Galatz
Import and export taxes
Author: ARDELEANU KONSTANTIN
General remarks concerning the customs policy of the Romanian Principalities / Romania
Before 1829, there were no specific regulations concerning the customs policy of the Danubian Principalities, territories which followed the provisions of the Ottoman Empire.
A new era in the commercial history of Wallachia and Moldavia started after 1829, as the “Organic Statutes” imposed in 1831–1832 under the guidance of the Russian military administration provided for a large autonomy in terms of customs policy: article 79 of the Moldavian regulation stated that the new customs tariff was to be settled by the National Assembly and the hospodar “in the most useful manner for the country”[1]. The authorities in Bucharest and Jassy attempted to impose a national customs policy, as an expression of the Principalities’ autonomy, guaranteed by international treaties. This new policy was intended to encourage the export of Moldo–Wallachian agro–pastoral commodities and to increase the revenues of the state treasury, without injuring the interests of the modest local industry. Therefore, a general tariff of three percent for the importation and exportation of goods was introduced, and it was the subject of small variations during the following two decades. However, there were differences for the strategic goods, such as grain, which paid a fixed tax per measurement unit. A larger rate was imposed for the export of salt, whereas horned cattle were sold with the authorisation of the finance minister and the payment of a special tax on each animal; suet and bone marrow also made the object of special rates. Finally, the export of leeches was almost forbidden by a high tariff[2].
Despite all these domestic arrangements, there was something completely unclear in the settlement of the Danubian Principalities’ customs policy. It was in fact a consequence of the two states’ juridical status. The Ottoman authorities could not interfere and modify the tariff rates effective for the Principalities, as this would have been an infringement of Moldo–Wallachia’s autonomy, guaranteed by the 1829 Treaty. However, the Principalities were not allowed, as vassal provinces, to raise their own rates above those effective for the Ottoman Empire as a whole. Since the rates had been fixed by the capitulations concluded with the European powers, they could not be raised above the value of three percent ad valorem without a general international negotiation[3].
Things remained in this awkward situation for a long time, with European powers interested to protect their own merchants, whose status was very advantageous under the capitulatory regime. In August 1838, Britain and the Porte signed the commercial treaty of Balta Liman, which became the basis of similar agreements concluded with most European states. The import tax was fixed at five percent ad valorem, two percent being added in compensation for the domestic monopolies abolished throughout the Porte’s dominions. The export tax was raised to 12 percent, and the land transit was settled at three percent[4]. Considered part of the Ottoman market, the Danubian Principalities were invited to apply the new regulations. But they were directly affected by these arrangements, as it would have meant that the Ottoman treasury got three percent when the goods entered the Empire, whereas the Principalities received, as internal customs, the rest of two percent when the merchandise was sold. In memoranda sent to the European powers the Moldo–Wallachian authorities protested against these provisions, and the local foreign consuls also reported that the 1838 agreement was detrimental to their interests[5].
The princes in Bucharest and Jassy attempted to increase the tariffs to five percent, but their intention was resisted by the European powers, mainly by Austria, so the Principalities remained within the capitulatory regime (i.e. – three percent customs rates)[6]. The two states concluded a customs union in 1835, which was further strengthened in 1847 and the new common Moldo–Wallachian tariff remained fixed at three percent until 1850, when Prince Barbu Ştirbey (appointed hospodar of Wallachia in 1849) invoked his country’s fiscal autonomy and raised the tariff to five percent. After the usual protests of the Austrians, the rate remained fixed at a flat five percent for both exports and imports, except for the exports of grain, to which the former fixed duty per measurement unit continued to apply[7].
After the union of the two principalities, the state abandoned in 1860 the system of farming the customs revenues, which were now exploited by the state. A new law stipulated the unitary organisation of the Romanian customs system, the norms of taxation etc. The import – export tax remained fixed at five percent ad valorem, but during the 1860s there were numerous changes and variations which prove that the authorities struggled to find the balance between increasing the incomes of the state budged and encouraging commercial exchanges. Thus, in 1865 the tariff was reduced to four percent, in 1866 it was seven and a half percent for imports and three percent for exports, then decreased to two percent in 1867 and one percent in 1868[8].
