Free Ports
FREE PORTS, a term, strictly speaking, given to localities where no customs duties are levied, and where no customs supervision exists. In these ports (subject to payment for specific services rendered, wharfage, storage, etc., and to the observance of local police and sanitary regulations) ships load and unload, cargoes are deposited and handled, industries are exercised, manufactures are carried on, goods are bought and sold, without any action on the part of fiscal authorities. Ports are likewise designated "free" where a space or zone exists within which commercial operations are conducted without payment of import or export duty, and without active interference on the part of customs authorities. The French and German designations for these two descriptions of ports are - for the former La Ville franche, Freihafen; for the latter Le Port franc, Freibezirk or Freilager. The English phrase free port applies to both. [1] The leading conditions under which free ports in Europe derived their origin were as follows: - (1) When public order became re-established during the middle ages, trading centres were gradually formed. Marts for the exchange and purchase of goods arose in different localities. Many Italian settlements, constituting free zones, were established in the Levant. The Hanseatic towns arose in the 12th century. Great fairs became recognized - the Leipzig charter was granted in 1268. These localities were free as regards customs duties, although dues of the nature of octroi charges were often levied. (2) Until the 19th century European states were numerous, and often of small size. Accordingly uniform customs tariffs of wide application did not exist. Uniform rates of duty were fixed In England by the Subsidy Act of 1660. In France, before the Revolution (besides the free ports), Alsace and the Lorraine Bishoprics were in trade matters treated as foreign countries. The unification of the German customs tariff began in 1834 with the Steuerverein and the Zollverein. The Spanish fiscal system did not include the Basque provinces until about 1850. The uniform Italian tariff dates from 1861. Thus until very recent times on the Continent free ports were compatible with the fiscal policy and practice of different countries. (3) Along the Mediterranean coast, up to the 19th century, convenient shelter was needed from corsairs. In other continental countries the prevalent colonial and mercantile policy sought to create trans-oceanic trade. Free ports were advantageous from all these points of view.
In following the history of these harbours in Europe, it is to be observed that in Great Britain free ports have never existed. In 1552 it was contemplated to place Hull and Southampton on this footing, but the design was abandoned. Subsequently the bonding and not the free port system was adopted in the United Kingdom.
Austria-Hungary. - Fiume and Trieste were respectively free ports during the periods 1722-1893 and 1719-1893.
Belgium. - The emperor Joseph II. during his visit to the Austrian Netherlands in June 1781 endeavoured to create a direct trade between that country and India. Ostend was made a free port, and large bonding facilities were afforded at Bruges, Brussels, Ghent and Louvain. In 1796, however, the revolutionary government abolished the Ostend privileges.
Denmark. - In November 1894 an area of about 150 acres at Copenhagen was opened as a free port, and great facilities are afforded for shipping and commercial operations in order that the Baltic trade may centre there.
France. - Marseilles was a free port in the middle ages, and so was Dunkirk when it formed part of Flanders. In 1669 these privileges were confirmed, and extended to Bayonne. In 1784 there was a fresh confirmation, and Lorient and St Jean de Luz were included in the ordonnance. The National Assembly in 1790 maintained this policy, and created free ports in the French West Indies. In 1795, however, all such privileges were abolished, but large bonding facilities were allowed at Marseilles to favour the Levant trade. The government of Louis XVIII. in 1814 restored, and in 1871 again revoked, the free port privileges of Marseilles. There are now no free ports in France or in French possessions; the bonding system is in force.
Germany. - Bremen, Hamburg and Lübeck were reconstituted free towns and ports under the treaties of 1814-1815. Certain minor ports, and several landing-stages on the Rhine and the Neckar, were also designated free. As the Zollverein policy became accepted throughout Germany, previous privileges were gradually lessened, and since 1888 only Hamburg remains a free port. There an area of about 2500 acres is exempt from customs duties and control, and is largely used for shipping and commercial purposes. Bremerhaven has a similar area of nearly 700 acres. Brake, Bremen, Cuxhaven, Emden, Geestemünde, Neufahrwasser and Stettin possess Freibezirke areas, portions of the larger port. Heligoland is outside the Zollverein - practically a foreign country.
