Richard Schüller, Distinction entre les droits d’entrée économiquement avantageux ou préjudiciables (1909)

Published as a separately paginated offprint from the Revue économique internationale, Schüller’s article seeks a criterion for judging individual import duties against the prevailing expansion of protectionism. Its three parts move from differences in production costs, through the effects of tariffs on production and consumption, to practical criticism of German and Russian policy. Neither indiscriminate protection nor an assumption that free trade fully employs productive resources supplies an adequate basis for judgment.

Schüller rejects Friedrich List’s distinction between agricultural products, supposedly undeserving of protection, and infant industries requiring temporary support. Established industries may also benefit from protection. Equally, the doctrine that all producers deserve equal protection disguises unequal effects: duties may sustain one branch while raising input costs and provoking retaliation against another. His alternative makes increased domestic production answerable to its cost for consumers:

L'action des droits est favorable lorsque le revenu total de la population croît davantage par l'augmentation de la production qu'il ne décroît par le renchérissement de la consommation.

English translation: The effect of duties is favorable when the population’s total income increases more through the expansion of production than it decreases through the increased cost of consumption.

The analytical foundation is the persistent diversity of production costs within a country. Soil, climate, transport, labor skills, managerial ability, capital, and credit give enterprises unequal advantages. Competition does not simply eliminate this diversity. Economies of expansion encounter limits: cheap power, suitable land, skilled workers, and favorable transport conditions cannot be extended indefinitely.

C'est pourquoi l'on voit coexister, dans tous les domaines, des entreprises dont les frais de production sont différents.

English translation: That is why enterprises with different production costs are seen to coexist in every field.

This coexistence overturns the treatment of national production cost as a single magnitude. Domestic producers can supply part of a market while imports meet the remainder, because some domestic costs fall below the import price and others exceed it. A tariff’s consequences therefore depend on two distinct conditions: the foreign supplier’s initial cost advantage and the domestic cost increases required to expand output. A small foreign advantage alone does not establish that protection is beneficial; further expansion may require sharply rising prices.

Schüller generally associates wider cost differences with agriculture, mining, and industries dependent on bulky materials, and narrower differences with standardized manufactures. These are conditional rankings, not universal sectoral rules. Underused agricultural resources can permit inexpensive expansion, whereas joint products such as hides cannot readily be increased independently of the principal activity. His numerical examples show why identical tariff rates can produce very different output responses and consumer burdens.

The argument also concerns distribution. Higher commodity prices reduce real wages and raise the rents of enterprises that could already operate profitably at lower prices. Expanded production, however, increases demand for labor and capital, potentially raising wages and interest. Schüller consequently judges both aggregate income and its distribution through the relationship between additional production and higher prices. He disputes the free-trade argument that consumers’ savings necessarily compensate for displaced production: a slight price reduction may accompany a much larger contraction of domestic activity.

The practical section proposes examining producers’ accounts, comparative factor costs, and observed changes in output, imports, and prices after tariff revisions. Yet Schüller explicitly limits the precision of his test: production increases and dearer consumption cannot be compared with mathematical rigor.

Mais ils sont politiquement commensurables, toute politique reposant sur l'appréciation d'avantages et d'inconvénients qui ne sont pas numériquement comparables.

English translation: But they are politically commensurable, since all policy rests on the assessment of advantages and disadvantages that are not numerically comparable.

The concluding cases expose protection without proportionate productive gains. Germany’s increased grain duties burden consumption without demonstrated acceleration of output; duties on export-oriented iron products strengthen cartels capable of restricting production. Russia’s raw-material duties raise downstream costs, while excessive protection of manufactures constricts consumption and industrial development. Retaliation compounds these domestic losses.

The article’s enduring conceptual contribution is to shift tariff analysis from abstract national or sectoral interests to heterogeneous enterprises and the cost of expanding supply. Its conclusion also identifies a political obstacle: economic interests possess unequal political weight. Rational discrimination among duties must therefore challenge both doctrinal simplification and the organized interests sustaining harmful protection.