Full text of World Trade Barriers in Relation to American Agriculture : Letter from the Secretary of Agriculture

View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

73d C o n g r e s s !

1st Session

SENATE

ocument

No. 70

WORLD TRADE BARRIERS IN RELATION TO
AMERICAN AGRICULTURE

LETTER
FROM

THE SECRETARY OF AGRICULTURE
TR A N SM IT TIN G

IN RESPONSE TO SENATE RESOLUTION No. 280, SEVEN TYSECOND CONGRESS, FIRST SESSION, SU B M ITTE D B Y SEN
ATOR NORBECK, A R EPO R T P E R T A IN IN G TO R E S T R IC
TIONS UPON IN TE R N A TIO N A L T RA D E IN M AJOR A G R I
C U LTU R A L PRO D U CTS TH ROU G H O U T THE W ORLD,
MEASURES U N D E RTA K E N IN SEVERAL COUNTRIES TO
PRO TECT THE POSITION OF T H E IR FARM PRODUCERS,
AND THE EFFECTS OF THESE R ESTRICTION S A N D M EAS
URES UPON PRICES OF FARM PRODUCTS A N D THE

W ELFARE OF A M ER ICA N FARM ERS

Ju n e

5 (calendar day, J u n e 7), 1933.— Referred to the
Committee on Agriculture and Forestry

UNITED STATES
GOVERNMENT PRINTING OFFICE
WASHINGTON : 1933

Submitted by Mr.
In

the

S enate

m it h

of t h e

n it e d

S tates,

June 5 (calendar day, June 10), 1933.
Ordered, That the report of the Secretary of Agriculture pertain
ing to restrictions upon international trade in major agricultural
products, transmitted to the Senate on the 7th instant in response to
Senate Resolution No. 280, Seventy-second Congress, be printed with
illustrations as a Senate document.
Attest :
E d w i n A. H a l s e y ,
Secretary.
ii

For sale by the Superintendent of Documents, Washington, D.C.

Price 50 cents

CONTENTS
P age

Summary_______________________________________________________________________
P art I. E conomic

and

Chapter I. Trade barriers in relation to American agriculture_____________
Recent trends and present position of American agricultural exports. _
Dependence of American agriculture on the world market____________
Effects of trade barriers directly applied to farm products____________
Differences among certain countries in recent agricultural price
declines____________________________________________________________
Changes in world agricultural production since the outbreak of
the World W a r___________________________________________________
Foreign purchasing power for American farm products as affected by
American foreign lending and American tariff policy________________
American foreign lending from 1914 to date______________________
The war period (1 9 1 4 -2 0 )_____________________________________
The collapse in 1920___________________________________________
The period of world prosperity (1 9 2 4 -2 9 )____________________
The crisis of 1929 and the present depression________________
The balance of international payments of the United States during
the present depression____________________________________________
Chapter II. World trade barriers during the post-war period______________
The period from 1918 to 1925___________________________________________
The period from 1925 to 1929_______________________________________ —
The period since 1929____________________________________________________
P art II. T ypes

P olicies of I ntervention A ffecting
A griculture
Chapter III. Import restrictions_____________________________________________
Causes and effects of existing trade barriers____________________________
Methods employed in restricting imports_______________________________
Tariff duties_________________________________________________________
Mixing and linked-purchasing regulations_________________________
Quotas or contingents______________________________________________
Import licensing and similar measures_____________________________
Import monopolies__________________________________________________
Sanitary restrictions_________________________________________________
Exchange regulation and currency depreciation___________________
Chapter IV. Export aids and restrictions___________________________________
Export aid through commercial agreements___________________________
Export dumping__________________________________________________________
Nature and economic effects of dumping__________________________
Methods employed in dumping agricultural products____________
Measures designed to control the quality of exports___________________
Export restrictions_______________________________________________________
Chapter V. Production aids and restrictions________________________________
Production aids__________________________________________________________
Direct regulation of production____________________________________
Indirect aid__________________________________________________________
Restriction of production________________________________________________
Chapter V I. Agrarian policies of selected countries: Deficit countries____
United Kingdom _________________________________________________________
Germany__________________________________________________________________
France_________i __________________________________________________________
Italy ______________________________________________________________________
Chapter V II. Agrarian policies of selected countries: Surplus countries___
British Dominions_______________________________________________________
The Danubian countries_________________________________________________
Union of Soviet Socialist Republics (Soviet Russia)___________________

H istorical B ackground
15
15
17
20
21
24r
28:
29
2$
31
31
33
35
40
40
43
45

and

55
55
58
5859*
61
62
6363*
6472
72
76
77
79
85
86
87
87
87
92
94:
101
101
104
107
110!
114
114
119
126*

P art III. E ffects of T rade B arriers and R elated M easures A pply
ing to A gricultural P roducts upon P rices of S ome I mportant
F arm P roducts in the U nited S tates
Chapter V III. W h eat_________________________________________________________
Measures restricting trade and otherwise affecting world wheat pricesEffect of control measures on prices in countries applying them _____
Effect in exporting countries_______________________________________
Effect in importing countries_______________________________________
Combined effect of wheat restrictions in all countries____________
Possible effect upon prices of elimination of intervention________
Chapter I X . Hog products___________________________________________________
The United Kingdom as the principal market for United States hog
products________________________________________________________________
Countries important in British pork and lard trade and of signifi
cance to United States export trade in hog products_________________
Denmark_____________________________________________________________
The Netherlands____________________________________________________
Poland_______________________________________________________________
The Baltic States____________________________________________________
Canada_______________________________________________________________
Irish Free State______________________________________________________
Other countries of significance to the United States export trade in
hog products___________________________________________________________
Germany_____________________________________________________________
Cuba_________________________________________________________________
Conclusions_______________________________________________________________
Chapter X . Tobacco__________________________________________________________
Character of the United States export trade___________________________
Foreign restrictions and other factors affecting the trade_____________
Factors affecting production and consumption____________________
Importance of restrictions in importing countries_________________
Effects of foreign restrictions upon United States trade_______________
Bases of estimating influence of trade restrictions________________
Displacements of United States tobacco resulting from trade
restrictions________________________________________________________
United Kingdom_______________________________________________
Germany________________________________________________________
France__________________________________________________________
Spain____________________________________________________________
Poland__________________________________________________________
Czechoslovakia_________________________________________________
Italy____________________________________________________________
Japan___________________________________________________________
Canada__________________________________________________________
Australia________________________________________________________
Summary of estimated displacements________________________
Conclusions__________________________________________________________
C h ap ter'X I. Fruit____________________________________________________________
Apples_____________________________________________________________________
United Kingdom____________________________________________________
Import duty____________________________________________________
Currency depreciation_________________________________________
Sanitary restrictions___________________________________________
Continental European markets_____________________________________
Germany________________________________________________________
France__________________________________________________________
Scandinavian countries________________________________________
Argentina____________________________________________________________
Effect of trade restrictions on United States apple exports______
-Citrus fruit________________________________________________ .______________
Oranges______________________________________________________________
Grapefruit___________________________________________________________

Page
145
146
152
153
157
167
170
172
176
179
179
180
181
182
183
183
184
184
185
186
190
191
194
195
197
200
200
201
201
203
204
205
205
206
206
208
209
210
210
211
214
221
225
225
228
229
230
230
230
232
233
234
235
236
240

CONTENTS

V
Page

Chapter X I I .
Cotton________________________________________________________
Measures affecting production___________________________________________
British organizations to promote cotton production______________
French agencies______________________________________________________
Italian, Portuguese, and Belgian agencies_________________________
Japanese agencies___________________________________________________
India_________________________________________________________________
China_________________________________________________________________
E gyp t________________________________________________________________
Russia________________________________________________________________
Brazil_________________________________________________________________
Peru__________________________________________________________________
Anglo-Egyptian Sudan______________________________________________
Uganda_______________________________________________________________
Other countries______________________________________________________
Trade restrictions on unmanufactured cotton__________________________
Trade restrictions on cotton manufactures_____________________________
Chapter X I I I .
Dairy products______________________________________________
The British butter market as indicative of the world situation_______
Effect of import restrictions on world trade____________________________
Great Britain________________________________________________ _______
Germany_____________________________________________________________
Other countries______________________________________________________
Conclusions concerning effects of import restrictions____________
Effect of export bounties and other aids in world trade_______________
Australia_____________________________________________________________
Irish Free State______________________________________________________
Union of South Africa_______________________________________________
The Netherlands_____________________________________________________
Finland_______________________________________________________________
Chapter X I V . Sugar_________________________________________________________
Dependence of price in United States upon world conditions_________
Nature of intervention in foreign countries_____________________________
Intervention in importing countries________________________________
Intervention in exporting countries________________________________
Stimulation or maintenance of output________________________
Restriction of exports and production________________________
Effects of intervention on the world sugar situation___________________
Effects prior to 19 31-32_____________________________________________
Production______________________________________________________
Consumption___________________________________________________
World stocks and p r ic e s______________________________________
Effects of international sugar agreement of 1931_________________
A ppen d ix — A gricultural P rice -S upporting
C ountries

M e asures

F oreign

Argentina______________________________________________________________________
Australia
____________________________________________________________________
Austria_________________________________________________________________________
Belgium________________________________________________________________________
Brazil___________________________________________________________________________
Bulgaria________________________________________________________________________
Canada_________________________________________________________________________
Chile____________________________________________________________________________
Cuba____________________________________________________________________________
Czechoslovakia________________________________________________________________
Denmark_______________________________________________________________________
E g yp t__________________________________________________________________________
Estonia_________________________________________________________________________
F in la n d ________________________________________________________________________
France
______________________________________________________________________
Germany______ 1_______________________________________________________________
Greece__________________________________________________________________________

242
242
244
244
244
245
245
246
247
248
24$
249
249
250
250
251
253
356
256
258
258
260!
261
263
263
263
264
264
264
265
266
268
269
273
275
275
275
279
279
279
282
287
288

291
297
306
310
312
318
327
334
336
344
350
354
361
367
369
379
396

CONTENTS
I age

Hungary_______________________________________________________________
Italy__________________________________________________________________
Japan_________________________________________________________________
Latvia_________________________________________________________________
Lithuania______________________________________________________________
M exico________________________________________________________________
Netherlands___________________________________________________________
New Zealand__________________________________________________________
Norway_______________________________________________________________
Poland_________________________________________ _______________________
Portugal_______________________________________________________________
Rumania______________________________________________________________
Southern Rhodesia_____________________________________________________
Spain__________________________________________________________________
Sweden________________________________________________________________
Switzerland____________________________________________________________
Turkey________________________________________________________________
Union of South Africa_________________________________________________
United Kingdom_______________________________________________________
Uruguay_______________________________________________________________
Yugoslavia____________________________________________________________

400
410
420
424
430
435
437
447
451
455
465
471
478
481
492
498
501
505
515
529
533

LETTER OF TRANSMITTAL

epartm ent

g r ic u l t u r e ,

Washington, June 7, 1933.
The

r e s id e n t of t h e

S enate.

Pursuant to the request made in Senate Resolution 280, Sev
enty-second Congress, I am transmitting herewith a report, prepared
by the Bureau of Agricultural Economics, pertaining to restrictions
upon international trade in major agricultural products throughout
the world, the measures taken by various countries in aid of agri
culture, and the effect of these restrictions and measures upon
American farmers.
This report shows the effect on American agriculture of trade
barriers and other measures designed to aid farming in foreign coun
tries. It also suggests that various other trade restrictions in their
present extreme form, debt payments, and international lending in
general have had a profound influence on our agriculture in the past
decade and a half.
Almost overnight we changed from a debtor to a creditor nation.
We entered the World War owing other nations $200,000,000 an
nually on interest account. Today other nations owe us annually
more than a billion dollars. Our failure in this period to adjust our
trade policies in conformity with our new status as a creditor Nation
has had particularly severe consequences to farmers in this country
who produce our great export crops. We normally export more than
half our cotton, nearly half our tobacco, a fifth of our wheat, and
from a third to a half of our packing-house lard. Of all agricultural
products, we have exported 18 percent, on the average, during the
last 20 years, whereas of our nonagricultural products we have
exported only 5 percent.
In making the necessary reductions in our tariffs, special attention
should be given to the possibility of reducing industrial tariffs.
These have had especially adverse effects on agriculture, not only
because they have tended to keep prices of things farmers buy at a
higher level than would have prevailed under more moderate tariffs,
but also because they have made it increasingly difficult for other
countries to buy our agricultural products. These tariffs, therefore,
must be reduced if we are to assume the role which a creditor nation
sooner or later must assume, and/or we must make radical readjust
ments in our internal economic structure looking toward contracted
production of those products which we produce for export.
Industry has received more than its share of such benefits as have
accrued from our tariff policy. F arming in this country has been se
verely affected in consequence of this inequality between agriculture
and industry. Farm income and values have dropped to so low a
level that, through impairment of farmers’ purchasing power and of
S ir:

VII

Vni

LETTER OF TRANSMITTAL

security for loans, industrial and financial institutions in turn have
suffered. Because of the demonstrated difficulty of adequately ad
justing agricultural production to changed conditions, it is particu
larly desirable that special care should be exercised in the revision of
our tariffs to avoid putting agriculture at a competitive disadvantage
and thus adding to the inequality already suffered by farmers.
Reduction in excessive trade barriers presents some of the most
difficult problems in international cooperation. Steps already taken
or in contemplation are promising and essential to world economic
recovery. Far-reaching adjustments, however, require time, not
only because of the nature of international negotiations, but also
because gradual adjustment may be desirable to mitigate the disrup
tive influence of sudden change.
Meanwhile, the rise of trade barriers described in this report has
helped to create serious emergency problems in American agricul
ture. The object of recent legislation for agricultural adjustment is
to deal with these emergencies, while policies are being formulated
and put into effect for those long-time adjustments which must be
made to regain advantageous market outlets for those agricultural
products for which there is in this country a natural advantage and
of which the United States produces an exportable surplus.
Sincerely yours,
H. A. W a l l a c e ,
Secretary.

LETTER OF SUBMITTAL

D
B

e p a r t m e n t of

ureau

g r ic u l t u r e ,

g r ic u l t u r a l

c o n o m ic s ,

'Washington, D.C., June 6, 1933.
The

S ecretary

g r ic u l t u r e .

The Senate of the United States, on July
11,1932, adopted the following resolution (S. Res. 280, 72d Cong., 1st
sess.) :
D

ear

M r. S ecretary:

Whereas information on international trade restrictions on farm products
is needed for the proper consideration of measures for farm relief ; and
Whereas information on such subjects is already being accumulated by
Government agents : Now, therefore, be it
Resolved, That the Senate request the United States Department of Agri
culture and the Federal Farm Board, jointly or severally, to investigate the
restrictions which now exist upon international trade in major agricultural
products throughout the world ; the measures which are now being undertaken
in several countries to protect the economic position of their farm producers;
and the effect, if any, these restrictions and measures have had upon the prices
of farm products and the welfare of American farmers ; and to report to the
Senate upon these matters by the next session of Congress : Provided, That the
Department of Commerce and the United States Tariff Commission shall lend
their assistance in the carrying out of said investigation.

A report complying with this resolution is herewith submitted.
The subject covered by the resolution is broad and complex and this
has necessitated extensive investigations by the resident staff as well
as by the Foreign Agricultural Service of the Bureau.
The report was prepared by this Bureau. Helpful suggestions
have been given by staff members of the Federal Farm Board, the
Department of Commerce, and the United States Tariff Commission.
It presents the conclusions of this Bureau. It seeks to explain the
conditions that have restricted international trade in agricultural
products or that have stimulated agricultural production. It also
attempts to evaluate the effects that such measures have had upon the
prices of farm products and the welfare of American farmers.
The report has been prepared by a special committee of the Bureau
composed of the following staff members: L. R. Edminster, execu
tive secretary, G. P. Boals, P. F. Brookens, G. Burmeister, A. C.
Edwards, Eric Englund,feW. G. Finn, C. W. Kitchen, M. Lynsky,
L. Myers, L. J. Schaben, J. L. Stewart, O. C. Stine, G. B. Thorne,
L, Volin, H. J. Wadleigh, N. J. Wall, L. A. Wheeler, E. J. Working.
Yours sincerely,
N i l s A. O l s e n ,
Chief of Bnnreau.

WORLD TRADE BARRIERS IN RELATION TO
AMERICAN AGRICULTURE
SUMMARY
International trade, including that in agricultural products, is
under the influence of more widespread governmental intervention
than ever before in modern times. The measures by which this in
fluence is exerted upon agriculture apply either directly as agri
cultural measures or indirectly through other branches of economic
life.
In its present extreme form, such intervention is a recent develop
ment. Indeed, in several countries restrictions on international trade
and other forms of intervention affecting farm products were either
nonexistent or relatively unimportant until the last few years. Some
countries, such as the United Kingdom, the Netherlands, and Den
mark, were practically on a free-trade basis. Others, such as Argen
tina and Canada, were so predominantly on an export basis for
agricultural products that tariffs and other import restrictions would
have been largely ineffective. Apart from the ordinary scientific
and technical aids, government assistance in such countries was
primarily directed toward developing new producing areas and
securing cheaper access to outside markets.
Since the beginning of the world economic depression, however,
governmental intervention has been particularly marked in agricul
ture, owing to the special severity of the agrarian crisis. Not only
have those countries that had previously given government support to
home agriculture greatly intensified their activities in this direction,
but other countries also have adopted similar policies. The United
Kingdom, the Netherlands, Denmark, the Irish Free State, and
Belgium have abandoned, at least temporarily, their free-trade or
low-tariff policies, and are now definitely endeavoring to aid their
farmers either by means of import restrictions or, in the case of
products on an export basis, by bounties or other means.
Restrictions of increasing variety and severity have been imposed
on imports of agricultural products by virtually every country.
Strictly noncompetitive imports include almost the only exceptions.
Even on such products, there has been a tendency for duties and other
import restrictions to increase either by reason of pressing revenue
requirements or because of the need to reduce imports in order to
balance international payments. Similarly, there has been increasing
intervention to aid exporting industries in both the newer and the
older countries. On the whole this intervention in support of export
products has neither gone so far nor been so effective as in the case of
agricultural products on an import basis. In some of the great ex-

WORLD TRADE BARRIERS 11ST RELATION TO AGRICULTURE

porting countries, notably Argentina and Canada, aids actually
granted have been for the most part comparatively mild. Never
theless there has been widespread application of a great variety of
devices designed to assist growers of products on an export basis.
Once actively under way, the process of restriction and counter
restriction, aid and counter-aid, has tended to become cumulative.
Import restrictions have tended to result in other import restrictions ;
export aids, in other export aids ; and import restrictions and export
aids, to compete each with the other. As each importing country has
raised its barriers in the hope of protecting its domestic agriculture
against the world price decline, the increased pressure of world sup
plies upon countries still granting relatively free access to their home
markets has impelled them also to take defensive action in behalf of
domestic producers. As each exporting country has sought, through
bounties and other aids, to relieve its producers from the effects of
declining prices forced still lower by rising trade barriers, rival ex
porting countries, bent on preserving at least the same competitive
advantages for their producers as before, have resorted to similar ex
pedients. When these aids are followed by countervailing restric
tions in the importing countries, the circle is completed.
N A T U R E OF TRA D E BARRIERS AND RELATED MEASURES
AFFECTING AM ERICAN FARM PRODUCTS

The measures now in force, restricting or otherwise affecting inter
national trade in agricultural products, are of three major types: (1)
import restrictions; (2) export aids and restrictions; and (3) pro
duction aids and restrictions.
Import restrictions.—Before the World War and during the pros
perous years which preceded the present depression, tariff duties were
by far the most important method of restricting imports. Sanitary
restrictions prohibiting imports considered to be infested with pests
or parasites were in effect on certain agricultural products in various
countries and played a secondary role in restricting international
trade. Since 1928, various other methods of restriction, generally
more severe than the earlier import duties, have come into extensive
use.
One of the more recently adopted methods of restriction is that of
linked-purchasing or mixing regulations. Such regulations generally
prescribe that persons who import a product to which this method
applies must at the same time purchase specified quantities of a do
mestic product with which that imported product competes. In some
cases, it is also prescribed that the two products must be mixed. This
method of regulating imports has been extensively applied to wheat.
In many European countries millers are required to include a certain
percentage, often very high, of domestic wheat in their grist. An
other example of this type of measure, employed in foreign countries,
is the compulsory use of alcohol as motor fuel.
Another method of restricting imports which has recently come
into extensive use is that of import quotas or contingents. Imports
of certain commodities are limited to a fixed maximum. It is not
uncommon to limit imports of a commodity to as little as one half
of the imports in the previous year. Quotas are often used not only
to limit the total imports of a commodity but also to restrict sep

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

arately, and thus to discriminate between, the imports from the prin
cipal countries exporting the commodity.
Licensing imports and establishing import monopolies are still
other methods of restriction. Under the licensing method, only such
persons are permitted to import a product as can obtain a license
from the Government to do so. Usually the license specifies how
much of the product may be imported. In this manner imports may
be restricted by the Government in whatever way it may see fit.
Similar control is exercised through import monopolies. Many Euro
pean governments have monopolies on the import of tobacco, and
some also of wheat and rye. Such monopolies are usually employed
to restrict imports in the interest of domestic producers.
In the summer of 1931, a new and powerful weapon of restriction
came to the fore—governmental limitation of the amounts of foreign
exchange which importers may obtain to pay for imports. This type
of restriction became important when adopted by Germany and Aus
tria in July, 1931; and it is now extensively applied in central and
eastern Europe and in Latin America. The primary purpose was
to prevent currency depreciation by several countries which found
themselves unable to remain on, or in danger of being forced off, the
gold standard during and after the financial crisis of 1931. That
crisis, however, caused a number of countries, including Great Bri
tain, to abandon the gold standard without having adopted severe
exchange restriction.
Export aids and restrictions.—Four principal methods of aiding
export industries, as practiced today in various countries, are here
summarized.
Negotiation of commercial treaties and agreements is one of these
methods. This method forms an important part of the tariff policy
of every nation, and is aimed to secure a favorable market for exports
by moderating trade restrictions in other countries. It may or may
not involve an active policy of tariff bargaining, but more commonly
it does. The concessions which governments attempt to secure from
each other in regard to trade barriers may be either exclusive or
generalized. Examples of exclusive concessions may be found in
the tariff preferences granted by the United Kingdom to the British
Dominions, which allow agricultural products from the Dominions
to enter the United Kingdom at a lower rate of duty than similar
imports from other countries, or admit Dominion products free:
of duty while a duty is charged on products from other sources.
Concessions of this character are also contained in the reciprocity
treaty between the United States and Cuba. In the case of general
ized concessions, one country agrees to lower its tariff duties on a
product or products in which the other country is vitally interested
and the reduction is applied to the products affected regardless of the
source from which they are imported.
Another method of encouraging agricultural exports, or of in
creasing the returns to producers of agricultural commodities on an;
export basis, is the selling of an agricultural product in the world:
market at a price lower than that prevailing in the domestic market«.
This may be done either through an export bounty, or through a;
monopolistic control of marketing which permits producers to re
ceive a higher price on that part of the output which is «old in the

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

domestic market than on the exported part. Such monopoly con
trols are usually set up through direct government intervention, the
most notable exception being the Paterson plan, applied to butter
in Australia. This maintenance of a higher price in the home
market, when unaccompanied by restriction of production, tends to
increase exports through a reduction of consumption and an increase
of production. Since the beginning of the present depression this
method of aid has been used by many agricultural surplus countries
as a means of partly offsetting the decline in the world prices of
their products. In recent years of declining price levels such meas
ures have tended to check declines of production rather than to cause
actual expansion. A few of these measures have been accompanied
by restriction of production, the most notable example being the plan
recently applied to hogs in the Netherlands.
Measures tending to improve or standardize the quality of exports
are a third means of aid. Such measures are in effect in many coun
tries. The standardization and grading work by the United States
Department of Agriculture is an important example. There are,
however, cases in which much more drastic measures have been
applied to agricultural exports by foreign countries. In Denmark,
for instance, the quality of agricultural products exported is subject
to careful control both by the cooperative marketing organizations
and by the government.
Restriction of exports, a fourth method of aid, has been used to
maintain world prices of certain commodities of which the produc
tion or supply is largely concentrated in one country. This has been
practiced or at least attempted in several tropical products such as
rubber, coffee and henequen. In cases where no one country has a
natural monopoly, it is possible to some extent to raise or maintain
the world price by restriction of exports through international agree
ment, if all the important producing countries can be induced to enter
and adhere to the necessary agreements. Thus far this has been done
only in the case of sugar.
Production aids and restrictions.—A third group of measures,
overlapping to some extent with the foreign trade control measures
just described, includes those applying directly to production as
such. Most of those now in effect are either intended, or at any rate
tend, to increase production. Examples include the exercise in
Soviet Russia of complete authority over all agricultural produc
tion as a phase of the economic planning adopted in that country;
intervention in the form of compulsory farm-management, as in
Italy and Spain ; and “ regulated stimulation ” of production of
particular crops, as in the case of the state tobacco monopolies of
various countries, and the British and Netherlands wheat acts.
Other aids, involving little or no actual regulation of production,
include numerous production bounties and all those trade control
measures tending to stimulate production in the country applying
them. Some attempts have been made to restrict production, either
singly or as a phase of export restriction. Examples include coffee,
rubber, henequen, Egyptian cotton, tea, sugar (in certain countries
participating in the international sugar agreement), and hogs (in the
Netherlands).

WORLD TRADE BARRIERS 11ST RELATION TO AGRICULTURE

WORLD TRADE BARRIERS AS A FACTOR IN THE AGRICULTURAL
SITUATION

Measures applied directly to agricultural commodities in foreign
countries do not represent the entire influence of trade barriers on
prices received by American farmers. Restrictions of trade in nonagricultural products have likewise had an adverse influence, although
their effects cannot be definitely measured. In part, their influence
has been reflected directly in the rise of the agricultural barriers
themselves, by making it more difficult for countries dependent upon
imports of foodstuffs and raw materials to pay for them with exports
of manufactured products.
In the main, however, the influence of the nonagricultural bar
riers arises from their relationship, along with that of the agricul
tural barriers, to the world economic depression. Trade barriers
were not the major cause of the depression, or of the agricultural
phase of it. Nevertheless such barriers did tend to aggravate the
situation prior to 1929. Not only did they retard world economic
recovery after the World War, but they were an element of weakness
in the international economic situation even during the period of
relatively greater prosperity in 1925-29. Since the onset of the
present depression, they have contributed to the decline of interna
tional trade and world business activity. It follows, therefore, that
they are closely connected with the existing world-wide collapse of
consumer purchasing power, with the present maladjustment of
world production in relation to demand, and with the severe deflation
of prices which has been especially marked in agricultural products.
Severe restrictions on trade characterized the first few years after
the World War, up to about 1925. The creation of several new states
and hence of new customs boundaries; the spirit of intensified econ
omic nationalism; the currency instability accompanying acute dif
ficulties in balancing international payments and national budgets ;
falling prices; pressing revenue needs—these and other factors en
couraged the maintenance of extremely high barriers in foreign
countries. Meanwhile, the United States increased her tariff in 1921
and 1922, and this had special significance in relation to our new
status as a creditor nation. But for the time being its effect on our
exports was offset in large part by other factors, particularly new
loans to foreign countries. Moreover, the shortage of raw materials
and foodstuffs in Europe was such that for some years after the war
they were not subjected to severe import restriction. Hence, so far
as exports of American farm products were concerned, the unfavor
able factors in this period were chiefly the general economic in
stability, the financial demoralization, and the decline of prices. Of
these factors the severe restrictions on trade, especially nonagricul
tural trade, were partly the cause but more largely the result.
The financial stabilization in Europe early in the period from 1925
to 1929 was accompanied by widespread economic revival. To be
sure, the relative depression in agriculture and the extensive indus
trial unemployment in some countries, notably the United Kingdom,
indicated that the effects of industrial dislocation caused by the
World War, and of other adverse factors, were by no means wholly
overcome. In general, however, more stable trade conditions were at

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

tained, including greater tariff stability and even some tendency
toward tariff moderation following the World Economic Conference
of 1927.
Despite these favorable elements, there were factors in the inter
national situation fundamentally unfavorable to agriculture, espe
cially agriculture in surplus-producing countries, including the
United States. The recovery of agricultural production in Europe
after the war, and excessive expansion of agriculture in many export
ing countries, contributed greatly to the failure of agriculture to
share fully in the prosperity enjoyed by other industries in the post
war years of economic improvement. Partly in an effort to aid their
agriculture, the principal importing countries of Continental Europe
successively increased their barriers against imports of farm prod
ucts. European production was thereby stimulated and this con
tributed to the fall in world prices. This in turn contributed to
still further increases in trade barriers. To some extent at least the
vicious circle of falling prices and rising trade barriers was under
way before the onset of the depression that began in 1929.
The increase of trade barriers, both agricultural and nonagricultural, up to 1930 helped to weaken the foundation of world economic
expansion. It made the payment of reparations, war debts, and
international private loans increasingly difficult, and by thus con
tributing to the general economic dislocation made more severe the
crisis that developed in 1929. In this connection our own tariff is
significant, particularly in view of the change during the war in the
status of the United States from a debtor to a creditor nation.
This fundamental reversal in our economic position among nations
was so sudden and so far-reaching that it was difficult to realize its
significance in relation to our trade policy. Our exports had ex
ceeded our imports for generations, a trade status essential to a
debtor nation. It proved difficult for the public at large to realize
that a creditor nation cannot continue indefinitely to*export more
than it imports of goods and services and at the same time collect
on foreign loans both public and private, unless it will also continue
indefinitely to grant new foreign loans in sufficient volume to enable
foreign countries to meet payments on the old loans and to pay for
that creditor nation’s excess of exports over imports.
Before 1929 the effects of our tariff on debt payments to us and on
our exports were not acutely felt. This was partly due to the
increase in our imports of nondutiable commodities that resulted in
some measure at least from increasing domestic prosperity, and
partly because of foreign loans floated in this country, tourist expen
ditures abroad, immigrant remittances, and other payments to for
eigners. These loans and payments, together with transfer of gold
to the United States, for the time being provided means of meeting
debt payments to this country and of paying for farm products and
other goods exported by us.
In 1929, however, our foreign lending began to decline; and this
was followed shortly, in the tariff act of 1930, by a still further
increase in our barriers. This in turn added to the difficulties con
fronting foreign debtors in paying their debts and contributed to
the already growing problem of finding buyers for our surplus farm
products abroad except at sacrifice prices. These difficulties were
further intensified as one country after another sought refuge from

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

falling prices by resort to additional trade barriers and related
measures.
The increase of trade barriers was to some extent the result of
efforts by individual countries to escape from these difficulties. Im
ports were restricted by some countries to provide a surplus of
exports over imports, in order to make possible the payment of inter
national debts. By some countries they were restricted also to
avoid an unfavorable balance of payments and thus to protect their
currencies against depreciation. But each country, in seeking thus
to alleviate its own financial difficulties, increased those of other
countries. Hence the rise of trade barriers to their present well-nigh
prohibitive levels on many products. Among these are included many
important agricultural products in the United States of which several
are on an export basis.
EFFECTS OF TRADE BARRIERS AND OTHER FOREIGN MEASURES
APPLIED TO AGRICULTURAL PRODUCTS UPON PRICES OF
AMERICAN FARM PRODUCTS

The effects of foreign trade barriers and related measures on prices
of farm products in the United States are both direct and indirect.
The indirect effects, though important, cannot be measured especi
ally with reference to individual farm products. Hence the follow
ing summary, dealing with seven products—wheat, pork products,
tobacco, fruit, cotton, dairy products, and sugar—relates only to
the direct effects.
Wheat.—In the case of wheat, governmental measures have been
especially widespread, with important effect on wheat prices in the
United States. Though the effect of protective measures in any
particular country may be to improve prices to growers within that
country, the effect upon prices in other countries is usually ad
verse. In almost every case intervention in the wheat trade has
tended either to increase production or to reduce consumption, or
both. On the whole, governmental intervention has been a more
effective aid to Yfheat growers in the importing countries. Of the
exporting countries, only those of the lower Danube have signi
ficantly aided producers by raising prices within their borders to
levels higher than in other exporting countries. In Canada, Argen
tina, and Australia the depreciation of currencies has prevented
wheat prices from falling as low as they probably would have fallen
otherwise. In addition, temporary bounties in the two British
Dominions have somewhat mitigated the burden of low prices.
In many of the importing countries of Europe, prices generally
have been maintained at levels well above the prices in the open
world markets. This is especially true of Germany, France, Italy,
and Spain, which are the largest wheat-producing countries of
Europe. Great Britain is the only important importing country in
which prices have not been maintained throughout the past 3 years
at levels well above those in exporting countries. During the
1932-33 season, however, the British grower is in effect guaranteed
a price of 10 shillings per hundredweight (the equivalent of $1.30
per bushel at par of exchange).
In general, the maintenance of relatively high prices in the import
ing countries, especially in Germany and Italy, has increased wheat
179563— 33------ 2

