Beginning in 1686, and continuing for the next 75 years, France banned the import of Indian cotton textiles and their imitations produced elsewhere. The reason for the ban was that the textiles had become popular among French consumers to the detriment of French wool and linen manufacturers. The ban was widely defied by smugglers and consumers, causing the French government to resort to draconian enforcement measures. In turn, the measures prompted a spirited public debate about free trade, one of Europe’s first. This case study provides an opportunity for readers to reflect on the effects of creative destruction and measures to restrict economic competition.
By the end of this case study, students should be able to understand:
- The phenomenon of creative destruction.
- The set of ideas called mercantilism.
- The effects of trade restrictions.
- The causes and consequences of underground markets.
Until about 400 years ago, cotton was not common in Europe—except in its southernmost reaches, the cotton plant does not grow on the continent. Linen and wool had been the staple fibers, while, since antiquity, cotton fabrics from the Middle East and India had trickled in as luxuries. A variety of cotton fabric called muslin was prized for its sheerness and was used in making dresses for upper-class women. The name “muslin” is thought to derive from Mosul (in present-day Iraq), the fabric’s purported city of origin, though its largest manufacturer was the city of Dhaka (in present-day Bangladesh).
Another variety of cotton called calico was desired for its colorful printed or hand-painted designs. It added a welcome dash of brilliant reds, blues, greens, and yellows to an otherwise drab European sartorial palette (see Figure 1). First used for upholstery and wall hangings, it quickly became a fashionable material for petticoats, dresses, skirts, blouses, and women’s jackets (see Figure 2). Men, too, began to permit themselves morning gowns, nightshirts, and handkerchiefs made of calico. In Molière’s 1670 play Le Bourgeois gentilhomme, the hero Monsieur Jourdain boasts of his new Indienne dressing gown that “all people of quality wore this in the mornings.” Indiennes or toiles peintes were the names given in France to calicos. The word “calico” originated from the fabric’s association with the Indian port city of Calicut, although the fabric was sourced from several regions along the coast of the Indian subcontinent.
In addition to the lightness and brightness of the cotton, the characteristic that drew Europeans to calico was that its colors were steadfast and resisted fading—something that European-made fabrics could not match until the late 1700s. As an entry in Diderot’s famous Encyclopédie (1765) gushed: “the cloth from the Indies draws its value and its price from the liveliness, endurance, and the adherence of the colors with which they are painted, which is such that, far from losing their brilliance when one washes them, they become only more beautiful.”
Source: Victoria and Albert Museum, T.215-1992.
Source: Victoria and Albert Museum. https://artsandculture.google.com/asset/overdress-unknown/agF1-L-_z2VBHA?hl=en
Colorful fabrics have great symbolic significance in several religions of the Indian subcontinent. By 1500, Indian artisans had honed the technology to fasten brilliant colors onto cotton—their staple fiber—in a way that survived both repeated washing and exposure to sunlight. The finished products also reached ready markets beyond India’s shores. Economic historians have estimated that, in the 1600s, India produced 25% of the world’s textile output and an even larger share of the world’s textile exports. The world had access to India’s textiles but not its technology, for the knowledge of textile dyeing was not codified or written down. The knowledge was tacit, and an Indian artisan would typically pass it on only through demonstration to apprentices belonging to his clan and caste.
When the Europeans discovered new sea routes in the 1500s, and invented large joint-stock companies for overseas trade in the 1600s (of which the various East India Companies were among the first), their trade with India became direct and more regular. (There were 16th-century joint-stock companies in Europe and, depending on the definition, they may have started earlier elsewhere.) The once slow trickle of Indian cottons soon turned into an abundant stream. In 1708 the English writer Daniel Defoe recalled that “it crept into our houses, our closets, and our bed-chambers; curtains, cushions, chairs and at last the beds themselves were nothing but Calicos and Indian stuffs. In short, almost everything that used to be made of wool or silk, relating to the dress of women or the furniture of our houses, was supplied by the Indian trade.”
