The Customs Tariff and the Development of Secondary Industry in South Africa with Special Reference to the Period 1924-1939¶
Lumby, Anthony Bernard (1974). The Customs Tariff and the Development of Secondary Industry in South Africa with Special Reference to the Period 1924-1939. PhD thesis, Department of History and Political Science, University of Natal (Durban). University of Natal.
| Type | thesis |
| Scope | Economics and economic history of apartheid |
| Method | mixed |
| Period studied | 1652–1939 |
| Regions | South Africa, Cape Colony, Transvaal, Natal, Witwatersrand |
| Themes | origins segregation, manufacturing industrial policy, business and state, labour markets wages, macro fiscal finance debt, mining migrant labour, methods data sources |
| Citation key | lumby1974 |
Argument¶
Lumby asks what part the customs tariff played in South African industrialisation, especially 1924-1939. He argues that a deliberate protective policy began only with the Pact government in 1924-25 (earlier duties were mainly revenue duties or ad hoc, apart from the Transvaal concessions policy). The mineral discoveries and later the gold-price boom after the 1932 devaluation, not the tariff, were the main drivers of growth. Case studies of footwear, printing and cement suggest a presumption that the tariff helped footwear and cement, but not printing. Protection served the 'civilised labour'/poor-white and diversification aims only partly, and the policy was self-defeating: manufacturing stayed dependent on gold-earned foreign exchange for imported raw materials while protection raised gold-mining costs.
Evidence and method¶
Official reports (Board of Trade and Industries, Customs Tariff Commission 1934-36, Economic and Wage Commission 1926, Low Grade Ore Commission 1932, Cullinan Commission), censuses of industrial establishments 1915/16-1941/42, trade statistics, Hansard, Transvaal Chamber of Mines annual reports, newspapers, trade journals, and secondary literature. Many tables and figures are compiled from these, plus a self-constructed estimate of the 1939 'crude cost of protection' to the mines.
Place in the debates¶
- Was there tariff protection for secondary industry before 1925? (see Industrialisation, protection and industrial structure). Distinguishes incidental from deliberate and ad hoc from systematic protection. Concludes there was no definite policy before 1924-25 apart from the Transvaal concessions policy (1881-1900). Closer to De Kock, Botha and Pearsall than to Bruwer and Knowles, who date protection to the 1880s.
- How important was the tariff relative to other causes of industrialisation? (see Industrialisation, protection and industrial structure). Tariff important after 1925 but secondary. The mineral discoveries gave the original stimulus (indirectly, via market growth). The greatest stimulus was the gold boom after the 1932 devaluation. The First World War also mattered but is exaggerated (inflation). Rejects the official claim that industrial revolution began in 1925.
- Causal link between protection and industrial expansion (see Industrialisation, protection and industrial structure). Accepts Schumann's warning against post hoc reasoning and criticises Rupert, van Biljon and the Board of Trade for asserting causation without proof. Concludes there is only a presumption in favour of a causal link, based on industry case studies.
- Motives for the 1925 protective policy (see Industrialisation, protection and industrial structure). Multi-causal: employment of 'civilised labour' and poor whites, diversification and reduced import dependence, replacement of the 'wasting' gold mines, and Hertzog's economic nationalism. Judged by these aims, the policy was only partially successful.
- Dumping duties (see Industrialisation, protection and industrial structure). Argues dumping legislation was arbitrary, poorly framed and sometimes harmful to consumers, invoking Haberler that only spasmodic dumping injures the importing country. Notes the hypocrisy of tolerating internal cement dumping.
Findings¶
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Under Kruger's Transvaal concessions policy, protection was a definite policy, but the Cape and Natal tariffs were mainly revenue-oriented. (p. 26)
Clearly, then, with the exception of the tariff policy followed by the Transvaal during the last two decades of the nineteenth century
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The 1914 tariff was mainly a revenue measure; a definite protective policy had not been adopted. (p. 41)
It is clear, then, that a definite and systematic policy of protection had not been adopted.
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The First World War stimulus is overstated once inflation is removed: nominal gross output rose 34.7% 1916/17-1918/19 but only 22.6% in constant prices. (p. 45)
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The Customs Tariff Act of 1925 introduced the deliberate protective policy, conditional on employing more 'civilised labour'. (p. 64)
the customs Tariff Act of 1925 which, at long last, introduced a deliberate and purposeful policy of tariff protection.