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

production and decreased consumption. In France, however, there
appears to have been little effect upon wheat acreage and only a mod
erate effect upon consumption.
By and large, it appears that, in the 1931-32 crop year, produc
tion for the world outside Russia plus shipments from Russia was
probably at least 225,000,000 bushels larger and world consumption
(except Russia) at least 175,000,000 bushels smaller, by reason of
the maintenance of wheat prices above their normal relationship to
the world wheat market in both importing and exporting countries.
If all restrictions on wheat were done away with, the effect would
be partly to reduce the carry-over and partly to raise prices, but
once the carry-over was reduced, prices would receive the full effect.
World wheat prices and hence prices in the United States would then
probably be improved by somewhere around 25 cents per bushel if
the general level of all commodity prices were about the same as in
1932.
Hog products.—Foreign import restrictions and related measures
applying to hog products have been increasing rapidly in number
and severity, with distinctly unfavorable effects upon hog prices in
the United States. Until 1930 the direct effects of such measures
upon our exports of hog products were only incidental. Meanwhile
hog production expanded materially in foreign countries, largely a
restoration of the hog industry in Europe to the position it held
prior to the World War. This meant intensified competition for the
American product.
Since 1930 foreign governmental regulations have become increas
ingly important to our exports of hog products. These regulations
have become more drastic as the severity of the business depression
has increased, and the repercussions of one country’s action upon
the position of the others have tended to aggregate the situation.
Since the beginning of 1932, practically all countries importing
United States hog products have applied new import restrictions.
Import duties in Germany and Cuba have been raised sharply and
quotas on pork products have been adopted in Great Britain. These
measures may be expected to hinder appreciably our already re
stricted exports of lard.
Tobacco.—Governmental intervention in trade and consumption
probably has been carried further in tobacco than in any other
major commodity. This intervention, embodied in monopoly control
.and taxation for revenue, is of such long standing that it is usually
accepted as a normal government function and the public generally
does not take cognizance of its far-reaching influence upon interna
tional trade.
The various trade restrictions imposed in foreign countries dur
ing the period 1920 to 1932, probably displaced between 100,000,000
. and 150,000,000 pounds of United States tobacco in foreign markets
in 1932. Most of this increasing displacement took place between
1924 and 1929, but about 20 percent occurred from 1930 to 1932.
This estimate represents only the losses attributed to increased pro
duction resulting from protective measures. It does not include
losses from decreased consumption owing to tobacco taxes. In most
instances these taxes are a major source of revenue and have been
in effect so long that it would be impossible to estimate what the
«quantity of consumption would be without them.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

Trade losses suffered by our tobacco growers have been much
greater for the fire-cured and dark air-cured types than for fluecured. Estimated displacements in foreign countries in 1932 were
from 80,000,000 to 100,000,000 pounds of fire-cured and dark aircured compared with a total annual world consumption of only about
200.000.000. Displacements of flue-cured are estimated at less than
50.000.000 pounds, compared with an annual world consumption of
from 500,000,000 to 550,000,000 pounds. Consumption of flue-cured
in foreign countries increased during the period under consideration,
but the rate of increase undoubtedly was less than it would have
been without trade restrictions.
The greatest reductions in the importation of United States to
bacco occurred in Italy and the United Kingdom; but Germany,
France, Spain, Poland, Czechoslovakia, Japan, Canada, and Aus
tralia also have made important substitutions for our tobacco.
Nearly one half the estimated displacements occurred in countries
which, through tobacco monopolies, have followed the policy of
stimulating home production at the expense of imports.
Fruit.—The quantity of fruit exported from the United States
has held up well in recent years in the face of declining purchasing
power and rising barriers in all the principal foreign markets.
Prices, however, have suffered, notably of apples and pears. Low
prices were in large part responsible for a marked expansion of sales
in the French market without which exports of apples and pears
undoubtedly would have declined considerably in the last 3 years.
Our exports of grapefruit and oranges already have been reduced
as a result of recently imposed duties in the principal markets—
Canada and the United Kingdom. It appears probable, moreover,
that citrus production in the British Empire will be stimulated be
cause of duty-free entry into the British and Canadian markets
in connection with the recent extension of imperial preference to
these products.
Cotton.—Cotton offers a marked contrast to the other products.
There has been some foreign government intervention, but its extent
and character have not on the whole been such as to affect prices
of raw cotton in the United States appreciably. In most countries
cotton is admitted either free of duty or subject to a very low rate,
our own tariff of 7 cents a pound on long-staple cotton being perhaps
the most conspicuous exception.
In the main, foreign intervention in cotton has been in the form of
direct subsidies or of other methods of encouraging cotton produc
tion in new areas. Foreign governments and cotton-milling interests
have encouraged production in areas outside the United States, thus
reducing foreign dependence upon this country as a source of sup
ply. These efforts were helped greatly by the drastic reductions in
supplies of American cotton and the high prices from 1921 to 1923.
Under the pressure of low prices since 1929, however, foreign pro
duction has declined significantly in spite of numerous attempts to
aid the growers. In Egypt, such reduction has been and is deliber
ately sought through restrictions on acreage planted, as a means of
securing higher prices for the long-staple cotton exported by that
country. These measures to influence production appear to have had
little effect on prices of American cotton. The widespread tariffs
on cotton goods, however, probably are much more important.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

Dairy products.—Any appraisal of the effects of foreign import
restrictions and related measures on prices of dairy products in the
United States is necessarily complicated by the diversity of the dairy
products themselves and of the conditions surrounding our foreign
trade position with respect to each. We are predominantly on an
import basis for milk and cream, butter, and cheese. Our butter
exports sometimes exceed our imports by a small margin, and we
export condensed and evaporated milk in large quantities, and cheese
in limited amounts.
The general tightening of foreign trade barriers has doubtless
been a hindrance to our exports of these products. On the whole the
dairy industry may be said to be on a domestic market basis. The
chief effects of foreign trade barriers upon prices of dairy products
in the United States, therefore, depend on their effects on world
prices of dairy products, especially upon those which we import even
in small amounts. Of these, butter is the most significant.
Trade restrictions and other measures of intervention in foreign
countries have tended distinctly to depress prices of butter in the
world market, as represented by the United Kingdom. Restrictions
on imports in other markets have concentrated supplies on the British
market; and bounties and other aids to the producers have further
enhanced this pressure in some of the exporting countries. Restric
tions in the British market are limited to a tariff on non-Empire
butter. In competing with Dominion supplies, producers in Den
mark and in other non-Empire exporting countries appear to have
absorbed most of the British tariff. This has meant a lower price for
foreign butter in London, exclusive of duty, and a lower price in the
non-Empire countries shipping to the United Kingdom.
This, together with the other measures of governmental interven
tion in both importing and exporting countries and the depreciation
of foreign currencies, has led to a widening of the gap between world
prices and prices received in the United States behind a domestic
tariff duty of 14 cents a pound. Nevertheless, the domestic tariff
could not counteract, and has not counteracted, except in part, the
effects of the decline of world prices of butter in recent years to
which trade barriers and other measures in foreign countries have
contributed.
Sugar.—This commodity, although less important in American
agriculture than the other products mentioned, furnishes an excellent
illustration of an agricultural product the price of which is affected
by widespread governmental intervention throughout the world.
Since sugar in the United States is so distinctly on an import basis,
the effects of intervention in foreign countries on the price of sugar
here must be traced through their effects on the world sugar price
level, and through it on the tariff-protected price of sugar in the
United States.
In virtually every country governmental intervention of some sort
tends to influence production or consumption of sugar, or both.
Such intervention has always been widely prevalent in respect to
sugar; bounties and other assistance to producers were very common,
especially in European countries, long before the World War. Since*
the war, and especially during the last few years, trade-control
measures have been intensified.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

In 1932 the weighted average rate of duty on raw sugar (96°) in
37 countries which were either on an import basis or in which there
was internal control of the sugar trade, was 2.8 cents a pound. The
average for 13 countries in continental Europe was 6.8 cents a
pound. In the exporting countries, aside from those (included
above) in which the tariff was made effective by internal control of
the sugar trade, government intervention, until 1931, was much less
marked. To be sure, export areas within the British and the French
Empires are granted tariff preferences in the mother countries, and
in some other exporting areas there has been special assistance to the
growers. But in such great exporting regions as Cuba and Java
there have been no bounties or similar aids to production. Since
1931, on the contrary, these countries have been parties to an inter
national agreement to restrict exports from the leading sugar-export
ing countries. In Cuba, indeed, the restriction of production was
attempted on a less ambitious scale prior to 1931.
The net effect of the various measures of intervention upon the
world price has been large. It is estimated that at the end of 1932,
from four to five million short tons were added to wrorld stocks of
sugar on account of the stimulative effect of various measures in
recent years. This is estimated to have reduced the world price by
nearly a cent a pound.
Since 1931 an international agreement curtailing exports, supple
mented by production restriction, has sought to reduce world sugar
stocks. This, together with low prices, has reduced somewhat the
production and visible supplies in the countries adhering to the
agreement.
Trade barriers and related measures, in their present extreme
form throughout the world, have contributed to the distress in
American agriculture. The agricultural depression, however, was
brought about by many other causes too numerous and complex for
summarization here. Suffice it to note that the dislocation of pro
duction and trade, growing out of the World War, contributed to
the severity of the situation under which farmers in this country
and elsewhere have labored in the past several years. Low farm
income and falling values of farm property brought distress and
failure to many financial institutions, and contributed to the indus
trial depression through reduced demand of farmers for industrial
products. The industrial depression and declining price levels in
turn curtailed consumer demand for farm products and caused farm
prices to fall to ruinously low levels. The results of these interre
lated causes were further intensified by the long-time influence of
planless expansion in agricultural production, overexpansion and
maladjustment in many industries, and by other fundamental factors.
Trade barriers and related measures, as part of these complex
forces, have aggravated the agricultural depression. Carried to the
levels reached in the past several years, these barriers create a strong
incentive for the raising of further barriers- Hence, the area of gov
ernmental intervention has been greatly widened until no country
remains wholly outside. Restrictions upon trade have been greatly
intensified, and it is increasingly apparent that actions intended for
the advantage of individual countries are resulting in cumulative
damage to the trade and prosperity of all.

PART I
ECONOMIC AND HISTORICAL BACKGROUND

CHAPTER I
TRADE BARRIERS IN RELATION TO AMERICAN
AGRICULTURE
The present report deals with international trade restrictions on
agricultural products and other farm relief measures in foreign
countries, and with the effects of such measures on American agri
culture. The decline of agricultural prices in recent years is due
in part to the increase of trade barriers. This increase has taken
place with respect not only to barriers and other measures directly
applied to agricultural products, but also with respect to nonagricultural barriers, which also tend indirectly to retard international trade
in farm products. The decline of agricultural prices, however, is also
due to many other important causes. To measure the importance of
trade barriers in relation to these other causes with any degree of
exactness is not possible, but an attempt is made in the present chap
ter to indicate in a general way the significance of trade barriers in
relation to the other factors involved.
RECENT TRENDS AND PRESENT POSITION OF AMERICAN
AGRICULTURAL EXPORTS

Agricultural commodities have always constituted an important
part of the export trade of the United States, and the present de
pression has not reduced their importance in relation to total ex
ports.1 There have been significant changes, however, during the
past two decades in the absolute amount of agricultural exports
both in quantity and, to a much greater extent, in value. The rela
tive importance of the various commodities entering into our agri
cultural exports has also changed considerably. The general nature
of these changes is indicated by figures 1, 2, and 3.
Figure 1 shows that agricultural exports increased considerably
during the World War and declined after it, but remained some
what above the level of the years preceding the war till 1929-30.
Changes in the value of agricultural exports have been similar in
direction to changes in their quantity, price changes having been
correlated somewhat closely with changes in quantity so far as total
agricultural exports are concerned* Changes in prices, however,
have been considerably greater than the changes in the quantities of
farm products exported.
Figure 2 shows the changes in the quantities exported of all farm
products; of cotton, which now makes up about half of the total;
and of all products except cotton. It will be noted that exports of
all agricultural commodities were maintained consistently above the
average of the years 1909-13 throughout the war and post-war
1 While the agricultural commodities accounted for a slightly smaller part of the value
of American exports in 1931 and 1932 than in 1924-28, the quantity of agricultural
exports has declined much less than that of other exports.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

periods until 1929-30. Exports of all commodities except cotton,
chiefly foodstuffs, increased greatly during the war years as a result
of a decline in European agricultural production and increased
European demand growing out of war conditions. Since the war
exports of foodstuffs have fallen off sharply. Before 1929 this was

largely due to the recovery of agricultural production in the Euro
pean importing countries, which was aided by trade barriers, and to
the expansion of agriculture in agricultural surplus countries. Since
1929 it has continued, owing partly to some further increases of

F i g u r e 2 .— Q u a n t i t y o f U n i t e d S t a t e s A g r i c u l t u r a l E x p o r t s .

production and partly to the reduction of consumption in importing
countries which has resulted from the reduction of purchasing
power and the rise of trade barriers.
Exports of cotton, on the other hand, fell off during the war
largely because of the blockade of the central European countries,
and continued to be small during the early post-war years because

WORLD TRADE BARRIERS IN' RELATION TO AGRICULTURE

of a succession of poor cotton crops in the United States. Unlike
other farm products, cotton has not been directly affected by trade
barriers to any significant extent.
Figure 3 shows the quantities exported of the principal groups of
agricultural commodities in our export trade. It will be noted that
the trends of the exports of wheat and pork have been essentially
different from those of other products. Wheat and pork exports
rose during the war, but have since shown a marked decline. It is on
these products that the effects of rising trade barriers in the prin
cipal foreign markets have borne most heavily. Tobacco exports
have been substantially larger in post-war years than before the war,
but in recent years increased import restrictions have led to a con
siderable displacement of American tobacco in foreign markets.
Fruit exports have shown a spectacular increase from pre-war levels.
Nevertheless, trade barriers have become increasingly important
obstacles to our fruit exports since 1929, and if continued at present
PER

per

CENT

300

200

100
600
500
400
300

200

100
1909-10

’19-20

’29-30 1909-10

’19-20

’29-30

F i g u r e 3.— u n i t e d S t a t e s E x p o r t s o f T o b a c c o , c o t t o n , c u r e d p o r k , l a r d ,
WHEAT, AND FRUIT.

levels promise to stimulate fruit production in the importing coun
tries and thereby lead to a diminution in the requirements of those
countries for American fruit.
DEPENDENCE OF AMERICAN AGRICULTURE ON THE WORLD
MARKET

It is impossible to measure the relative importance of domestic
and foreign conditions on the returns received by American farmers
from the sale of agricultural products. It is, however, possible to
show that prices of farm products generally in the United States
depend to a considerable extent on prices of American agricultural
exports.
During the 6 years, 1924-25 to 1929-30, the farm value of agricul
tural products exported, from the United States was equal to 12.7
percent of the total farm value of net agricultural production 2 in
2 Net agricultural production as here used means total production
and seed used in its production.

a crop

less feed

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

this country. Since then the percentage has become much smaller.
It is sometimes inferred from the smallness of these percentages that
foreign markets are of little importance to American agriculture.
That this view is fallacious can be readily shown.3
That American agriculture is in fact highly dependent upon the
world market becomes evident upon closer examination of our agri
cultural exports. Of a number of our principal farm commodities
the production each year, or in most years, is greater than can be
sold in the domestic market. Table 1 indicates the proportion of the
output of certain selected commodities which has been exported in
recent years.
T able

1 .—

Islet exports of selected commodities in percent of United States
production, average 1926-30 1

Cotton
Prunes
Tobacco
R a is in s ___
Lard
Rye

- -

_ - .

Percent
58. 8
49. 7
33. 9
53. 8
31
30

Rice _
Apples _ _
Wheat
Oranges
Hog products 2
Grapefruit

_
—

Percent
23. 3
20. 2
18.5
8 .5
6 .2
6. 2

1 E x p o r t s in c r o p y e a r s in p e r c e n t o f p r o d u c t i o n in c a l e n d a r y e a r s .
2 P e r c e n t o f w h o le s a l e v a lu e o f h o g p r o d u c t s e x p o r t e d , c a l e n d a r y e a r s .

The most important types of export commodities are cotton, wheat,
tobacco, hogs, and fruit. Although less than half of the production
of most of these commodities is exported, the whole production is
affected to a greater or lesser extent by world price. In a market in
which producers compete with each other the price of that part of
the output which is sold in the domestic market can differ from the
price of that which is exported only to a limited extent and under
certain special conditions.4 Broadly speaking, the price received for
the whole production of agricultural commodities on an export basis
is directly affected by conditions in the world market.
A substantial part of our agricultural resources is devoted to the
production of such commodities. The acreage under corn 5, cotton,
3 I n c id e n t a ll y , a t t e n t io n s h o u ld b e d i r e c t e d in th is c o n n e c t io n t o t h e e r r o r in h e r e n t in
t h e u s e o f t h e r a t io o f e x p o r t s t o t o t a l p r o d u c t i o n a s a m e a s u r e o f th e d e g r e e o f d e p e n d
e n ce o f o u r fa r m in g in d u s tr y u p o n fo r e ig n m a rk ets.
A n y s u c h r a t io n e c e s s a r il y f a il s t o
t a k e i n t o a c c o u n t t h e e f fe c t s o f t r a d e b a r r ie r s a n d o t h e r e c o n o m ic o b s t a c le s t o e x p o r t s .
S in c e w e d o n o t k n o w w h a t t h e v o lu m e a n d v a lu e o f o u r e x p o r t s w o u ld h a v e b e e n in t h e
a b s e n c e o f th e s e o b s t a c le s , s u c h p e r c e n t a g e s a r e a l l t h a t w e h a v e t o g o o n .
B u t w it h
t h e i m p o r t a n t e x c e p t i o n o f c o t t o n , u p o n w h ic h f e w d i r e c t r e s t r i c t io n s a r e im p o s e d , m o s t
o f o u r a g r i c u lt u r a l e x p o r t s a r e c o n f r o n t e d b y f o r m i d a b l e b a r r i e r s in f o r e i g n m a r k e t s .
If
t h e b a r r i e r s h a d b e e n s t il l h ig h e r in t h e p e r io d 1 9 2 4 - 2 5 t o 1 9 2 9 - 3 0 t h a n t h e y w e r e , t h e
1 2 .7 p e r c e n t r a t i o n o t e d a b o v e w o u ld h a v e b e e n m a t e r ia l l y l o w e r .
In; f a c t , t h e r a t i o
h a s d e c lin e d s h a r p l y in th e l a s t f e w y e a r s ; in 1 9 3 1 i t w a s 6 .7 p e r c e n t .
B u t t h is d e c lin e
d o e s n o t a t a ll i n d i c a t e a r e d u c e d d e p e n d e n c e u p o n f o r e i g n m a r k e t s .
I t o n l y in d i c a t e s
t h a t t h e c o n s e q u e n c e s o f t h a t d e p e n d e n c e a r e n o w b e in g m o r e a c u t e l y f e lt .
E v e n i f th e
b a r r i e r s n o w in e ffe c t w e r e r e s p o n s i b le f o r a r e d u c t io n o f t h e f a r m v a lu e o f e x p o r t e d
a g r i c u lt u r a l p r o d u c t s b y o n l y 5 p e r c e n t o f t h e v a lu e o f t o t a l n e t f a r m p r o d u c t i o n , t h is
w o u ld s t il l m e a n a l o s s a m o u n t in g t o a b o u t t h r e e f o u r t h s o f t h e v a l u e o f p r e s e n t a g r i
c u l t u r a l e x p o r t s a n d t o a b o u t t w o fif t h s o f t h e a v e r a g e v a lu e o f o u r a g r i c u lt u r a l e x p o r t s
fr o m 1 9 2 4 -2 5 to 1 9 2 9 -3 0 .
4 T h u s in the c a s e o f s e v e r a l o f o u r p r i n c ip a l e x p o r t c r o p s t h e r e a r e c e r t a in v a r i e t ie s o r
g r a d e s w h ic h a r e o n a n i m p o r t b a s is .
T h is a p p lie s t o l o n g - s t a p le c o t t o n a n d c e r t a in
va rieties^ o f t o b a c c o ; b u t o n l y r e la t i v e l y s m a ll q u a n t it ie s o f t h e s e a r e p r o d u c e d in t h e
U n it e d S t a t e s .
H a r d s p r i n g w h e a t is , in s o m e y e a r s , o n a n i m p o r t b a s i s ; b u t t h e
p o s s i b i l i t y o f s u b s t i t u t i n g h a r d w in t e r f o r h a r d s p r i n g m a k e s i t i m p o s s ib le f o r h a r d - s p r i n g
p r i c e s t o g e t v e r y f a r o u t o f l in e w it h w h e a t p r i c e s in g e n e r a l.
O th e r e x c e p tio n s a re
t h a t c o m m o d it ie s w h ic h a r e , g e n e r a lly s p e a k in g , o n a n e x p o r t b a s is m a y b e o n a n i m p o r t
b a s is in c e r t a in l im i t e d r e g io n s o r a t c e r t a in t im e s o f t h e y e a r .
F i n a l l y , i t s o m e t im e s
o c c u r s t h a t t h e p r i c e o f a n e x p o r t c o m m o d it y , w h ile r e m a in in g s o m e w h e r e n e a r e x p o r t
p a r i t y , is n o t l o w e n o u g h t o p e r m it e x p o r t s in l a r g e v o lu m e .
T h is h a s b e e n t h e c a s e w it h
w h e a t in t h e l a s t t w o s e a s o n s .
5 S in c e a la r g e p a r t o f t h e c o r n c r o p is f e d t o h o g s a n d c o r n is e x p o r t e d a ls o a s g r a i n
a n d a s c o r n s t a r c h , i t is t o b e r e g a r d e d a s a n e x p o r t c r o p .

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

wheat, and tobacco in 1929 was 210,000,000 acres, or 59 percent of the
total crop acreage of the United States, which was 358,000,000.®
Thus approximately one half or more of our agricultural resources is
used in the production of commodities of which the price is to a large
extent dependent on the world market.
That the farm prices of these commodities have fallen more since
the years before the depression than those of farm products as a whole
is indicated by table 2.
T a b le

2 .—

Index numbers of farm prices of all principal products and of principal
products on an export basis, United States
[1924-29=100]

C rop years

A ll prin
cipal
produ cts

H ogs,
w heat,
tobacco,
and
apples 1

C o tto n

C rop years

A ll p rin
cipal
prod u cts

H ogs,
w heat,
tobacco,
and
apples 1

C o tto n

1924________________
1925________________
1926________________
1927________________

104
104
94
101

105
116
101
96

125
107
68
110

1928________________
1929________________
1930________________
1931.................... .........

100
97
71
47

92
92
67
39

98
92
52
31

1 E a ch c o m m o d ity w eighted in proportion to the total cash farm incom e d erived from it.
m in or export crops w ere in clu d ed, this w o u ld n o t m aterially affect the index.

I f the various

Cotton has been separated in the table from the other export com
modities because it has not been affected by trade barriers to nearly
the same extent as the rest. That the farm price of cotton has de
clined more than most other farm prices is principally a result of
the greater sensitiveness of cotton prices to industrial conditions.
The decline of the average of farm prices of other export commodi
ties in relation to the general average is probably due in considerable
part to the effect of trade barriers on hog products and wheat, which
because of their great importance principally determine the index
number for export commodities other than cotton. Farm prices of
tobacco and apples have not declined as much as the general average.7
Commodities which are not on an export basis, however, have also
been affected by conditions in the world market, though for the most
part in a more indirect way and to a lesser extent. Several impor
tant agricultural commodities, such as wool, hides, sugar, and flax
seed are definitely on an import basis. Although our tariff duties on
these products raise the domestic price above the world price, this
does not prevent the domestic price from fluctuating with the world
price of the same commodity. Other commodities, such as a number
of truck crops, are imported in certain seasons or in certain localities
only. Finally, certain commodities are on the borderline, there being
a small amount both of exports and of imports.
The prices of all agricultural commodities are closely interrelated,
since farm products compete with each other both for the consumer’s
dollar and the farmer’s land. Thus when the prices of export prod
ucts decline more than other agricultural prices as a result of world
6 Th ese acreage figures include the acreage under annual crops, and do n o t ap ply to
fr u its .
A considerable part, how ever, o f the fru it production is exported an d several o f
the m ost im p o rta n t fr u it crops are on an export basis.
7 B u t the fa rm prices o f types o f tobacco and ap ples on an exp ort basis have declined
m ore than those o f tobacco and ap ples n ot on an export basis.
T h is is certain ly due in
p art, an d possibly in large p a rt, to th e effect o f trade barriers.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

conditions, consumers tend to shift their consumption to these prod
ucts at the expense of other farm products; and farmers tend to shift
their acreage from export products to products sold only in the do
mestic market. The result is that the price decline of commodities
on an export basis tends to drag down the prices of other agricul
tural commodities.
It is noteworthy that even deficit countries such as France and
Germany have not been able to insulate their farm prices entirely
from the world market. The dependence on world conditions, how
ever, is far greater in the United States and in other surplus-produc
ing countries, where products on an export basis are far more impor
tant in relation to total agricultural production.
EFFECTS

OF TRADE BARRIERS DIRECTLY
PRODUCTS

APPLIED

FARM

When a trade barrier is imposed on any product by a country
which imports it, the immediate effect is to raise the price in that
country in relation to prices of the same product in other countries.
I f the country in question is an important consumer and producer
of the commodity, prices in other countries will tend to be lowered
by a significant, though not easily measurable, amount. The price
changes which result from the new trade barrier may in turn give
rise to changes in production and consumption which involve a
reduction of the imports of the commodity in question. Production
tends to be increased and consumption reduced in the country im
posing the trade barrier. I f the effect on prices in other countries
is significant, this will tend to discourage production and to encour
age consumption.
As regards prices, it will appear that trade barriers have been
in considerable part responsible for certain disparities between the
prices of farm products in protectionist deficit countries and those
in other countries, and for the widening of these disparities since
1929. In what degree the rapid decline of prices in the world’s
principal surplus countries can be attributed to this cause is uncer
tain, but, in view of the number and importance of the countries
which have greatly increased the severity of their trade barriers on
agricultural products, the effects of these barriers must be of very
considerable significance.
Agricultural production of the principal deficit countries recov
ered, some years after the World War, to a level on the average about
as high as before the war, and had, at the beginning of the present
depression, risen above the pre-war level. This increase of produc
tion has been accompanied and to some extent aided by trade barriers
in these countries.
But although the increase of production in the deficit countries
has considerably reduced the exports of American farm products,
American exports have also been seriously affected by the increase
of agricultural production in surplus countries, such as Canada, Ar
gentina, Australia, Denmark, and Holland. These countries have
increased their agricultural production in spite of the fact that their
prices, like those of the United States, have tended to fall. In order
to consider the effects of trade barriers in their proper perspective
it will be necessary to give attention to the increase of production in
surplus as well as in deficit countries.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

That agricultural production in the United States has increased
less since the World War than in other surplus countries is due to
various causes. Such countries as Canada, Australia, and Argentina
have possessed certain competitive advantages over the United States
owing to their large regions of fertile virgin lands, to the fact that
they are debtor countries, while the United States is a creditor coun
try with a high protective tariff, and in recent years to the deprecia
tion of their exchanges.8
D IF F E R E N C E S

AM ONG

C E R T A IN

C O U N T R IE S IN
D E C L IN E S

RECENT

A G R IC U L T U R A L

P R IC E

Owing to the costs of transportation it is natural that prices of
agricultural commodities entering into international trade should be
somewhat higher in deficit than in surplus countries. The existence
of trade barriers, however, has greatly increased these differences and
has made them of primary importance in influencing the geographical
distribution of the world’s agricultural production. Since the World
War trade barriers have steadily increased the disparities between
the prices of many agricultural commodities in the surplus countries
and the prices of the same commodities in those deficit countries
which have pursued a protectionist agricultural policy. The increas
ing divergence, however, has become particularly marked since 1929
owing to the unprecedentedly rapid increase in trade barriers which
has taken place since 1929.
To illustrate, wheat prices in 1929 were considerably higher in
those deficit countries which applied trade barriers to wheat than
they were either in the surplus countries, or in such countries as
Great Britain, which admitted wheat free of duty or other restric
tions. Since 1929 these disparities have been greatly increased.
These facts are shown in table 3.
T able

3.— Wheat prices in selected countries

[C on verted in to cents per bushel at current rates of exchange]

Y ear

January—
1929
_____________________________________________
1930 _______________________________________________
1931
_ _ _
__________________________________
1932
________________
______________________
1933
__________________________________________

Paris,
dom es
tic

Berlin,
dom es
tic

165
144
179
168
115

136
160
168
146
120

G reat
B ritain,
d om es
tic

124
124
73
54
48

B u enos
Aires,
near
futures

109
119
48
41
36

K ansas
C ity no. 2
hard
w inter

114
119
70
53
44

In the United States, Argentina, and Great Britain9 wheat prices
have declined sharply since 1929. In France and Germany, however,
domestic wheat prices in 1931 and 1932 were actually maintained
above the level of 1929 by means of import restrictions. In 1933 the
effectiveness of these restrictions has been reduced by the large crops
8 R eferences to currency depreciation in th is chapter apply to the situ ation existing up
to M arch 1 9 3 3 .
T h e subsequent depreciation o f the dollar has grea tly modified the
situ ation .
9 T h e B ritish W h e a t A c t o f 1 9 3 2 provides fo r the paym ent to B r itis h w heat grow ers o f
a bou nty calcu lated to m ake their to ta l returns, includ in g m ark et price and bounty, equal
to 10 sh illin gs per hundredw eight (abou t $ 1 .3 0 a bushel at par o f e x c h a n g e).
A lth o u gh
th is does n o t directly affect the m ark et price, it is likely to increase produ ction by
increasin g the returns to the grow er.

WORLD TRADE BARRIERS IN' RELATION TO AGRICULTURE

of 1932, but the prices in both countries are still much higher in re
lation to prices in exporting countries than they would be but for
the increase of import restrictions since 1929.
Although the general level of agricultural prices has declined
greatly in all countries since 1929, the decline has, on the whole, been
greater in surplus than in deficit countries. Among the causes of
this decline, the increasing severity of trade barriers no doubt has
played an important part.
Table 4 compares recent changes in the average level of agricul
tural prices in three surplus countries with those in the deficit
countries. Two of the deficit countries included, namely France and
Germany, had severe trade barriers on agricultural products before
1929 and have greatly increased the severity of these barriers since
the onset of the depression. The other deficit country, England,
admitted most agricultural products free of duty till 1931, and the
protectionist policy which was initiated in that year had not, before
the end of 1932, had very much effect upon prices of agricultural
products in that country.
T able

4 . — Index

number,s of wholesale prices of farm products in selected
countries1

[ I n d e x n u m b e r s p u b lis h e d in t e r m s o f in c o n v e r t ib l e p a p e r c u r r e n c ie s h a v e b e e n c o n v e r t e d
t o g o l d b a s is — 1 9 2 9 = 1 0 0 ]

D e ficit countries

Surplus countries

Y ear
F rance

1926 ...................................... .........
1927
_________________________
1928 ___________________________
1929____________________________
1930_____________ _______________
1 9 3 1 ___________________________
1932 ____________ _______________

103
101
100
91
94
83

G erm an y

99
106
103
100
87
80
70

E n gland
and W a le s 2

105
100
102
100
93
78
55

U n ited
States

95
95
101
100
84
62
46

C anada

99
101
100
100
82
54
42

A rgen tina

95
98
109
100
74
44
35

Sources: F or France: B u lletin de la Statistique Generale de la France. F or other countries: M o n th ly
C rop R ep ort and Agricultu ral Statistics, Internation al In stitu te o f A g ricultu re.
1 Th ese index n um bers h ave been calcu lated b y official agencies in the various countries to w h ich th ey
refer. T h e y are n ot strictly com parable, ow in g to (1) differences in the m eth od of com p u tin g, (2) differ
ences in the ch oice of the base year, and (3) differences in the criteria used in the ch oice of w eights. O n
the last of these 3 points of divergence, see footn ote 10, p. 23.
2 Prices p aid to producers in local m arkets.

It will be seen that in 1932 the index numbers for England and the
three surplus countries had decreased much more, in comparison with
1929 and the preceding years, than those of France and Germany.
The difference is to be explained in large part by the increase of
tariffs and other import restrictions in France and Germany since
1929. This increase has not only retarded the decline of agricultural
prices in France and Germany but it has also tended to make the
decline in other countries more severe.
Important factors other than the increase of trade barriers have
been also partly responsible for disparities between the agricultural
price movements of the various countries. The world price of a com
modity which is of particular importance in the agriculture of one
country may have declined more than the prices of commodities which
are important in the agriculture of the other countries. For in
stance, cotton, which is of the greatest importance in American agri-

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

culture, is not produced in significant quantities in any of the other
countries included in table 1. That the price of cotton has declined
more than many other agricultural prices partly accounts for the rela
tive severity of the average decline of agricultural prices in the
United States. And yet cotton, although it is our most important
export crop, has been affected by trade barriers for the most part
only indirectly. That agricultural prices in England had in 1930
declined less than those of any other country included in the table is
probably due mainly to the much greater relative importance of ani
mal products in English agricultural production than in that of the
other countries included. The prices of these products were, on the
whole, affected by the depression less early than those of other agri
cultural products.10
While trade barriers have affected price differences between agri
cultural deficit and surplus countries, the relative competitive ad
vantages of agriculture among the surplus countries have been in
some degree affected by currency depreciation.11 Of the three sur
plus countries included in table 4, Argentina has allowed its currency
to depreciate substantially in recent years, thus affecting the relation
between its own price level and the world price level. Canada also
allowed its currency to depreciate somewhat during the depression.
Every important agricultural surplus country is now off the gold
basis. In table 4 the index numbers for Canada and Argentina have
been converted to a gold basis. Table 5 shows the index numbers
converted to a gold basis as in table 4, and also in terms of the
national currency of each country.
T a b l e 5. — Index numbers of wholesale prices of farm products in Canada and

Argentina compared with United States
[1929 = 100]
C anada

Y ea r

U n ited
States

1926_____________________________________________________
1927 ___________________________________________________
1928_____________________________________________________
1929_____________________________________________________
1930________ _______ ____________________________________
1931__________________________________________ __________
1932_____________________________________________________

95
95
101
100
84
62
46

In term s
of na
tional
currency

99
101
100
100
82
56
48

A rgen tina

C o n v e rt In term s
ed to
of na
gold
tional
basis
cu rren cy

99
101
100
100
82
54
42

98
96
107
100
84
62
58

C o n ve rt
ed to
gold
basis

95
98
109
100
74
44
35 ]

10 Th e real differences between the agricu ltu ral price levels o f som e o f the countries
included in tab le 1 are probably som ew hat exaggerated by differences in the m ethods o f
choosing w eigh ts for the variou s com m odities.
Id ea lly , fo r our present purpose, w eights
should be based on the qu an tity of each com m odity m arketed by farm ers in each cou n try.
T h is principle has been follow ed in the com p ilation o f the index num bers fo r the U nited
S tates, C anada, and E n glan d .
In the case o f France, however, w eigh ts are based upon
m ark etin gs p lu s im ports, and in the case o f G erm any, on consum ption.
W h ile such a
procedure m u st tend to give undue im portance to com m odities o f w hich considerable
qu an tities are im ported and in w hich im port restriction s have presum ably been m ost
effective in fa ls in g price, it is n o t likely th a t th is w ould account for m ore than a m inor
part o f the difference betw een the index num bers o f these tw o countries and those of
the other countries.
T h e w eights o f the index num bers fo r A rgen tin n , on the other
hand, are based upon exp orts.
B u t since the range o f A r g en tin a ’ s a gricu ltu ral exports
is alm ost coextensive w ith th a t o f her agricu ltu ral production , th is discrepancy also is
likely to be o f m inor im portance.
T h e index num ber fo r A rg en tin a w ould m ost probably
have falle n m ore than those o f th e U n ited S tates and C anada even if it had been cal
culated on the sam e basis as the latter, since A r gen tin a is on an exp ort basis in a larger
p a rt o f its agricu ltu re th an either the U n ited S tates or C anada.
11 T h is applies also to deficit countries.
B u t probably the principal effects o f exchange
fluctuations on w orld agricu ltu re have taken place in surplus countries.