In addition to quality, price also gave Indian textiles a competitive edge. City officials in the French city of Toulon noted that “the extreme poverty which reigns in this city and the low price of Indiennes and painted Indian cloths that can be washed like linen have engaged nearly all women and girls to make use of them.” To cater to the booming markets, a few calico dyeing workshops sprang up in Europe in the 1600s to produce imitations. But these manufacturers’ knowledge of Indian dyeing and printing technology was inadequate, and so they had to improvise. Authentic Indian calicos continued to be the standard of quality in Europe until the late 1700s.
The surge in imported cheap and fashionable cotton threatened the businesses of domestic wool, linens, and silk producers all over Europe. Today, economists refer to this as “creative destruction,” whereby the arrival of a new product or technology displaces an older product or technology. The resulting destruction and creation of economic opportunities cause economic dislocation that is harmful to many. Because creative destruction also generates economic growth, many economists today warn against preventing it. Instead, they advocate for compensation to ease the burden of those suffering dislocation as the creative destruction plays out.
In 1600s France, no such mechanism for compensation existed, and so the industries threatened by the calico surge petitioned the king for protection. Fortunately for them, the surge ran afoul of the then-predominant economic ideas (termed today as mercantilism) that deemed exports as conducive to national prosperity and imports as detrimental (economists today consider exports and imports in general to be equally beneficial components of international trade).
Mercantilists favored exports over imports because they identified national prosperity with tangible measures such as the amount of domestic production, employment, or gold earned from abroad. Exports contributed to such tangible measures. Additionally, exports benefited the king, as they generated wealth that was easily identifiable and taxable. Such wealth was concentrated among a small number of manufacturer-exporters who tended to be highly visible. On the other hand, the benefits of imports were less tangible and visible. Imports increased the variety of prices and quality available to consumers, while challenging domestic firms to increase their efficiency and innovation. Discounting such intangibles, the mercantilists frowned upon imports, particularly those that displaced domestic production. That the calico imports were associated with stereotypically female concerns such as fashion and furnishing did not help. Imports were also less convenient sources of tax revenue because the consumer beneficiaries were generally more numerous, more impoverished, and geographically dispersed compared with domestic producers. Consumers back then, as now, were less vocal about their interests than domestic producers, and so their stake in international trade policy was easy to overlook.
The British, French, Prussian, and Spanish governments passed several “calico bans” on the importation, production for domestic use, and consumption of printed Indian fabrics by consumers. The French calico ban imposed in 1686 was the longest-lasting and most comprehensive of all. Therefore, it is singled out in this case study. The preamble read:
The King has been informed that the great quantity of cotton fabrics painted in the Indies or counterfeited in the kingdom […] have not only given rise to the conveyance of many millions outside the kingdom, but have also caused the reduction of Manufacturers long established in France for Stuffs of Silk, Wool, Linen, Hemp, & provoked at the same time the ruin and desertion of Workers who, no longer finding employment nor subsistence for their families due to the cessation of their work, have left the kingdom.
The French ban covered not only the importation and use of Indian textiles but also the domestic production of its imitations. Other countries banning calicos permitted domestic production of imitations for export. But the French reasoned that it was not always possible for the harried officials to distinguish the domestic-produced from the imported. The imported textiles would be difficult to keep out if they could be passed off as domestically made. Additionally, if the goal was to protect domestic wool and linen manufacturers, then calicos, both domestic and foreign, were equally menacing.
An exception was made for overseas trading companies such as the French East India Company. It was allowed to bring imported calicos into its docks and warehouses, but strictly for re-export. The exception was necessary because Indian cottons were the goods that could be most readily exchanged for spices in Southeast Asia and slaves in Africa.