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The Customs Tariff Commission (1936) estimated that protected output was a large share of non-agricultural manufacturing and imposed a substantial cost on consumers. (p. 111)
it was calculated that £19,305,000 or 54,14 per cent. was dependent upon protective duties.
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Manufacturing remained dependent on gold: it relied on imported raw materials and exported little, so gold-mining financed its expansion. (p. 121)
The manufacturing sector was a parasite, feeding upon the very sector which, so it was planned, it eventually was to replace.
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Footwear: South African producers' market share rose sharply after the 1930 and 1932 duty increases. (p. 142)
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Footwear productivity growth slowed under protection, which also sustained small, inefficient firms. (p. 149)
Betwee.n 1924/25 and 1938/39, however, value added per employee increased by only 13,9 per cent., or by an average of 1,6 per cent. per annum.
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Printing owed its growth more to natural protection and general economic expansion than to the tariff, and protection was unjustified. (p. 190)
there existed no real justification for the policy of high tariff protection that was pursued in relation to the printing industry after 1925.
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Cement imports fell as dumping duties and the 1932 duty increase operated, but the higher duty burdened local consumers. (p. 220)
It is, therefore, not unreasonable to suppose that the customs tariff probably did play some part in the expansion of the local cement industry prior to 1939.
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Manufacturing used heavily imported raw materials, about half of the total, and exported very little, creating a large foreign-exchange deficit financed by gold. (p. 229)
the fact remains that, prior to the Second World War, approximately one-half of the raw materials required by secondary industry had to be imported.
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The 1932 devaluation and gold boom, not the tariff, produced the biggest industrial stimulus: real manufacturing gains exceeded those of the First World War. (p. 270)
The 'greatest stimulus' to industry prior to the Second World War came from the tremendous expansion in gold-mining after devaluation in December 1932
Evidence ledger¶
Sources used¶
| Source | Kind | Period | How used |
|---|---|---|---|
| Industrial census series: Census of Industrial Establishments 1915/16-1941/42 (e.g. U.G.14/1918, U.G.32/1928, U.G.34/1936, U.G.21/1941, U.G.20/1945) | industrial mining census | 1915/16-1938/39 (no census 1930/31-1931/32) | Supplies the number of firms, employment by race, wages, materials, gross and net output used in all trend tables and figures on secondary industry, footwear, printing and cement. |
| Statistics for Fifty Years, 1910-1960 (national income, price indices, construction output) | official statistical series | 1910-1960 (used for 1912-1939) | Gives sectoral contributions to national income (Appendix 2), retail price indices and construction output used to deflate and compare industry growth. |
| Annual Statement of the Trade and Shipping of the Union of South Africa, 1910-1939 | official statistical series | 1910-1939 | Provides import and export values of footwear, cement, printing products and raw materials, used for import-substitution ratios and foreign-exchange deficit tables. |
| Official Year Book of the Union of South Africa (Nos. 3-22) | official statistical series | 1910-1941 | Source for revenue and expenditure, export values by commodity, gold-mining statistics and budget surpluses. |
| Board of Trade and Industries reports (e.g. No.51 Revision of the Customs Tariff 1925; No.282 Manufacturing Industries 1945; No.294 Leather Industry 1947; No.353 Printing Industry 1955; dumping reports Nos.8, 30, 42, 48, 60, 70, 77, 82, 84, 133) | commission or official report | 1923-1955 | Used for tariff recommendations, industry histories, dumping investigations, footwear consumption data and the critique of printing protection. |
| Unpublished Board of Trade and Industries reports and Department of Census and Statistics unpublished data | commission or official report | various, 1920s-1930s | Supplied details of unpublished reports and statistical series not otherwise available (e.g. cement production tonnage and prices). |
| Report of the Customs Tariff Commission, U.G.5/1936 (Holloway Commission) and evidence | commission or official report | 1934-1936 | Source for estimates of protected output, excess cost of protection, white employment ratios, Chamber of Mines evidence and cement/footwear findings. |
| Report of the Commission on Conditions of Trade and Industries (Cullinan Commission), U.G.10/1912 | commission or official report | 1910-1912 | Evidence on pre-war tariff policy, industry conditions (footwear, printing employment) and obstacles to industrialisation. |