An important reform was imposed in 1874 by a law that organised all aspects related to the customs policy: taxes, prohibitions, surveillance, penalties, etc. It remained in use, with slight alterations, until 1906[9]. Soon enough, a new customs tariff was agreed upon that also had the political intention of stating the customs autonomy of the country. It replaced the ad valorem system with the taxation per physical unit (weight or number) and only exceptionally ad valorem. The tariff had the first roots for encouraging the national industry, so taxes varied between four and six percent for the undeveloped industrial branches, 10–20 percent for several protected goods and 7.5–15 percent for the rest. However, this general tariff was not applied, as in June 1875 Romania signed a commercial convention with Austria–Hungary, which forced her to conclude similar agreement with most of her commercial partners (Russia – 1876, Germany – 1877, Switzerland, Greece, Italy – 1878, Great Britain, Belgium – 1880, the Netherlands and the USA – 1881). In exchange for the low taxation of Romanian grain and cattle that were exported to Austria–Hungary (and to other countries), Romania accepted to decrease import rates, so that the country continued to be flooded by the cheap products manufactured in the industrialised countries. The tariff was modified in 1878, when the conventional tariff included 711 articles, grouped into 24 categories. The taxation was done by the weight, measurement unit and number of these products[10].
In 1886 independent Romania led by a liberal cabinet imposed a new customs tariff that abolished former privileges and was meant to encourage the national industry. The customs inventory included 590 articles, 22 of them taxed with a rate varying between 50–180 percent, 31 between 40–50 percent, 43 between 30–40 percent, 113 between 20–30 percent, 53 between 10–20 percent, 107 goods under ten percent, and 121 exempted. This tariff was the trigger of a customs war with Austria–Hungary and other European powers, an economic conflict that lasted until 1891. A new tariff was introduced in that year by the conservative government, when the new inventory contained 576 articles and a significant reduction of taxes: only 81 products were taxed with more than 20 percent (11 of them with taxes between 50–70 percent, and 15 between 40–50 percent). On the basis of this new tariff there were concluded commercial conventions with Great Britain and Italy – 1892, France, Switzerland, Germany – 1893, Austria–Hungary, Belgium – 1894, the Netherlands – 1899, Greece – 1901, Turkey – 1894[11].
A new law for the organisation of Romanian customs was imposed in 1904, followed by a new tariff (valid since 1906), more protective for the emerging Romanian national industry. The average taxes were higher than in the previous tariff (10–25 percent), with the special taxation of raw materials and products that could be manufactured in Romania[12].
The customs regime of Galaţi
The prosperity of the Danubian ports was greatly related to the introduction of the porto franco (free port) regime, as already in 1833 the local mercantile community in Galaţi publicly requested this privilege[13]. The Moldavian General Assembly formally accepted the initiative, but as its application was lingering, the merchants sent a petition to the new prince, Mihail Sturdza, and to the Home Department, requesting the setting up of the free port, a fact “which would stimulate many commercial houses and would increase the trade of Moldavia”, turning Galați among “the most significant [ports] in Europe”[14].
The Administrative Council agreed to the proposal (30 July 1834), but, prior to its realisation, preparatory actions were necessary, such as the completion of a ditch around the city, the erection of barriers and of customs houses. The wholehearted involvement of Prince Sturdza gave new incentive to the preparations, and the desired works were scheduled for next year[15]. The works were ready in 1836, so that on 1 October 1836 Sturdza issued a princely charter for the inhabitants of Galați, termed “the sole channel of the country’s happiness, by its free trade”. In the following months, the authorities elaborated a Provision for entrepot and free port, ratified by the Administrative Council in 17 March 1837. Article 1 and 2 defined the perimeter enjoying this privilege (Galați and the neighbouring village of Vadul Ungurului), article 3 referred to the exemption from customs duties of the merchandise brought into the free port, and the taxation of the goods only on leaving the privileged area, either for being exported or as imports into the country. The stipulations of articles 4 and 5 touched issues related to the customs house and the quarantine, included in line with the free port, so that all products be accepted to the city “only after their cleaning”. Article 6 alluded to the free transit of foreign goods, except for a series of Wallachian products (animals, food, suet, salt, etc) mentioned in the customs convention with Wallachia. The provisions regulating the operation of foreign merchandise in transit and of exported autochthonous goods (art. 7–9) were followed by references to the cases considered as smuggling. Articles 11 and 12 referred to the taxes levied in the free port (an optional tax for the local community, levied for “the embellishment, improvement and use of the Galați city and port” and exportation taxes on foodstuffs, suet and tobacco for the use of the local Ephorate), whereas article 14 mentioned the tariff comprising the products exempted from customs duties and the customs rates imposed on leaving the privileged area. The provision was applied starting with 1 June 1837[16] and it remained in used until 1 April 1883.
Nevertheless, until the union of the two principalities, foreign merchants were not very happy with these conditions, as they restricted, due to quarantine regulations, the transit of grain sent from the right bank of the Danube and as the most traded goods (grain, cattle, suet, salt, etc) were specifically forbidden in the trade between Moldavia and Wallachia. Therefore, they requested that Galați and Brăila be also recognised as entrepots for storing and re-exporting foreign goods.