179563— 83------ 3

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

In Canada, where the currency is not greatly depreciated, the dif
ference is small. The situation in Argentina is more representative
of that of the remaining surplus countries of the world. The index
number in terms of Argentine currency has declined less than that
of the United States, whil'e in terms of gold it has declined more.
The depreciation of the currency in agricultural surplus countries
has thus afforded some relief to farmers. The fact that farm prices
in these countries are higher in terms of their national currencies
than they would be in the absence of depreciation makes them alsohigher in relation to the farmers’ debts and to the prices of some com
modities which farmers buy. This factor is beneficial to farmers in
countries with greatly depreciated currencies, such as Argentina and
Australia. For farmers in countries with greatly depreciated cur
rencies are in a better position to pay their debts and to buy various
commodities, to maintain their production at its existing level, in spite
of the drastic reduction of world prices in gold. This intensifies
the competition of these countries with the United States. That
competition has also, to some small extent, been aided by various
measures tending to stimulate exports.
Thus, while import restrictions in the deficit countries have pro
tected farmers in those countries, partly at the expense of American
farmers, currency depreciation and export aids have helped farmers
in other surplus countries to compete with American farmers in the
world market. But of these two groups of factors the import re
strictions have been the more important.
CHANGES

WORLD

A G R IC U L T U R A L P R O D U C T IO N
TH E W O R L D W A R

S IN C E

TH E

OUTBREAK

As already indicated, American agricultural exports have been
greatly affected by changes of agricultural production in foreign
countries. Table 6, showing the changes in crop acreages in the
principal agricultural regions of the temperate zone, gives a rough
statistical measure of these changes in world production.
T a b l e 6 .—

Crop acreage in leading agricultural regions

Year

1909-13
1920
1925
1930
1932

____________________________________
_______________________________
____ __________________________
________________________________________
______________________________________

United
States

Europe (ex
cluding
Russia)

M illion acres
290
321
321
327
320

M illion acres
250
210
240
250
247

Russia

M illion acres
1 282
2fi3
303
337

Canada,
Argentina,
Australia

M illio n acres99
125
125
151
140

Figures include’ For United States, wheat, corn, oats, barley, rye, cotton, tame hay, potatoes, sweetpotatoes, flaxseed, buckwheat, tobacco, and rice; for Europe, excluding Russia, wheat, corn, oats, barley,
rye, potatoes, sugar beets; for Russia, all crops; for Canada, field crops; for Argentina, wheat, corn, oats,,
flaxseed, barley, rye, and alfalfa; for Australia, all crops.
1 1913 only.

The war caused European agricultural production to decline and
European demand to increase. Russia, one of the great foodstuffs
exporters, disappeared from the world’s markets. Agricultural pro
duction in the United States and other non-European countries
expanded to meet the increase in European requirements. Since

WORLD TRADE BARRIERS IK RELATION TO AGRICULTURE

the war Europe has gradually restored its agricultural production to
pre-war levels and has even advanced it beyond that point. This
restoration was made possible and even encouraged by increasingly
severe barriers to agricultural imports into the European deficit
countries. A factor influencing these barriers against agricultural
imports has been the rise in barriers against their industrial prod
ucts in foreign markets. The result has been a substantial curtail
ment of European requirements for imported foodstuffs.
Meanwhile, aided by improvements in production technique, pro
duction continued to expand in Canada, Australia, Argentina, and
other exporting countries competing with the United States in
European markets. The return of Russia as an important exporter
in 1930 further intensified competition in European markets.
Such was the position at the outset of the world economic crisis
in 1929. The competitive situation has been greatly aggravated by
the depression. Surplus countries competing with the United States
have, partly by reason of depreciated currencies, maintained their
production and exports in the face of declining prices. Agricultural
production in the European deficit countries has been maintained
and even expanded under the shelter of greatly increased trade bar
riers. Thus, American agricultural exports, especially grains and
animal products, have been adversely affected both by increased
European production aided by import barriers and by production in
other surplus countries aided by depreciated currencies.
Wheat and pork are the principal products affected by these de
velopments. In a later section attention is given to the specific
effects of trade barriers and restrictions on the prices and exports of
these and other products. It will be of value here, however, to pre
sent some basic statistical evidence of the relationship between
changes in world production and United States exports of wheat and
pork. The principal developments in world wheat acreage and pro
duction since pre-war years are shown in table 7.
T a b l e 7. — Wheat acreage and production in principal regions

Period

ACREAGE

1909-10 to 1913-14___________________
1920-21 to 1924-25___________________
1925-26 to 1929-30___________________
1930-31______________________________
1931-32______________________________
1932-33_____________________________
PRODUCTION

United
States

Canada,
Argentina,
and Aus
tralia

Russia

M illion
acres
48
60
58
61
55
55

M illion
acres
34
47
56
64
58
62

M illion
acres
74
40
71
80
92
89

M illion
acres
73
64
70
74
76
75

M illion
acres
204
i 226
243
2 258
2 250
2 255

M illion
bushels
690
822
823
857
900
727

M illion
bushels
435
671
810
867
731
860

M illion
bushels
757
332
796
989

M illion
bushels
1,349
1,106
1,350
1,362
1,434
1,499

M illio n
bushels
2,966
3,199
3, 624
2 3, 813
2 3, 771
2 3’ 760

i 1921-22 to 1924-25 average.

Estimated
Europe, ex
world total, ex
cluding Russia cluding Russia
and China

2 Preliminary.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

First of all, it will be noted that wheat acreage and production
in the United States and in other non-European countries were
substantially higher just after the war than before. European
acreage and production, on the other hand, were much reduced. The
post-wrar developments have been of special significance to our export
trade. Non-European production continued to expand during the
post-war years up to 1930. This was due partly to such factors as
improvement in dry-farming methods; the development of early
maturing varieties of spring wheat in Canada and the extension of
the Canadian area northward; and, finally, a marked advance of
mechanization (tractors and combine harvesters) in the principal
exporting countries. During this post-war period Europe was gradu
ally restoring its production to the pre-war level. It is of special
significance in this connection that while European acreage is only
slightly above pre-war, the production is considerably over the pre
war average. This indicated increase in yield per acre has been
made possible in part at least by the more extensive use of fertilizer.
In order to accomplish this restoration in wheat production Euro
pean countries found it necessary, however, to impose increasingly
severe restrictions against the rising supplies from non-European
sources.
In spite of strong competition and declining European require
ments wheat exports from the United States have been substantially
above pre-war levels for most of the post-war period, although the
trend has been downward since 1920. The marked decline in our
exports of wheat in more recent years has been influenced by sev
eral factors, the most important of which were the stabilization
activities wdiich maintained prices of our wheat above world levels,
the increasing pressure of competition from other surplus countries,
and the drastic restrictions imposed by the deficit countries on
imported wheat.
The influence of foreign production on our exports of pork and
pork products has been somewhat similar to that in the case of wheat.
The war reduced European production of animal products and stim
ulated production and export in the United States, Canada, and par
ticularly in Southern Hemisphere countries. At the same time, there
was a marked expansion in the production of edible vegetable oils
Avhich compete with butter and lard. Table 8 shows the average
numbers of hogs and cattle in Europe before the war and since.
T able

8.—

Hogs and cattle: Average numbers in Europe

Period

1909-13
__________
1920-22
______
1923-25____________________

Hogs

M illion s
68
57
65

Cattle

M illion s
100
99
99

( excluding Russia)

Period

Hogs

1926-28____________________
1929-31______ _____ ________

M illion s
72
75

Cattle

M illion s
102
104

It will be noted that hog numbers in Europe now exceed pre-war
levels and that cattle numbers are also slightly larger. The actual
increase in the production of animal products has probably been

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

somewhat greater than for animal numbers because of technical im
provements in production methods. In contrast to wheat, the compe
tition met by United States pork exports comes chiefly from
European countries. The gains made by Denmark, the Netherlands,
and other European surplus producing countries, such as the Baltic
States and Poland where government aid to the hog industry has
been important, have materially reduced the outlook for American
pork products in the deficit countries of Europe. But, beyond this,
the increased production in Germany, one of the leading importing
countries, has decreased its requirements for foreign supplies of pork
and to a lesser degree of lard; and within the last few months Great
Britain has taken steps to restrict imports of pork with a view to the
encouragement of its domestic hog industry.
The rising volume of animal products from Southern Hemisphere
countries, made possible largely by improvements in transportation
facilities and refrigeration, has an important bearing on American
agricultural exports. In the first place it has made it unprofitable
for the United States to continue to export beef in volume to Euro
pean markets. Such exports assumed important proportions during
the war years when shipping conditions made it difficult to move
Southern Hemisphere products. Furthermore, Southern Hemisphere
beef and mutton compete indirectly with American pork; and the
heavy shipments of butter combined with large European produc
tion are a factor limiting American exports of lard, especially to Ger
many where lard and butter are more or less interchangeable. Ship
ments of beef and mutton from the principal countries of the South
ern Hemisphere are now over one-third larger than in pre-war years
while shipments of butter are about two and one-half times the
pre-war volume.
The great expansion in world production of vegetable oil mate
rials is also of special significance in relation to American lard
exports. Between the periods 1909-13 and 1925-30 there was an
increase of considerably more than 50 percent in the world produc
tion of edible vegetable oil. While some of this increase in vegetable
oil has been absorbed in the United States the bulk of it has been
taken by European countries which constitute our best foreign mar
kets for lard.
The other leading items in the agricultural export trade of the
United States, cotton, tobacco, and fruit, have been much less affected
by changes in world production than have grain and animal products.
This is due, in part, to the possession by the United States of out
standing advantages in the production of cotton and certain types
and varieties of tobacco and fruit. Conversely, the principal agri
cultural deficit countries lack the physical advantages for the pro
duction of these products, or, at least, of the same qualities and types
grown in the United States, so that import barriers where they exist
have not, in general, led to greatly increased production. There has
been, however, as will be shown in subsequent chapters, considerable
stimulation of the production of tobacco in Continental European
countries due to monopoly control measures, and in the British Em
pire because of the advantage of preferential duties in the British
market. Fruit production is also being stimulated in British Empire
countries as a result of the preferential duties of Great Britain.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

FOREIGN PURCHASING POWER FOR AM ERICAN FARM PRODUCTS
AS AFFECTED BY AM ERICAN FOREIGN LENDING AND AMERICAN
TA R IF F POLICY

The purpose of the present section is primarily to consider the
effects of trade barriers, other than those applied directly to Ameri
can farm products, on the foreign purchasing power for those
products, and particularly on its decline since 1928. Attention will
be directed here to the effects of the American tariff and American
lending.
The American tariff—maintained and even increased despite our
new status as a creditor nation—limited the increase of American
exports up to 1929, contributed to their decline thereafter, and is now
one of the obstacles to their revival. To infer from this that the
present depression is primarily due either to our tariff or to causes
associated with our foreign lending would be erroneous. Nor should
it be inferred that the investment of American capital in foreign
countries is in itself undesirable. Nevertheless, the conjuncture of
our creditor position and our tariff policy has been such as seriously
to impede our exports of agricultural and other products.
American exports are paid for in the first instance out of the
incomes of consumers in foreign countries. But in order that these
payments may be made available to the producers of American
goods they must be converted into American dollars and transferred
to the United States. The foreign importer must make this con
version or transfer by purchasing American dollars with the foreign
money be obtains from the consumer. This he can do only insofar
as other foreign business men are ready to sell American dollars
which they have obtained through the sale of goods or services to
Americans or by borrowing from American creditors. Thus Ameri
can exports are paid for chiefly by American imports of goods and
services and by American loans to foreign debtors. Funds may also
be transferred through shipments of gold, but the available gold
supplies are extremely small in relation to world trade. The Ameri
can tariff, subsidies to our merchant marine, and other barriers to
the purchase of goods and services from abroad, tend to make it
more difficult for foreigners to make payments to us.
Before the World War the United States was a debtor country.
It paid interest and principal on its foreign debts by an excess of
exports over imports. About 49 percent of the total exports con
sisted of agricultural products in the years 1909-13. The United
States ¡emerged from the war a leading creditor nation. But al
though large sums were due to be repaid by foreign debtors, this
country continued to have a substantial excess of exports over im
ports. A growing export of industrial products was added to con
tinued large exports of agricultural products. The United States
did not admit sufficient imports both to enable foreign countries
to pay for the growing exports from the. United States and to
permit the debtor countries to pay principal and interest on their
debt. In the face of a growing debt of foreigners to Americans
the American tariff was successively raised in 1921, 1922, and 1930.
Under these conditions the continuation of a considerable excess of
exports over imports was made possible only by further American

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

lending to foreigners and by large expenditures of American tourists
in foreign countries.
Since 1929 both the imports and the foreign lending of the United
States have greatly diminished.12 As a result, foreign debtors have
had difficulty in making payments to American creditors. Inso
far as they have succeeded in doing so, this has been made possible
by a reduction of American exports even greater than that of Amer
ican imports.13 The need of the debtor countries to secure, in the
face of a declining demand for their exports, a surplus of exports
over imports with which to pay their debts has provided them with
a strong motive for the reduction of their imports by means of trade
barriers.
Figures 4 and 5 indicate in a general way the relation between
the exports of capital (foreign lending) of the United States, and
the exports both of commodities in general and of farm products.14
It will be seen from figure 4 that there has been a fairly close
correlation between the net exports of long-term capital and the
excess of commodity exports over commodity imports. The explana
tion of this is that by borrowing in the United States, foreign coun
tries are able to buy more from us than they sell to us. Partly
for the same reason there is also some correlation between our total
exports and our exports of long-term capital. The latter correla
tion is, however, also due to the fact that a rapid flow of long-term
capital into foreign countries has often coincided with increasing
business activity throughout the world, which, by increasing the
amount of purchasing power, has tended to stimulate both imports
and exports. Figure 5 illustrates the fact that our exports of farm
products, like those of commodities in general, have been influenced
by our foreign lending.
A M E R IC A N F O R E IG N L E N D IN G FR O M 1914 TO D A T E

In the following discussion the development of American foreign
lending is described in its relation to our exports of farm products
and to the rise of trade barriers in foreign countries.
1.
The mar period {19,1^-20).—Prior to the World War the
United States was, as has already been indicated, a debtor country.
Our exports exceeded our imports by about half a billion dollars
annually, on the average, during the period 1910-14, and by means
o f this excess we obtained funds which were used in part to pay
interest to our creditors. After the outbreak of the war in Europe
in August 1914, however, the position was rapidly changed. Ameri
can securities held abroad, which were principally in the hands of
citizens of Great Britain, were sold in the United States. Thus
Great Britain reimported the capital which had previously been
exported to the United States, in order to finance her own military
12 The decline o f to u rist expenditures has been less m arked.
13A n d in pa rt also throu gh the w ith d raw al by foreign bankers o f fu n d s held on deposit
in A m erican banks.
14 E stim a te s o f net exp ort o f long-term cap ital show n in figs. 4 and 5 are those m ade
by the D epartm en t o f Com m erce, and published in th e an n u al bu lletin s on th e B alance
o f In tern atio n al P a ym en ts of th e U nited S tates.
N o such estim ates w ere m ade before
1 9 1 9 ; those from 1 9 1 9 to 1 9 2 1 are less com plete than those fo r subsequent yea rs and are
th erefo re indicated by a lig h ter line in th e tw o figures.
Im p o rts and exports o f com
m od ities show n in th e ch art include silver a s w ell as m erchandise, and th e figures for
1 9 2 2 and s u b s e q u e n t yea rs are t h e “ ad ju sted ” exports and im p orts as estim ated in the
D ep artm en t o f Com m erce bu lletin s m entioned above.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

activities and those of her allies. So rapidly was capital consumed
in this process that by‘ the time the United States entered the war
in April 1917 we had become a creditor nation. The allies had used
up nearly all of their holdings of American securities and had in addi
tion floated loans in the United States amounting to a billion dollars.

F i g u r e 4.— U n i t e d

s ta tes
Co m m o d it y
Ex p o r t s o f Lo n g

Ex p o r t s a n d
-T erm Cap ita l .

im p o r t s

an d

N et

The funds thus obtained were used largely for the purchase of food
and munitions from the United States, and in 1916 the surplus of our
exports over imports had increased to over three billions.

F i g u r e 5,— u n i t e d s t a t e s E x p o r t s o f f a r m p r o d u c t s , t o t a l C o m m o d i t y
E X P O R T S , AND N E T E X P O R T OF L O N G -T E R M CA PITA L.

During the period in which the United States was at war, and
subsequently till near the end of 1920, loans were made by the United
States Government to various European countries amounting to over
10 billion dollars. These loans made possible a still further increase
in the excess of our exports over our imports. In the year 1919 the
value of total United States exports was actually a little more than

WORLD TRADE BARRIERS IN' RELATION TO AGRICULTURE

twice that of total imports. The increase of our total foreign trade,
both exports and imports, during this period (see fig. 4) was due to
the rise of prices and the stimulation o f business activity which
resulted from the immense war expenditures of our own and foreigp
governments.
The expansion of American agriculture which took place during
the World War was primarily due to the increased European need
for imported farm products resulting from the decline of agricul
tural production in Europe (including Russia) at that time, and to
other causes. But it was largely through borrowing from the United
States that European countries were able to increase their imports
of American farm products. Hence the expansion and prosperity
of American agriculture during the war were connected with the
export of capital at that time.
2. The collapse in 1920.—The cessation of war loans in 1920 was
accompanied by the cessation or sharp reduction of other Government
expenditures connected with the war both in the United States and
other countries. This cessation of expenditures probably precipi
tated the economic collapse of 1920-21, which in several respects was
similar to that of 1929-33 but of much shorter duration and not
nearly so severe. Prices and business activity declined sharply for
several months. Owing, however, to the ravages of the war there
was a great scarcity of capital, which caused investments of Ameri
can capital abroad to be made in considerable volume in 1921 and
1922, in spite of the confused and unstable economic situation. But
in 1922 and 1923 economic conditions recovered much more rapidly
in the United States than in the rest of the world, making foreign
countries a relatively unattractive field for investment. In 1922 our
export of long-term capital was offset to a considerable extent by
large imports of short-term capital.15 In 1923 the movements of
capital both into and out of the United States were almost negligible.
In view of the decline of foreign lending and of the large debt pay
ments due to the United States from foreign countries, the excess
of exports over imports inevitably fell to a very low level. (See fig. 4.)
3. The period of world prosperity (192Jp-29).—By 1924 eco
nomic conditions abroad had improved sufficiently to attract Ameri
can capital. Recovery in Europe was particularly marked after
1924, and European industrial activity in 1925 had approximately
reached the level of 1913. Our export of capital during this period,
however, was not nearly so large as during the World War.
In spite of the change of the United States from a debtor to a
creditor country, the excess of exports over imports during the years
1924-30 was larger, on the average, than during the years immedi
ately preceding the war. This was made possible partly by the
revival of our foreign lending, and partly also by the large expendi
tures of American tourists in foreign countries, as well as other
payments to foreigners, such as immigrant remittances, ocean freight
payments, etc.
35 T h e exp ort o f long-term cap ital includes th e purchase o f foreign secu rities by A m e r i
can in vestors, the repurchase o f A m erican securities previously purchased by foreign ers,
and the tra n sfe r o f fu n d s by A m erican corporations in to foreign cou ntries fo r th e bu ildin g
o f branch factories.
T h e im port o f sh o rt-term cap ital includes the placin g o f deposits in
A m erican banks by foreign ers, the w ith d raw al o f deposits from foreign banks by A m e ri
cans, the m akin g o f sh o rt-term loan s by foreign ers to A m erican s, an d the rep aym en t by
foreigners o f sh o rt-term loan s obtained from A m erican s.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

Meanwhile exports had begun to increase in 1922, and continued
to increase till 1929. The increase was made possible partly by
tourist expenditures, foreign lending, and other payments that
account for the excess of exports over imports, but largely also by the
increase of imports. The latter took place in spite of the raising of
the American tariff by the Emergency Tariff Act of 1921 and the
Tariff Act of 1922. Although the tariff severely restricted imports
of manufactured products, there was a considerable increase in the
imports of nondutiable raw materials, such as rubber, silk, and coffee.
This resulted mainly from the increase of the national income from
1922 to 1929, but partly also from Government restrictions in coun
tries producing some of these raw materials, which temporarily
raised the prices of such products and hence also the value of Amer
ican imports. Thus the effects of the tariff, in conjunction with the
creditor status of the United States, on our total exports were not
acutely felt during this period, owdng to the increase of imports of
nondutiable commodities, of our foreign lending, and of other pay
ments by Americans to foreigners.
It will be seen, however, in figure 5 that the increase of total ex
ports was not accompanied by a sustained increase of the exports of
farm products. World prices of farm products during the period
in question were tending to decline in relation to the prices of other
products. But the failure of the value of agricultural exports to
increase was also due to the decline of the quantity of exports of
grains and animal products. As indicated in the preceding section*
this resulted from the increase of foreign agricultural production not
only in deficit countries, where agriculture was protected by trade
barriers, but also in such surplus countries as Canada, Argentina, and
Australia, where it was not. The fact that agricultural production
expanded more rapidly in the three latter countries than in the
United States during the period in question was probably a conse
quence, in part, of the fact that the United States was a creditor
country, whereas the other countries were debtor nations.
American foreign lending during this period was to have a signif
icant bearing on world economic conditions and on the rise of trade
barriers after 1929. Net imports of private capital by the principal
debtor countries during the years 1926-29 16 were approximately as
follows in millions of dollars:
Europe
Germ any_______________________
H u n gary____ .__________________

2, 783 I P oland__________________________
244 |

201

Other continents
Australia_______________________ ____ 786
Argentina______________________ ____ 533
India____________________________ ____ 401
Canada______________________________ 301

Japan___________________________
South A fric a ___________________
New Zealand___________________

249
164
112

Most of these countries borrowed mainly because they were new
or relatively undeveloped, with insufficient capital of their own to
develop their natural resources. Germany, however, borrowed nearly
16
From W o rld E conom ic Survey, 1 9 3 1 -3 2 , published by the League o f N a tio n s .
fo r 1 9 2 4 and 1 9 2 5 are not a va ilab le fo r all cou ntries included.

F ig u r e s

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

as much as the rest combined for purposes of reconstruction and
reparations payments.
Such was the position of the borrowing countries. The lending
countries were fewer in number, and the principal one was the United
States. Net capital exports of the three principal creditor countries
in the years 1926-29 were as follows in millions of dollars:
United States_________________________________________________________________
United Kingdom-----------------------------------------------------------------------------------------------France17_______________________________________________________________________

2,058
1,402
720

International lending facilitated the expansion of the agriculture
of certain new countries in competition with the United States. It
will be observed, from the figures of capital imports shown above,
that Argentina, Australia, and Canada, the principal agricultural
competitors of the United States, were among the principal borrow
ers. And while the funds which these countries borrowed were to a
considerable extent invested in industry, it is probable that the
expansion of agricultural production was thereby indirectly aided.
During the years preceding 1929, as international debts accumu
lated, their payment became increasingly difficult. Many of the
debtor countries had incurred so large an indebtedness that they
could not, without great difficulty, make the necessary payments of
interest and principal otherwise than by obtaining fresh loans.
Obligations on account of interest and amortization were due regu
larly, and covered long periods of years. But there was no assurance
that new loans could be obtained with any regularity or for any
specified period of years. The debtor countries were therefore liable
at any time to be required to make a drastic and difficult readjust
ment in their balances of trade, involving either a reduction of
imports or an increase of exports.
4.
The crisis of 1929 and the present depression.—The instability
of the Avorld^s economic system began to show its results in 1929,
when stock speculation in the United States and the high interest
rates which accompanied it diverted the flow of American capital
away from foreign investment. American long-term lending to
foreign countries mostly takes the form of flotations of foreign bonds
in the United States. In 1929 it became much more difficult than in
the preceding years to issue bonds and higher interest rates had to
be paid. As a result, foreign lending declined sharply. The prices
of agricultural products and raw materials had already declined
gradually in 1927 and 1928, but in 1929 they began to fall rapidly.
Early in 1930 a partial revival of business confidence took place.
Interest rates became extremely low, and funds began once more to
flow between countries. The restoration of confidence, however, was
far from complete, and the new long-term loans which debtor coun
tries were able to obtain did not provide them with enough purchas
ing power to pay for their usual imports. This fact gave rise to a
considerable movement of short term capital from creditor to debtor
countries. Banks in debtor countries withdrew their deposits from
banks in creditor countries in some cases, and obtained loans or
deposits from them in others. There was a considerable outflow of
short-term capital from the United States in 1930, 1931, and 1932,
17 Includ es on ly 1 9 2 7 -2 9 .

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

which largely explains the fact that the excess of exports over im
ports did not decline as much as the net outflow of long-term capital
during these years. (See fig. 4.)
To the debtor countries the movements of short-term capital in
their favor afforded little relief, and that at a high cost. So long as
their debts were mainly on long term, a stoppage of new loans meant
merely that they would need, sooner or later, to obtain sufficient funds
through their balances of trade for the payment of interest and prin
cipal in specified amounts at regluar intervals. Although this in
itself was difficult enough where the debts were large, there was
added, through short-term debts, a burden of much less calculable
extent, for short-term creditors were likely, whenever financial
troubles developed, to lose confidence ; and in that case all of them
would be likely to attempt to withdraw their credits at the same time.
The fall of business activity and of prices, which appeared for a
short time to have been arrested, started again in the summer of
1930 and gathered speed. Governments all over the world raised
trade barriers in an attempt to protect industries on an import basis
against the decline of world prices and of domestic purchasing
power. Debtor countries, no longer able to pay their debts by
obtaining new loans, were also unable to do so by increasing the value
of their exports, in view of the decline of prices and the rise of trade
barriers. The only alternative therefore was to reduce imports; and
this provided a powerful additional motive for further raising of
trade barriers. But although it may have temporarily eased the
situation of certain debtor countries, the raising of trade barriers
acted as a boomerang, for the stifling of international trade which
resulted from the universal adoption of this procedure materially
aggravated the situation of every country.
Nor were the major increases in trade barriers by any means con
fined to the debtor countries. The American Tariff Act of 1930 con
siderably increased the duties, which were already high, on many
commodities, and by making it more difficult for debtor countries to
pay their debts provided the appearance of a justification for the
raising of tariffs in other countries. Moreover, at the end of 1931
even Great Britain began to depart from the low-tariff policy which
had been pursued in that country for over half a century.
An illustration of the way in which governments were acting at
cross purposes may be found in the case of wheat. In Australia
farmers were exhorted to increase their plantings of wheat in 1930
as a patriotic duty in order to increase their country’s exports and
help to pay its debts. While Australia, a debtor country, was striving
to increase her exports of wheat, France, Czechoslovakia, and
Sweden, all creditor countries, added to their restrictions on wheat
imports in order to protect their farmers against increasing foreign
competition and declining prices. Germany, a debtor country, re
stricted her imports of wheat, partly to make it easier for her to
pay her debts and partly to protect her own farmers. Thus each
country was taking measures which injured other countries, and so
indirectly also injured itself. In this way practically every govern
ment in the world was instrumental in making the depression more
severe.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

In May 1931 the full consequences of short-term lending began to
make themselves felt. The first serious blow to the confidence of
short-term creditors was dealt in that month by the news that ani
important Austrian bank with international connections was insol
vent. The consequent rush of creditors to withdraw their short-term
loans from Austria was a repetition on an international scale of the
phenomena of a run on a country bank. Germany was also involved
in the run. In order to meet this situation both the German and
Austrian Governments took measures to prevent their citizens from
making payments abroad except with the express permission of the
Government. These “ exchange restrictions ” , as they were called,
were soon adopted also by many other countries and have become one
of the principal hindrances to international trade. German bankers
also concluded the famous “ standstill agreement ” with their short
term creditors, in which the latter, realizing that they could not hope
to withdraw their funds, agreed to renew their loans till February
1933. The agreement has twice been extended and is still in effect.
Meanwhile the Bank of England had granted liberal credits to
German and Austrian banks in an attempt to check the run on them.
As a result of the standstill agreement these credits became frozen.
Now a considerable part of the funds which had thus been loaned by
the Bank of England had been obtained by loan from France, and
the French, realizing that their credits had been frozen through a*
freezing of the British credits, started a run on the Bank of England.
The United Kingdom, therefore, was faced with the alternatives of
adopting exchange restrictions similar to those of Germany or of
allowing the pound sterling to depreciate in relation to gold. The
latter alternative was chosen. In September 1931 sterling went off
the gold standard. Since then most of the countries which had not
previously abandoned the gold standard have done so either by
allowing their currencies to depreciate as was done by the United
Kingdom or by adopting exchange restrictions, as was done by
Germany.
The widespread adoption of exchange restrictions which began in
the summer of 1931 has greatly intensified the decline of interna
tional trade. Not only are exchange controls an extremely severe
form of import restriction in themselves,18 but they have also led to.
the intensification of other forms of import restriction, partly
through retaliation, and partly through the efforts of countries which
have had their exports reduced by exchange restrictions in other
countries to protect their balances of international payments.
T H E B A L A N C E OF IN T E R N A T IO N A L P A Y M E N T S O F T H E U N IT E D
T H E P R E S E N T D E P R E SSIO N

S T A T E S D U R IN G

The depression has produced several highly important changes in
the balance of international payments of the United States. Instead
of being a net exporter of long-term capital as before the depression,
the United States has, during the years 1931 and 1932, imported more
capital on long term than it has exported. This import of capital
has consisted in large part of the repayment by foreigners of some
of the capital previously borrowed in the United States. Our im18
F o r a fu rth e r discussion of t h e s e m easures and their effect on in tern a tio n a l trade, see
the section on exchange regulation and currency depreciation in ch. I I I .