| Report of the Economic and Wage Commission, U.G.14/1926 | commission or official report | 1925-1926 | Divided reports on protection and civilised labour policy used to show contemporary dissent against the government's tariff policy. |
| Report of the Low Grade Ore Commission, U.G.16/1932; Low Grade Mines Commission reports (U.G.45/1919, U.G.34/1920) | commission or official report | 1919-1932 | Evidence on working costs, the burden of tariff duties on gold mining and the need to reduce costs. |
| Other official commission/committee reports (Chapman Economic Commission U.G.12/1914; Railway Tariffs Inquiry U.G.56/1929; Select Committee on Gold Standard S.C.9/1932; Industrial Legislation Commission U.G.37/1935; Third Interim Report Industrial and Agricultural Requirements Commission U.G.40/1941; Cape, Natal and Transvaal tariff commissions 1908; Select Committee 1883) | commission or official report | 1883-1941 | Used for cost of living, tariff debates, railway rates, gold standard decisions and early protection history. |
| Customs Tariff Acts and amending legislation 1914-1939; Customs Union Conventions 1903 and 1906; Export Subsidies Act 1931; Wage Act 1925 etc. | legislation gazette | 1903-1939 | Establishes the tariff rates, dumping provisions and policy changes whose timing is correlated with industry growth. |
| Government Gazette notices and proclamations (dumping duties, tariff, 1921-1939) | legislation gazette | 1921-1939 | Dates and countries of dumping duties on cement and other goods, import prohibitions on footwear. |
| Hansard 1914-1939 and Cape Times reports of debates | parliamentary debates | 1914-1939 | Ministers' statements on revenue vs protection, imprint bill, and tariff rationale. |
| Transvaal Chamber of Mines Annual Reports 1909-1939 and Award of Mining Industry Arbitration Board 1927 | chamber of mines or recruiting records | 1909-1939 | Evidence of the Chamber's opposition to protection, working costs, gold-mining statistics (Table 8-4) and stores consumed (Table 8-7). |
| Annual Reports of the Government Mining Engineer and Jeppe's Gold Mining in South Africa (1948) | official statistical series | 1910-1939 | Source for tonnage milled, grade, working costs and profit per ton in Table 8-4. |
| South African Federated Chamber of Industries: Memorandum on Customs Duties (1922) and Annual Convention reports | employer association records | 1921-1925 | Proposed tariff increases on mining supplies and consumer goods (Table 8-5), and manufacturers' support for protection. |
| Other business-association publications (Associated Chambers of Commerce congress 1925, Johannesburg Commercial Year-books, Cape/Transvaal Chambers of Industries histories, South African Manufacturers Association) | employer association records | 1907-1960 | Used to show positions of importers, miners and manufacturers on protection. |
| South African Typographical Union records (Registration of Journeymen 1910; Downes, Printers' Saga) | union or movement records | 1881-1934 | Journeymen numbers, wage settlements and unemployment in printing industry. |
| Newspapers and trade periodicals (Cape Times 1916-1921; South African Commerce and Manufacturers' Record; Industrial South Africa; Commercial and Industrial Gazette; Johannesburg Star) | newspapers periodicals | 1890-1931 | Used for ministerial statements when Hansard unavailable, manufacturers' complaints and industry conditions. |
| Frankel's estimates of mining taxation and national income analysis | secondary literature compilation | 1914-1944 | Uses Frankel's figures for tax burden on gold mines, government revenue from gold, and manufacturing's imported raw material share. |
| Du Plessis and Schumann business-cycle chronologies; Swanepoel thesis estimates of tariff effects | secondary literature compilation | 1910-1939 | Dates for cycles and Swanepoel's estimate of wages being 6 percent higher because of protection, used in the cost-of-protection estimate for gold mines. |
| League of Nations publications (World Economic Survey, Commercial Policy of the Inter-War Period) | international trade or finance data | 1927-1942 | International industrial production index (Table 3-3) and background on global tariff increases. |
| Cartwright, A.P. company histories (Pretoria Portland Cement Company; The Dynamite Company; The Corner House) including company ledgers | company records or reports | 1888-1936 | Source for early cement factory quality problems, prices and company histories. |
| Early records of Cape and Transvaal (Cape Select Committee 1883 report, Transvaal Volksraad committee 1895, Hatch and Chalmers 1895, Industrial Commission of Inquiry 1897) | commission or official report | 1883-1897 | Evidence on nineteenth-century tariff character, concessions policy, and costs of imported cement and mining stores. |
New data¶
The author compiled derived tables and figures from published census and trade series: per-firm output (Appendix 4), revalued output at 1916/17 prices (Appendix 3), industry tables for footwear, printing and cement (employment, output, import ratios, value added per employee), and a 'crude cost of protection' estimate of mining stores in 1939 (Table 8-7).
