Sweden During The Late 19th Century - Free Trade Vs. Protectionism

Free Trade Vs. Protectionism

Influenced by the economic reaction which took place in 1879 in consequence of the state of affairs in Germany, where Prince Otto von Bismarck had introduced the protectionist system, a Protectionist party had been formed, which tried to gain adherents in the Riksdag. It is true that in the Riksdag of 1882 the commercial treaty with France was renewed, but since 1885 the protectionist party was prepared to begin the combat, and a duty on barley, which had been proposed in the Riksdag of the same year, was rejected by only a slight majority. During the period of the unusually low price of barley of 1886, which greatly affected the Swedish farmers, protection gained ground to such an extent that its final triumph was considered as certain within a short time. During the Riksdag of the same year, however, the premier, Themptander, emphatically declared himself against the protectionist party, and while the parties in the Second Chamber were equal in number, the proposed tax on barley was rejected in the First Chamber. In the Riksdag of 1887 there was a majority for protection in the Second Chamber, and in the first the majority against the tax was so small that the tax on barley would have triumphed in a combined meeting of the two chambers. The government, availing itself of its formal right not to dissolve the chamber in which it had the support of a majority, therefore dissolved only the Second Chamber in March 1887.

The new Riksdag assembled in May with a free trade majority in the Second Chamber, but nothing in connection with the great question of customs was settled. In the meantime, the powerful majority in the Second Chamber split into two groups - the new "Lantmanna" party, which approved protection in the interests of agricultural classes; and a somewhat smaller group, the old "Lantmanna" party, which favored free trade.

The victory of the free traders was not to be of long duration. The protectionists obtained a majority in both chambers in the next Riksdag in 1888. To the First Chamber protectionists were almost exclusively elected, and in the Second all the twenty-two members for Stockholm were disqualified, owing to one of their number not having paid his taxes a few years previously, which prevented his being eligible. Instead, then, of twenty-two free traders representing the majority of the Stockholm electors, twenty-two protectionists, representing the minority, were elected, and Stockholm was thus represented in the Riksdag by the choice of a minority in the capital. This singular way of electing members for the principal city in the kingdom could not fail further to irritate the parties. One result of the Stockholm election came at a convenient time for the Themptander ministry. The financial affairs of the country were found to be in a most unsatisfactory state. In spite of reduced expenses, a highly estimated revenue, and the contemplated raising of taxes, there was a deficit, for the payment or discharge of which the government would be obliged to demand supplementary supplies. The Themptander ministry resigned. The King retained, however, for a time several members of the ministry, but it was difficult to find a premier who would be able, during the transition from one system to another, to command sufficient authority to control the parties. At last Baron Gillis Bildt, who, while Swedish ambassador in Berlin, had witnessed the introduction by Otto von Bismarck of the agrarian protectionist system in Germany, accepted the premiership, and it was under his auspices that the two chambers imposed a series of duties on necessaries of life. The new taxes, together with an increase of the excise duty on spirits, soon brought a surplus into the state coffers. At a Council of State on October 12, 1888 the king declared his wishes as to the way in which this surplus should be used. He desired that it should be applied to a fund for insurance and old age pensions for workmen and old people, to the lightening of the municipal taxes by state contributions to the schools and workhouses, to the abolition of the land taxes and of the obligation of keeping a horse and man for military service, and, lastly, to the improvement of the shipping trade; but the Riksdag decided to devote it to other objects, such as the payment of the deficit in the budget, the building of railways and augmentation of their material, as well as to improvements in the defenses of the country.