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

ports of commodities have diminished greatly in value. This is due
in large measure to the exceptionally great decline in the prices of
those raw materials and tropical products (rubber, silk, coffee, etc.)
which constitute the major part of our imports. Thus foreign coun
tries have lost a very large part of their sources of purchasing power
for American products. This loss of purchasing power has been
offset toi some extent by an export of short-term capital from the
United States, but this must necessarily be temporary.
T a b l e 9 . — The balance of international payments of the United States, 1924-28

(average), 1931 and 1932
[I n m illions o f do llars]

Credits (1924-28) :
Exports of farm products______________________________________________
Other commodity exports-----------------------------------------------------------------------Net interest receipts (including principal on war debts)_____________
Net import of short-term capital------------------------------------------------------------Net export of gold1----------------------------------------------------------------------------------

1, 952
3,158
682
46
38

T o ta l___________________________________________________________________

5, 886

Debits (1924-28) :
Total commodity imports-----------------------------------------------------------------------Net miscellaneous invisible item s2_____________________________________
Net export of long-term capital________________________________________

4, 448
777
649

Total____________________________________________________________________

5, 874

Credits (1931) :
Exports of farm products_______________________________________________
Other commodity exports_______________________________________________
Net interest receipts (including principal on war debts)____________
Net import of long-term capital________________________________________
Net export of gold 1_____________________________________________________

821
1, 660
649
218
166

Total____________________________________________________________________

3, 514

Debits (1931) :
Total commodity imports_______________________________________________
Net miscellaneous invisible items 2-------------------------------------------------------Net export of short-term capital-----------------------------------------------------------

2,197
773
709

Total____________________________________________________________________

3, 679

Credits (1932) :
Exports of farm products_______________________________________________
Other commodity exports_______________________________________________
Net interest receipts (including principal on war debts)____________
Net import of long-term capital________________________________________

662
1, 055
492
217

Total____________________________________________________________________

2, 426

Debits (1932) :
Total commodity imports_______________________________________________
Net miscellaneous invisible item s2_____________________________________
Net export of short-term capital------------------------------------------------------------Net import of gold 1_____________________________________________________

1, 476
608
371
91

Total____________________________________________________________________

2, 546

1 Includ ing earm a rking o f gold and currency m ovem ents.
2 Includes tou rist expenditures, im m igrant rem ittances, freigh t paym ents, governm ental
tra n sa ctio n s other than w ar-debt receipts, charitable and m issio nary contributions, and
other item s.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

An increase in our exports or even their maintenance at the present
level is therefore contingent on an increase of the value of our im
ports, perhaps accompanied by a revival of our foreign long-term
lending. In the long run, however, even long-term lending will
tend to make an increase of the value of imports necessary in order
to avoid a decline of exports. For the longer foreign lending con
tinues, the greater will be the payments on account of interest and
amortization which must be made to the United States; and such
payments can be made only out of the proceeds of the sale of goods
and services to the United States.
Table 9 and figure 6 show the relative magnitude of the principal
items in the balance of our international payments during the period
from 1924 to 1928, and during the years 1931 and 1932. For each of
the three periods included in the figure the bar on the left entitled
“ Credit ” represents payments made by foreigners to Americans,
and that on the right entitled “ Debit ” represents payments made
by persons resident in the United States to foreigners.19
Most of the items in figure 6 are net items, representing the credit
or debit balance of payments of a certain kind. Thus the part of
each credits bar representing interest payments shows the excess of
interest payments made by foreigners to Americans over those made
by Americans to foreigners. Exports and imports of commodities,
however, have been shown as gross items, instead of merely showing
the excess of commodity exports over commodity imports on the
credit side, in order to make it possible to show exports of farm
products as a separate item.
As is natural for a creditor country, the payments other than
capital transactions, interest payments and gold movements show
a balance on the debit side. To distinguish these from the rest, on the
chart they have been shown in black (with white stripes in part).20
Capital and interest payments are shown with black shading on a
white background. The balance in favor of foreigners on the items
shown in black enables them, in part, to pay their interest and other
debt obligations. During the period 1924-28, however, a considerable
part of the balance required by foreigners to pay interest was sup
plied by our net long-term lending. During the depression, since our
net export of long-term capital has been converted into a net im
port,21 the debit, balance of the items shown in the black parts of
the bars have inevitably tended to increase. In terms of imports
and exports of commodities this means that our exports have
declined more rapidly than our imports and the excess of the
is F o reign ers can obtain fun ds w ith w hich to m ake pa ym en ts to A m e rican s on ly by
receiving p a y m en ts (or credits, w hich involve a paym ent, either direct or in d irect) or by
d ra w in g on th eir stocks o f gold.
T h u s i f paym ents m ade by A m e ric a n s to foreigners
exceed p a ym en ts m ade by foreign ers to A m erican s, the balan ce m u st be paid in gold
(a ctu a lly som e v ery sm all am ou n ts are paid in U nited S tates currency w hich foreigners
h a v e in their p o sse ssio n ).
Th erefore the to ta l on both sides, in clud in g paym ents in gold
m ust balance.
In figure 6 an inflow o f gold to the U n ited S ta tes is treated as if it
w ere a com m odity im port.
T h u s in 1 9 3 2 foreigners, in the net, sold gold to the U nited
S ta tes and used th e proceeds to m ake certain p aym ents, the gold im p ort th u s appearing
on the debit side.
20 The item en titled “ m iscellaneou s invisible item s ” con sists m ain lv o f the excess of
exp end itu res by A m erican tou rists abroad over paym ents by foreign tou rists in the U nited
S ta te s, th e excess o f ocean and lake freig h t pa ym en ts to foreign ers, and im m ig r a n ts’
rem ittan ces.
21 I t is clear th a t w h ile exp orts o f com m odities are shown on the credit side (since p a y
m en t fo r such exp orts is m ade to A m e ric a n s) exp orts o f cap ital m ust be shown on the
d e b it side, since they in volve p aym ents (in the form o f lo a n s) to foreign ers

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

latter over the former has diminished. But the change has been post
poned in part by the large export of short-term capital from the
United States.22

CREDIT DEBIT
1924*1928 (AVERAGE)

CREDIT DEBIT
1931

F i g u r e 6.— U n i t e d S t a t e s B a l a n c e o f

CREDIT DEBIT
1932

in t e r n a t io n a l

Pa y m e n t s .

This export of short-term capital suggests the effect of the decline
of American imports on foreign purchasing power for American
products. The decline of United States imports, together with the
22
Th e phrase “ export (or im p ort) o f short-term c a p i t a l ” is here defined as a change
in the net debt o f A m erican banks to foreign ers.
Foreigners have, in fa c t, been m akin g
p a ym en ts to the U n ited S tates by d ra w in g on their deposits in A m erican banks or by
o btain in g ban kers’ loans in the U nited S tates.

WORLD TRADE BARRIERS IK RELATION TO AGRICULTURE

disappearance of American long-term lending, has made it necessary
for foreigners to withdraw their balances in American banks or to
borrow from them in order to pay for American exports. Consumers
in foreign countries have been willing to pay in their own currencies
for a certain quanta of goods imported from the United States, but
foreign bankers have been able to transfer the whole of these pay
ments only by realizing such of their assets as were held in the form
of deposits in American banks or by borrowing from American
banks. This process has forced banks in foreign countries to reduce
their holdings of liquid assets, thus providing an added necessity
for deflationary measures in some countries and an added deprecia
tion of currencies in others. It has also provided a motive for the
imposition of new trade barriers. A result in each case has been a
further reduction of foreign consumers’ ability to buy American
goods.
1 7 9 5 6 3 — 3 3 -------- 4

CHAPTER II
WORLD TRADE BARRIERS DURING THE POST-WAR
PERIOD
Broadly speaking, the situation with respect to world-trade bar
riers during the post-war period has included three major phases.23
The first few years after the cessation of hostilities, up to about the
year 1925, were characterized by severe restrictions on trade surviv
ing from or growing out of the war period. The next few years, up
to 1929, were characterized by a general trend toward tariff stabiliza
tion and a moderation of previous upward tendencies with respect
to trade restriction. The third period, the period since 1929, has
been marked by a new upsurging of restrictions on trade which has
carried them beyond any point ever before attained in modern peace
times. Such, briefly, have been the main trends with respect to trade
barriers as a whole.
In the case of agricultural products, however, the trends have not
always coincided with those in respect to other products. In the
earlier post-war years the restrictions on trade in agricultural prod
ucts were much less severe than were those on industrial products,
indeed were less severe than during the pre-war period; whereas
in recent years they have been the predominant feature in the rapid
rise of new barriers. But this distinction between agricultural and
nonagricultural restriction is one that can easily be overstressed,
inasmuch as all barriers to trade, whether or not directly applicable
to agricultural products, cannot but tend to diminish agricultural
trade. Countries which, on account of trade barriers and reduced
purchasing power in foreign markets, cannot export industrial prod
ucts to other countries obviously cannot be expected to import from
those countries so much in the way of agricultural or other products
as they otherwise would. Hence it is pertinent in the present con
nection to show the course of developments with respect to both
agricultural and nonagricultural products.
THÉ PERIOD FROM 1918 TO 1925

The period from 1918 to 1925 was one of extremely high tariffs
and of severe trade restrictions of other sorts. The spirit of intensi
fied political and economic nationalism aroused by the World War;
the creation of new states aspiring to economic self-sufficiency; the
instability of national currencies in both new and old states and the
desire to stabilize the foreign exchange value of their currencies
through trade control measures designed to maintain favorable or
to reduce unfavorable trade balances; the desire in the older states
2sA m o n g th e variou s sources consulted in preparing th is ch apter, th e a n n u al tariff
review s published by th e D iv ision o f F oreign T a riffs, B ureau o f F o reign and D om estic
C om m erce, U .S . D ep artm en t o f Com m erce, have proved especially help fu l.

WORLD TRADE BARRIERS 11ST RELATION TO AGRICULTURE

to protect reviving industries or to shelter new ones that had sprung
up during the war; the greatly increased needs of the former bel
ligerents for revenue ; and the disposition to raise tariffs in anticipa
tion of a period of post-war tariff bargaining: all were factors
tending to foster a general tightening of restrictions on trade.
The creation of new states out of portions of the former AustroHungarian and Russian Empires, accompanied as it was by high
customs barriers around each state, meant a break-up of the former
territorial division of labor and of former channels of trade in that
area of Europe; and the currency difficulties which these states
and some of the older states encountered, led to a further tightening
of their foreign-trade controls. Requisitions, priority systems, im
port prohibitions and restrictions, price-fixing, government monopo
lies, and yet other measures were employed. Even on exports many
governments maintained restrictions or prohibitions for the purpose
of preventing an excessive outflow, to countries with stronger cur
rencies, of supplies of foodstuffs and raw materials needed at home.
On the side of both imports and exports the greatest hindrance to
trade arose from the disordered state of currencies, due both to their
instability in relation to the contractual basis of trade and to the
artificial trade controls that they engendered. In the new states, and
in the older central European countries as well, direct restrictions
and prohibitions on trade persisted in marked degree well after they
had been relaxed or abandoned in western Europe. It was not until
Germany abolished her import and export licensing regime in 1925
(after having stabilized her currency) that they began to disappear
in this area ; and in eastern Europe many such restrictions continued
to prevail after 1925.
In western Europe and in other parts of the world, both among
former belligerents and among neutrals, most of the war-time and
post-war restrictions and prohibitions had been abolished earlier,
only to be succeeded by increased tariffs, antidumping statutes, and
other regulations interposing formidable obstacles to the resumption
of international trade. Industries that had languished or been se
verely disorganized during the war demanded tariff shelter in order
to foster their post-war revival. Moreover, new industries that had
sprung up or old ones that had been expanded in response to war
needs sought by means of new restrictions on trade to perpetuate the
gains made during war time. In France, Italy, and various other
countries of western Europe the removal of the severe war-time re
strictions on trade was followed by increases in tariff rates through
both legislative and administrative action. Even the United King
dom enacted special measures to check foreign dumping, to restrict
imports from countries with depreciating currencies, to protect
“ key ” industries, and to form the basis of further preferences in the
British market to imports from other parts of the Empire.
In general, however, agricultural products did not share in this
tightening of trade restrictions in the earlier post-war period. Dur
ing the war many of the belligerent countries had removed their pre
viously existing duties on essential foodstuffs and raw materials. For
several years after the close of hostilities the needs of a number of
these countries for imported foodstuffs and raw materials continued
to be so great, their progress toward restoring domestic production

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

to its pre-war dimensions so retarded by the economic and financial
disorganization wrought by the war, that they were compelled to
continue old or to adopt new measures, partially or entirely suspend
ing protective duties on such products. Some countries which ap
plied an automatic system of increases to most of their tariff sched
ules in order to offset foreign currency depreciation refrained from
applying it to foodstuffs, so that the gold equivalent of the duties
on foodstuffs was actually reduced. Moreover, with prices of many
farm products higher than before the war, specific duties that were
left unchanged became lower than pre-war in terms of their ad
valorem equivalent.
Sometimes more positive measures were taken to keep food prices
down. In some of the newer states the policy of fostering industrial
and urban expansion through the intervention of government led to
the application of restrictions on exports of foodstuffs partly or ex
clusively for the purpose of keeping down costs of living for the nonagricultural population. As time passed and conditions became more
stable many of these European countries began to take measures to
support prices of domestic farm products. But in the earlier post
war years the prevailing tendency was otherwise. By and large, in
Europe at least, import restrictions on agricultural products were
less severe than before the war. In the United States, however, the
Emergency Tariff Act of 1921 and the general Tariff Act of 1922 in
cluded large increases in the duties on agricultural products. Insofar
as these duties could be effective, they represented, of course, a tight
ening of the barriers to international trade in agricultural products.
An example of the comparative moderation of the earlier post-war
tariff restrictions on agricultural products is afforded by wheat. A
survey by the United States Department of Commerce in 1924 in
cluded a study of pre-war and post-war tariff duties on American
wheat in 20 leading wheat-importing countries.24 These 20 countries
took 97 percent of our wheat exports in 1910-14. Table 10 gives
a comparative summary of the findings for the two periods.
T a b le

1 0 . — Foreign

tariff levels on United States wheat export,s in leading
wheat-importing countries in 19 IS compared with 1922
1913

Rate category

D u tv-free _
_ ___________ ____ _ _ _ - __________
U p to 15 cents a bushel____ _ ___
_________
_ _ _ _ _ _ __
15 to 35 cents. _ ___________________________________________________
O ver 35 cents... ______ ___ _____________________________________

N u m ber
of cou n
tries

8
5
2
5

1922

Percent of
Percent o f
total
total
N u m ber
U nited
U n ited
of cou n
States
States
tries 1
w heat
w heat
exports
exports

69
3
4
24

10
6
3
2

66
20
13
1

1 Inclu des 21 countries, ow ing to the creation of Poland as a new state after the war.

On the basis of the figures in table 10, it is clear that our wheat
exports were receiving more liberal tariff treatment in foreign coun
tries in 1922 than in 1913. To be sure, only 66 percent of our exports
24

T rad e

U .S . D ep artm en t o f Com m erce Trade In fo rm a tio n B u lletin N o. 23 3 , Survey o f W o r ld
in A g ric u ltu ra l P roducts, no. 5, June 1 9 2 4 .

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

went to free markets in 1922, as compared with 69 in 1913. But of
the remainder, virtually all went to countries levying duties of less
than 35 cents a bushel, nearly two thirds going to countries levying
less than 15 cents, whereas in 1913 the bulk of the exports going to
duty-levying countries paid more than 35 cents a bushel. Of the four
European countries with duties in excess of 35 cents prior to the
war—Germany, Italy, France, and Spain—the first two had continu
ously suspended their duties between 1914 and 1922.
The same study by the Department of Commerce revealed a similar
situation with respect to meat and lard. In 10 of the 12 principal
foreign markets American meat products were receiving in June
1923 at least as favorable treatment as in 1913. Some of these 10
were paying lower duties or none at all. France, Germany, and
Italy, which had imposed relatively high duties on such products
before the war, were admitting most of them free of duty. Of bacon
and ham this was true in respect to all three countries, but only Italy
and Germany admitted lard free and only France and Germany
freely admitted beef and mutton (which are unimportant in our
meat exports). In France and Germany this free admission was a
continuation of the war-time suspension of duties; in Italy it had not
gone into effect until in 1923, as a means of keeping down the cost of
living. In the case of lard, two of the three countries taking the
greater part of our exports—Cuba and the United Kingdom (the
latter granting free entry)—had not increased their rates, and the
third (Germany) had suspended its rate.
THE PERIOD FROM 1925 TO 1929

No precise date can be assigned, but toward the middle twenties
there set in a noticeable trend toward tariff stabilization and modera
tion which may be taken to represent the second phase of the post
war developments in this field. It can hardly be said that this
period from 1925 to 1929 was one of world-wide reduction of trade
barriers, since, generally speaking, barriers still remained high
throughout. But it did witness a slowing down of earlier upward
tendencies; achievement of more stable conditions of trade, including
greater tariff stability; and in some cases actual reduction of barriers.
One manifestation of this trend was the further elimination of
direct restrictions that were still fettering trade. In central and
eastern Europe many of the more drastic restrictions on foreign
trade—direct restrictions which had persisted in this area well after
their abandonment in western Europe—began to be discarded or
mitigated. Late in 1925 Germany, after having stabilized its cur
rency, abolished its import and export licensing regime. In other
countries of central Europe, and in eastern and southeastern Europe,
there was also a considerable moderation of such restrictions, though
by no means a complete abandonment of them.
With respect also to tariff restrictions the obstacles to trade began
to show signs of abatement. With the achievement of greater finan
cial and economic stability in Europe after 1924, there was a marked
trend toward greater tariff stability. Comprehensive tariff revisions,
involving more or less complete overhauling of tariff schedules, be
came less numerous from year to year; and new commercial agree

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

ments were negotiated that tended to give greater assurance against
sudden tariff changes. This greater stability in the tariff rates
tended in itself to reduce the risks and uncertainties that so greatly
hamper trade. Moreover, in connection with such rate changes as
did take place, there was a larger proportion of downward revisions,
and a smaller proportion of upward revisions, than in earlier years.
Much, though not all, of the improvement that took place in the
period 1925-29 from the standpoint of checking previous upward
tendencies in trade restriction, dated from the World Economic Con
ference in the spring of 1927. This conference, technically unofficial
but called in the hope of inducing official action, recognized the in
creasingly widespread dissatisfaction with existing tariff systems,
and recommended a general and a nondiscriminatory reduction of
tariffs, together with their simplification and stabilization. Partly,
this was to be done through independent action by each country—•
each inspired by, or hoping to inspire, the others. Partly, it was to be
done by pairs of countries negotiating reductions on particular ar
ticles and extending the benefits freely to all other countries through
the operation of the most-favored-nation clause. And partly it was
to be achieved through collective agreements for simultaneous
reduction.
Throughout 1927, and for 2 years thereafter, the spirit that led to
the calling of the conference and the deliberations of the conference
itself were reflected in a quickening of international efforts to halt
further increases in world-trade barriers. Nor were these efforts
wholly without avail, however much the ultimate outcome may have
fallen short of original hopes. Indeed, it appeared for a time that
the long-awaited reversal of earlier tendencies might at last be under
way. In part the liberal trend was manifested in achievement of
greater tariff stability, as just noted; in part it was expressed in
the adoption of commercial agreements designed to remove or miti
gate existing restrictions on trade.
A distinct decline in the number of general tariff revisions set in
from 1927. In 1925, and again in 1926, there had been fairly com
prehensive tariff revisions in 16 European countries. In 1927 there
were ten; in 1928, five; and in 1929, two. This slowing down of
general revisions was evidence only of a respite from further in
creases ; it did not indicate an actual lowering of barriers, although
in some cases rates were reduced. What happened, in the main, was
that projects for large tariff increases were revised or abandoned, and
for a time new demands for tariff increases were discouraged.
At the same time there was some progress on the side of bilateral
action. There was a distinct speeding up of bilateral tariff negotia
tions and a wider acceptance of the policy of equality of treatment.
The year 1927 has been referred to as “ the year of commercial
treaties.” There was marked progress in the conclusion of commer
cial treaties tending to give greater stability to tariff rates than
previously, though it still remained true that if any rates were
definitely “ bound ” or “ conventionalized ” , it was for only relatively
short periods as compared with pre-war times. Especially striking
as an indication of the liberal trend was the fact that in these
treaties the unconditional most-favored-nation clause, which had

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

been temporarily abandoned by some European countries after the
war, was reestablished as the guiding principle in the new treaties,
thus tending to eliminate the granting of exclusive concessions by
the treaty countries and to insure equality of treatment to all.
The third approach was to be through multilateral action, and
some progress was likewise made from this side. A number of
multilateral agreements followed in the wake of the World Eco
nomic Conference which, though ultimately falling short of the
hopes which originally inspired them, served nevertheless to indicate
the spirit and trend of the time. Growing immediately out of the
discussions at the Economic Conference was the Convention for the
Abolition of Import and Export Prohibitions and Restrictions, con
cluded at a diplomatic conference in Geneva in November 1927,
whereby some twenty-odd countries (including the United States,
which ultimately signed and ratified the agreement, the principal
European countries, and Japan) undertook “ to abolish within a
period of 6 months from the coming into force of the present con
vention all import and export prohibitions and restrictions and not
thereafter to impose any such prohibitions or restrictions.” The
agreement was weakened, however, by a multitude of exceptions; it
did not include customs duties; and even though it went provision
ally into effect on January 1, 1930, it failed of ratification, and
hence remained inoperative, in certain countries of central and
eastern Europe where such restrictions were most prevalent.25
The effort to deal with the problem of trade barriers through con
certed action was reflected in other activities and agreements. In
March 1928 two multilateral agreements were signed by 17 Euro
pean countries abolishing export restrictions on hides, skins, and
bones, and removing or limiting the export duties on them. These
conventions were especially significant from the standpoint of technic,
in that they represented an attack on the general problem of trade
barriers through separate multilateral agreements confined to specific
commodities. Other efforts were made, under the auspices of the
Economic Section of the League of Nations, to promote multilateral
agreements limiting import or export duties, though without much
result. In 1929, M. Briand, of France, launched his project for a
so-called “ United States of Europe ” , involving the ideal of Euro
pean economic federation, and especially the scaling down of intraEuropean trade barriers.
Meanwhile various schemes had been suggested for all-round hori
zontal reduction of tariffs, for international “ tariff holidays,” etc.
In consonance with the latter idea, 18 European countries, at a
so-called Tariff Truce Conference called by the League of Nations
early in 1930, signed a commercial convention pledging themselves
not to cancel, for 1 year from the date of ratification, any duties
bound by commercial treaty with other participating countries and,
in the case of countries that were not accustomed thus to bind their
rates, undertaking to refrain from increasing their statutory rates
for 1 year. Even this very limited agreement failed of ratification
by a sufficient number of countries, and it has never gone into effect.
25
I t is now in force in on ly 4 countries : D enm ark, Japan, N orw ay, and the N etherlan ds.
A ll but these four, p lus the U nited States, G reat B rita in , and P o rtu g a l, w ith drew on Jan .
1, 1 9 3 1 ; the U nited S ta te s and G reat B ritain , on June 30, 1 933 .

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

THE PERIOD SINCE 1929

The Tariff Truce Conference (technically, the Conference for
Concerted Economic Action), though held in 1930, represented a
continuation of the earlier efforts to check the rise of trade barriers
and hence is mentioned along with the events of preceding years.
Meanwhile a new upward trend had begun—a trend that was to
carry these barriers to the unprecedented level to which they have
now attained. But this time it was agriculture that assumed the
lead, whereas in the earlier post-war years it had been other indus
try. Even before the World Economic Conference, and continuing
throughout the period following the conference when the forces
making for higher or lower tariff policies appeared for a time to
be evenly balanced, a trend toward agricultural protectionism had
set in—a trend that needed only the impetus of collapsing prices
in 1929 to carry it to the extreme lengths to which it has since gone.
It is necessary for the moment, therefore, to go back to the period
preceding.
So long as there had been an internal scarcity of foodstuffs in post
war Europe the failure to restrict imports of agricultural products
while new restrictions were being imposed on other products was not
a source of great anxiety to European farmers. In spite of the
unequal tariff treatment accorded them, farmers were able to secure
relatively satisfactory prices. But with the adoption of the new
German tariff law in 1925, which reimposed high duties on food
imports, a new trend toward agricultural protectionism set in. Im
pelled partly by the desire to protect its farmers and partly by the
need of restricting imports in order to attain a favorable trade bal
ance for making external payments on its foreign reparations and
debt accounts, Germany continued, through partial tariff revisions, to
tighten its import restrictions on agricultural products during the
next 4 years. Meanwhile, other European countries began tightening
theirs. In 1926, and again in 1927, France made general tariff re
visions which included marked increases on agricultural items. In
Italy no general upward revision took place; but in 1925 a duty was
reimposed on wheat, and this was further increased by subsequent
revisions. In other countries there were likewise tariff increases on
agricultural products.
This tendency toward increasing agricultural protectionism in
Europe, to repeat, was already under way before 1929. But from
the middle of 1929 any further doubt as to whether the forces making
for a further rise of world-trade barriers would triumph over those
working in the opposite direction was banished by the steady deep
ening of the depression, and in particular the rapid descent of prices
of raw materials and foodstuffs. From that time restrictions on
trade, as well as other forms of intervention, began to multiply at a
rapid rate. Countries that had been endeavoring to protect their
domestic agriculture by tariff and other import restrictions hastened
to tighten these barriers as world prices of competing agricultural
staples declined. As this occurred the position of the exporting
countries became more difficult. Especially was this true of the
nearby agricultural states of eastern and southeastern Europe. Con
fronted by increasingly severe competition from overseas countries

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

and from Russia, and also by the gradual closing of their nearby
markets, these countries were compelled to see their unsalable sur
pluses of cereals mount to alarming proportions. This, in turn, led
to the adoption, one by one, of a series of artificial schemes in aid of
exports which have occupied the foreground of developments in
those areas since that time.
Meanwhile, especially among the so-called “ debtor countries ” ,
there was a marked tendency to tighten import restrictions in the
hope of providing favorable or active trade balances from which
heavy overseas financial commitments could be met. As the depres
sion deepened, the difficulty of making international payments be
came constantly greater. The result was an ever-increasing scale of
government intervention either to restrict imports or to aid exports,
or both. This was still further accentuated in many countries by new
tariff increases to check declining government revenues and to aid
in balancing national budgets. Once under way, this regime of in
tervention—of restriction and counter-restriction, aid and counteraid—acquired unprecedented proportions. Yet its only result, so far
as the general world situation was concerned, was to deepen the
world decline; hence the whole process became cumulative. Finally,
in the summer of 1931 came the financial collapse in Europe and in
its train the application throughout Europe, as well as in other
parts of the world, of a network of arbitrary controls over foreign
trade on a scale unparalleled in modern peace time.
Such, in brief, was the broad trend of events from 1929 to the
present time. Before taking up in detail in succeeding chapters the
nature of the measures now in effect, it remains to point out some
of the concrete manifestations of this recent trend.
Throughout 1930 the renewed upward trend in trade barriers and
other forms of trade control which had gotten under way a year
earlier, manifested itself in a rapid tightening of import restrictions
and in widespread adoption of measures designed to aid exports,
with agriculture playing the leading role in both instances. On
the side of import restrictions the tightening of barriers took the
form partly of tariff increases and partly of more drastic forms of
restriction. In 1930 every country of continental Europe, except
two, made partial or comprehensive tariff revisions, predominantly
upward. Six of these countries made general revisions, of which
three were predominantly downward; and some of the selective re
visions were also downward. But considering the revisions as a
whole, the trend was upward. Especially prominent were the re
visions of the agricultural schedules. In only about half the coun
tries where tariffs were increased were changes effected in the rates
on various groups of manufactured products; whereas in all but 5 of
the 24 countries making tariff changes, agricultural products played
a prominent part. Most of the grain-importing countries increased
their duties on wheat and flour at least once during the year.
More striking, however, was the rapid adoption of more drastic
forms of restriction. Already under way prior to 1930, the trend
toward agrarian protectionism in the food-importing countries was
greatly accelerated by resort to direct quantitative control of
imports. Various countries adopted, or continued from the pre
ceding year, milling regulations requiring the admixture of stipu

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

lated minimum percentages of domestic wheat in the manufacture
of flour for domestic use. By the end of 1930 five countries on the
Continent had such regulations. This same general principle was
extended in some instances to other products. To the two countries
that already had import licensing systems for cereals, a third was
added. Several countries maintained government monopolies of
trade in one or more grains. And in some countries authority was
granted to administrative officials to make flexible adjustments of
the duties on cereals and other foods as circumstances might require.
In other parts of the world there was likewise a tightening of im
port restrictions throughout 1930. In the British Dominions—no
tably in Canada and Australia—drastic upward tariff revisions oc
curred, in some cases reinforced by restrictive customs regulations
and licensing controls, with such motives as protectionism, the need
for balancing international payments and protecting the exchange
value of currencies, and the need for revenue, all playing varying
parts. In Latin America, revenue needs and the desire to support
falling currencies were the chief motives for many general or partial
upward revisions. In the Orient revenue needs were chiefly respon
sible for raises in rates. The tariff increases in these various nonEuropean areas included many on agricultural products; but since
many of the countries were surplus areas in respect to agricultural
production, the increases on agricultural products, though often
individually significant, were on the whole less important in their
effects than were those that had been adopted in the food-importing
countries in Europe.
Meanwhile the low level to which agricultural prices had fallen
led to new efforts on the part of various exporting countries to
bring relief to their distressed farming populations through govern
ment intervention. In the United States the stabilization operations
of the Federal Farm Board got definitely under way. In Canada
the provincial governments, and later the Dominion Government,
were compelled to come to the financial assistance of the provincial
wheat pools in the marketing of the 1929-30 and 1930-31 wheat
crops. Among the chief sugar-exporting countries negotiations for
an accord to restrict sugar exports with a view to bolstering world
prices were initiated, culminating in the so-called “ Chadbourne
Agreement ” in the spring of 1931. In several of the Danubian
countries new and striking measures were launched for the relief of
their wheat growers. In Hungary and Yugoslavia schemes were
inaugurated whereby the growers were accorded prices above the
world level (in the case of Hungary, the equivalent of higher prices,
in the form of coupons redeemable in tax credits and cash), the bur
den being assessed upon domestic taxpayers and domestic consumers
of flour. From that time, also, there developed a program of con
certed economic action on the part of the Danubian countries (Hun
gary, Rumania, Yugoslavia, and Bulgaria), together with Poland—
the group being commonly referred to as the “ eastern European
agricultural bloc.” The central feature of this program was the
development of a concerted policy for the conclusion of preferential
tariff agreements with western European countries for the purpose
of securing better export outlets for their grain and other surplus
agricultural products.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

The trends that had been under way during 1930 continued
throughout the early part of 1931, and after the middle of the year
were greatly intensified by the world financial crisis that had set in
early in the summer. As the world depression continued to deepen,
strictly protectionist motives for further tightening of trade re
strictions were increasingly overshadowed by financial and fiscal
motives. Even before the crisis broke there had been some tendency
in this direction. With their trade, both internal and external,
rapidly falling off and their entire economic life in the grip of de
pression, all countries were finding it increasingly difficult to secure
adequate revenues to balance their budgets, and most of them were
confronted with the additional problem of checking adverse trade
balances with a view to protecting their currencies and their general
financial solvency.
After the middle of 1931 these latter considerations became wholly
decisive in connection with the measures taken by most countries.
As country after country went off the gold standard and currencies
depreciated, the safeguarding of gold reserves from further inroads
by reason of adverse balances in its international accounts became the
dominant concern of each. In the effort to promote more favorable
trade balances and to conserve the exchange parities of their local
currencies, such countries might have sought either to encourage their
exports or discourage their imports. But since each country could
exert its sovereign powers more effectively to keep out imports than
to compel others that were equally anxious to keep out imports to take
its exports, the chief result in fact was a rapidly cumulative system of
import restriction. From the middle of 1931 onward a period set in,
and still continues, during which a vast proportion of the inter
national trade of the world has been literally wiped out of existence.
Increases in tariff rates have been an important part, though not
the most striking feature, of this drastic tightening of restrictions.
Wherever the desire to increase government revenues by increased
levies on imports has been an important consideration, the new re
strictions have necessarily taken the form of duties or other import
charges, rather than of downright exclusion of goods. In many of
the Latin American countries, in certain European countries, and
in some of the British Empire countries (notably New Zealand and
British India) this has been the chief factor responsible for increased
rates. Sometimes the increases have taken the form of straight hori
zontal advances, as in Italy, Holland, New Zealand, British India,
and other areas. Moreover, many countries have levied or increased
other charges on imports (general sales taxes, luxury taxes, excise
taxes, etc.), as for example the sharp advances in the Australian sales
tax and primage duties on most imports. But protectionism has also
been an incentive to many of the increases. In some of the Latin
American countries it has played an important part. In Canada
and South Africa it appears to have been the chief motive for partial
upward revisions. In the United Kingdom, where it was strongly
reinforced by the desire to check the decline of British exchange, it
led to the abandonment of “ free trade,” late in 1931, by the very
country which for so many years had clung steadfastly to that policy
in a world in which protectionism had become almost universal.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

The most striking development since the summer of 1931, however,,
has been the widespread application of more drastic forms of control.
Devices that had been used to control trade during and immediately
after the war were revived on all sides, and new ones invented. By
the end of 1931 some 10 European countries had begun to apply
licensing systems to selected imports. Similarly, import quota sys
tems were revived—or further expanded—in many countries: in
Czechoslovakia, France, Italy, Latvia, Netherlands, Turkey, Poland,
and others. Of particular significance to agriculture was the further
extension and tightening of the system of milling and mixing regula
tions whereby consumption of domestic wheat and other farm prod
ucts was enhanced, and imports indirectly reduced, by requiring the
admixture of fixed minimum percentages of the domestically grown
product. Complete prohibitions on some classes of imports and
establishment of importing monopolies in some countries (as in
Estonia and Sweden) served still further to tighten the system of
restriction. But perhaps the most striking and important of all such
measures was the establishment of centralized control of exchange on
the part of the governments of a large number of the countries whose
currencies were depreciating. By limiting and regulating the supply
of foreign exchange available to persons wishing to make foreign
payments it was sought to check the flight of capital and to conserve
the exchange resources of each country for the most essential national
requirements.'26 Throughout 1932 and into the present year this
variegated system of drastic controls over imports was, on the whole,
even further intensified.
Meanwhile there was a further intensification of effort on the part
of exporting countries to find outlets for their surpluses. In Canada
and Australia production bounties were paid on wheat. In Chile
and South Africa more or less extensive systems of export bounties
were established (in South Africa to offset the relative disadvantages
of remaining on the gold standard, while many of its competitors
in export trade were on a depreciated-currency basis). Among the
Danubian countries, Bulgaria and Rumania followed the earlier ex
ample of Hungary and Yugoslavia by setting up schemes for aiding
their domestic wheat growers through what was tantamount to ex
port dumping, and all the Danubian countries continued to press
their program of negotiation of preferential tariff treaties to facili
tate exports of grain and other products, though without marked
success. In Rome in March 1931, and in London in May, interna
tional wheat conferences were held at which it was sought, unsuc
cessfully, to ease the pressure of world surpluses upon international
markets. In August 1932, at the Ottawa conference, the British
Dominions succeeded in obtaining a wide range of preferences in the
United Kingdom for their more important agricultural exports in
return for the widening of their existing preferences to the mother
country. By and large this represented not only an increase in tariff
discriminations against the products of countries outside the Empire*
but since the widening of preferences took the form more largely of
a raising of the barriers against foreign countries than of a lowering
26
A s to th e m ann er in w hich the system o f exchange control has been applied and it s
effects on in tern ation al trade, see ch. I I I .

WORLD TRADE BARRIERS 11ST RELATION TO AGRICULTURE

of intraimperial barriers, it represented also an increase in worldtrade barriers.
Thus at the present time world trade in agricultural and other
products is severely hampered, much of it wiped out, by a con
juncture of financial and of other economic developments in which
trade barriers have played a very important part. To the general
collapse of purchasing power has been added, through trade barriers,
increasing incapacity on the part of exporting countries to obtain
access to whatever potential markets for their products still remain;
and this, in turn, has further reduced the purchasing power of all.

