Research

The German Shift Towards Protectionism in the Great Depression and its Impact on Trade (work in progress)

(I am presenting this paper at the Economic and Social History Society's annual conference. A (very) short version of the paper can be found here.)

When the Great Depression hit Germany in 1929 and trade collapsed over the following years at an unprecedented pace, the government of the Weimar Republic also experienced a paradigm shift in trade policy. Tariffs skyrocketed over the course of the years 1930 and 1931. And while Germany became less reliant on imports from major Western trading partners, imports from Southeastern Europe and Latin America -- the so-called Reichsmark Bloc -- began to play an increasingly important role. Recently, de Bromhead et al. (2019) have taken a new approach to the analysis of trade flows and policy by going beyond aggregate measures and looking at how the trade policy shift occurred at the good-times-country level. In this paper, I apply de Bromhead et al.'s methodology to German trade and protectionism in the interwar period. I construct a new data set of imports of 535 goods from 50 countries, measured annually from 1925 to 1938. I estimate elasticities of substitution for these varieties and then employ them in a CGE model to simulate how trade would have changed under a counterfactual trade policy with tariffs and other measures frozen at their 1929 level. By comparing counterfactual trade to actual trade, I can isolate the impact of trade policy on trade. I find a large effect of tariffs, quotas, and treaty-based import guarantees on the total value of German imports by 1933. Imports fell by approximately 18% compared to the counterfactual scenario. However, I find no positive – and, in fact, a slight negative – effect on the share of Reichsmark bloc countries in total imports. Despite the use of preferential rates, tariffs did not contribute to the geographical shift towards Southeastern Europe and Latin America in total trade and only contributed very little to the shift within agricultural goods and raw materials. Furthermore, tariffs and quotas mattered a lot for the decline in imports of food, fuel, and consumer products, but not at all for capital and industrial goods.

Effective Protection in the German Interwar Economy (work in progress)

Between the start of the Great Depression and the mid-1930s, Germany became one of the most protectionist economies in the world with tariffs sky-rocketing especially in the agricultural sector, following demands of lobbying organizations under duress of globally falling prices. The narrative of this paradigm shift in trade policy mostly describes a dichotomy between agriculture and heavy industry as the beneficiaries of protectionism and the modern export industries – electronics, precision mechanics, chemicals – as proponents of free trade. However, little attention has been paid in the literature to the role of effective protection and its impact on Germany's economy. In order to analyze effective protection, I have digitized both tariff revenues and trade at the dis-aggregation level of the German tariff classification system for the universe of German imports in 1929, 1932, and 1936. I find that protectionism was even more targeted at agriculture than the nominal rates suggest. While the effective rate of protection for agricultural goods was fairly similar to the nominal one in 1929, the effective rate was higher by almost 20 points in 1932. Protection of the food and beverage industry was already much higher in 1929 and rose to an even higher level by 1932. Imports in another strategically important sector, the fuel industry, saw effective protection spike much more than the nominal figures suggest.

The Breakdown of German Trade in the Great Depression (work in progress)

Germany experienced the biggest collapse in international trade in its post-war history during the Great Recession of 2008/09. History offers relatively few examples of sudden peace-time trade collapses such as these to compare them to, with the Great Depression as the most noteworthy 20th century case. To what extent were these two collapses similar in their structure and causes? In this paper, I investigate the trade collapse in Germany during the Great Depression using highly dis-aggregated data and compare it to the Great Trade Collapse (GTC) during the Great Recession. I find that the German trade collapse in the Great Depression was similar in many aspects to the British one: Germany's terms of trade also increased sharply in the Great Depression (but not in the GTC). The trade collapse occurred primarily at the intensive margin. Prices declined more for non-differentiated goods than for differentiated ones. The goods categories in which trade declined the most are similar to those in which it declined during the GTC in the United States for the first two years, 1929 to 1931, but the relationship is inverted after 1931. However, there are some important differences. The German trade slump lasted even longer and was deeper than the British one at the same time. The shift towards protectionist trade policy was even more radical. Unlike in Britain, automobile exports decreased far less than average in the first couple of years, then far more in the second half. possibly reflecting the fact that Britain began to recover in 1931 while Germany's depression worsened. Conversely, food exports collapsed earlier and more severely in Germany. Unlike the UK in the early Depression years, the German trade collapse was geographically not balanced and affected different world regions to different degrees and at different times. Trade with countries of the Reichsmark bloc, that would become an economic sphere of influence under the Nazis, was actually hit harder than trade with the rest of Europe in the early years of the Depression, but then appears to have done better in later years.