In the context of Romania’s protectionist intentions, the authorities in Bucharest decided to abolish the free port regimes, a decision postponed from 1878 to 1883. By 1 April 1883 the free port regime was abolished, and in the following years warehouses were erected at Galaţi and Brăila for storing foreign goods in transit, and then quays, dockyards, grain and general cargo warehouses were constructed[17].
[1] Apostol Stan, Independenţa României. Detaşarea de piaţa otomană şi rataşarea de Europa (1774–1875) (Bucharest: Editura Albatros, 1998), 19–21; Details on the customs policy of the Danubian Principalities during this period in Constantin Ardeleanu, International Trade and Diplomacy at the Lower Danube. The Sulina Question and the Economic Premises of the Crimean War (1829–1853) (Brăila: Istros Publishing House, 2014), 63–67. This template includes material from the book cited above.
[2] Thibault Lefebvre, Études diplomatiques et économiques sur la Valachie (Paris: Guillaumin et Cié, 1858), 158–159; Ardeleanu, International Trade¸ 64–66.
[3] Vernon John Puryear, ‘Odessa: Its Rise and International Importance, 1815–50, Pacific Historical Review, 3 (1934), 204.
[4] Orhan Kurmuş, ‘The 1838 Treaty of Commerce Re-Examined’, in vol. Économie et sociétés dans l’Empire Ottoman (Fin du XVIIIe – Début du XXe siècle), edited by Jean–Louis Bacqué-Grammont et Paul Dumont (Paris: Editions du C.N.R.S., 1983), 411–417.
[5] Radu R. Florescu, The Struggle against Russia in the Romanian Principalities: a Problem in Anglo–Turkish Diplomacy 1821–1854, 2nd edition (Iaşi: Center for Romanian Studies, The Foundation for Romanian Culture and Studies, 1997), 283; Paul Cernovodeanu, Relaţiile comerciale româno–engleze în contextul politicii orientale a Marii Britanii (1803–1878) (Cluj Napoca: Editura Dacia, 1986), 85–86. The reports are found at The National Archives of the United Kingdom (TNA), Public Record Office, Foreign Office, FO 78 (Turkey), File 400, fols. 111–114 (Colquhoun to Palmerston, Bucharest, 3 June 1840); Ibid., file 409, fols. 244–245 (Cunningham to John Bidwell, Galaţi, 23 May 1840). References also in Stan, Independenţa, 29–30.
[6] Prince George Bibescu, Domnia lui Bibescu. Corespondinţă şi documente (Bucharest: Tipografia F. Göbl, 1893), 148–150; Puryear, ‘Odessa’, 207–208; Georgeta Penelea, Contracte în comerţul extern al Ţării Româneşti (1829–1858), Studii. Revista de istorie, 25:4 (1972), 772 and Stan, Independenţa, 33–35.
[7] A description in TNA, FO 195, file 349, fols. 242–247 (Report on the custom duties in Moldavia and Wallachia, enclosure to the dispatch of Cunningham to Canning, Galaţi, 22 June 1850). According to the fixed duties per measurement units or head, they represented in Moldavia: wheat – 4%, maize – 4%, tallow – 4%. For Wallachia – wheat 2 ½ % and maize 1 ½ %. According to other data, the rates for grain were in Moldavia, in August 1850, 4% for wheat and 2% for maize – FO 78, file 828, fols. 228–229 (Gardner to Palmerston, Jassy, 16 August 1850). More details in Ardeleanu, International Trade, 66–67.
[8] Nicolae Sută, Gabriela Drăgan, Maria Mureșan, Sultana Sută–Selejan, Istoria comerţului exterior şi a politicii comerciale româneşti (Bucharest: Editura Eficient, 1998), 65–66.
[9] Enciclopedia României, vol. I, Statul (Bucharest: Imprimeriile Naţionale, 1936), 633.
[10] Sută at alii, Istoria, 94–99.
[11] Ibid., 100–108.
[12] Emil Costinescu, Încurajarea industriei naţionale (Bucharest: Imprimeriile Independenţa, 1912), 3.
[13] Constantin Buşe, Comerţul exterior prin Galaţi sub regimul de port franc (1837–1883) (Bucharest: Editura Academiei Republicii Socialiste România, 1976), 30.
[14] Ibid., 31. For the setting up of the free port in Galaţi, references in Petre Oprea, “Înfăptuirea regimului de porto–franc la Galaţi şi consecinţele lui immediate”, Studii, 12:2 (1959), 117–130; Dumitru D. Rusu, Gh. Bujoreanu, “Contribuţii la cunoaşterea înfăptuirii regimului de porto–franc la Galaţi”, Danubius, 1 (1971), 155–163.
[15] Buşe, Comerţul, 31–32.