PART II
TYPES AND POLICIES OF INTERVENTION
AFFECTING AGRICULTURE

CHAPTER III
IMPORT RESTRICTIONS
The present chapter, together with chapters IV and V, contains a
description of the principal types of government measures affecting
prices and production of agricultural commodities in the world today,
together with an analysis of the consequences which tend to result
from their application. For purposes of description, the various
measures have been divided into three main classes, as follows: (1)
those affecting imports, which are discussed in the present chapter;
(2) those affecting exports, described in chapter I V ; and (3) those
which affect production otherwise than through regulation of im
ports or exports, described in chapter Y.
Of these three classes, import restrictions have been most common
and have done most to influence international trade in agricultural
products. The recovery and increase of European agricultural pro
duction since the World War have been due to import restrictions in
some considerable measure. Had it not been for such restrictions in
European countries, the geographical distribution of world agricul
tural production would probably be materially different today.
Moreover, the trend of events during the present world depression
has been profoundly influenced by the widespread and unprecedented
increase in trade barriers which has taken place since 1929. Largely
as a result, international trade has decreased considerably more even
than world production. Industries on an export basis, by and large,
have suffered much more than industries on an import basis in prac
tically every country, even though the latter have been far from
immune.
CAUSES AND EFFECTS OF EXISTING TRADE BARRIERS

The world’s international trade in farm products consists, in very
large part, of the movement of commodities to the agricultural deficit
countries of Europe. This is particularly true of those products of
the type of which the United States is an exporter. At the same
time practically all European countries impose severe restrictions on
imports of agricultural products.
The motives for these restrictions are various, but undoubtedly the
most important of them is a desire to protect domestic agriculture.
Because of the development of agriculture in countries outside of
Europe during the past several decades, European farmers have
been faced with increasingly severe competition. In more recent
years various technical improvements in agriculture have further
intensified this competition. The larger nations of continental
Europe have for many years adhered to the policy of maintaining or
increasing their agricultural populations. Such policies are sup1 7 9 5 6 3 — 33 -------- 5

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

ported by a conviction that a substantial number of persons engaged
in farming constitutes a valuable and even necessary element in the
national life of the country. This view is based partly on senti
mental grounds and partly on political and military considerations.
A class of prosperous farmers is regarded as a bulwark against revo
lutionary tendencies and the growth of a propertyless class in the
cities. The political power of the agricultural interests is also a fac
tor of the greatest importance, especially where, as in the case of
Germany, these interests are represented by a well-educated class of
large landowners.
The rapid decline of prices which has taken place since the onset
of the depression has given added strength to the drive for agricul
tural protectionism. Import restrictions have been imposed with
increasing severity not only in countries where such measures were
formerly of importance, but also in those countries that had previ
ously made little use of them. Great Britain, after pursuing a policy
of free trade in agricultural products for over three quarters of a
century, adopted a policy of protection in 1931 and 1932. The
change, which was precipitated by the financial and political crisis
of 1931, was also influenced by the steady decline of farm population,
accompanied by a growing volume of unemployment in industry.
Another motive for the present import restrictions on agricultural
products is a desire for a “ favorable ” balance of trade, or a surplus
of exports over imports. This is partly due to the traditional fallacy
that the prosperity of a country is necessarily dependent upon its
having a favorable balance of trade, but partly also to more
rational considerations arising from the fact that debtor countries
must have a surplus of exports over imports to enable them to pay
their debts. Almost every country has used import restrictions as a
means of protecting its balance of trade. The choice of this method
is influenced at the present time by the extreme difficulty of increas
ing exports in the face of high and increasing trade barriers and
decreasing purchasing power in other countries. Since the financial
crisis of 1931 many countries have been making desperate efforts to
protect their currencies from depreciation through control of their
trade balances. This has given rise to the exchange restrictions de
scribed later, and has also contributed to the intensification of other
forms of trade barriers.
A third motive of considerable importance is the desire for eco
nomic self-sufficiency, which is often a result of the aim to secure an
adequate food supply in time of war. During the World War most,
if not all, of the European countries experienced either an actual
shortage of foodstuffs or a considerable difficulty in obtaining ade
quate supplies. Among those which suffered an actual shortage were
several neutral nations.1 The desire for economic self-sufficiency,
however, is not based entirely on a rational consideration of what
might happen in time of Avar. Self-sufficiency is often sought as an
aim in itself—in fact, this is one of the principal manifestations of
extreme nationalism. In some countries it is an important political
slogan.
1
T h e th orough going m easures o f governm en t assistan ce to grain g row in g w hich have
been pursued in Sw itzerland and N orw ay since th e end o f the W o rld W a r are in p a rt a
direct consequence o f th e difficulties experienced in th ose countries w hile th e w ar w as in
progress.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

Certain European countries levy import duties on agricultural
products for revenue purposes. Such duties apply mainly to tropical
or semitropical products, such as tea and coffee, or are accompanied
by excise duties on the domestic production of the commodity in
question. Most of the duties imposed on products of American
origin, with some exceptions, as in the case of tobacco, are motivated
by other aims.
Finally, trade barriers in some cases are motivated by the desire
to retaliate against barriers imposed by other countries, or are used
as a weapon in, a political dispute. An illustration may be found
in the duties imposed by the United Kingdom on agricultural prod
ucts imported from the Irish Free State. Governments are particu
larly likely to retaliate against dumping by other countries.2 The
tariff laws of certain countries authorize the Government to impose
by administrative order special duties against goods which are being
dumped by foreign countries. Such clauses are contained in the
tariff laws of various countries, including the United States, Canada,
Australia, and certain European countries.
The direct economic effects of import restrictions are well known
and fairly simple. In the country which imposes the restriction the
price of the commodity affected tends to be raised, consumption to
be reduced, and production increased; imports are reduced by the
amount by which consumption is reduced plus the amount by which
production is increased. The effect in other countries is the oppo
site; price tends to be reduced, consumption increased, production
reduced, and the exports of exporting countries are also reduced.
The imports of importing countries other than the one which imposes
the restriction tend to be increased as a result of the tendency to
reduce the world price.
Whether the domestic price is raised more or less than the world
price is reduced, and to what extent, depends on various factors.
Perhaps the most important of these is whether the country in ques
tion produces and consumes a large or small part of the world supply
of the commodity. A small country, producing and consuming little,
will not greatly affect the world price by imposing either an import
duty or any other form of import restriction, since the increased
production and decreased consumption in that country will add
little to the supplies available to the rest of the world. A large
country, on the other hand, or a large number of small countries,
may seriously affect the world price of a commodity by restricting
imports. The effect of an import duty on price, both world and
domestic, also depends on the readiness with which production and
consumption respond to price change.
In addition to the direct effects of trade barriers on prices, exports,
production, and consumption of the commodities to which they are
applied, the indirect effects on general economic conditions are ex
tremely important. When a country reduces its imports by trade
barriers its exports, as a rule, suffer also. For the ability of other
nations to purchase commodities from that country is reduced by
the reduction of their exports to it. At the same time trade barriers,
by raising the prices of imported goods, tend to increase costs of
2
A discussion o f export dum ping o f agricu ltu ral products is con tain ed in the fo llo w in g
ch apter.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

living and of production generally, and so to handicap the exporting
industries.
Moreover, the raising of trade barriers in some countries is likely
to induce other countries to take similar action. During the last
few years trade barriers have spread from one country to another like
an epidemic. In the first instance this has been due to the decline of
prices, but the raising of trade barriers has in turn accentuated the
decline for various reasons. When several countries raise a barrier
against the imports of a commodity, it reduces the world price and
so is likely to encourage other countries importing the same com
modity to raise similar barriers. Moreover, many countries, the
value of their exports being curtailed partly by the decline of the
world price level and partly by trade barriers, have considered it
necessary to reduce their imports also by trade barriers in order to
maintain a favorable trade balance and protect their currencies from
depreciation. Retaliation has also been responsible in part for the
spread of barriers from country to country.
METHODS EMPLOYED IN RESTRICTING IMPORTS

The principal methods employed in restricting imports are i l )
tariff duties, (2) mixing and linked-purchasing regulations, .(3)
quotas or contingents, (4) licensing and similar measures, (5) im
port monopolies, (6) sanitary restrictions, and (7) exchange regu
lation and currency depreciation.
1.
Tariff duties.—Before the World War and during the years of
prosperity preceding 1930 tariff duties were the principal type of
import restriction in all countries that pursued a protectionist policy.
Recently other methods have become at least equally important. This
does not mean, however, that tariff duties have not become more
prevalent and more severe. On the contrary, international trade in
farm products is, generally speaking, affected by higher tariffs in a
larger number of countries than at any previous time in the world’s
history. Import duties on American exports of farm products are
so numerous that it is scarcely worth while to give any particular
examples. They directly and materially affect practically every
product except cotton. In many cases the duties imposed are higher
than the prices, in the country of origin, of the commodities on
which they are imposed.
A tariff duty is an indirect means of restricting imports. Instead
of imposing any legal limitation on the quantity of the commodity
in question that can be imported, it simply places a tax on the im
ports. Protective duties in many of the countries which are net
importers of agricultural commodities are usually made high enough
to raise the domestic price very materially, with the result that pro
duction is increased, consumption is decreased, and imports are sub
stantially reduced.
Import duties do not in most cases, however, render domestic pro
ducers immune to a decline of the price received by them as a result
of a decline of the world price of the same commodity. Most of
the duties on agricultural products are, in practically all countries,
specific duties; that is to say, a fixed amount is charged per ton,
bushel, pound, or other unit of each commodity, regardless of flue

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

tuations in the value of the unit. When the general price level falls,
and the amount of the duty remains the same in currency, its value
in goods is increased. This intensifies the burden on producers in
the exporting countries. But since a fixed duty does not prevent
the price in the protected country from varying in response to major
changes in the world price,3 the price paid to the domestic producer
will usually decline when the world price declines unless the duty
is raised. Consequently, when prices fall, protected industries are
likely to demand a higher rate of duty to offset the fall in the prices
of their products; and the tendency of governments has been to
comply with such demands.4 Consequently those who produce com
modities for the world market have been hit by increased duties (and
also by many new duties) at a time when even the old rates, where
they are specific, would have imposed an increased burden upon
them.
In a few cases import duties are determined in such a way that
they automatically increase when the world price of the commodity
affected decreases, and decrease when the world price increases. Such
duties, known as sliding-scale duties, are intended to stabilize the
domestic price by offsetting the effects of changes in the world price,
to protect producers against a decline of the import price, and con
sumers against a rise.5 In addition to such duties, there are instances
in which the Government is directed by law to change duties in such
a way as to keep domestic prices as near as possible to a constant
level. This is the case, for instance, with the duties on cereals in
Germany.
It is perhaps surprising that the rapid decline of prices during the
last 3y2 years has not given rise to a larger number of sliding-scale
duties, for the number and importance of such duties existing at the
present time is not great. In nearly all cases in which governments
have used means of restriction other than that of a fixed specific or
ad valorem duty they have resorted to more direct methods of restric
tion. These methods, as we shall indicate, have the effect of partly
insulating the domestic market from changes of world price.
2.
Mixing and linked-purchasing regulations.—One of the methods
of restricting imports which has become fairly prevalent since 1929
is that of limiting imports of a commodity to a certain percentage
of the domestic consumption. Sometimes two commodities capable
of serving the same purpose are linked together in connection with
such a restriction.- Some of the measures in this group provide that
the domestic and foreign product shall be mixed in specified propor
tions; others merely require the purchaser of the imported product
to purchase a certain quota of the domestic product also. The term
“ linked purchasing 55 is herein applied to the latter procedure.
3 In som e cases a ta riff even tends to increase price fluctuation s in the protected
country.
In years o f relative shortage o f supplies in the im p ortin g cou ntry and w hen
con ditions are therefore especially favorable to im portation , the ta riff w ill tend to raise
the dom estic price above the w orld price by a w ider m argin th a n in yea rs o f relatively
large dom estic supplies.
4 E ven m ore lik ely is a demand to be m ade for increase o f the du ty w hen the la tter is
charged on an ad valore m b a s i s ; th a t is to say, w hen the du ty charged is a certain
percentage o f th e value o f the com m odity im ported.
F o r then the am ou n t o f the duty in
m oney is reduced when the price is reduced.
5 A n exam ple is the du ty on w h ea t in N ew Zealand.
T h is du ty is 8 pence per bushel
w hen the value o f th e w heat at the port o f export in th e cou ntry o f origin is 5 shillin gs ;
but for every pennyi by w hich this v alu e exceeds 5 shillin gs the du ty is reduced by a
penny, and for every penny by w hich it is less, a penny is added to the duty.
Slidingscale duties on w heat are in effect also in South A fric a , E g y p t, an d Chile.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

These methods of import restriction have received their most
widespread application in the case of wheat. They now constitute
the most important of the various restrictions affecting that com
modity. Such measures are in force not only in France, Germany,
and Italy, the largest wheat-importing countries of continental
Europe, but also in a number of other countries, including Sweden,
Holland, and Greece. In these countries millers are required each
month (or other short period) to include in their grist an amount of
domestic wheat not less than a certain proportion of the total amount
purchased. The proportion is often very high. Measures of this
kind applied to wheat and rye are known as “ milling regulations.”6
Another agricultural product which is affected in some countries
by similar regulations is butter. In Holland all margarine intended
for domestic consumption, with certain exceptions, must contain 25
percent of butter. This, in effect, is an import restriction designed
to assist an industry which is on an export basis by restricting
imports of a rival product.7 In Germany an arrangement has
recently been made by which manufacturers of margarine must in
clude domestic butter and lard in their product.
Alcohol is another example. The laws of certain countries
provide for the use of alcohol as a motor fuel. In Germany
and Czechoslovakia an artificial market is thus created for potatoes,
which are used in those countries as a raw material for the making
of alcohol. In Germany it is provided that importers and manufac
turers of motor fuel must purchase a certain quota of alcohol. In
Czechoslovakia all motor fuel must contain 10 percent of alcohol.
Another example of linked purchases is that of feedstuffs in Ger
many. The German Government permits barley to be imported at
a reduced rate of duty where the importer at the same time pur
chases certain quantities of domestic feedstuffs, such as potato flakes
and rye.
The method of linked purchasing or mixing regulation is employed
mostly in cases where the imported and the domestic products are
only partly interchangeable, and where a consumer’s preference must
be overcome if the consumption of the domestic product is to be
increased. Wheat is no exception to this rule. The wheat produced
in western and central Europe is of the “ soft ” variety, and differs
very considerably in quality from the “ hard 55 wheat imported from
North America and Russia. Millers in Europe, as in other parts of
the world, consider it necessary to include at least a certain propor
tion of hard wheat in their grist in order to obtain flour which will
make the quality of bread that consumers prefer. In Europe millers
when necessary pay high premiums for hard wheats. Under such
conditions a tariff duty, unless it is excessively high, is a much less
effective weapon of protection than when the two products are more
readily interchangeable.8
One important consideration which appears to have influenced
European governments in adopting milling regulation is the degree
of control which it enables them to exercise upon price. Where the
6 T h e com plicated system o f regu lation s affecting purchases o f w h eat by m illers in
G erm an y is described in the appendix.
7 T h is m easure is p a rt o f a broader schem e described in the appendix.
8 A special m otive fo r the adoption of the “ lin ked -sales ” m ethod applied to feed
stuffs in G erm any has been the desire to m itig a te the rigor o f protection accorded to
cereals.
(S ee th e discussion o f G erm an A g ra ria n P o licy in ch. V I .)

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

domestic and foreign products differ in quality, and particularly in
the case of wheat, the effectiveness of a duty is likely to vary ac
cording to the amounts of the domestic product available for con
sumption, in a way which is hard to calculate in advance. Milling
regulation allows the price of domestic wheat to be controlled with
greater accuracy. The prescribed percentages are subject to frequent
alteration by administrative order, and the proportion of domestic
wheat which must be used is made to vary in accordance with changes
in the available domestic supplies. In years of a large domestic crop
it is as a rule made higher than in years of a small crop; and it is
nearly always larger at the beginning of the marketing season when
the newly harvested crop is moving to market in large volume than
toward the end of the season when most of the crop has been sold.
In this way the government is able greatly to modify seasonal fluctu
ations of price as well as fluctuations from season to season.
The gains to producers in the wheat-importing countries resulting
from milling regulations tend to be accompanied by corresponding
losses to producers in the exporting countries. While the former
obtain an assured market for their product at relatively stable prices
(so long as their production is not in excess of domestic consumption
requirements), and are protected against seasonal price fluctuations,
the producers in the exporting countries are made to bear an even
greater share than before of the burden of irregular and excessive
production. When surplus stocks accumulate, owing to an unusually
large world wheat crop, these stocks must be held outside of the
importing countries, since the latter will import only enough for
their immediate requirements; and the tendency of a fall in the
world price resulting from a large world crop to increase consump
tion in the importing countries is much less than it would be if
producers in those countries were protected only by a fixed tariff
duty. Moreover, since the importing countries utilize the greater
part of their own production in the early part of the season in order
to avoid seasonal fluctuations of price, the exporting countries must
hold their crops till toward the end of the season, a factor which
probably tends to intensify the seasonal fluctuations of their prices.
An important objection to mixing and linked-purchasing regula
tions—and this applies also to quota regulations—is that these meas
ures not only; tend to reduce consumption in the countries where
they are applied, by raising prices paid by consumers, but they also
may deprive producers in the exporting countries of benefits which
would otherwise result from such advantages of quality as their
products may possess. Under a tariff, consumers may use an im
ported product in preference to the corresponding domestic product
if they are willing and able to pay the higher price; but quotas,
mixing regulations, and the like, set a definite limit to the amount
that may be obtained, thus restricting the consumer’s choice of
qualities and varieties.
3.
Quotas or contingents.—Under the quota system, imports of
the commodities affected are not permitted to exceed a certain
maximum amount in each month, quarter, or other period. These
maximum amounts are called “ quotas ” or “ contingents.” The
result of the imposition of a quota is that, imports being limited
to a specified quantity, consumers must fill the remainder of their

WORLD TRADE BARRIERS

RELATION TO AGRICULTURE

requirements from domestic sources. The domestic producer is thus
assured a broader and more stable market for his produce. The
foreign producer is correspondingly injured.
At the outset of the present depression this type of restriction was
rather uncommon. Since that time, and particularly since the finan
cial crisis of 1931, it has become increasingly prevalent. In some
countries, such as France, Poland, Switzerland, and Holland, it is
applied to a wide range of commodities. In Great Britain it has
recently been applied to meats imported from sources outside of the
British Empire. In Germany a variant of the system hats been used
to some extent, by which limited quantities of certain products are
admitted at relatively moderate rates of duty while prohibitive rates
are imposed on any excess above this amount. An example of this
is the butter contingent.9
The motives for the choice of the quota method of restriction are
various. It appears to be well adapted to the reduction of imports
for the purpose of maintaining a favorable balance of trade, since it
allows the quantity of imports to be subjected to an exact control.
That is probably one reason for its comparatively widespread ap
plication at the present time. Perhaps a more important reason,
however, is the fact that quotas have been used to evade treaty obli
gations by which countries have bound themselves not to raise their
import duties above certain specified rates. Quotas have also been
used to discriminate between countries where the imposition of dis
criminatory duties would be contrary to treaty obligations; for where
the quota system is used it is usually applied not only to the total
imports of a commodity, but also to the imports from each principal
country of origin.10
4.
Import licensing and similar measures.—Under import licensing
the commodity affected can be imported only if the importer has Ob
tained a license to do so from the Government. Import licensing is
sometimes used to secure the enforcement of quotas, milling regula
tions, and the like. The British quotas on beef and mutton, for
instance, are enforced in the following manner. The commodities
affected can be imported only by an importer who has been granted
a license. The licenses do not specify how much the importer may
import, but all the importers who hold licenses have made a “ gen
tlemen’s agreement ” with the Government that limits their imports
to specified amounts. In most other instances, however, the amount
which may be imported is specified in the license. In France licens
ing is used to secure enforcement of milling and quota regulations.
In other cases licensing is used to ensure that a product will be
imported only if certain special conditions are fulfilled. In Czecho
slovakia the licensing of imports of wheat and rye is placed in the
hands of the Grain Syndicate, which is composed of representatives
of various interests concerned in the regulation of grain imports.
The syndicate grants licenses for the importation of wheat only on
condition that the import be compensated by an export of Czecho
slovakian agricultural produce of equal value.
In Portugal imports of wheat are subject to licensing. At the be
ginning of each marketing season the Government, having ascer
9 See ch. I V , footn o te 2 6 , p. 74.
10 T h e relation o f qu otas and oth er direct im p ort re strictio n s to the m ost-fa vored -n atio n
clause is discussed in the follo w in g ch apter pp. 7 4 , 75.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

tained the size of the wheat crop, decides what quantities of imported
wheat will be needed for domestic consumption. Licenses are then
granted for that amount and no more.
In Spain a method of restricting wheat imports is in effect which,
though not enforced by licensing, is somewhat similar to the fore
going measures. Whenever the price of domestic wheat is below a
certain specified level, wheat imports are entirely prohibited. Only
when the wholesale price has remained above the stated level for a
certain period of time is wheat admitted.
5. Import monopolies.—An import monopoly gives the sole power
of importing the commodity affected to the Government or an agency
appointed by it. Import monopolies are usually associated with a
monopoly of the marketing of the domestic product. The Govern
ment is then in a position to regulate imports and at the same time
to give assistance to domestic producers. The monopoly usually
purchases the domestic product at a price higher than the price
which would be paid for an imported product of similar quality.
Owing to its power of limiting supplies it is able to obtain a high
price also from the consumer.
Tobacco monopolies exist in a number of European countries.
They serve the triple purpose of restricting imports, regulating do
mestic production, and obtaining revenue. The way in which these
organizations are able to restrict imports is obvious. Their activities
in regulating domestic production are described in chapter V (see
pp. 89-90); also, in chapter X.
After the World War, grain monopolies were established in Nor
way and in Switzerland. The purpose in both cases was to limit
imports and to encourage domestic production—not to obtain rev
enue. In fact, an important aim in both countries has been to pay a
high price to the domestic producer while raising the price paid
by the consumer as little as possible. Grain was imported at the
world price and purchased from the domestic producer at a substan
tially higher price. The consumer was charged just enough to cover
the costs of the monopoly. In this way the consumer was made to
pay an enhanced price only for the domestic product, as in the case
of linked purchasing. In Norway, the method of regulation of grain
marketing has been changed several times, but is now substantially
as described above. In Switzerland the Government no longer has
a monopoly of importing, but still purchases the domestic crop at a
high price, a small tax on imports of all commodities being levied to
cover the excess cost. The grain is then resold to domestic millers
who are compelled to purchase the whole crop.
The German corn monopoly is in reality a method of imposing
import duties under another name. The device was adopted in 1930
because Germany wished to increase its import duty on corn, but was
prevented from raising the duty by a commercial treaty with Yugo
slavia. The monopoly purchases the corn from the importer, and
resells to him at a higher price. But the corn does not pass out of
the hands of the importer, who merely pays to the monopoly the
difference between the latter’s purchasing and reselling prices.
6. Sanitary restrictions.—Imports of specified agricultural prod
ucts are often prohibited for the purpose of excluding certain plant
and animal diseases and pests. In other cases imports of the com

WORLD TRADE BARRIERS IN’ RELATION TO AGRICULTURE

modity in question are not entirely prohibited, but are permitted only
under certain stipulated conditions with regard to the method of
packing, or subject to inspection and/or quarantine at the port of
entry. These restrictions often apply only to imports from certain
countries or regions within a country in which it is held that the
pest does or might exist. These sanitary restrictions often have
important economic effects. They have contributed to restricting
international trade in agricultural products.
7.
Exchange regulation and currency depreciation.—The rapid
falling off of international trade since the financial crisis of 1931 has
been due in considerable measure to developments in the international
exchange situation. These developments, however, were in turn due
to various factors in the economic situation, including the reduction
of international trade which had taken place up to that time. In
the summer and fall of 1931, owing to the efforts of creditors to
withdraw their short-term loans from certain debtor countries, and
particularly from Germany, the governments of those countries
were induced to check the flight of capital by restricting the amount
of payments their citizens could make to foreign countries. As a
result of those restrictions certain creditor countries, particularly
Great Britain, found themselves unable to remain on a free gold
standard.
In fact, most countries in the world found themselves in a position
where they could maintain their currency at par with gold only by a
rigorous control of their balances of foreign payments. Some coun
tries decided to allow their currencies to depreciate freely, thus using
the depreciation as a means of readjusting their balances of payments.
Many others took drastic measures in an attempt to readjust their
balances artificially while maintaining their currencies at par. Still
others, allowing their currencies to depreciate (or remain depre
ciated if they were already so), also restricted dealings in foreign
exchange in order to limit the extent of the depreciation.11
(a)
Exchange regulation.—Thus exchange control is an alternative
to currency depreciation, and is aimed to avert the latter. It is also
used as a means of making a sufficient amount of foreign exchange
available for the payment of the country’s foreign debts. In order to
do this it is sought to eliminate all outward payments but those which
are considered essential to the economic life of the country.
Exchange control is usually adopted in the first instance to restrict
outward payments for purposes other than the import of commod
ities, such as the export of capital, tourist expenditures, and other
invisible exports.12 But when exchange control has once been put
11 Both currency depreciation and exchange regulation result from the circumstance
that the total amount of payments which people are seeking to make from a country
exceeds the payments which it is sought to make into it and that neither gold nor new
credits are available for payment of the excess. This means that the amount of foreign
currency for which there is a demand by those who have payments to make abroad is
greater than the supply of foreign currency offered by those to whom payments from
abroad are being made. Under these circumstances, if there is no intervention from a
central authority toi restrict the effective demand, competition among those wishing to
purchase foreign currency drives up its price; or in other words, the currency of the
country in question depreciates.
12 A country in a state of financial embarrassment often cannot, by restriction of
commodity imports alone, reduce outward payments enough to avoid currency deprecia
tion. For payments are made into foreign countries for other purposes than the import
ing of goods which can be held back at the boundary. In particular, when the currency
of a country is held to be in danger there is usually a flight of capital; foreign creditors
seek to withdraw their short-time loans, and citizens of the country in question who have
funds at their disposal seek to invest them abroad. One of the principal aims of exchange
control is to check this process.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

into effect for this purpose it is often used to restrict payments for
commodity imports.
The ways in which imports are restricted by exchange control vary
considerably from one country to another. One method is to allow
each importer a limited quantity of foreign exchange. In Germany,
for instance, recognized firms may purchase an amount of foreign
exchange, which is based on the amount which was purchased during
the period July 1, 1930, to June 30, 1931. From this the quota of
each firm is calculated in the following manner. The amount pur
chased in the base period is first scaled down in accordance with the
general reduction of foreign trade and with the fall of the prices of
the commodities in which the importer deals. Of the amounts thus
determined all importers may obtain a certain percentage, which is
fixed each month. For the past several months this has been 50 per
cent. On the average the result is that importers are able to obtain
only about 25 percent of the exchange which they purchased in the
base period, since the scaling down of the original amount in accord
ance with present conditions involves a reduction of about 50 percent,
and this is again cut in half by the general 50 percent limitation.
The exchange restriction in Germany is by no means exceptional
in the degree of its severity, but is quite exceptional in the uniformity
with which it is applied. In most countries the severity of the
restriction varies according to the nature of the commodity to which
it is applied. A distinction is usually made between imports
regarded as essential, such as necessities of life and raw material
required by industry, and, on the other hand, manufactured prod
ucts, luxuries, and other commodities considered to be nonessential.
In several countries no exchange may be obtained for a long list of
“ nonessential imports ” ; in others a list of “ essential imports 55 is
exempted from restriction. In most cases, however, certain classes
of commodities are given priority, and exchange is allocated to the
remainder only insofar as it is available after provision has been
made for essential imports. Another distinction often made is that
between goods which can and goods which can not be produced in
the country which applies the restriction. By limiting purchases
mainly to the latter, the exchange control is used to serve the aim
of protecting domestic industries as well as that of maintaining the
value of currency. A third distinction is that between imports from
countries having friendly trade relations with the country in ques
tion and imports from other sources.
There are also certain features of exchange control which, while
they do not limit imports directly, add to the risks and expenses
involved in importing goods and so indirectly tend to reduce imports.
In certain countries the foreign exchange required to pay for im
ports may not be purchased until a specified time, such as 60 or 90
days, after the goods have been cleared through the customs. This
in effect compels the exporter in the country of origin to grant
credit on the goods to the importer for the period specified. The
risk involved in the delay is often great, since in many cases the
exchange is not made available even at the end of the specified
period, or only a part of the required amount is granted. A similar
but even more severe form of restriction is that which compels the
exporter in the foreign country to accept payment in the currency

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

of the country imposing the restriction. Such payments usually take
the form of a credit in a “ blocked account.” Funds credited to such
an account may be used only for specified expenditures within the
country in which the account is located. This generally includes
payment for commodities exported from the country, traveling or
living expenses of foreign tourists within its boundaries, and invest
ment in securities or real estate. The exporter who receives pay
ment in a blocked account is usually forced to borrow from his bank
on the security of the blocked account in order to pay for the goods
he has exported. A credit in the blocked account is obviously a very
poor security, since it is impossible to know when the funds will be
released, and it is often likely that when they are released the cur
rency of the country in question will have depreciated.
The enforcement of exchange control is not nearly so easy as the
enforcement of those import restrictions by which goods are kept
out at the frontier. In the majority of cases the method of enforce
ment has been to require all persons receiving foreign exchange,
whether it be as payment for exports or otherwise, to sell it to
the central bank. The latter thus obtains a monopoly of foreign
exchange (or is intended to obtain such a monopoly) which will en
able it to limit the sales of exchange to importers and other persons.13
There is perhaps no country in which the government has been
able to compel all persons holding foreign exchange to surrender it
to the central bank. In practically all cases a certain amount of
illicit trading in foreign exchange appears to be taking place. In
some countries it has reached such dimensions that the efforts of the
government to maintain the value of the currency at an artificial
level have been frustrated. On the “ black bourse 55 or bootleg ex
change, the domestic currency is always or nearly always valued at a
substantially lower rate than that which the government attempts
to maintain. In Yugoslavia the Government was recently forced to
reduce the. official valuation of the domestic currency to the level
prevailing in the bootleg market.
In order to give an indication of the widespread nature of ex
change control, a list of countries follows in which exchange control
has been used in such a way as to reduce substantially the quantity of
imports.14
Argentina
Austria
Bolivia
Brazil
Bulgaria
Chile

Columbia
Costa Rica
Czechoslovakia
Denmark
Ecuador
Estonia

Germany
Greece
Hungary
Latvia
Paraguay
Persia

Rumania
Turkey
Uruguay
Yugoslavia

13 In some countries the central bank itself is the authority which passes on applica
tions to purchase exchange, while in others the Government has appointed a special com
mission to grant permits without which exchange may not be obtained from the central
bank. In Norway and Sweden a different method is follow ed; there is no official control
of exchange but the private banks cooperate voluntarily with the central bank in restrict
ing those exchange transactions which are not regarded as essential for the economic life
of the country.
14 In all of these countries the methods of exchange control are approximately as
described above. Norway and Sweden are not included in the list because the unofficial
control in these countries is apparently not very severe. In Italy, also absent from the
list, the exchange control restricts imports only from certain countries. Some of the
countries included, such as Germany, have used exchange control to maintain their cur
rencies at par with gold, while in others, such as Yugoslavia and Argentina, the currency
was depreciated before exchange control was adopted and the purpose of control has been
both to prevent a further decline in the value of the currency, and to make sufficient
amounts of exchange available for the payment of foreign debts.