The marriage of iron and rye reunited? The shift towards protectionism in the Weimar Republic and the political economy of German trade policy (work in progress)

(I am presenting this paper in the poster session of the Economic History Society's annual conference in Belfast. Here is the poster.)

The interwar era was a time of rising protectionism, especially in Germany where a brief period of relatively liberal trade policy abruptly ended in the late 1920s with the introduction of skyrocketing tariffs. The existing literature ascribes this development to a radicalisation of the agrarian base. It is not clear, however, to what extent this development is also reflected in electoral results. Could the government rely on popular support for its protectionist course? Did the population as a whole or did specific groups become more protectionist? Was there a shift in voter turnout towards more protectionist-minded groups? Was there a united front of agriculture in favour of higher tariffs despite potential diverging interests between grain-producing landlords and peasants in livestock farming? I bring together electoral, agricultural and industrial statistics at the district level. I apply King’s algorithm of ecological inference to estimate sector-specific voting behaviour and test if right-wing voting is driven by trade exposure. I show that there was no unified front in agriculture but rather a divergence between livestock and grain farmers with regards to trade policy. In industry, the shift towards right-wing parties occurs across all sectors but exporting industries like electronics and chemicals are distinctly less protectionist than the average and shift right at a later point than importing sectors.

Skill Selection and American Immigration Policy in the Interwar Period

University of Oxford Discussion Papers in Economic and Social History No. 161

The Age of Mass Migration came to an end in the interwar period with new American immigration restrictions, but did this end affect some potential migrants more than others? I use previously unanalysed data from passenger lists of ships leaving Bremen, one of the major European ports of emigration, between 1920 and 1933, to identify occupations and skill levels of individual migrants. The main focus of the paper is on the role that policy played in influencing the selection of migrants. I study the American quota laws of 1921, 1924, and 1929, and find that increasingly strict quotas led to an increase in the skill level of migrants as well as a shift from agricultural to manufacturing workers first, and from manufacturing to professional workers later.

MPhil Dissertation: Selection in Transatlantic Migration during the Interwar Period, 1920-1939

The current version of the dissertation (submitted to the Examinations Schools 24 April 2017, uploaded 30 August 2017) is available here.

Abstract: This dissertation extends previous research on the Age of Mass Migration in the Atlantic economy into the interwar period. I use previously un-analysed data from passenger lists of ships leaving Bremen, one of the major European ports of emigration, between 1920 and 1939. I will describe trends in migrant selection and then show to what extent exogenous shocks caused trend changes in terms of skill level, gender, age, and geographic distribution both in the source and the destination country. The main focus of the thesis is on the role that policy played in influencing selection of migrants. The case study I use for this are the American quota laws of 1921, 1924, and 1929. I find that increasingly strict quotas led to an increase in the skill level of migrants as well as a shift from agricultural to manufacturing workers first, from manufacturing to professional workers later. I then turn to the role that politically motivated migration and refugee movements play in shaping the composition of who left. For this I exploit information on religion for the later years of the period and show differences between Jewish and non-Jewish passengers leaving an increasingly antisemitic Germany. I use Kristallnacht in 1938 as an exogenous shock to the migration regime that disproportionally affected Jewish citizens and find that it led to a shift in occupational distribution towards more low-skilled migrants as well as a rise in the urban-rural ratio. Among passengers from the broader German population it led to a higher skill level, age, and male/female ratio.