The responsibility of policing the ban was entrusted to the United Farmers General, a private corporation to which the French king had sold, among other things, the right to collect customs duties. Wealthy financiers owned the “Farm” or the “Fermes,” and it had its own police force. It was given the right to confiscate illegal calicos, arrest offenders, and levy fines. But it had minimal economic incentive to enforce the ban zealously. For one, it took enormous resources to police a ban on a product that was deeply entrenched in people’s lives. Secondly, the benefits of its enforcement efforts accrued not to itself but mainly to the domestic textile industry.
With the ban, the calico trade went underground to partake in the well-oiled French infrastructure for trading in contrabands such as banned books, untaxed salt, and U.S. tobacco not imported through the official tobacco monopoly. Most French people participated in the contrabands trade as consumers or suppliers, or knew someone who did. Peasants supplemented their income during the off-season by hiring themselves out for trafficking. Routes were identified where borders were lightly patrolled, or officials could easily be bribed. Several noblemen and clergy made their properties available to store inventory, as officials were hesitant to raid them. Merchandise intended for re-export in the French East India Company warehouses leaked into the underground market. A network of enterprising and clandestine middlemen and peddlers ultimately ensured that there were very few parts of France where people would not be able to read subversive books while smoking competitively priced U.S. tobacco and sitting on bedroom furniture upholstered with beautiful illegal Indian calicos.
The widespread evasion of the ban was facilitated because there was no moral stigma attached in society at large to duping tax officials, for they were the most imperious representatives of an increasingly unpopular regime. Smuggling was akin to a sport. Moreover, by mercantilist logic, countries (including France) encouraged the smuggling of manufactured consumer goods into rival territories as a form of economic sabotage. Several independent cities and provinces that lay just outside France’s customs boundaries, such as Savoy, Mulhouse, Avignon, and Orange, embraced as their economic mainstay the role of an entrepôt for goods being smuggled into France.
Indiennes in the black market were sold at a premium compared with their price in the world markets, making smuggling quite lucrative. It gave a fillip to the establishment of calico printing workshops in Switzerland and the Netherlands (where they were not illegal). It upped the incentive to innovate in the sphere of dyeing and printing to match Indian quality. Geneva’s first modern industrial workshops (in terms of scale and extensive use of division of labor) came into being solely to make “Indian” fabrics for smuggling into France.
The hierarchal nature of French society contributed to the ban’s ineffectiveness. The nobility, still decades away from the 1789 revolution, enjoyed great privileges and wealth, and did not take kindly to lowly tax officials interfering with their splendor. An overzealous tax official who overstepped social bounds to enforce the calico ban was quickly intimidated, bribed, or transferred. Personal honor and maintaining social distinctions mattered more than impersonal enforcement of the law.
Rather than pay a premium for their calicos in the underground markets, some of the nobility began to place their orders directly with the French East India Company. Ships returning from Pondicherry (the French base in India) regularly contained, alongside legal merchandise, private parcels for nobles that the customs officials dared open only at their peril. Additionally, crew members supplemented their incomes by carrying calicos in their personal baggage. As a ship approached a French port, accomplices of smugglers would row out to meet it. An official of the French East India Company described:
It is enough, gentleman, to have seen but once a ship from the Indies approach the pontoon, to understand that it is impossible to hold back the crowd of all kinds of people which assail it and board it from all sides while the port officers are berthing the ship. As a result it is impossible to prevent them from carrying off such goods as can be hidden in one’s person, in spite of the line formed along the pontoon by the troops with bayonets on their rifles.
Even when the ban was in in full force, the ladies of the court continued to deck themselves out in their favorite Indiennes. It served to some as a visual reminder (albeit a beautiful one) of the ineffectiveness, corruption, and inequity of the pre-revolutionary regime.
Recognizing that the widespread defiance of the calico ban was undermining its legitimacy, in the 1720s the royal administration started to rein in calico smuggling with increasingly draconian measures. Consumers who were caught using calicos were subject merely to confiscation, summons, and a fine (which several managed to finagle out of), but harsher measures were meted out to smugglers. Over the years tens of thousands of smugglers were sent to jails and galleys.
