideas and measures are therefore also represented as almost entirely in line with the traditional policy of France. Sorel has undoubtedly exaggerated the predestination of this development, as Professor Hjärne has pointed out in his noteworthy book, Revolutionen och Napoleon (Stockholm, 1911); and in general it is undoubtedly true that the deepest conception does not consist in representing the same dramatis personae as constantly reappearing in different costumes. But in the economic sphere—which does not stand out very much in Sorel's work, with its marked bias in favour of foreign policy—the connexion with the past is very strongly emphasized. As is well known, the men of the Revolution derived their strongest impressions from Rousseau, and, so far as one can see, they were very little impressed either by physiocracy or by British liberalism. Consequently they stood, unconsciously, but almost entirely, under the all-pervading influence of the old economic conception. Thus it was almost in the nature of things that the Eden Treaty not only should be treated as an isolated episode, but should positively hasten a return to the old system—especially inasmuch as the commercial reconciliation with Great Britain was the work of none other than the discredited and despised ancien régime.

Naturally enough, however, it was the general political situation which was chiefly responsible for the return to the policy of commercial war; and consequently some few years elapsed before the change was made. In 1791 the Constituent Assembly adopted a new tariff, which, after great protectionist preparations, ultimately came to offer only a very moderate amount of actual protection. France and Great Britain were then at peace, and both were respecting the Eden Treaty. But the new tendency was even then asserting itself in France, not only in the form of recurring complaints against British competition, but also in the form of an actual raising of the customs rates on woollens and other textile goods manufactured in the Duchy of Berg—the even then flourishing textile region on the eastern side of the Rhine, which was destined to play an important part in the history of the Continental System. In justification of these measures, whereby the importation of textiles into France from the east was cut off, there was asserted the need of 'alleviating the detrimental effects' of the Anglo-French treaty of 1786.

Great Britain, under Pitt's leadership, had as long as possible stood aloof from the struggle against the French Revolution. But toward the end of 1792 the relations between the two countries became very strained. Great Britain held up cargoes bound for French ports, whereupon France retaliated by denouncing the Eden Treaty. This was shortly after the beginning of 1793; and on February 1 of that year, less than two weeks after the execution of Louis XVI, war actually broke out. This precipitated both countries into a policy of economic strangulation which was destined to last for more than twenty years and soon to leave all its predecessors far behind. Under the Revolution, and to a certain extent under Napoleon as well, this policy had two very closely interwoven sides, which, however, must be kept separate for the present. One side consists of the blockade measures and the generally rude treatment of maritime intercourse, in which Great Britain decidedly led the way, but was very closely followed by France; and the other side consists of the compulsory measures that were adopted specifically in the sphere of commercial policy. The latter measures were of real importance only on the French side, as a matter of fact, since similar measures on the British side would have been meaningless for the reason that French goods could hardly have reached England without English co-operation. It is the latter policy which we will first consider.