Inference¶
Quantification: Descriptive tables.
Historical narrative combined with descriptive time-series tables and three industry case studies (footwear, printing, cement) plus a chapter on gold mining. Causality from tariff to growth is argued by timing correlations between duty changes and output or import share, qualified by 'presumption', natural protection, and contemporaneous factors (war, gold price). No regression or counterfactual model.
Key claims¶
| Claim | Basis | Strength |
|---|---|---|
| Before 1925 the tariff was mainly a revenue instrument; there was no deliberate, coherent protective policy except the Transvaal concessions policy of 1881-1900. (p. 267) | Cape, Natal and Transvaal commissions, Cullinan report, Union Tariff Acts 1914-1923 and Hansard statements of ministers. | Partial data |
| The mineral discoveries, and especially the expansion of gold-mining after devaluation in 1932, were bigger stimuli to manufacturing than tariff protection, with the First World War also important. (p. 270) | Real net manufacturing output computed from industrial census and price indices for 1915/16-1920/21 versus 1932/33-1937/38. | Partial data |
| There is a presumption that tariff protection stimulated expansion in footwear and cement: import share fell after duty increases in 1930/1932. (p. 142) | Industrial census series, trade statistics (footwear imports/consumption, cement import ratios), duty dates. | Partial data |
| Protection did little for printing, which enjoyed substantial natural protection and expanded with the economy; tariff encouraged small firms and slowed productivity growth. (p. 190) | Census data on printing output, value added per employee, firm size classes; Board of Trade Report No.353. | Partial data |
| Tariff-protected expansion deepened dependence on imported raw materials paid for by gold exports, so secondary industry did not replace gold mining. (p. 233) | Census raw materials data, manufactured and gold export values (Tables 8-1 to 8-3). | Systematic data |
| Protection raised gold-mining costs by about 1/4d per ton in 1939 (roughly £4 million), partly self-defeating the policy. (p. 262) | Table 8-7 estimates from Chamber of Mines stores data and customs duties, plus Swanepoel's 6 percent wage effect. | Partial data |
| The civilised labour objective was partially met: white employment in secondary industry grew faster than non-white after 1924/25, though other legislation also contributed and results varied by industry. (p. 275) | Industrial census employment by race (Table 9-1, Figure 6) and industry case studies. | Partial data |
| The use of dumping duties on cement was poorly founded and administration was arbitrary, with no published returns of duties collected. (p. 224) | Board of Trade reports on cement dumping, tariff acts, The Economist price quotations, Plant's critique. | Illustrative or anecdotal |
The author's caveats¶
Acknowledges absence of official industrial statistics before 1915/16, no census for 1930/31-1931/32, changes in factory definition in 1916/17, mixing of government and private establishments before 1924/25, lack of a raw material price index to deflate, cement figures including modelling, unavailable dumping-duty returns, and the impossibility of isolating tariff effects or measuring burden on gold mining precisely.
Gaps in the evidence¶
The argument lacks any counterfactual or multivariate test separating tariff effects from gold-price, war and market-size effects; industry-level effective protection rates (duty-based nominal protection against input costs) were computable from tariff schedules and census data and are now available. Firm-level archives of the Board of Trade and Industries, company records and unpublished wage data would allow better tests of productivity and cost claims. The cost-of-protection estimate for mines rests on assumed shift percentages rather than observed price data.
Replicability: Data described but not public.