In Italy free ports were numerous and important, and possessed privileges which varied at different dates. They were - Ancona, during the period 1696-1868; Brindisi, 1845-1862; Leghorn (in the 17th and 18th centuries a very important Mediterranean harbour), 1675-1867; Messina, 1695-1879; Senigallia, 1821-1868, during the month of the local fair. Venice possessed warehouses, equivalent to bonded stores, for German and Turkish trade during the Republic, and was a free port 1851-1873. Genoa was a free port in the time of the Republic and under the French Empire, and was continued as such by the treaties of 1814-1815. The free port was, however, changed into a "deposito franco" by a law passed in 1865, and only storing privileges now remain.
Rumania. - Braila, Galatz and Kustenji were free ports (for a period of about forty years) up to 1883, when bonded warehouses were established by the Rumanian government. Sulina remains free.
Russia. - Archangel was a free port, at least for English goods, from 1553 to 1648. During this period English products were admitted into Russia via Archangel without any customs payment for internal consumption, and also in transit to Persia. The tsar Alexis revoked this grant on the execution of Charles I. Free ports were opened in 1895 at Kola, in Russian Lapland. Dalny, adjoining Port Arthur, was a free port during the Russian occupation; and Japan after the war decided to renew this privilege as soon as practicable.
The number of free ports outside Europe has also lessened. The administrative policy of European countries has been gradually adopted in other parts of the world, and customs duties have become almost universal, conjoined with bonding and transhipment facilities. In British colonies and possessions, under an act of parliament passed in 1766, and repealed in 1867, two ports in Dominica and four in Jamaica were free, Malacca, Penang and Singapore have been free ports since 1824, Hong-Kong since 1842, and Weihaiwei since it was leased to Great Britain in 1898. Zanzibar was a free port during 1892-1899. Aden, Gibraltar, St Helena and St Thomas (West Indies) are sometimes designated free ports. A few duties are, however, levied, which are really octroi rather than customs charges. These places are mainly stations for coaling and awaiting orders.
Some harbours in the Netherlands East Indies were free ports between 1829 and 1899; but these privileges were withdrawn by laws passed in 1898-1899, in order to establish uniformity of customs administration. Harbours where custom houses are not maintained will be practically closed to foreign trade, though the governor-general may in special circumstances vary the application of the new regulations.
Macao has been a free port since 1845. Portugal has no other harbour of this character.
The American Republics have adopted the bonding system. In 1896 a free wharf was opened at New Orleans in imitation of the recent European plan. Livingstone (Guatemala) was a free port during the period 1882-1888.
The privileges enjoyed under the old free port system benefited the towns and districts where they existed; and their abolition has been, locally, injurious. These places were, however, "foreign" to their own country, and their inland intercourse was restricted by the duties levied on their products, and by the precautions adopted to prevent evasion of these charges. With fiscal usages involving preferential and deferential treatment of goods and places, the drawbacks thus arising did not attract serious attention. Under the limited means of communication within and beyond the country, in former times, these conveniences were not much felt. But when finance departments became more completely organized, the free port system fell out of favour with fiscal authorities: it afforded opportunities for smuggling, and impeded uniformity of action and practice. It became, in fact, out of harmony with the administrative and financial policy of later times. Bonding and entrepot facilities, on a scale commensurate with local needs, now satisfy trade requirements. In countries where high customs duties are levied, and where fiscal regulations are minute and rigid, if an extension of foreign trade is desired, and the competition which it involves is a national aim, special facilities must be granted for this purpose. In these circumstances a free zone sufficiently large to admit of commercial operations and transhipments on a scale which will fulfil these conditions (watched but not interfered with by the customs) becomes indispensable. The German government have, as we have seen, maintained a free zone of this nature at Hamburg. And when the free port at Copenhagen was opened, counter measures were adopted at Danzig and Stettin. An agitation has arisen in France to provide at certain ports free zones similar to those at Copenhagen and Hamburg, and to open free ports in French possessions. A bill to this effect was submitted to the chamber of deputies on the 12th of April 1905. Colonial free ports, such as Hong-Kong and Singapore, do not interfere with the uniformity of the home customs and excise policy. These two harbours in particular have become great shipping resorts and distributing centres. The policy which led to their establishment as free ports has certainly promoted British commercial interests.
See the Parliamentary Paper on "Continental Free Ports," 1904.
(C. M. K.)
[1] In China at the present time (1902) certain ports are designated "free and open." This phrase means that the ports in question are (1) open to foreign trade, and (2) that vessels engaged in oversea voyages may freely resort there. Exemption from payment of customs duties is not implied, which is a matter distinct from the permission granted under treaty engagements to foreign vessels to carry cargoes to and from the "treaty ports."
Note - this article incorporates content from Encyclopaedia Britannica, Eleventh Edition, (1910-1911)