WORLD TRADE BARRIERS IN' RELATION TO AGRICULTURE

In view of the large number of countries in the list it is not sur
prising that the effect on the world’s international trade has been
very substantial, especially when it is remembered that in all of
these countries the restrictions have been very severe. In fact, in
some countries foreign-exchange transactions have been so greatly
restricted that the import trade has been practically brought to a
standstill.
The direct effect on American exports of agricultural products has
probably on the whole been less than that on our exports of manufac
tured products, since in those countries where a distinction is made
between essential and nonessential imports, our farm products are
usually included in the former class. But there are some exceptions.
Since exchange control was adopted in Denmark, the exports of
American apples to that country have fallen to insignificant propor
tions. Apparently apples are not included among the commodities
regarded by the Danish Exchange Control Commission as neces
saries of life. The indirect effect of exchange controls on American
agriculture, although hard to estimate, has unquestionably been
serious. By reducing the total volume of international trade these
restrictions have severely reduced the purchasing power of foreign
countries for our farm products, and by reducing our exports of
manufactured products they have also affected the demand for farm
products in the United States.
An important aspect of exchange controls is their use as a weapon
of discrimination between countries. In many cases their administra
tion involves discrimination without publicity. The allocation of
foreign exchange to importers is largely a matter of administrative
decision in most countries. Such rules as have been laid down by leg
islation to determine the principles upon which the allocation is to be
based are generally vague, and the decisions of the authority that
administers the control are often arbitrary. This makes it hard to
ascertain whether countries exporting the same or similar products
are receiving equal treatment. Many countries openly adhere to a
policy of controlling exchange transactions in such a way as to favor
those countries that purchase commodities from them. This policy
has led to a considerable amount of retaliation between countries;
it has also found expression in the numerous “ clearing agreements ”
which provide for reciprocal treatment in regard to exchange
control.15
The general effect of such agreements is to divert trade from its
most profitable channels. Normally a country will have a “ favor
able” balance of payments with some foreign countries and an
“ unfavorable ” balance with others. These inequalities are compen
sated by other similar inequalities among the various foreign coun
15 A clearing agreement usually provides for the following mechanism of payments be
tween the two countries which are parties to it. A person in country A importing goods
from country B makes payment for them in the currency of A to the national bank of A ;
the latter credits the payment to the national bank of B, which in turn pays an
equivalent amount in the currency of B (according to the rate of exchange stipulated in
the clearing agreement) to the exporter. Similarly, for goods shipped from A to B, pay
ment is made by the importer to the national bank of B, which credits the amount to the
national bank of A, and the latter then makes payment to the exporter. Tbe national
bank of A, however, will not pay exporters to B more than importers from B pay to i t ;
and similarly with the national bank of B. Thus if the exports of A to B are greater
than its imports from B a part of those exports will not be Paid for, excopt, possibly, in
blocked accounts. There are some instances in which a clearing agreement has been made
between a country that, in general, has no exchange restrictions, and one that has.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

tries. Clearing agreements tend to reduce this three-cornered or
many-cornered trade and substitute for it a less economic and more
limited type of trade in which the imports of one country from
another tend to be forced into equality with its exports to the latter.16
Countries entering into clearing agreements have been motivated
partly by a desire to mitigate the effects of exchange control on their
foreign trade and partly also to secure a more favorable balance
of payments. It has been found, however, by the governments of
at least some countries that clearing agreements have not produced
the results which were hoped for, and some of the agreements have
been abandoned. In certain cases this has led to disputes and
retaliation.17
Experience with the results of import restrictions effected by
exchange control has led to a widespread desire for their abolition.
Such action was, for instance, recommended by the preparatory
commission of experts which drafted the agenda for the World
Monetary and Economic Conference. A widespread desire for any
measure involving international cooperation is generally, of course,
far from being an indication that such a measure is likely to be
effected. But there are some signs that a tendency to abatement of
exchange restrictions exists. A few countries have abandoned ex
change control, although in most of these the control does not appear
to have been particularly restrictive. In Austria and Czechoslovakia,
where exchange control has till now or very recently been highly
restrictive, the governments apparently aim to effect a gradual aboli
tion of exchange restrictions.
(b)
Currency depreciation.—As indicated above, exchange control
is an alternative to the policy of allowing the currency to depreciate
in a free market.18 Depreciation of exchange involves both a stimu
lation of exports and a reduction of imports,19 and thus tends to
18 This artificial equalization of trade between pairs of countries is sometimes effected
by manipulation of exchange rates. Some clearing agreements provide that the currencies
of the two countries shall be exchanged at a rate that is different from the par rate or
inconsistent with the values at which the two countries are attempting to maintain their
currencies. In some cases the rate of exchange used in a clearing agreement is kept
secret in order to conceal certain special favors that are involved.
17 A clearing agreement between Italy and Germany was denounced by the latter in the
early fall o f 1932. In retaliation against this Italy introduced severe restrictions on pay
ments to Germany on Oct. 1, and these are still in effect. As a result of the termination
of the clearing agreement certain sums due to Italian exporters were being held by Ger
man authorities in blocked accounts. The Italian Government, therefore, issued a decree
by which all payments for goods imported by Italy from Germany must be made through
Italian banks. Only 25 percent of the sums thus paid could be converted into German
currency and remitted directly; the balance was to be credited to the German exporter in
a blocked account, not bearing interest, with the Italian National Institute of Exchange.
The sums thus credited could be drawn only against sums released from blocked accounts
in Germany existing in the names of Italian firms or individuals. Similar restrictions
were also imposed by the Italian Government on imports from Yugoslavia in retaliation
against the exchange restrictions imposed by that country. In this case the exchange
payments are limited to 10 percent instead of 25 percent. The Italian balance of trade
both with Germany and Yugoslavia had been unfavorable at the time when the Italian
restrictions were adopted. This fact was no doubt influential in determining the policy
adopted by the Italian Government.
18 The abandonment of the gold standard by the United States in March 1933 and
the subsequent depreciation of the American dollar in international exchange have re
sulted from conditions differing in important respects from those which previously led to
depreciation of currencies of other countries. Many of the statements in this chapter
regarding depreciation of currency do not apply to the United States. In general, the
analysis applies to the situation existing at the time of the abandonment of the gold
standard by the United States.
19 When the currency of a country previously on the gold standard depreciates in terms
of other currencies, the costs of production and the incomes of consumers in that country
in terms of its own currency tend to increase less than in proportion to the depreciation
of the currency; they therefore tend to decrease in terms of gold. As a result, exports are
stimulated and imports are restricted. Imports tend to be reduced for two reasons. First,
the incomes of consumers and therefore their purchasing power for commodities in the

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

correct the unfavorable balance of payments which has given rise
to it. Partly because it tends to stimulate exports as well as to
reduce imports, and partly because it involves no arbitrary or exces
sive restriction of imports, it does not tend to strangle international
trade as do the measures of exchange control described above.
In this respect the effect on trade in farm products differs from
that on trade in industrial products. The prices of the latter tend to
remain stable, for short periods, in terms of the currency of the coun
try in which they are produced. Consequently American manufac
tured products, for instance, became more expensive in terms of
British currency when Great Britain abandoned the gold standard,
thus tending to reduce British imports of such products. Prices of
agricultural products, however, being highly variable, rapidly adjust
themselves to changed market conditions. Consequently the quan
tities of our farm products exported have probably not been
reduced greatly by the depreciation of currencies in countries to
which we export and in competing countries. It is probable, however,
that the prices of these products have been affected to some sig
nificant extent. This is likely to be true particularly where impor
tant competing countries have depreciated currencies. For the de
preciation affects cost of harvesting, cost of inland transportation,
and other costs that set a lower limit to the price at which farm
products can be delivered in the world markets, and this tends to
make such costs lower in the country with depreciated currency in
relation to similar costs in its gold-standard competitor.20
The quantities exported and the prices of our farm products are
probably also indirectly affected by the depreciation of currencies,
through the effects of the latter on international trade in general.
But whether currency depreciation in foreign countries has tended
to accelerate or to retard the decline of international trade is hard
to determine. The answer depends largely on whether or not the
depreciation of the exchanges of Great Britain and other countries
since August 1931 has done more to increase their exports than
to reduce their imports. By and large, industrial activity in
countries with a depreciated currency has declined less since 1931
than in countries the currencies of which were still at par at the
beginning of the year 1933. I f it were inferred from this that the
depreciation of currencies has caused industrial activity in countries
where depreciation has taken place to decline less than it otherwise
would have done, it would appear probable that the international
country with the depreciated currency are reduced in relation to the prices of commodities
imported from countries on the gold standard, hence the latter are no longer able to sell as
much to the former as before depreciation. Second, the costs of production of domestic
industries in the country with the depreciated currency are lowered in comparison with
costs in gold-standard countries; hence when imports compete with domestic products, the
latter are favored by depreciation. Exports are stimulated for similar reasons. Costs and
consequently prices in the country with depreciated money are reduced in comparison
with consumers’ incomes in gold-standard countries and the former is thereby enabled to
sell to the latter a larger quantity of goods than would otherwise be the case. Exports
are also favored by the fact that costs of production in the country with depreciated
currency tend to be lowered in relation to cost of production in gold-standard countries;
this favors the country with the depreciated currency in competition with gold-standard
countries which export the same products. Thus the depreciation o f sterling in Great
Britain has not only tended slightly to favor exports from that country to the United
States, but has also aided British exporters in competition with the United States in
South American and other markets.
20 Thus in the case of wheat, the minimum cost of harvesting and delivering in Liver
pool was probably, under gold-standard conditions, higher on the average for Australian
wheat than for American wheat. The depreciation of Australian currency has tended
to lower those costs for Australian wheat in relation to those for American.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

trade of such countries had also declined less than it would have
done in the absence of depreciation. But it must not be forgotten
that the depreciation of British and other currencies has tended to
accelerate the decline of industrial activity in countries which have
maintained their currencies at par. Whether world industrial ac
tivity, therefore, has in the net been increased or decreased is an
open question. But in view of the shock to business confidence
throughout the world which resulted from the unexpected abandon
ment of the gold standard by Great Britain, it seems not unlikely
that the effect has been to accelerate rather than to retard the decline
of world business activity and international trade.21
There are, moreover, certain more tangible factors which interfere
with the tendency of depreciation to stimulate exports but do not
affect its tendency to reduce imports. One of these factors is the
tendency of gold-standard countries to combat the stimulus to ex
ports by retaliatory import restrictions. Since the crisis of 1931
several of the countries which have remained on the gold standard
have imposed special restrictions on goods coming from countries
with a depreciated currency. In some cases this is done by imposing
new restrictions on such goods as are mainly imported from coun
tries with depreciated currencies. In other cases special discrimina
tory measures are applied specifically to those countries with depre
ciated currencies. France and Germany impose higher duties on
goods from countries with depreciated currencies than on goods
from countries of which the currency is at par with gold. Canada,
which is not on the gold standard but has a currency less depreciated
than most other countries which are off the gold standard, also
imposes such duties. Furthermore, it is not always necessary that
gold-standard countries should impose special or new restrictions
in order to make the stimulation to exports in the countries not on the
gold standard less effective than the restriction of imports. All of the
present gold-standard countries, as also the United States (which
from the fall of 1931 till early in March 1933 was one of the few
remaining gold-standard countries in the world), have tariff duties
or other restrictions on many commodities which are so severe as
to be prohibitive regardless of such price changes as may result
from exchange fluctuations.
Another factor that tends both to offset the stimulation to exports
and to increase the restriction of imports is the uncertainty and risk
created by fluctuations in exchange rates. An exporter in a goldstandard country who ships goods to a country not on the gold
standard is never certain what will be the value of the payment re
ceived by him if he contracts to receive payment in terms of the
currency of the country to which he exports. If, on the other hand,
payment is made in terms of gold the importer in the country which
is not on the gold standard will not know how much he will have
to pay in terms of his own currency. The same difficulty applies to
exports from countries not on the gold standard to gold-standard
21 The severity of the banking situation in the United States in the fall and winter of
1931 was in some considerable degree due to the effects of the abandonment of the gold
standard by Great Britain. For creditors, in France and other gold-standard countries,
who had funds on deposit in New York withdrew these funds in the fear that the
United States might follow the example of Great Britain. This was in considerable
measure responsible for the “ rush for liquidity ” on the part of the New York banks, the
repercussions of which were felt all over the country.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

countries. The adverse effect of these circumstances on the quantity
of international trade, while it cannot be accurately measured, is
undoubtedly of significance.
The number of countries that have allowed their currencies to de
preciate in terms of gold and have not restricted imports by exchange
control is smaller than the number of countries which have resorted
to exchange restrictions. All of the foreign countries listed below
have depreciated currencies. Some of them have exchange controls
that apparently involve no severe restriction of commodity imports.
Australia
Canada
China
Egypt
Finland
British India

Japan
Lithuania
Mexico
New Zealand
Peru

Portugal
South Africa
Spain
United Kingdom
Venezuela

With the recent abandonment of the gold standard by the United
States, the only remaining countries which have neither allowed
their currencies to depreciate nor directly restricted exchange trans
actions are the following:
France
Netherlands
Belgium

Switzerland
Poland

The position of these countries is not nearly so different from that
of the countries with exchange restrictions as might appear, since
all of these countries have extremely severe import restrictions which
partly take the place of exchange controls.22
22 It is not intended to imply that countries with depreciated currencies do not also in
many cases have severe import restrictions.

179563— 33------ 6

CHAPTER IV
EXPORT AIDS AND RESTRICTIONS
Like the measures affecting imports which have been described in
the last chapter, those affecting exports are motivated by two aims:
assistance to particular industries, and the maintenance of a favor
able balance of trade. While the immediate aim of the former
measures has been to reduce imports both in value and in quantity,
those affecting exports are, without significant exception, intended to
increase the value of exports but not in all cases their quantity.
Four principal types of aid to exporting industries are in opera
tion in the world at the present time. These are: (1) commercial
agreements to secure the reduction or to check the increase of trade
barriers in other countries; (2) dumping measures, consisting of ex
port subsidies and other similar financial aids to exports; (3) regu
lations designed to improve or standardize the quality of exported
products for the purpose of improving their competitive position in
relation to similar products of other countries and of stimulating
demand; and (4) restriction of the quantity of exports with a view
to the maintenance or enhancement of price in the world market.
EXPORT AID THROUGH COMMERCIAL AGREEMENTS

Exporting industries in every country are vitally interested in
securing the reduction or in checking the increase of trade barriers
affecting their products in other countries. As a rule, the method
used by a government that wishes to secure such concessions from
other countries is to offer equivalent concessions in return. And the
tariff policies even of the most highly protectionist governments are
usually influenced, in some degree at least, by a desire to secure
favorable treatment of their exports by foreign governments. Prac
tically every country in the world today has a number of commercial
agreements or treaties with other countries in which each of the
contracting countries undertakes in some way to limit or moderate
the barriers that it places in the way of the other’s trade.
Three types of concessions are commonly made in commercial
treaties. One consists of an undertaking by one of the contracting
countries to limit to a stipulated rate its duty on a certain product
or products in which the other contracting country is vitally inter
ested. Such stipulated duties are known as conventional duties.
To illustrate: France in its commercial treaty of 1927 with Germany
undertook not to place duties of more than a stated amount on cer
tain German products, while Germany made similar concessions to
France. Concessions of this kind are not of an exclusive nature;
France was not prevented by its treaty with Germany from granting
to any other country the same privileges in regard to the same
commodities as it had undertaken to grant to Germany.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

A second type of concession is the opposite of the preceding type
in this latter respect. This consists of an undertaking by one coun
try to admit products of another country at a rate of duty that is
less by a stipulated amount than the duties charged on similar prod
ucts from other countries. The outstanding illustration is that of
the preferences granted to each other by various countries in the
British Empire by the terms of the Ottawa agreements of 1932. The
reciprocity treaty between the United States and Cuba is another
example.
Such arrangements, of course, involve discrimination against the
products of nations that are outside of the agreement. To prevent
such discrimination is the purpose of the third type of concession
made in commercial treaties—the unconditional most-favored-nation
clause. This provides that each of the two countries which are
parties to the treaty undertakes to extend to the other any privilege
which it grants to a third country. More specifically, each under
takes to impose no higher or other duties or restrictions on the
imports of any commodity from the country with which the treaty
is made than it imposes on imports of the same commodity from
any third country. Thus, by the terms of the most-favored-nation
treaty between the United States and Germany, which came into
force in 1925, if Germany offers a concession on any products to
any other country, the United States is entitled to obtain the same
concession on like products exported by the United States. Thus
the most-favored-nation clause is a means of safeguarding export
industries against discrimination by foreign governments. It can
also be a positive aid to exports in securing such benefits as may
result from concessions made to each other by foreign countries.23
In general, the tendency of most-favored-nation treaties is to pre
vent nations from making concessions to each other of the second type
mentioned above, namely, those of the preferential or exclusive type,
and to confine definite tariff-bargaining concessions mainly to the
first or nonexclusive variety. Many commercial treaties now in
force, however, provide for certain exceptions to the most-favorednation clause under which exclusive preferential arrangements may
be concluded. Such exceptions are usually based on geographic
propinquity or close political relationship. Countries in the British
Empire, for instance, do not obligate themselves to grant to foreign
nations the same treatment as they do to each other. There is a
Baltic exception exempting preferences granted to each other’s prod
ucts by the four small countries on the eastern shore of the Baltic
Sea and by these to Russian products.24 Other exceptions are the
United States and Cuba, Spain and Portugal, and the South Amer
ican countries. Moreover, a generally recognized exception to all
most-favored-nation treaties permits one country to enter into a
23 Many countries have two or more rates of duty on all or most commodities, the lower
rates being applied to imports from countries* with which the country imposing the duty
has a most-favored-nation treaty, and the higher rates to imports from other countries.
The differentiation of rates is. of course, intended to induce foreign countries to make
most-favored-nation treaties with the country in question.
34 Thus in the treaty between Estonia and Great Britain it is stated that the British
Government “ will not claim the benefit of any customs preferences or other facilities of
whatever nature which are, or may be, granted by Estonia in favor of Russia, Finland,
Latvia, or Lithuania, in regard to Russian, Finnish, Latvian, or Lithuanian goods, respec
tively, so long as such preferences or facilities are not extended by Estonia to any other
foreign country.”

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

customs union with a second although it may have a most-favorednation treaty with a third.25
During the present depression there have been far-reaching rever
sals of policies in regard to commercial treaties, in two ways.
(1) Governments have recently been much less ready than in pre
vious times to assume obligations limiting the restrictions they place
upon imports. In many cases they have been seeking to rid them
selves as rapidly as possible of these obligations in order to obtain
freedom of action to protect their industries against the decline of
World prices by raising their tariffs. At the present time numerous
treaties are being terminated and replaced by new treaties that give
the governments concerned a greater freedom of action in tariff
matters. In fact, it has been said that in the last 2 years countries
have been making numerous agreements with each other which for
the most part provide for the exclusion of one another’s goods from
their markets. Most commercial treaties, however, provide that the
treaty in question can be terminated only after several months*
notice has been given, and many governments, in their haste to im
pose new restrictions on imports, have resorted to the use of import
quotas and other devices where their treaty obligations have tem
porarily prevented them from raising their import duties. To illus
trate : At the beginning of 1933 more than two thirds of the import
duties of France were limited by treaty obligations; and this is
generally understood to be one of the principal reasons for the exten
sive system of quota restrictions applied to the imports of that
country. France is now engaged on an extensive revision of its com
mercial treaties, which began with the new treaty concluded with
Germany early in 1933.
(2) Not only is there less readiness to make concessions, but gov
ernments are also less willing to make a general extension, through
most-favored-nation treatment, of such concessions as are granted..
In the effort to develop a favorable balance of payments with the rest
of the world, a nation will often seek to control its balance of pay
ments with each individual country. Such a policy is now receiving
an almost world-wide application; each country seeks to buy no more
from another country than the other buys from it. The result is an
accumulation of exclusive bilateral arrangements, such as clearing
agreements, which represent the very opposite of the most-favorednation policy. Just as conventional limitations of tariffs have been
rendered ineffective by the imposition of restrictions other than
tariffs, so has the most-favored-nation clause been rendered ineffective
by clearing agreements, quotas, import monopolies, and antidumping
measures.26
25A customs union, however, is held to mean only a complete abolition of tariff barriers
between the countries entering into the union, and the formation of a single customs
boundary around the group as a w hole; the proposal for a customs union between Germany
and Austria which was made in 1931 provided for such an arrangement. Tariff prefer
ences do not constitute a customs union, and are not exempt from the application of
most-favored-nation obligations except in such specific cases as those mentioned above.
% n illustration of the way in which the application of most-favored-nation treatment
has become complicated by the new restrictions may be found in some difficulties which
arose recently in connection with the German butter tariff. In February 1932 Germany
made an agreement with Finland that it would admit an annual contingent of 5,000 tons
of butter from' Finland at a duty of 50 reichsmarks per quintal. This duty was lower
than any German duty on butter in effect at that time. The same concession was, o f
course, automatically granted to all countries with which Germany had most-favored.nation treaties. This arrangement caused great dissatisfaction in Holland, Denmark, and
some other countries which export considerable quantities of butter to Germany. Since
the imports from Finland are small in comparison with those from Holland and Denmark,
a contingent of 5,000 tons allowed a large proportion of butter from Finland, but a

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

This development is mainly a result of the impact of the world
crisis. The various governments, faced with a situation they had
not anticipated when they entered into commercial agreements with
each other, have sought to circumvent these agreements by emergency
measures without heed to anything but the immediate consequences.
In the prevailing confusion, a maze of discriminatory restrictions has
arisen which is not the result of any settled or carefully thought-out
policy.
Nevertheless, there appears at the present time to be a more delib
erate trend of commercial policies toward regional tariff agreements
of an exclusive character. A fairly widespread dissatisfaction with
the results of most-favored-nation policy has recently developed.
It was once hoped by those interested in promoting international
trade that the general adoption of the most-favored-nation clause
would lead to a general lowering of tariff barriers throughout the
world. Unfortunately, some countries which pursue a most-favorednation policy, instead of treating all nations equally well, treat them
equally badly. Countries that grant tariff favors to a second country
in return for similar favors to their own export trade are becoming
increasingly reluctant to extend such favors automatically and with
out compensation, under the unconditional most-favored-nation
clause, to other countries when the latter maintain tariff rates which,
however equally applied, are none the less so high as to bar out nearly
all competitive imports.
Moreover, certain groups of countries are aiming to secure exclu
sive preferential treatment for their agricultural products in the
principal countries to which those products are exported. By the
Ottawa agreements of 1932 the British Dominions succeeded in
securing substantial tariff preferences for their agricultural exports
to the United Kingdom. Since these preferences have been made
effective by raising new barriers against imports from countries
outside of the British Empire, they tend to injure producers in such
countries.27
Similar preferences are being sought by the agricultural surplus
countries of eastern Europe for their exports of grains and other
products to the industrial countries of western continental Europe.28
relatively small part of the imports from Holland and Denmark, to enter at the reduced
rate. According to the Dutch and Danish points of view, therefore, the new arrangement
was a violation of the spirit of the most-favored-nation clause. In addition, Denmark and
Sweden had another grievance. Shortly before the agreement was made with Finland,
Germany had imposed an antidumping duty of 36 reichsmarks per quintal on butter im
ported from countries not on the gold standard. This applied to countries having mostfavored-nation treaties with Germany and was added to the regular duty. Thus, as a
result of the antidumping duty and the quota arrangement resulting from the agreement
with Finland, no less than four rates of duty on butter imported from countries having
most-favored-nation treaties with Germany were in effect. Countries on the gold standard
paid 50 reichsmarks on butter within the contingent and 100 reichsmarks on other butter.
The corresponding figures for countries with depreciated currency were 86 and 136.
(Countries having no most-favored-nation treaty paid 170 reichsmarks.) Since the fixed
contingent formed a different proportion of each country’s exports, it is clear that no two
o f the countries receiving nominal most-favored-nation treatment paid the same average
rate of duty. In November 1932 this complicated state of affairs came to an end, and a
uniform rate of 75 reichsmarks was applied. At the same time imports from each country
were limited to a certain proportion of the imports during 1929-31. Although this
involves approximately equal treatment, it does not permit free competition between the
various exporting countries.
27 In general, the Ottawa agreements provide for free entry into the United Kingdom of
imports from the Dominions together with the imposition of duties on competing products
from sources outside of the British Empire. For further details see ch. VII and the
appendix.
28 The way in which such preferential arrangements would affect American agriculture
would depend on the way in which the preferences were put into effect. A group of
European countries granting preferences to each other might either impose new and
discriminatory restrictions on imports from countries outside of the group, or they might

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

The governments of the latter countries would apparently not be re
luctant to grant such concessions in return for similar treatment of
their industrial exports if they were not prevented from doing so by
their most-favored-nation treaties with agricultural surplus countries»
outside of Europe. These treaties they are for the most part un
willing to sacrifice.
Partly for this reason, and partly because of the growing dissatis
faction with most-favored-nation policy mentioned above, an exten
sion of the recognized exceptions to the most-favored-nation clause is
being widely advocated in Europe. The problem of the modification
of most-favored-nation obligations by international agreement has
been discussed at a number of international conferences in Europe^
but has thus far not been solved.
But although the question has not yet been settled in a general
way, a few preferential arrangements affecting agricultural exports
from eastern Europe have already been put into effect. France has
granted virtual preferences on wheat from Yugoslavia, Hungary,
and Rumania, and on corn from Rumania. Treaties have also been
made by Germany with Hungary, Rumania, and Bulgaria, providing
for preferential treatment of grains from the latter countries. The
adoptiton of these preferences, however, was made contingent on the
waiving of their rights by other grain-exporting countries having
most-favored-nation treaties with Germany; and since the permission
of all of these countries has not been obtained, the treaties have not
come into effect.
Thus the movement toward inter-European preferences on agri
cultural products has not made much progress. There has been no
multilateral agreement affecting the products of the Danubian coun
tries. The limited significance of such p r e f e r e n c e s as have come into
effect is in strong contrast with the ambitious schemes for a Euro
pean customs union or a system of intra-European preferences which
have been discussed in official quarters. The desperate economic con
dition of the European agrarian States, however, is of great concern
to the industrial countries of Europe, and further efforts in the
direction of a system of preferences are being made.
EXPORT

DUMPING

The word “ dumping ” is sometimes used loosely to indicate the
selling of goods at excessively low prices, or regardless of price, but
this is not what is meant here. In its more technical sense, dumping
means the sale of exported goods at less than the price prevailing in
the country of origin, due allowance being made for costs of
shipment.29
reduce restrictions on trade with one another. The former method would certainly be
injurious to American agriculture. But if a preferential system were built up by reducing
restrictions within the group, it is possible that the economic gain to the group as a whole
would be beneficial to the trade of countries outside of the group, such as the United
States. A substantial reduction of trade barriers between European countries would be
beneficial to these countries and so would increase their purchasing power for farm
products. And although agricultural production in some European countries would also
be stimulated, it is not improbable that the net result might be to increase European
imports of American farm products. While exports of wheat might be reduced by
increased production in the Danube Basin, our exports of other commodities, like cotton
and fruits, would probably be increased.
29 The word may also be used to indicate the sale of goods, shipped from one region
to another, at a lower price than that prevailing in the region from which they originate.
It is not necessary that the goods should pass across an international boundary. We
are here, however, concerned only with dumping in international trade.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

1.
Nature and economic effects of dumping.—Dumping of farm
products is effected in some cases by an export subsidy, either direct
or indirect; in others it is effected by the setting up of a marketing
organization that possesses a monopoly of the commodity in ques
tion in the domestic market and is thereby enabled to charge domes
tic consumers a higher price than that prevailing in the world mar
ket. In either case the immediate effect is to raise the price in the
domestic market above the world price,30 and to make the prices to
producers higher, in relation to the world price, than they Would be
in the absence of dumping.31
But unless the dumping measure is accompanied by restriction of
production, the possible benefit to producers is likely to be offset,
either wholly or in part, by a lowering of the world price. The in
crease of price in the domestic market tends to restrict consumption
and to stimulate production, thus operating to increase exports and
to reduce the world price.32
Moreover, dumping measures that are unaccompanied by produc
tion restrictions (and few of them are accompanied by such restric
tions) are likely to provoke retaliation by countries that import
the commodity in question. The lowering of the world price, which
results from dumping, strengthens the tendency to raise trade bar
riers ; and the fact or belief that a fall of price results from dumping
further strengthens this tendency. Public opinion in most countries
is particularly sensitive on the subject of dumping. The very word
itself has an opprobrious connotation. The antidumping provisions
contained in the tariff laws of certain countries, mentioned in the
preceding chapter, are an expression of this attitude. And even
countries that have no such provision in their tariff laws are likely
to impose severe restrictions if their producers are threatened by or
apprehensive of the competition of dumped commodities. Dumping
measures are more vulnerable to retaliation than import restrictions,
since it is easy for importing countries to place restrictions on imports
of dumped products, while retaliation against import restrictions is
necessarily of a more indirect character. In a struggle between a
country offering an export bounty and an importing country which
retaliates by tariffs or other import restrictions, it is usually the lat
ter which is likely to win. The export bounty may for a time be
raised high enough to offset the import duty in the importing coun
try. In effect, however, this involves a payment from the treasury
of the exporting country into that of the importing country. Even
tually, of course, the importing country may increase its duty to so
high a point that imports from the other country must cease. And
30 In the case of an export subsidy this is brought about under competitive conditions
in the following manner. Exporting having become more profitable as a result of the
subsidy, competition between exporters raises the price paid to producers. Middlemen who
sell to domestic consumers are then forced to charge the latter a higher price in order
to pay the enhanced price to producers.
31 In cases where dumping is effected by a monopolistic marketing organization it is
possible that the organization may reserve to itself the profits arising out of its monopoly,
with the result that farmers do not get the full potential benefit of the enhanced price
paid by domestic consumers. This may occur in the case of sugar cartels in some
European countries, which are controlled by the refiners, but in most other cases the
marketing organization in question is controlled either by the government in the interest
of farmers or by farmers themselves.
32 If the country that practices dumping is capable of producing but a small part of
the world’s commercial supply of the commodity in question the effect on the world price
will not be great. But if the country is one that can produce a large part, and is
capable of materially expanding its output, the effect will be more considerable.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

it is always possible for the importing country to adopt more direct
methods of restriction against which bounties are of no avail.33
Furthermore, when dumping is applied to a product by one coun
try, other countries are likely to take similar action in order to
protect their producers against the price decline resulting from
dumping by the first country. This tends further to reduce the world
price, thus causing producers in the country which first adopted a
dumping measure to lose a part, at least, of their initial gain.
The case of rye offers a good illustration of the international effects
of dumping. For a few years preceding February 1930, Germany
gave a form of financial assistance,34 equivalent to an export bounty,
on rye. Partly in consequence of this, prices of rye in the Scandi
navian countries, the principal export market, were greatly depressed,
and this in turn was followed by an increase of import restrictions in
Sweden. Furthermore, in November 1929, following the example of
Germany, Poland provided a similar form of financial assistance for
the export of rye.35 The intensified competition resulting from this
drove prices in the export markets to such low levels that in February
1930, Germany and Poland were forced to reach an agreement for
joint limitation of rye exports and the maintenance of a minimum
price. Early in 1930, however, Germany entirely ceased to give
assistance to rye exporters and the agreement became of no conse
quence. The added factor of Russian competition, and the cost to
the German treasury of the virtual export subsidy, had induced
Germany to retire from the export market and rely on measures of
internal aid. Finally, the end of this unsuccessful experiment was
officially recognized in June 1931, by the termination of the GermanPolish agreement.
Probably the outstanding instance in which competitive dumping
of an agricultural product was practiced by a number of important
producing countries occurred in the case of sugar at the end of the
last century. The situation in that commodity around 1900 became
so serious, owing to the almost universal adoption of export bounties
and import restrictions, as to force the adoption of the international
Brussels sugar convention in 1903. This bound the contracting
countries to remove export and production bounties on sugar and to
reduce import duties. The desperate situation in sugar which led
to the adoption of the Chadbourne plan in 1930-31 was partly a
result of export dumping by certain European beet-sugar producing
countries.
33 Contemporary events in Ireland offer an illustration of a commercial struggle between
two countries of which one is attempting to push its agricultural exports over the tariff
wall of the other by means of export bounties. In June 1932 the Irish Free State
Government refused to pay the semiannual installment for land annuities due to the
United Kingdom. On July 15 the British Government in retaliation imposed duties of
20 percent ad valorem on the principal agricultural exports of the Irish Free State,
which were raised in November to 30 percent for some commodities and 40 percent
for others. The Free State responded by granting bounties to offset the British duties
on shipments to the United Kingdom of various agricultural products. The principal
commodities affected were meats, live animals, butter, poultry, and eggs. In order to
finance these bounties a sum of £2,000,000 was appropriated, which was considerably
more than the semiannual installment of the annuities. Only 6 weeks after the first
bounties went into effect more than a quarter of this sum had already been spent.
Moreover, on November 9 the bounty on butter, which had been in effect before the
dispute began, was discontinued. Though no explanation for this was given by the
Government, it was presumably decided that a bounty which would overcome the British
duty of 40 percent was too expensive.
34 “ Import certificates,” tenderable in payment of import duties on certain products,
were issued to exporters of rye. This form of dumping is described below.
35And of other grains.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

Thus the increase in prices to producers which results from dump
ing without restriction of production may be only a temporary one,
and in any event is likely to be greatest when the scheme is first put
into operation. At the outset of the measure’s application, the in
crease of exports of the commodity in question will be small. The
first effect will be to increase exports only to the extent by which
domestic consumption is reduced. But as soon as the increased re
turns to producers have had time to stimulate production, the increase
of output will necessitate a further increase of exports and a further
decrease of the world price. This, in turn, will tend to reduce the
initial increase of price to producers. And if a dumping measure
causes other countries to apply import restrictions and dumping
measures to the same product, the ultimate effect of the measure may
be in the direction of lowering prices to producers.
There are two conditions, however, under which the chances of
success of a dumping measure are more favorable. One is that the
country applying the (measure shall not be an important producer of
the commodity in question and that resultant increase in production
shall not be sufficient to affect the world price to any marked extent.
The Australian Paterson plan applied to butter (described below) is
an example, Australia being a minor producer of butter, and the
measure having had no very noticeable effect on world supplies or
price. The other condition is that the measure shall be accompanied
by restriction of production to prevent its having a depressive effect
on the world price.
The latter condition appears to be fulfilled in the measure that
has recently been applied to hogs in the Netherlands. The distribu
tion of hogs is controlled by a central organization which sets the
price of hogs in the domestic market above the export price, and is
therefore able to secure for farmers a higher price than they could
obtain under unrestricted competition. At the same time, however,
the production of hogs is rigidly controlled as described in the next
chapter. By thus preventing the measure from leading to an in
crease of exports which would tend to reduce the world price, the
Dutch authorities are able to avoid not only the direct consequences
which would result therefrom to their own hog producers, but they
can also prevent the measure from being injurious to hog producers
in other countries and so avoid the danger of retaliation. Thus the
measure, while technically it involves dumping, appears to be free
from all the objectionable international consequences of dumping.
2.
Methods employed in dumping agricultural products.—The
dumping of manufactured products often results from action taken
by private manufacturers or associations of manufacturers without
government aid, but in agriculture, owing to the competitive nature
of the industry, dumping is effected in nearly all cases through direct
government intervention. The'methods employed include: direct
subsidies; indirect subsidies, such as import certificates and reduced
freight rates; and government regulation of marketing.
(a)
Direct export subsidies.—Direct export subsidies are not the
most prevalent form of dumping, even in farm products. From the
point of view of public finance the method has the disadvantage that
it involves an expense to the treasury unless it is supported by some

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

special source of revenue, such as a tax on the domestic consumption
of the commodity in question. For the producers it may have the
disadvantage that a lack of perfect competition among exporters can
prevent the benefits of the bounty from being passed back to the
producer.
In two countries export bounties are granted on a number of agri
cultural products owing to somewhat peculiar circumstances. The
Irish Free State grants bounties on the export of a number of agri
cultural products, including cattle, hogs, and potatoes. These boun
ties are the result of a political dispute between the British and Irish
Governments36 rather than of general economic conditions.
In South Africa a bounty of 10 percent on all exports other than
gold, diamonds, and sugar was put into effect after Great Britain
abandoned the gold standard. During the last 3 months of 1931
and the whole of 1932 South Africa was the only country in the
British Empire—and almost the only agricultural-surplus country
outside of the United States—that had remained on the gold stand
ard. South African farmers were handicapped by the abandonment
of the gold standard by Great Britain, to which they sell most of
their products, and by many of the principal countries competing
with South Africa in the British market. The export bounties were
originally adopted to overcome this unusual handicap.
There are, however, cases in which direct export bounties have
recently been granted not as a result of peculiar circumstances but in
order to protect producers against the world-wide decline of prices.
Such bounties are often accompanied by a tax on the domestic con
sumption of the commodity out of the proceeds of which the subsidy
is paid.
An example possessing some unique features is the Hungarian
Boletta or grain-ticket system. According to this plan, every dealer
who purchases wheat from a farmer must at the same time purchase
grain tickets from the Government to the value of 48 cents for every
bushel purchased. One part of each grain ticket, worth 29 cents a
bushel, is given to the farmer, who may tender it in payment of
taxes or convert it into cash. The other part, with which we are
more directly concerned, is retained by the dealer or passed on to
other dealers to whom the wheat is sold. I f the wheat is exported,
the dealer’s part of the ticket may be resold to the Government; but
if the wheat is consumed in Hungary the ticket is finally surrendered
to the Government without compensation. Thus the ticket is in part
an instrumentality for raising a tax on the domestic consumption of
wheat. The proceeds have been used for farm relief in various ways,
including the payment of an export bounty. But at the present
time, owing to a short crop of wheat in 1932, the Hungarian Govern
ment has prohibited exports of wheat, so that the export aid fea
ture of the Boletta system is in abeyance. (For further details con
cerning the Boletta system, the reader is referred to the Appendix.)
There are some cases of sliding-scale bounties. Such a bounty
for instance, is paid by the Portuguese Government on cotton ex
ported from Portuguese East Africa. The rate of the bounty is
equal to the difference between the monthly average market price

36 See footnote 33, p. 78.

WORLD TRADE BARRIERS IN DELATION TO AGRICULTURE

and a fixed price of 8 escudos per quintal. The latter price is thus
guaranteed to the exporter. A similar sliding-scale bounty has re
cently been granted by Egypt on beans. Such bounties are an
alogous to sliding-scale import duties in the same way that export
bounties in general are analogous to import duties. Fixed duties
or bounties tend to raise the price received by domestic producers
above the world price by a fixed amount, while the sliding-scale
variety is intended to give the domestic producer a stable, or rela
tively stable, price.
(&) Import certificates.—The form of export aid which is pro
vided by import certificates is the same as the export debenture sys
tem that has been proposed in the United States. Subject to certain
limiting conditions, it is equivalent to that of an export bounty.
The method was first used extensively by Germany, and the Ameri
can proposal has been modeled after the German practice. Origi
nally the method grew out of the practice of granting a drawback
on the reexport of imported commodities for which an import duty
has been paid. In practically every country the customs authorities
pay such a drawback if the exporter can prove that the article which
is being exported was previously imported and that an import duty
was paid on it. The reexporter must produce a receipt for the duty
paid and other documents to prove that the article that is being reexported is the same as that on which the duty was paid.
I f the requirement for proof of identity is waived, the drawback
may become equivalent to an export bounty, when the imports of the
commodity in question exceed the exports thereof. A plan of this
kind is in effect in France. The French importer of wheat may, on
payment of import duty, obtain a certificate that entitles the holder
to a refund of the duty upon exportation of an equivalent amount of
wheat. Domestic wheat may be substituted for the imported wheat,
so that the refund of duty is more than a drawback. In fact so long
as France is on a deficit basis for wheat, the effect is similar to that
which would result if an equivalent export bounty were paid in cash.
For under this condition exporters of wheat can acquire the certifi
cates at a nominal cost, the supply of certificates being in excess of
the amount that can be sold. This measure facilitates the export of
soft wheat, the production of which in France is often in excess of
domestic needs, in exchange for the hard wheat that must be
imported.
But the import certificate plan is removed by one further step
from the drawback. Instead of granting a refund of duty on proof
that the latter has been paid, the Government issues certificates to
exporters which are tenderable in payment of import duty. Thus,
the exporter of wheat in Germany formerly received certificates that
were equivalent in face value to the import duty on wheat and could
be tendered in payment of the duty. These certificates were trans
ferable. Since imports of wheat exceeded exports37 there was a
demand for as many certificates as were issued, and their market
value was therefore only slightly less than their face value. The
same plan was also applied to other cereals.
37 Eastern Germany exported wheat; western Germany imported it. The quality of the
exported wheat, moreover, was different from that which was imported.

