Trade Policy (TRADEPOL)

Colonies were seen as a way of ensuring markets. Trade flows have always been closely monitored by colonial governments, and trade policies were changed frequently in order influence them. The British colonial government in India, for instance, was more willing to protect the textile industry when the threat came from Japanese producers and not British ones. Between 1930 and 1934 the tariff on cotton cloth was raised from 11% to 50%, although British imports were accorded a margin of preference (Maddison 1971b: 15). Maddison argues that the considerable substitution of local textiles for imports was a result of these measures. In the Great Depression of the 1930s, all colonial empires introduced protectionist measures. Therefore, it is difficult to code colonial trade policies 1850-1950 beyond a simple ‘general opening’ vs. ‘more distortive’. We followed the definitions of Mitchener/Weidenmier (2008), but made no distinction between ‘preferential tariff policy’ and ‘tariff assimilation/customs union’ :

• 0= not applicable (5 cases in which no colonial influence in trade policy was discernible)
• 1= predominantly ‘open door’ policy (43 cases)
• 2= preferential tariff policy, policy of tariff assimilation/customs union with metropole country (35 cases, of which 21 were French colonies, 3 Portuguese and 3 Japanese)

French colonies more often experienced a distortive trade policy than British ones (see 'Descriptive Statistics').

On the relations with other colonial indicators, we can say: The more direct colonial rule (DOMFORM), the more distortive the colonial trade policy, and the more likely anti-colonial resistance (VIOLRES). Beyond that, TRADEPOL also correlates significantly with colonial immigration (FORPRES), INDTRANS and the share of the metropole in the total trade of the colony (TRADECON). However, trade policies were not always effective, and the “colonial ties” that Mitchener/Weidenmier (2008: 2; “being in an empire roughly doubled trade relative to those countries that were not part of an empire”) found for the period 1870-1913 have other causes than trade policies as well. In the late 1890s, J.A. Hobson already argued that the recent extension of Britain’s colonial empire has not led to a respective increase in trade:

„... the enormous accessions of territory and population since 1884 – comprising the Niger Coast Protectorate, Somali Coast Protectorate, Socotra, Pahang and other Straits Settlements, parts of New Guinea, Bechuanaland, Zululand, Royal Niger Company’s territory, British East Africa, the British South Africa Company’s territory, Zanzibar and Pemba, Upper Burmah and Shan States – have been followed by no increase of colonial trade reckoned in money values, and by an increase reckoned in goods, which is not commensurate with the increase of British area and population.” (Hobson 1898: 53)

Therefore, an indicator for the factual impact of colonial domination on trade flows is needed.