[16] Tezaur documentar gălăţean, edited by Cezar Bejan, Alexandru Duţă, Stelian Iordache, Viorica Solomon (Bucharest: Direcţia Generală a Arhivelor Statului, 1988), 78–81; Buşe, Comerţul, 35–36; Paul Păltănea, Istoria oraşului Galaţi de la origini până la 1918, second edition, edited by Eugen Drăgoi (Galaţi: Editura Partener, 2008), vol. I, 300–303.
[17] Moise N. Pacu, Cartea judeţului Covurluiu. Note geografice, istorice şi în deosebi statistice (Bucharest: Institutul Grafic I. V. Socecu, 1891), 262–263.
References
Websites:
Archival sources:
The National Archives of the United Kingdom (TNA), Public Record Office, Foreign Office, FO 78 (Turkey), File 400 and 409 & FO 195, file 349.
Serviciul Judeţean Galaţi al Arhivelor Naţionale (The National Archives, Galaţi Branch), Primăria oraşului Galaţi (The Municipality of Galaţi), files starting with 1831.
Bibliography:
Ardeleanu, Constantin, International Trade and Diplomacy at the Lower Danube. The Sulina Question and the Economic Premises of the Crimean War (1829–1853) (Brăila: Istros Publishing House, 2014).
Aurelian, P. S., Politica noastră comercială faţă de conveniţiile de comerţ [Our Commercial Policy Regarding Commercial Conventions] (Bucharest: s.e., 1885).
Băicoianu, C. I., Istoria politicei noastre vamale şi comerciale [The History of Our Customs and Commercial Policy], vol. I–II (Bucharest: s.e., 1904).
Buşe, Constantin, Comerţul exterior prin Galaţi sub regimul de port franc (1837–1883) [The Foreign Trade through Galaţi under the Regime of the Free Port (1837–1883)] (Bucharest: Editura Academiei Republicii Socialiste România, 1976).
Cernovodeanu, Paul Relaţiile comerciale româno–engleze în contextul politicii orientale a Marii Britanii (1803–1878) [The Romanian–English Commercial Relations in the Context of Britain’s Eastern Policy (1803–1878)] (Cluj Napoca: Editura Dacia, 1986).
Costinescu, Emil, Încurajarea industriei naţionale [The Encouragement of the National Industry] (Bucharest: Imprimeriile Independenţa, 1912).
Enciclopedia României, vol. I, Statul [Romania’s Encyclopaedia, vol. I, The State] (Bucharest: Imprimeriile Naţionale, 1936).
Iordăchescu, V. Th., Evoluţia politicii şi legislaţiei vamale a României, de la 1886–1904 [The Evolution of Romania’s Customs Policy and Legislation, from 1886 to 1904], vol. II (Bucharest: s.e., 1936).
Lefebvre, Thibault, Études diplomatiques et économiques sur la Valachie (Paris: Guillaumin et Cié, 1858).
Oprea, Petre, “Înfăptuirea regimului de porto–franc la Galaţi şi consecinţele lui imediate” [The Making of the Free Port Regime at Galaţi and Its Immediate Consequences], Studii, 12:2 (1959), 117–130.
Pacu, Moise N., Cartea Judeţului Covurlui. Note geografice, istorice şi în deosebi statistice [The Book of Covurlui County. Geographical, Historical and Mainly Statistical Notes] (Bucharest: Stabilimentul Grafic I. V. Socecu, 1891).
Păltănea, Paul, Istoria oraşului Galaţi de la origini până la 1918 [The History of Galaţi from Its Beginnings to 1918], second edition, edited by Eugen Drăgoi (Galaţi: Editura Partener, 2008).
Rusu, Dumitru D., Gh. Bujoreanu, “Contribuţii la cunoaşterea înfăptuirii regimului de porto–franc la Galaţi” [Contributions at the Knowing of the Introduction of the Free Port Regime at Galaţi], Danubius, 1 (1971), 155–163.
Stan, Apostol, Independenţa României. Detaşarea de piaţa otomană şi rataşarea de Europa (1774–1875) [Romania’s Independence. The Dettachment from the Ottoman Market and the Attachment to Europe (1774–1875)] (Bucharest: Editura Albatros, 1998).
Sută, Nicolae, Gabriela Drăgan, Maria Mureșan, Sultana Sută–Selejan, Istoria comerţului exterior şi a politicii comerciale româneşti [The History of the Romanian Foreign Trade and Commercial Policy] (Bucharest: Editura Eficient, 1998).
Tezaur documentar gălăţean [Tresure of Documents on Galaţi], edited by Cezar Bejan, Alexandru Duţă, Stelian Iordache, Viorica Solomon (Bucharest: Direcţia Generală a Arhivelor Statului, 1988).
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