WORLD TRADE BARRIERS II* RELATION TO AGRICULTURE

In order to make import certificates effective as an export subsidy
on a commodity of which the country is a net exporter, a further
departure from the principle of the drawback is necessary. Import
certificates issued on the export of one commodity, let us say rye*
of which there is a net export, may be made tender able in payment
of import duty on another commodity, or 011 a whole range of com
modities, of which there are net imports. This was practiced in Ger
many during the last pre-war decade and again from 1925 to March
1931, but since the latter date this feature has been absent. The
import certificate system in its present more limited form is known
as the “ exchange plan.” It is applied to wheat to facilitate the
exchange of German soft wheat, some of which is exported to Great
Britain, for hard wheat which is imported from overseas.38
Since the reintroduction of import certificates in Germany in 1925.,
the plan has been adopted in several countries which are close neigh
bors of Germany. This illustrates the way in which dumping meas
ures, like import restrictions, are likely to spread from one country
to another. In Poland import certificates are issued on a w~ide range
of agricultural (and on some industrial) products. They are tenderable in payment of import duties on any product, and have in some
cases even been made redeemable in cash. Reference has already
been made to the German-Polish rye agreement which arose out of
the issuance of import certificates on rye by both governments. Sim
ilar plans have also been adopted in Sweden, Czechoslovakia, and
Austria. In Sweden, as in Poland, the certificates are redeemable in
cash. In Austria import certificates have recently been discontinued.
(c) Export bounties in the form of reduced freight rates.—Indi
rect export subsidies are sometimes granted by governments that
operate the railways in their territory in the form of specially re
duced freight rates. Reduced rates for export shipments apply, for
instance, to wheat in India, sugar in Germany, corn in Rumania, and
hops in Czechoslovakia. It is not always easy, however, to deter
mine whether the existence of freight rates on export shipments lower
than those charged for comparable distances on domestic shipments
constitutes dumping. Freight reductions are sometimes made by
governments with the definite intent of aiding an industry, but they
may also be made for other reasons, not only by government-ownedr
but also by private, railroads. It may be, for instance, that the ex
port shipments, being in greater volume, involve a lower cost, or that
the carrier is more subject to the competition of other transportation
agencies in regard to export shipments than in regard to domestic
shipments.39 It is probably for such reasons as these that the freight
rates on grain for export in some parts of the United States and Can
ada (in the latter country on both government-owned and private
railways) are lower than those for domestic shipments of comparable
distances.
(d) Dumping by means of a monopolistic marketing organiza
tion.—The general nature of dumping by means of a monopolistic
marketing organization has been indicated. When an organization
is operated for the purpose of dumping in the interest of producers,
38 For details see ch. VI and the appendix.
39 In the latter case the differentiation of freight rates constitutes dumping of trans
portation services. Even if the commodity transported is an agricultural product the
practice can hardly be considered a form of farm relief.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

its procedure in regard to price will tend to be as follows: Although
the price received in the domestic market will be higher than that
received in the export market, the price paid to the producer will
not depend upon whether his product is exported or not. The or
ganization will sustain a loss on exports which will be offset by its
profit in the domestic market.
There are, however, cases in which the actual handling of the com
modity is done not by the central or national marketing organiza
tion itself, but by a number of private dealers or cooperative mar
keting agencies over which the central organization has regulatory
powers. In such cases the equalization of the returns obtained in
the domestic and export markets may be effected by levying a tax
or fee on the handling of the commodity and by paying from the
proceeds of this fee a bounty on exports. The so-called “ equaliza
tion fee plan ” which has been advocated in the United States in re
cent years, would have operated in this manner.
Most of the dumping measures now in effect are of recent origin
and were first adopted after the present depression began. Coming
into effect during a period of rapidly declining prices, they have,
in most cases, had the effect of checking or moderating the decline
of prices to producers rather than of raising them. They appear
to be an outcome of a desperate need for relief rather than a mani
festation of a settled policy. The outstanding exception to this rule
is the Paterson plan, which has been in effect with respect to butter
in Australia since 1925. This is one of the few cases in which
monopoly control in an agricultural commodity has been exercised
without government intervention. All the important creameries in
Australia, both cooperative and private, have voluntarily submitted
to the control of a stabilization committee, elected by themselves.
The committee makes a small levy on the entire output of butter
produced by the creameries, and with the proceeds pays a bounty on
exports of butter. But, although the organization of producers
under the Paterson plan is not based on government intervention,
the operation of the plan does depend on government support insofar
as the levy on butter production would not be feasible without the
butter tariff which is in effect. In the absence of the tariff the com
petition of butter from New Zealand would make it impossible for
the industry in Australia to exact a monopoly price from the con
sumer. The Paterson plan also enjoys government support insofar
as the Government has abstained from prosecuting the butter pro
ducers under the antitrust laws of Australia.
Since the Paterson plan has been in effect for several years, it is
possible to reach some conclusions as to its results. Australia con
tributes only a minor part of the world’s supply of butter, and the
effect of the introduction of the Paterson plan on world prices has
not been noticeable. Moreover, so far as can be ascertained, the plan
appears to have made the returns to Australian producers greater
than they otherwise would have been. Production, however, and
exports have been increased, and it has been necessary accordingly
to reduce the rate of bounty paid on exports of butter.40
*° In addition to Australia, a number of other countries have recently applied dumping
schemes to dairy products. This includes South Africa, Sweden, Norway, Finland, and
Estonia. This is another illustration of the tendency of such measures to spread from
one country to another with respect to the same commodity. It is noteworthy, moreover,
that all the countries mentioned are minor exporters of dairy products.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

Another example is the measure applied to rice in Italy. The
National Rice Institution (Ente Nationale Risi), created by a Gov
ernment decree, has extensive powers to regulate all trading in rice.
In addition to fixing the prices that must be paid to growers, it levies
a fee on the purchase of rice from the. grower. This fee is used to
pay an export subsidy that varies according to the country to which
the rice is exported. For those countries in which the competition
of rice from other sources (Brazil being the chief competitor) is
great the bounty is high, while in other countries a lower rate o f
bounty is found sufficient to secure an adequate market for Italian
rice. For this purpose the countries to which exports have been
made are divided into three groups, and a different rate of bounty
is fixed for each group. The group to which the highest rate o f
bounty applies includes South America and most of northern Europe.
Exports to the European countries bordering on Italy are subject to
the lowest rate of bounty.
The method of dumping according to which the whole production
is handled by a single agency has been used in a few countries. An
example is the grain monopoly in Yugoslavia. The monopoly for
merly purchased the whole wheat crop and charged a price well above
export parity on that part of the crop which was sold in the domestic
market; exported wheat had, of course, to be sold at the world price.
Farmers received the net proceeds of the sale of wheat after deduc
tion of costs of distribution. Thus the price received by the farmer
was raised above world price parity, but not by as much as the price
paid by the domestic consumer. The procedure was the equivalent*
in bookkeeping operations, of the payment of an export bounty out
of the proceeds of a levy on domestic consumption. More recently
the method of administration, though not the economic principle, of
the measure has been changed. The monopoly now handles only
wheat for export and is enabled to pay to farmers a price above ex
port parity by receiving the proceeds of a government tax on the
domestic consumption of wheat.41
(e )
Export quotas.—A method of dumping similar in principle to
the foregoing, but unique in the method of its administration, has
been applied by the South African Government to corn. At the be
ginning of each marketing season the government determines what
proportion of the crop is to be exported, and every dealing agency
(including the cooperative marketing associations) must export that
same proportion of the total quantity of corn handled by it. The
policy is to fix the proportion in such a way as to restrict the supply
and thus to raise the price in the domestic market. The large coop
erative organizations, which control a substantial part of the trade
in corn, pay their members the net proceeds of their sales, both
domestic and foreign, according to the same principle as was in
dicated above in connection with the Yugoslav grain monopoly.
Private dealers are forced by competition with the cooperatives to
pay the same price as the latter for their purchase of corn from
farmers. Thus far the measure has been rather unsuccessful owing
to the existence of large surplus stocks carried over from earlier years.
41 For further details see appendix.

WORLD TRADE BARRIERS IK RELATION TO AGRICULTURE

MEASURES DESIGNED TO CONTROL THE QUALITY OF EXPORTS

The measures designed to control the quality of exports are, like
dumping measures, usually a form of international competition in
export markets. In the case of all agricultural commodities, quality
is an effective weapon of competition, and any improvement of the
quality of exports of a commodity from one country will give pro
ducers in that country an advantage over producers in other coun
tries. But improvement of quality is not generally regarded as a
form of unfair competition, as is dumping. It does not tend to
lower the world price of the commodity in question. It may, how
ever, lead the governments of other countries to take action in selfdefense. The severity of the German restrictions of butter imports,
for instance, is partly due to the fact that the high quality of Danish
butter puts German butter producers at a disadvantage.
Examples of the type of measure in question may be found in all
countries in which the government provides facilities for grading
agricultural products. This is done in the United States as well as
in many foreign countries. Some countries prohibit the export of
ungraded products or make the grading of certain commodities com
pulsory. In Denmark butter can be exported only if it conforms
to certain standards laid down by the Government. In fact, Den
mark has succeeded in building up a very substantial export trade
in agricultural products in large part through the attention given
by its cooperative marketing organizations and its Government to
the maintenance of high quality and standardization. Owing to its
export trade, Denmark had during the last decade become one of the
most prosperous countries in the world in spite of its very limited
natural resources.
In other countries export taxes are imposed on produce that is
ungraded or of a low grade. In Poland the Government imposes
export taxes on a long list of products that do not conform to estab
lished grades and qualities. At the same time an export bounty is
paid on the highest qualities of the same products. In Rumania the
Government places an export tax on unstandardized eggs, to dis
courage the exports of eggs that do not conform to the established
standards. In Australia and New Zealand the exporting of a num
ber of agricultural products is controlled by export boards. The
purposes of these controls are various, but among them one of the
principal aims is to maintain a high standard of quality. The New
Zealand Fruit Control Board, for instance, places a tax on exports
of apples and pears of low quality and provides a bounty on apples
and pears of the best qualities.
Another type of export regulation, which is not unlike the fore
going in its aim, is intended to encourage the processing of a raw
product in the country which exports it. Such measures are not
intended to improve quality in the strict sense, but they do aim to
add value to the exported product. As an example, mention may
be made of the export tax imposed in Lithuania on raw or un
worked flax and on worked flax containing over 15 percent of waste.
The purpose of the tax on raw flax is to encourage the processing of
flax in Lithuania, while the tax on worked flax containing over 15
percent waste is imposed to raise the quality of the exports of the

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

product. The latter feature therefore comes under the first rather
than the second type. The principal example of a measure of the
second type, though not applying to a strictly agricultural product,
is the restriction placed on the export of wood pulp from Canada.
EXPORT RESTRICTIONS

There are a number of cases in which governments have en
deavored to reduce the total quantity of exports of a particular com
modity for the purpose of raising or maintaining the price in the
world market, but such measures have been less numerous than the
other forms of export aid. Moreover, the present depression has
been characterized as least as much by the breakdown of such schemes
as by their increase, although measures of this kind are likely to be
adopted when an oversupply of the product in question has severely
reduced the world price. In fact, some very severe obstacles must
be overcome in order to make such measures effective. A single
country cannot restrict the world supply of a commodity unless that
country happens to be the only important source of the world supply.
Further, whenever a country does so restrict the supply, other coun
tries that are capable of producing the product are always likely to
increase their production. This difficulty was mainly responsible for
the breakdown of the British rubber restriction scheme, and was
partly responsible for the breakdown of the Brazilian coffee
restriction.
It is for this reason that several attempts have been made to limit
exports by international agreement. Several international confer
ences, with this aim in view, have been held in recent years. Wheat
and coffee have been among the commodities proposed for restriction.
But international agreements are notoriously difficult to make and
put into effect. The only case in which such an agreement designed
to restrict exports of an agricultural product has come into operation
in recent years is that of the Chadbourne sugar plan which, since
May 1931, has been applied to sugar.
It is feasible to restrict exports only if there is at the same time
an effective restriction of production. This is true at least in the
long run. In fact, all of the schemes to restrict exports have been
made effective either by restriction of production, as in the case of
Egyptian cotton and henequen in Yucatan, or have involved produc
tion restriction as a necessary element of their operation, as in the
case of the rubber-restriction scheme, or have been accompanied by
some attempt to restrict production, as in the case of Brazilian coffee.
The Chadbourne plan combines export restrictions on an interna
tional scale with production restriction on a national scale. More
over, the success of export-restriction schemes has been dependent
primarily on the extent to which it has been possible to restrict
production. Not only must production be restricted within the coun
try that applies the restriction but there must be no substantial
increase in production elsewhere. Since the problems connected
with export restriction are largely those of restricting production,
and since nearly all the export-restriction schemes that have been
put into effect are also in some degree restrictions of production, the
discussion of these schemes in detail is reserved for the following
chapter.

CHAPTER V
PRODUCTION AIDS AND RESTRICTIONS
The two preceding chapters have described the major types of
trade-control measures now in effect which directly influence inter
national trade in agricultural products. All such measures, it was
recognized, must tend in some degree to influence the domestic pro
duction of the commodity to which they are applied, save in the
case where there is no domestic production. This influence upon
production may be one of the ends sought or it may be simply an
incidental result; but in either case it will certainly not be lacking
and may often be large.
There are, however, other measures quite outside the field of for
eign trade control, though by no means unrelated to it, which also
affect production. It is the main purpose of this chapter to describe
and illustrate these, though it will be necessary also to give some
further attention to the production aspects of foreign trade con
trols.42 Some of the measures to be described involve direct regula
tion of agricultural production or of some branch of it ; others indi
rectly influence the volume of domestic production, deliberately or
otherwise, but do not directly regulate it. All of them, however,
come under the general heading either of production aids or of
production restrictions.
PRODUCTION AIDS

The measures to be described in the general group of production
aids include both measures involving some degree of direct régula-'
tion of output for the purpose of increasing it and measures tending
indirectly to stimulate production but not actually regulating it.
D IR E C T R E G U L A T IO N O F PR O D U C T IO N

The furthest development of the idea of production control for
purposes of expansion would be found in a country which directly
regulated all agricultural production to that end. Actually, we
have a situation closely approaching this in Soviet Russia. In
Soviet Russia, control of production lies at the center of a compre
hensive system of planned economy. Over the economic structure
42
From the stan d poin t o f th eir effects on dom estic production or on foreign trade, as
the case m ay be, there is no hard and fa s t d istin ction betw een foreign trad e-co n trol
m easures and production -influen cing m easures o f a m ore direct sort.
T h u s, for exam ple,
the tendency o f im port restriction s and o f export aids w ill be to increase the dom estic pro
duction. O f export restriction s, on the other hand, the tendency w ill be to reduce it. E ven
w hen there is no deliberate restriction o f ou tp u t in con ju nction w ith th e restriction o f
exp orts, the increase o f dom estic stocks, unless dom estic consum ption m ean w h ile increases
sufficiently to offset the reduction in exports, w ill tend to bring about a decline o f prices
and hence to discourage production.
C onversely, production aids and restrictions m u st
tend to affect the volum e o f foreign trade in the com m odities to w h ich th ey are applied.
A production bou nty, i f applied to a product w h ich is on an im p ort basis, w ill tend to
reduce im ports.
A n d i f applied to one on an exp ort basis, it w ill tend to increase
exp orts.
T h e reverse w ill be true o f ou tp ut restriction.
I t w ill tend to increase im ports
i f the product is on, or sufficiently close to, an im port basis (un less, as is likely to be
the case, such im p ortation is deliberately p re v en ted ). A n d it w ill ten d to reduce exports
if th e product is on an exp ort basis.

179563— 33------ 7

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

and resources of the country the authority of the Soviet State is allpervasive. Prices and profits in a competitive market do not dictate
production policies. What shall be produced and in what proportion
are matters determined by the Government plan. The acreage to
be planted and the amount to be delivered to the State are all fixed
by the plan. If, because of its inherent defects or for some other
reason, the plan is not fully executed, it is none the less the blueprint
to which the State endeavors to compel producers to conform. Costs
and other economic considerations must be taken into account in
framing the plan, but it is the plan itself which is immediately para
mount in relation to production policy.
In formulating its plan, moreover, the Soviet Government defi
nitely aims to increase the total agricultural output.43 In particular
areas there may be, and in fact has been, encouragement of one branch
at the expense of another; but by and large it is expansion that is
sought.44
The Russian case is unique in the pervasiveness of government con
trol over economic activity. In no other country is the whole process
of production and distribution made subservient to authoritative
government direction. But there are instances in the “ capitalistic ”
countries where the government regulates agricultural production in
one or more of its phases.
In connection with its intensive program of agricultural expan
sion the Italian Government actively intervenes to insure more pro
ductive use of all land which it finds is not being satisfactorily used.
To this end the Government asserts complete authority over private
farm management in all cases in which the owner fails adequately
to apply the policies laid down by the Government. This it may do
either by turning over the management of the land for a period of
years to a local farming association or to some other agency, such as
an agricultural college, or by actual expropriation.45
In Spain much the same sort of thing is done, or at least is con
templated in recent legislation. Since the spring of 1931 successive
decrees have gone into effect providing for what may be called “ com
pulsory farming.” Under their provisions farming ceases to be
merely a private enterprise; it becomes virtually a public utility.
Farms or estates that are not operated in accordance with the official
program worked out for a particular region may be taken over by
the Government for operation. How this system will ultimately
work out in practice is not yet clear; but the intent of the Gov
ernment, and some suggestion of the difficulties encountered, are
indicated by the recent issuance of decrees defining in detail the
program of farm work to be undertaken in the various regions, to
the end that neither the farmers themselves nor the local police
charged with enforcement may plead ignorance as to what exactly
is to be done. In the present connection it should be observed, of
course, that the general agrarian program in Spain, of which com

43 I t is interestin g to note here th a t the Soviet representatives at the L ondon W h e a t
Conference in M a y 1 9 3 1 , though they assen ted to the gen eral prin ciple o f establish in g
export quotas from the w h ea t-exp ortin g countries, insisted th a t R u ssia ’ s quota should
be a t least equal to its pre-w ar share o f th e w orld w h ea t exp ort trad e and th a t there
should be no u n dertak in g on R u ssia ’s pa rt to restrict w heat production.
44 F or a m ore detailed account o f the m ethods em ployed by th e Soviet G overnm ent, see
ch. V I I .
45 For a sum m ary account o f Ita lia n agra ria n policies, see ch. V I ; and for a m ore
detailed account o f the m easures applied in execu tin g these policies, see the appendix.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

pulsory farming is but a phase, contemplates an increase in agricul
tural, and especially cereal, production, although the emphasis on
this particular object is rather less than in Italy.46
Much more prevalent than direct government control of farming
operations in general is the regulation of production of a particular
crop. Such regulation may be either stimulative or restrictive. We
are concerned at this point only with the former. A good illustra
tion, in which the immediate regulation of production is restrictive
but in which the tendency of government intervention in its en
tirety is stimulative, is supplied by the State tobacco monopolies in
countries which grow leaf tobacco. Among these countries the ones
that also import large quantities of leaf tobacco are France, Spain,
Poland, and Czechoslovakia; those that are virtually self-sufficient
are Italy, Rumania, Yugoslavia, and Japan; and those that are defi
nitely on export basis are Turkey and Hungary. In all these coun
tries, and in some others that do not have monopolies but that never
theless give artificial encouragement to domestic tobacco growing,47
there appears to be at least some measure of direct governmental
regulation or supervision of the quantity, type, or condition of
production.
The methods of regulation employed are various, but they are
usually administered through the issuance of production permits to
the individual growers, subject to conditions laid down by the Gov
ernment. Thus, for example, in Spain the.area planted in 1932-33 is
restricted to a maximum of 5,000 hectares; the number of growers to
receive permits may not exceed the number in 1931-32, with preference
given to those already growing tobacco; the number of plants per
grower may not be less than 2,000 nor more than 150,000 (the latter
may be exceeded under certain conditions); the number of plants
per hectare is fixed on the basis of type of tobacco and soil conditions;
and the number of leaves to be left on each plant is officially deter
mined in the light of the condition prevailing in the particular local
ity. In Japan the Government tobacco monopoly regulates the
variety and area that each district may plant, and individual permits
are issued after the acreage applied for has been scaled down in ac
cordance with the general acreage allotment for that particular dis
trict. In Turkey the particular areas to be planted, the type to be
grown, and the production and marketing of the crop are under
official supervision. In Hungary the Government requires that a
46 The sim ila rity betw een the tw o countries in the p a rticu la r m atter o f com pulsory
fa rm in g m ust not be taken as in dica tin g com plete sim ila rity o f agrarian program s.
A c tu a lly , there are m arked differences.
In Spain, basic land reform , in v o lv in g the break
in g up o f large estates through exp ropriation, is con tem plated in recent law (Septem ber
1 9 3 2 ).
E x p rop ria tion is not an incidental, but a m ain, featu re, ju s t a s it w as in eastern
European countries in w hich agrarian reform s have occurred since the W o rld W a r .
The
social problem o f pro m otin g fam ily fa rm in g and settlem ent o f the land less fa rm workers
is especially em phasized.
M oreover, althou gh fa m ily farm in g is con tem plated in con
siderable areas subject to expropriation, m uch o f the expropriated lan d is to be farm ed
collectively.
O nly to a lim ited exten t is th is la tte r phenom enon paralleled in Ita ly ; and
in other E u ropean countries w here agrarian reform s have occurred, except in R u ssia, it
finds no parallel.
S till an other difference is th a t in Spain actu al ow nership is not granted
to the peasants w ho are settled upon the expropriated land.
47 In Germ any, fo r exam ple, fo llo w in g m arked expansion o f dom estic production under
artificial stim u lus, a decree o f Dec. 1, 1 9 3 0 , lim ited the area plan ted in the different
provinces to the m axim um grow n during one of the crop years 1 9 2 7 , 1 9 2 8 , or 192 9 .
And
in Sw itzerland a governm en t loan to the grow ers in 1 9 3 0 w as m ade conditional upon
guarantees of the la tte r to restrict tobacco cu ltivation fo r 5 years to lim its set by thè
governm ent.
In Greece, wh^re the indu stry is on an export basis, there is no govern
m ent m onopoly, bu t intervention in the f o r m o f financial assistance, governm en t purchase
and disposal o f old and deteriorated stocks, prohibition o f tobacco cu ltivation in certain
areas, and in other w ays has been a feature.

“WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

grower, in order to obtain a permit, must own an area of land suit
able for tobacco' growing equal to at least five times the area he is to
plant.
Unaccompanied by positive measures to stimulate production, such
regulation, in and of itself, would have to be regarded as restrictive.
But as a matter of fact the regulation is always accompanied by
stimulative measures. In those countries that are on a net-import
basis, such measures are predominantly of an artificial price-support
ing character involving the restriction of imports. If there is a
monopoly, imports are directly regulated by the monopoly, and this
regulation is accompanied by payment of higher prices for domestic
leaf than would have to be paid for the same grade if imported. I f
there is no monopoly, reliance is usually placed upon tariff or other
restrictions on imports or higher internal excise taxes on imported
than on domestic leaf to give a price advantage to the domestic
producer. In those countries that are on an export basis, while there
may also be import restrictions affecting prices of certain grades in
which domestic production is deficient or lacking, chief reliance must
naturally be placed on measures designed to increase the competi
tive strength of the industry in foreign markets. In either case,
however, the result is a tendency to stimulate domestic production.
The net situation is, therefore, that in most of these tobaccogrowing countries, and especially in those that have monopolies,
there is what may be termed “ regulated stimulation55 of production.
Artificial aid is given to domestic producers, but not unconditionally.
In the importing countries fiscal considerations, the interests of con
sumers, the general market situation, and other matters must be taken
into account. Likewise, in the exporting countries in which there is
government intervention, fiscal considerations, the state of competi
tion and demand in foreign markets, and other factors must be taken
into account in regulating production and marketing. Insofar as
there is regulation of production in the various tobacco-producing
countries, it is employed not to reduce output as a whole (though it
may do so for particular types) but to adapt the operations of the
domestic industry to the broader requirements of the country’s fiscal
and economic position. In a particular country, as for example in
France, it may turn out that there is actually no tendency for do
mestic production to expand, yet production is presumably greater
than it would have been in the absence of government intervention.
In fact, however, in most of the countries having monopolies, produc
tion has been increasing.48
Tobacco is but one of many cases that may be cited to illustrate
the principle of “ regulated stimulation ” of production of a par
ticular agricultural commodity. Another illustration, one in which
there is widespread interest just now, is the proposed “ pig reorgani
zation scheme 55 in the United Kingdom.49 This plan, drawn under
procedure laid down in the British Agricultural Marketing Act of
1931 but for the actual application of which a broadening of the
scope of the act is now pending, contemplates the regulation of total
supplies of bacon and ham marketed in the United Kingdom in such
manner as (a) to iron out the cycle of production and prices, and
48 C oncerning fu rth e r details, see ch. X .
49 F or m ore detailed inform ation concerning the schem e, Fee the appendix.
d etails, see the R eport of the R eorgan ization Com m ission for P igs and P ig
M in istry o f A gricu ltu re and F ish eries, U n ited K in gd om (O ctober 1 9 3 2 ).

For fu ll
Products,

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

(b) to increase, first, the home-produced, and second, the Dominion,
share of the total supply offered. To this end the Pig Reorganiza
tion Commission recommends that, beginning July 1, 1933, the total
volume of supplies, domestic and imported, be limited to the average
of the 6 years 1925-30, or about 1,195 million pounds per annum.
This would involve a very considerable reduction below the total
in 1931 and in 1932. But in the future allocation of quotas amongst
domestic, Dominion, and foreign sources, expansion rather than re
striction of home-produced supplies is contemplated. The plan con
templates expansion at a uniform rate under a system of contracts
for delivery to the bacon factories at regulated prices. The rate
of increase of deliveries is not to be permitted to exceed 10 percent
in every 4 months. This would permit production to double approx
imately every 2y2 years. Thus, though the scheme actually regulates
only marketing, it ultimately involves what amounts to “ regulated
stimulation 55 of production.50
Other cases may be cited in which artificial assistance to the pro
ducers is accompanied by some sort of ultimate, but direct, limitation
of output. In the United Kingdom what amounts to a production
bounty on wheat, in the form of a minimum price guarantee the
costs of which are ultimately assessed upon domestic consumers of
flour, cannot, under existing law, be paid upon more than 27,000,000
hundredweights (50,400,000 bushels) of home-grown, millable wheat.
One of the main objects of this bounty is to promote the extension
of wheat raising into certain parts of the United Kingdom where it
is felt that its production will be advantageous in the agricultural
economy as a whole. Beyond that point artificial support of the
industry is not intended to go.51 In the Netherlands a bounty to
wheat growers in the form of a minimum price guarantee, adopted
in 1931, resulted in such an expansion of acreage in 1931-32 that for
the current crop year (1932-33) it is provided that no wheat grower
shall plant more than one third of his 1932 crop land to wheat, and
no grower who has violated this regulation is eligible to the price
guarantee on any of his wheat.52
Sometimes the direct limitation accompanying the general pro
gram of assistance to the industry takes the form primarily of regu
lation of the conditions rather than of the amount of production.
Some of the restrictions already mentioned with respect to tobacco
are of this type. In France a 10-year subsidy to the olive industry,
dating from 1932 and taking the form of a payment of so much per
tree if certain minimum conditions in caretaking are met, is doubled
and even trebled, provided certain further conditions as to caretaking or planting are observed. In Spain a per acre subsidy to the
corn (maize) growers in certain areas in 1929-30 and 1930-31 was
made subject to close governmental supervision of the conditions of
production. The same is true of the per acre subsidy to cotton
growers, together with a minimum price guarantee, under which it is
being sought to expand cotton growing in Spain.53
50
T h is “ regulated stim u lation ” of production is only partial, since the plan applies on ly
to bacon and ham and not to fresh pork.
A farm er is free to sell an y hogs he pleases
fo r the fresh-pork m arket, and it is possible th at a surplus o f the “ bacon-type ” hogs
m igh t be directed in to this channel.
01 F o r fu rth er details concerning the B ritish W h ea t A c t of 1 9 3 2 , see the appendix.
52 F o r fu rth e r d etails, see the appendix.
53 A ll o f these illu stra tio n s are described in more detail in the .appendix.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE
IN D IR E C T

A ID

There remain to be discussed, under the general head of production
aids, those measures that tend to increase output, or to check its
decline, by making the total financial returns of the producers larger
than they would otherwise be, but that do not involve any direct
regulation of the amount or conditions of production.54 These com
monly take the form either of direct payments by the Government
to the producers, such as production bounties or premiums, or of
measures to increase the prices of their products. In either case
production may be profoundly affected.
There are, however, important differences between the two which
should be noted in the present connection. One is that production
bounties and other direct payments to producers are much less preva
lent than price-supporting measures. Another is that the mainte
nance or stimulation of production as an immediate end appears to
be more commonly associated with bounties than with price-raising
measures, though there are important exceptions. A third is that
bounties are usually accompanied by some prior limitation on the
amount, the conditions of payment, or the period of duration.
Whether because this kind of aid is so clearly an outright gift or for
some other reason, such is usually the case. A few illustrations of
production bounties may be cited for the purpose especially of
emphasizing this last point.
1.
Production bounties.—In one type of case the limitation takes
the form of a graduated reduction of the amount of the bounty. The
British bounty to the sugar-beet industry, under the Sugar Subsidy
Act of 1925, involves a diminishing payment to the sugar-beet fac
tories over a period of 10 years from 1925, to be reflected at least in
jjart in prices paid to the growers, and is accompanied by a guaran
teed minimum price to the growers throughout the 10-year period.
The Australian bounty on flax, under the Flax and Linseed Bounties
Act of 1930, consists of a payment of 15 percent of the cash selling
value of the flax during the first 2 years, 10 percent the next 2, and
7y2 percent the last year (1935), with the further limitation that the
total amount of the bounty payment in any one financial year is not
to exceed £20,000 (except as credits may be carried over from the
preceding year). Similarly, the Australian bounty on seed cotton,
under the Cotton Bounty Act of 1926, provided for a 5-year bounty
of l^ d . per pound on the better grades of cotton and %d. per
pound on the lower grades, with the proviso that the total pay
ment in any one year must not exceed £120,000. An accompanying
bounty on cotton yarn from native cotton was limited annually to
£60,000. In 1930 a new act provided for a gradual reduction of both
bounties over the next 5 years, the rates on seed cotton in the last
year (1936) being y2d. for the higher and y±d. for the lower grades;
and the amount of the combined payments in respect to seed cotton
and cotton yarn in any one year was set at not to exceed a total of
£260,000.
In a slightly different case from the foregoing the limitation is
made to hinge upon price. In France a production premium of 7
54
N o attem p t w ill be m ade here to include m easures o f intervention th a t seek, by
reducing costs o f production or o f m arketin g, to increase the net incom es o f the producers,
althou gh it is recognized th a t these also w ould tend to stim u late ou tp ut o r to check its
decline.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

cents a pound on flax fiber in 1931-32 was accompanied by the condi
tion that payment should cease if the price of Russian flax (no. 4,
first quality) on the Lille Flax Exchange exceeded 12 cents a pound.
Finally, the limiting condition may be wholly on the side of period
of duration. The Canadian and the Australian bounties to the wheat
growers in 1931-32, granted only for a single year and not renewed
in 1932-33, are examples. Incidentally, they are also among the ex
ceptions noted above in connection with the statement that the
maintenance or increase of production is likely to be an immediate
object of the bounty payments. For in these two cases, and in
others, some of them arising especially out of the world agricultural
crisis, the paramount consideration was the extension of financial
relief to the producers, and not any immediate desire to expand
production or to prevent its decline.
2.
Trade control measures.—Much more prevalent than bounties
among the measures of indirect aid to production which operate
through higher gross income, are those measures that are of a pricesupporting character. Among these, foreign trade controls, either
in the form of import restrictions or of export aids, are by far the
most important.
Here too, but much less commonly than in the case of production
bounties, the production effects of the measures adopted may be
limited by a certain flexibility in the measures themselves. This is
true, for example, of sliding-scale tariffs. Even though the primary
purpose of the sliding scale may be to reduce the" burden of the tariff
on consumers when prices are high, the tendency is also to check an
overstimulus to production. In Chile the sliding-scale tariff on
wheat provides for complete removal of the duty when the price
rises to 40 pesos per 100 kilos.55 In Egypt a similar system is in
effect for wheat, except that there is a minimum duty. Indeed, in
every case where there is a sliding-scale tariff on a commodity of do
mestic production, the point holds.
It is likewise true of flexible import restrictions of other kinds.
In Japan the Government suspends its licensing restrictions on rice
imports when prices rise unduly. In Spain the prohibition on
imports of wheat is lifted and import permits are issued when the
price reaches 53 pesetas per 100 kilos ($1.45 a bushel at exchange,
May 1, 1933). In Portugal a somewhat similar scheme, further
reinforced by a per-acre subsidy on new lands devoted to wheat, is
in operation. In all the countries imposing milling quotas on wheat
or rye, the foregoing ends are subserved by changes in the quota.
The same thing applies to mixing regulations, linked sales, and the
like, described in an earlier chapter; indeed, to any flexible system
of import restriction. And it applies also to sliding-scale bounties
on exports, such as those on Portuguese East African cotton and
Egyptian beans mentioned in the preceding chapter.
By and large, however, the tendency of import restrictions and ex
port aids to stimulate production is likely either to be ignored or to
be definitely recognized as one of the ends for which the measures
are adopted; and if there is a certain measure of flexibility in the
55
E q u ivalen t to $ 1 .3 2 a bushel at par and to 68 cents a bushel a t th e rate o f exchange
on M a y 1, 1 9 3 3 .

