Tariff
In contrast, in economic theory tariffs are viewed as a primary element in international trade with the function of the tariff being to influence the flow of trade by lowering or raising the price of targeted goods to create what amounts to an artificial competitive advantage. When tariffs are viewed and used in this fashion, they are addressing the country's and the competitors' respective economic healths in terms of maximizing or minimizing revenue flow rather than in terms of the ability to generate and maintain a competitive advantage which is the source of the revenue. As a result, the impact of the tariffs on the economic health of the country are at best minimal but often are counter-productive.
German tariff of 1879
...its effects would be more equally spread over all the productive circles of the land than is the case with a system of protective duties for isolated branches of industry. The minority of the population, which does not produce at all, but exclusively consumes, will apparently be injured by a customs system favouring the entire national production. Yet if by means of such a system the aggregate sum of the values produced in the country increase, and thus the national wealth be on the whole enhanced, the non-producing parts of the population...will eventually be benefited.
In the "Reichstag" Bismarck announced that from henceforth the government's income would come from indirect rather than from direct taxation. Also, since "other states surround themselves with customs barriers it seems to me justified...that German products have a small advantage over foreign ones". The adoption of protectionism by Bismarck signalled a shift towards a greater reliance on the Conservatives for support rather than on the National Liberals. The tariff was supported by the two Conservative Parties and the Centre Party and opposed by the Progressives and the Socialists, with the Liberals divided. On 31 March Bismarck held a meeting with the Centrist deputy Ludwig Windthorst, where Bismarck agreed to relax the "Kulturkampf" against the Catholic Church in exchange for Centrist support for protection.
The committee that drafted the tariff legislation was chaired by Georg Freiherr von und zu Franckenstein. He gave his name to a clause in the legislation that limited to 130 million marks as the maximum amount the central government could receive from customs revenue and the tobacco duty. The remaining amount would go to the federal states. On 9 July 1879 the "Reichstag" voted for the Franckenstein clause by 211 votes to 122 against. On 12 July the tariff bill was voted for by a majority of 100.