Smugglers often banded together in armed groups for protection, resulting in violent confrontations with tax officials. In 1723 a royal proclamation prescribed the death penalty for all caught smuggling in an armed group of five or more. A big obstacle to enforcement was that the tax officials represented an increasingly unpopular regime enforcing an unpopular ban, and so they received little cooperation from ordinary people. Smugglers, on the other hand, received much sympathy and protection. Some consummate ones, such as Louis Mandrin (1725–1755), who were caught, convicted, and broken on the wheel, were hailed as martyrs. Their exploits were lionized in folk songs and literature.
The violence associated with the calico ban made it a cause célèbre in mid-18th century French society, and its repeal became the rallying cause for the emerging liberal movement. The liberals believed that allowing people to produce and consume in accordance with their interests was most conducive to national prosperity. This was because, unlike the mercantilists, they did not discount the interests of consumers. Additionally, they considered the pursuit by ordinary people of their economic interests as natural and part and parcel of the society based on individual liberty for which they advocated. As Vincent de Gournay (1712–1759), an intellectual leader of the French liberals, explained:
It is delusional to think that one can make several million people constantly act against their self-interest; the more considerable the self-interest, the more difficult the thing becomes. The self-interest of any inhabitant of the Dauphine and our border regions will lead him to engage in smuggling, especially in tobacco and toiles peintes, because he will make great profit in taking toiles peintes from Geneva and Savoy and bringing them into France.
The problem, according to the liberals, was that a misguided regime beholden to a small number of domestic manufacturers had prevented the majority from pursuing their interests in open competitive markets where the effects would be more prosocial. The development of the calico printing industry elsewhere in Europe had rendered French liberals more optimistic about the ability of the French to compete successfully with Indian calicos. The French ingenuity currently being deployed to construct secret compartments and forge inspection certificates, they argued, could be used to develop calico printing. The public execution of smugglers for which the public had sympathy helped the liberals in focusing public attention on the issue. It also helped them link the argument for economic freedom to moral progress. As Gournay put it:
Will our nephews be able to believe that we are really as polite and enlightened a nation as we pride ourselves in being, when they will read that in the middle of the eighteenth century, a man would still be hanged in France because he bought in Geneva for 22 sous what he could sell in Grenoble for 58?
In the 1750s, France’s poor performance in several military conflicts prompted its leaders to re-examine the status quo and consider reforms. Several liberals came to occupy positions of leadership in the country’s economic administration. They pointed to the technological stagnation and economic inefficiency engendered by the calico bans. They believed that it was a waste to “employ one part of the nation to watch over the other,” as Gournay complained. The progress of the textile industry elsewhere (such as in its old nemesis England) made France’s backwardness palpable.
In the 1750s the production and consumption of calicos were gradually decriminalized. The ban on calico imports was replaced by a 25% import tax, which reduced the price of calicos in the legal market (and consequently the incentive to smuggle) while keeping the French market from being inundated with imports. The French government, in a marked reversal, began to actively encourage the development of calico printing by sponsoring research as well as knowledge acquisition and immigration from abroad.
Although the Paris merchants’ guild warned that, “the project of establishing in France manufacturers for the printing of calicos and other cloth is a chimerical one,” France went on to develop a thriving calico printing industry. It developed world-renowned distinctive designs, aesthetics, and technology. India’s competitive edge declined as the Industrial Revolution—initiated, significantly, in the cotton textile industry—raged through Europe. Calicos were integrated into several regional attires that are now considered traditionally French, as a tourist in a French souvenir shop today would attest. The tortuous history of how the fabric came to be an object of French pride is hinted at only in its name: Indiennes.
- Which groups in France benefited from the surge in calico imports? Which groups lost out?
- Explain the concept of mercantilism and how it provided an intellectual justification for the calico ban.
- Which groups of people benefited from the calico ban? Which groups lost out? What was the effect on the economic development of France?
- What factors contributed to the thriving underground trade in calicos?
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