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

manner of their application, this is likely to be owing to considera
tions other than a desire to limit their effects upon production.
Take import restrictions as an example. Not only do they tend
to stimulate, or to check a decline of, production in countries that
are on a deficit basis, but this is usually one of their deliberate objects.
Especially is this likely to be the case if the country in question is
anxious, on grounds of national safety, to avoid too great a depend
ence upon foreign countries for products essential to subsistence.
Other long-run considerations may also enter, such as the desire for
a large rural population as a stabilizing influence in the social fabric.
Germany illustrates both considerations. More immediate motives
may be the desire to soften the shock of collapsing prices in time of
severe depression, or to protect the national currency from the effects
of dangerous inroads into the national gold reserves. But back
of these immediate considerations, in countries like Germany, France,
and Italy, there always exists the desire to keep agricultural produc
tion from declining to a point too far short of the requirements for
national self-sufficiency. Hence there is no thought of limiting the
expansion of output arising from such restrictions; indeed, quite the
contrary.
Differing in motive, but illustrating the same general point, is the
case where a government undertakes, by stimulating production of
other crops, to diminish the production of a particular one. In Cuba
and Egypt the desire to diversify production and thus to become less
dependent on a 1-crop economy (sugar and cotton, respectively) has
led to increasing governmental effort, through tariffs and in other
ways, to encourage the growing of other crops.56
Production stimulation is much less likely to be a deliberate object
in the case of export aids, although the case of Soviet Russia is an
important exception. Nevertheless, their stimulative effect on pro
duction is usually not checked in any way. This applies, for instance,
to the various wheat export-dumping schemes in the Danubian coun
tries and to such export aids as have been applied to wheat in the
other leading wheat-exporting countries. It is true that the incen
tive to prevent these aids from too greatly stimulating production if
diminished by the fact that they have not kept the prices obtained
for the assisted products from declining during the last few years.
Hence there has been no actual price incentive to increase produc
tion. But insofar as they may have tended to check a decline in,
even though they did not stimulate, production, they have been
permitted to do so.
RESTRICTION OF PRODUCTION

We turn now to a discussion of measures that are intended to be
positively restrictive, to bring about an absolute reduction of agri
cultural output. Though there may be such restriction in branches
of agriculture that are on an import basis, most of the familiar and
important illustrations are in respect to commodities that are on an
export basis. When the industry is on an import basis, ready means
are at hand for restricting supplies offered in the domestic market
66 C oncerning the m otives fo r im port restriction in variou s countries, see w h a t w as said
in ch. I I I .

WORLD TRADE BARRIERS

RELATION TO AGRICULTURE

and thus raising the price of the domestic product. In some measure,
at least, restriction of imports will accomplish the purpose.57 Not
so, however, in the case of products that are on an export basis.
Hence it is among these products that the more striking examples of
production restriction are found.
The motive for such restriction is either to raise the price in
the world’s markets above its existing level or to prevent it from
declining as much as it would in the absence of restriction.58 There
are two main types of policy in this connection. The more common
one is the monopolistic type of restriction, in which a country or a
group of countries, able to control the major part of the world
supply, attempts to reduce the total amount of that supply in order
to make the price higher than it would be under free competition.
The cases of Egyptian cotton and Malayan rubber are illustrations.
The other type of control is that which is used primarily to prevent
the operation of a dumping scheme from evoking excessive exports
and so to avoid a consequence which would lead to its ultimate
failure. In the first case the paramount consideration is the price
in the world market. In the second, it is the price in the domestic
market, the purpose of the restriction being, rather, to avoid or
minimize losses in the export market.
As was indicated in the previous chapter, restriction of exports
and restriction of production are intimately connected. Sometimes,
as in the cases of Egyptian cotton and of henequen in Yucatan,
there is no provision for restricting exports as such, but the same
thing is accomplished by restricting production. Sometimes it is
the reverse; exports are restricted. When this is done, however,
either the conditions are such that the export restriction is tanta
mount to production restriction, or, if they are not, the export
restriction is likely to be implemented by measures intended to
restrict production. Illustrations are, respectively, the Stevenson
rubber restriction scheme and the existing international (Chadbourne) sugar agreement. Under the Stevenson scheme (abandoned
in 1928) production of each plantation was, in effect, controlled
through an export tax which was made prohibitive for amounts in
excess of those allotted to individual producers.59 Under the sugar
agreement each participating country is required to limit its exports
to a stipulated amount, and Cuba is required to limit its production
also. The other participating countries restrict their own produc
tion as they see fit with a view to keeping their exports within the
allotted quota and their domestic prices at a satisfactory level.
Though the problem of restricting output of agricultural prod
ucts has been much in the foreground in recent years, and many
proposals to restrict production or exports have been put forward,
the proportion of the world’s agriculture to which such measures
have been actually applied is not large. In agriculture the con
ditions are on the whole less favorable to control of total output
of a commodity than in other industry, owing to the large number
of producers. But there are considerable differences among particu
57 R estriction o f production, or rather, lim itation o f expansion, m ay be resorted to in
order to m ake the tariff still more effective in raisin g the price o f the protected com m od ity.
58 Save in those cases where, strictly speaking, there is no “ w orld m ark et.”
59 T h is, o f course, w ould not literally prevent production in excess o f the export q u o t a ;
but in the absence of a dom estic ou tlet there w ould be no m ark et fo r th e excess.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

lar branches of agriculture in regard to the ease or difficulty with
which restriction can be applied. One factor is the extent to which
production, by reason of natural or other conditions, tends to be
localized within the confines of a particular country, or perhaps in
not more than two or three. Manifestly, successful control to raise
prices is easier under such conditions.60
Another factor is the nature of the organization of the industry.
I f large scale organization predominates, as in cane sugar and rub
ber, the sugar mills and the rubber plantations are focal points
through which restriction can be administered. In rubber, when the
Stevenson scheme was first applied, most of the production was on
large plantations, and the output of each producer was not hard to
ascertain. Other commodities, such as sugar, are the result of pro
cessing an agricultural product which, because of its bulky character
and perishability, must be produced near the mill in which it is
processed. The individual mills are sufficiently large to permit con
trol of their output with relatively little difficulty, and from each
mill the production of cane or beets in the area from which it is
supplied can be controlled. On the other hand, the control of
wheat or cotton acreage obviously presents much more formidable
difficulties.
A factor that facilitates temporary restriction of production or
exports is the nature of the product itself, or of its production. The
harvesting of rubber, for instance, can simply be postponed. The
same is true to a lesser degree of sugarcane. The Cuban Govern
ment has sometimes ordered postponement of the cutting of the
cane. Another factor is the degree of perishability of the product,
as it relates to storage over extended periods. In this regard such
commodities as cotton, coffee, and wheat have distinct advantages
over the more perishable commodities. Still another factor which
renders possible the restriction of supplies, though not, strictly speak
ing, of production, is the possibility of disposing of a part of the
product in some secondary use. Thus Greece has restricted supplies
of currants in the world market by diverting part of the crop into
industrial uses.
The means of restriction are varied, depending upon the circum
stances of the particular case. The restriction may be through lim
itation of acreage, of the number of plants or trees per acre, of the
types that may be grown, of the region within which planting may
occur, of the quantities that may be marketed, and so on. Special
taxes or prohibitions on new plantings, restriction of exports in such
manner as virtually to limit output, allocation of production quotas,
and other devices are employed. A few of the outstanding examples
will be briefly described in order to illustrate some of the variations
in methods and in the conditions under which restriction is applied.
In Egypt the Government definitely restricts cotton acreage.
For more than a decade restrictive legislation has been in effect from
time to time. In 1926 a law was enacted restricting plantings in
1927-28, 1928—29, and 1929—30 to one third the total number of
60
E ven under these conditions, com p etition from ou tside sources, eith er in the product
it s e lf or from som e substitute, u ltim a tely sets fa irly definite lim its upon the con trol, as is
show n by th e h isto ry o f th e coffee, rubber, and o f variou s other a tte m p ts a t con trol. F o r
a m ore detailed account o f such experiences, see W a lla ce, B . B ., and E d m in ster, L . R .,
In tern a tio n a l C on trol o f R aw M a te ria ls (B ro o k in g s In stitu tio n , 1 9 3 0 ) .

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

arable acres.61 In February 1931, a decree limited the planting of
Sakellaridis cotton to certain specified areas in the northern zone of
the delta during the three crop years 1931-32 to 1933-34, and within
these areas specified that the area planted by each individual should
not exceed 40 percent of the total area of land held by him. In
September 1931, however, this ratio was reduced, for the single year
1931-32, to 30 percent. At the same time another decree limited the
area planted to cotton in any other part of Egypt during the 1931-32
season to 25 percent of the total land area held. Late in 1932, how
ever, the restrictions for the next year’s planting were greatly re
laxed, maximum percentages being raised, on Sakellaridis (in the
northern zone of the delta) to 40 percent, and on other varieties
(mostly in other sections of the country) to 50 percent.
Brazilian coffee constitutes a well-known historical case. But in
this instance, at least until recently, efforts at production restriction
were always an incidental and largely ineffective part of the Govern
ment’s policy of intervention. From 1905, when the first experiment
with coffee valorization began, on through the various attempts at
valorization and defense of coffee extending through the decade fol
lowing the World War, the regulation and restriction of coffee ex
ports in such manner as to secure higher average prices in foreign
markets than would otherwise be obtained, was the central feature
of the intervention. Restrictions upon the planting of new trees
were in effect from the beginning, but they were largely nominal.
In 1929, when prices collapsed and the period of painful liquida
tion which still continues set in, stocks of coffee had risen to the level
of practically an entire annual crop. From that time the problem
became the dual one of disposing of stocks already accumulated and
of preventing further accretions from current crops. To this end
special taxes have been levied on coffee shipped out of the producing
States, the proceeds being applied to “ the purchase for elimination
of the excess of production and of actual stocks, for the balancing of
supply and demand.’2 Large stocks have been burned. An annual
tax of 1 milreis 62 per tree was for a time levied on new plantings,
other than replacement of worn-out trees. A more recent order pro
hibits for 3 years from November 1932 all new plantings, including
substitution for fields abandoned.
Yet another example is sugar. Underlying the restrictive pro
grams of several countries relative to sugar production is the Inter
national Sugar Agreement, or Chadbourne Plan. This agreement,
entered into in May 1931 by Cuba, Java, Germany, Czechoslovakia,
Poland, Hungary, and Belgium, and subsequently adhered to by
Peru and Yugoslavia, provides for restriction of exports on the
part of a group of countries which together produce some 40 percent
of the world’s sugar and whose exports comprise about 90 percent of
world sugar exports. The total volume of exports of sugar was
limited to a definite figure and a specific quantity of stocks already
on hand was set aside under the designation of surplus stocks, to be
disposed of at a certain rate. Although restriction of production
was not provided for explicitly, it was agreed that each signatory
01 T h ese law s w ere never fu lly enforced, althou gh they were p a rtly effective in years o f
low prices.
F o r fu rth e r details concerning E g yp tian cotton restriction , see the appendix.
®2 Equivalent to 7 .6 3 0 c ïn t s in U nited S tates currency a t current exchange as o f M ay 1,

WORLD TRADE BARRIERS IN' RELATION TO AGRICULTURE

country should so adjust the production of sugar that its output, plus
the annually disposable part of its surplus, should not exceed domestic
consumption plus an export quota assigned to it in the agreement.63
It will suffice here to note briefly the manner in which production is
controlled by some of the leading participants.64
In Cuba, control of production is effected through the allotment of
grinding quotas by the Sugar Export Corporation to the individual
mills. At the beginning of each grinding season the Sugar Export
Corporation furnishes the President of Cuba with a statement of the
quantity of sugar to be exported to the United States, the quantity
to Europe, the quantity likely to be consumed in Cuba, and the quan
tity to be ground by the mills in the forthcoming year. Upon this
basis the President legally establishes, by administrative decree, the
total quantity that may be produced. The Sugar Export Corpora
tion then allots to each mill the maximum quota it may grind.65
Heavy fines are imposed for violations. In Java the restriction of
output, until late in 1932, was left to private control through an
association of sugar manufacturers popularly known as the Y.I.S.P.
(the Verseniging van Inclische Suiker Producenten). Recently, com
plete control has been taken over by the Government, which has s$t
up a marketing monopoly, the Nederlandsch-Indische Vereeniging
voor den Afzet van Suiker, known as the N.I.Y.A.S. All production
as well as sale of sugar will be under strict supervision, each estate
sharing according to its size in the production and sale of sugar.
With 2,850,000 tons of unsold sugar on hand on January 1, 1933, it
was reported that acreage would be reduced by about 53 percent,
but that this would probably mean a much smaller reduction of
output. In Germany the Government, operating through an organi
zation set up in 1931, known as the a Economic Union of the
German Sugar Industry,” fixes a total national quota for domestic
sales and individual quotas for the factories.66
63 C oncerning fu rth e r details o f the agreem ent and the m ethods of ap plyin g it, see
ch. X I V and also the appendix (under C u b a ).
64 R estriction of the production of sugar is also practiced in countries not m embers o f
the In tern a tio n a l Sugar A greem en t.
Such, fo r exam ple, is the case in A rgen tin a and
B razil.
The exports o f sugar from A rg en tin a and B razil are very sm all com pared w ith
their total ou tput, both countries being close to a dom estic basis.
N everth eless, the con
trol and elim in ation of the surpluses have recently been undertaken in these countries.
In A rgen tin a both the production anrl distribution o f su g ar have been placed by a
sugar production law under the control o f a N atio n al Sugar C om m ission .
D u rin g the
crop year 1 9 3 1 —32, production in the A rgen tin e Province of T u cum an (w hich accounts for
about three fou rth s o f the A rgentine production ) w as lim ited by decree to 2 7 8 ,0 0 0 m etric
to n s ; and production in the Provinces o f Sa lta an d J u ju y (producing the rem ainder) w as
lim ited by agreem ent between the piod ueers an d the com m ission to 9 0 ,0 0 0 m etric tons.
T h e legally fixed total o f 3 6 8 ,0 0 0 m etric tons represented a reduction o f 4 percent from
the previous yea r’ s output o f s u g a r ; but the crop actu ally turned out to be only about
3 4 6 ,0 0 0 m etric tons, representing a reduction o f about 10 percent from the previous year.
Su bsequently, it w as reported th a t the N a tio n a l Sugar C om m ission plan ned a fu rth er
reduction of 1 2 4 ,0 0 0 m etric tons for the next 3 years.
In B ra zil a p rice-stabilizatio n plan
in effect since Decem ber 1931 includes control by the M in istry o f L a bor, C om m erce, and
In d u stry o f both the supply and the price of sugar.
W h en quotations a t R io de Janeiro
fa ll below a given m inim um , stocks are exported ; when they rise above a slig h tly higher
maxim um ', stocks are sold on the dom estic m arket.
Th ese m inim um and m axim u m prices
are 39 and 45 m ilreis per bag o f 1 3 2 .3 pounds, respectively ( 3 .5 cents and 4 .1 cents a
pound at nar ; 2.2 and 2.6 cents a pound at current exchange as o f M a y 1, 1 9 3 3 ) .
To
insure stabilization of the price of sugar above th e low er lim it, the supply is lim ited by
assign in g an ou tp ut quota to each sugar m ill in B razil, a fine o f 20 m ilreis a bag (1 .8
cen ts a "pound a t p a r ; 1.2 cen ts a pound a t current exchange asi of M a y 1, 1 9 3 3 ) bein g
im posed for excess grinding.
F or fu rth e r details regarding the A rgen tin e and B ra zilia n
sugar controls, see the appendix.
5
The corporation issues to each m ill certificates o f iden tity for sugar to be exported
to the U nited S tates, sugar to be exported to other countries, and sugar for do m estic con
sum ption. E x p o r ts m ay not be m ade except p u rsuan t to the tender of said certificates of
id en tity for a num ber o f sacks equal to the num ber it is desired to exp ort.
66
For fu rth e r details concerning Java. G erm any, and other countries both w ith in and
outside the intern ation al agreem ent, see ch. X I V and also the appendix.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

One of the most recent and interesting schemes of restriction is
the Netherlands hog-control scheme. The principle of the scheme
appears to represent a combination of the equalization fee idea and
production control. An official organization, known as the “ Nether
lands Hog Central ” , is given a monopolistic control of foreign trade,
the right to establish a price stabilization fund, and the right to
control production. The stabilization fund is procured by taxing
all hog slaughter (for sale). Prices paid to producers are fixed well
above the export level, the losses being met out of the stabilization
fund. Provision is then made for limiting production through a
system of earmarking. The total number that can be marked is
fixed by the Government, and allocations to individual producers
are made through the provincial u Hog Centrals ” which are con
stituent parts of the national body. Since only hogs thus officially
marked can be sold, the actual result is production control.67
Other examples of production restriction include henequen, rubber,
and a pending scheme for tea. In Yucatan the production of hene
quen is restricted to 80 percent of the 1929 output. Each producer is
given a maximum individual quota for delivery equal to 80 percent
of his 1929 deliveries. The entire scheme is administered by the
Yucatan Henequen Cooperative, Ltd., which is a semiofficial organ
ization possessing virtually a monopoly over production and trade.
In the case of tea, restriction of exports is contemplated in a
recent agreement, not yet ratified, between the British and Dutch
tea-growing interests in British India, Ceylon, Java, and Sumatra.
Following the failure of a production-restriction agreement in 1930,
a new agreement was worked out late in 1932.68 The abandonment
of the earlier scheme was alleged to be owing to the failure of the
Dutch authorities adequately to control the native producers. It
was therefore proposed that the new scheme, which is to run for 5
years, should be controlled by the respective governments.
The proposals submitted are said to have the support of approxi
mately 93 percent of the tea interests in these tea-growing areas.
Supplies are to be restricted by means of export quotas, each country
being entitled to have its export quota based on the year of maximum
exports between 1929 and 1931. The initial quota is to be fixed at
85 percent for the first year, and subsequent quotas are to be deter
mined at the end of each year. Existing tea areas are not to be
extended during the 5-year period and further areas are not to be
leased or sold for tea cultivation. The measures will be submitted
to the proprietors of tea estates in the form of a referendum, and if
the referendum is favorable the sanction of the governments con
cerned will be sought.
The Stevension Rubber Restriction Scheme in British Malaya, in
effect from 1922 to 1928, may be mentioned, finally, as a case in which
restriction took the form of flexible control of exports on a sliding
scale of releases upward or downward according to fluctuations in
the price. Each rubber estate was assigned a “ standard produc
tion” ; but the total “ standard production” for all the estates was
less than their aggregate productive capacity by amounts variously
67 See ch. I X and also the appendix fo r fu rth er details.
68 T h ose represented in the conference were : T h e Ind ian Tea A sso ciation , the Ceylon
A sso ciation in London, the South Ind ian A sso cia tio n in London, th e B ritish Cham ber o f
Com m erce for the N etherlan ds E a s t Indies, and the A m sterd am and J ava T ea A sso ciation .

100

WORLD TRADE BARRIERS 11ST RELATION TO AGRICULTURE

estimated at from 13 to 20 percent,69 The act then provided that the
quantity exported should vary with the price of rubber in London.
In the beginning the “ fair price ” was set at Is. per pound. For the
first 3 months no plantation could export at a rate in excess, on a fullyear basis, of 60 percent of its “ standard production.” 70 If during
that quarter the price averaged less than Is. per pound, the percentage
of “ standard production ” permitted to be exported during the next
quarter was reduced to 55 percent, and so on until the minimum of
Is. per pound was attained. If, on the other hand, the price aver
aged in excess of Is. 3d. per pound in any quarter, the percentage to
be released in the following quarter was increased by 5 percent, and
so on. Thus the pivotal points were Is, and Is. 3d. In 1926, when
prices were sharply declining after a previous rise to fantastic levels,
the “ fair price ” was re-defined at almost twice the original level.
In 1928, owing chiefly to competition from the Dutch plantations,
which had refused to come into the scheme, the whole project was
abandoned.
69 W a llace, B . B ., and E d m in ster, L. R ., In tern atio n al C ontrol of R aw M a teria ls, p.
3 7 5 ff.
70 E x p o rts in excess o f the assigned quota w ere subject to prohibitive taxes.

CHAPTER VI
AGRARIAN POLICIES OF SELECTED COUNTRIES:
DEFICIT COUNTRIES 1
In the present chapter an effort is made to outline briefly the out
standing features of the agricultural policies of four of the leading
agricultural deficit countries, namely, Great Britain, Germany,
France, and Italy; to show the fundamental bases of these policies;
and in particular to trace the development of restrictions on imports
of agricultural products into these important markets in recent years.
In all these countries self-sufficiency with respect to agricultural
products has made great headway in recent years and each country
is making particularly determined efforts at the present tixn& to ex
ploit to the fullest possible extent its resources for agricultural pro
duction. This tendency is, in part, a reflection of the growth of
economic nationalism since the World War. In Germany, France,
and Italy protection of domestic agriculture has long been a car
dinal point of national policy. But the necessity of achieving a
more favorable balance of international payments has recently been
an additional, important cause of the rise of import barriers. Not
only has it served to intensify the earlier protectionism of the three
foregoing countries, especially that of Germany, but it has also
played an important part in the recent abandonment by Great Bri
tain of an historical policy of free trade and the adoption of a gen
eral policy of protection which includes encouragement of its domes
tic agriculture and (perhaps of even greater significance for Ameri
can agricultural exports) definite and substantial preference in the
British market for the products of the Empire.
UNITED KINGDOM

The outstanding importance of Great Britain as a market for agri
cultural products makes its agricultural policy of special significance
to American agriculture. From the time of the repeal of the corn
laws in 1846 up to 1931 Great Britain provided the greatest open
market for the products of agricultural exporting countries, and
during all this time British agriculture was virtually unprotected
from foreign competition. The few duties that were imposed were
71
A m o n g the references consulted in the preparation o f th is chapter, in addition to
reports from rep resentatives in Europe o f th e U n ited S tates G overn m ent, w e r e : R oyal
I n stitu te of In tern a tio n a l A ffairs, W orld A g ricu ltu re : A n In te rn a tio n a l Su rvey, 3 1 4 p.,
L ondon, 1 9 3 2 ; D eu tsch e A g rarp o ltik im R ahm en der Inneren und A u sseren W ir t s c h a ft s
p o litik * * * inj A u ftr ä g e des V o rstan d es der•Fried rich List-Gessiellsichaft, 3 v., B erlin ,
1 9 3 2 ; G t. B rit., A g ric u ltu ra l Trib unal of In v e stig a tio n , F in a l R eport, 4 0 5 p., London,
.1 9 2 4 ; O rw in, C. S., T h e F u tu re of F a rm in g (in the U n ited K in g d o m ), 1 5 6 p., L ondon,
1 9 3 0 ; T u gw ell, R. G ., Th e A g ric u ltu ral P olicy o f France, P o lit. Sei. Q uart. 4 5 : 2 1 4 - 5 4 7 ,
1 9 3 0 ; C lap ham , J. H ., T h e E conom ic D evelopm ent o f France and G erm any, 1 8 1 5 -1 9 1 4 ,
,420 p., Cam bridge. E n g .. 1921 ; Sering, M ax, D ie D eutsch e L a n d w irtsch a ft u n ter V o lk s
und W e ltw irts c h a ft- liehen G esichtspu nkten , G erm any, R eich sm in isteriu m fü r Ernährung
und L a n d w irtsch a ft, B erichte über L a n d w irtsch a ft, n .f. 5 0 .
Sonderheft 9 5 4 , 66 p.,
B erlin , 1 9 3 2 .

101

102

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

on noncompetitive products and chiefly for revenue purposes, al
though they also provided, starting with 1919, an effective basis for
preferential treatment for Dominion products. Otherwise, with the
exception of schemes for encouraging settlement on “ small hold
ings ” , temporary price guaranties for wheat and oats during and
immediately following the World War, and a subsidy for sugar beets
inaugurated in 1925, there was practically no attempt on the part of
the British Government to bolster the position of agriculture by
price fixing or other forms of aid. In short, unlike the other indus
trial nations of western Europe, Great Britain pursued a laissezfaire policy with respect to its agriculture, while on the other hand
industrialization was so emphasized that in recent years less than 7
percent of the gainfully employed workers in the United Kingdom
have been engaged in agricultural pursuits. This compares with
over 50 percent in Italy, about 40 percent in France, and 30 percent
in Germany.
That this decline in British agriculture has not been viewed with
unconcern by the Government, especially since the war-time threat
of food shortage, is indicated, in part, by a number of official inquiries
starting during the war into the position of agriculture and its pos
sible remedy. The latest of these, the Agricultural Tribunal of In
vestigation, appointed in December 1922, came to the significant con
clusion that, unless large-scale experiments could demonstrate that
stock and dairy farming in Great Britain could be made to pay, the
only alternative to the continued decline in British agriculture was a
resort to protective measures. But in spite of this growing realiza
tion of the difficulties faced by British agriculture, particularly fieldcrop production, it was not until the financial crisis of 1931 that the
die was finally cast in favor of protectionism.
With the establishment of the National Government in the autumn
of 1931 it became clear that some kind of protective legislation would
be enacted as soon as the new Parliament assembled. In order to
forestall the heavy imports already being made in anticipation of
a protective regime, a law was enacted giving the Board of Trade
discretionary power to impose duties up to 100 percent ad valorem.
Under the authority of this law, known as the Abnormal Importa
tions Act, effective on November 24, 1931, duties were levied on a
wide range of industrial products. This act did not apply to agri
cultural products, but on December 11, 1931, the British Parliament
adopted the Horticultural Products Act, which authorized the Min
istry of Agriculture to impose duties up to 100 percent ad valorem
on fresh fruits and vegetables and other horticultural products ex
cept on products of Empire origin. Duties were accordingly levied
on a seasonal basis on a long list of fruits, vegetables, flowers, and
nursery stock. These duties affected principally exports from near-by
continental countries and, with one or two exceptions, such as fresh
plums, did not apply to items exported in significant quantities from
the United States to Great Britain.
On March 1, 1932, a general tariff went into effect. This act im
posed a general duty of 10 percent ad valorem on all imports from
sources outside the Empire except on products already subject to
import duties, such, for example, as tobacco, and a few specifically
exempted items. Among these exempted items were included not

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

103

only such noncompetitive products as cotton but also the principal
products competitive with British agriculture, notably meat and
wheat. With respect to such leading items of food, decision as to
import restriction was in the main deferred, pending the outcome
of imperial preferential negotiations. Finally, at the Imperial Eco
nomic Conference at Ottawa in August 1932 provision was made for
the complete application of the principle of preferential treatment
for Empire products.
It will suffice to note here the agreements of special interest from
the point of view of United States exports to Great Britain.72 These
include provision for a duty on foreign wheat imported into Great
Britain of 2 shillings a quarter of 480 pounds (6 cents per bushel at
par and about 4 cents per bushel at the then current exchange); a
duty on foreign apples of 4 shillings sixpence per hundredweight (43
cents per bushel of 44 pounds at par and 30 cents per bushel at ex
change then current) ; and arrangements for regulating the quantity
of imports of pork and other meats and meat products into the
British market. The wheat and apple duties were ratified and be
came effective in November 1932, and quotas for foreign meat have
been in effect since December of that year. While the agreements
growing out of the Ottawa Conference definitely established the
policy of Empire preference, there was nevertheless a clear determi
nation on the part of the British representatives to give first support
to British agriculture.
The support has not been confined to the establishment of tariffs
and other restrictions on imports. Even before protectionism set in,
efforts had gotten under way to give more active assistance to British
farming, with the emphasis resting upon measures other than import
restriction. One of these was the Agricultural Produce (Grading
and Marking) Act of 1928, the purpose of which is to secure for the
producers more satisfactory returns by enabling them to compete
more successfully with overseas products. It is hoped to do this by
improving the quality of home-grown products and by marking them
as British-grown in order to create a consumer preference for do
mestic products. In 1931 the Agricultural Marketing Act went into
effect. The object of this act is to facilitate by government aid
schemes for regulating the marketing of home-grown agricultural
products.73
It will be sufficient to note here the scheme of greatest significance
to American farmers. This is the proposed plan of the Reorganiza
tion Commission for Pigs and Pig Products announced on October
19, 1932. Although preliminary steps looking to its adoption have
already been taken, this plan has not as yet (May 1933) gone into
effect. It proposes, principally by an improvement of production and
marketing methods and limitation of imports by means of quotas, to
build up the hog industry to a point where a much larger pro
portion of the British demand is supplied by domestic production
than has heretofore been the case. Finally, mention must be made
of the enactment on May 12, 1932, of the Wheat Act, which aims to
72 F o r fu rth e r details concerning the O ttaw a agreem ents, see ch. V I I , section on th e
B ritish D om in ions.
73 F o r a m ore detailed discussion o f the B ritish A g ric u ltu ra l M ark etin g A c t, see theappendix (un der the U n ited K in g d o m ).

179563— 33------ 8

104

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

halt the decline in wheat growing by providing the grower a secure
market at a guaranteed price for a stated quantity of wheat. This
price guaranty resulted in a small increase in British wheat acreage
in 1932 and is expected to cause a still greater increase in 1933,
possibly even to the point where production will exceed the quantity
to which the guaranty applies. Whatever the results in this direc
tion, it is clear that Great Britain, in view of its limited resources for
wheat growing in relation to its population, will continue to be one
of the world’s largest importers of wheat.
GERMANY

Germany is the second largest market for American farm products,
and this fact alone endows the German agrarian policy with a
considerable degree of interest to American agriculture. This in
terest is enhanced by the importance of German agriculture and
by the fact that the German agrarian policy, unlike the British
policy, has long been characterized by active State interference.
The tariff has been the cornerstone of German agrarian policy for
more than half a century. But before considering German agricul
tural protection it will be well to note a few of the many other ways
in which the German Government has sought to give aid to its agri
cultural industry. Some of the more outstanding of these have been
governmental intervention in the consolidation of the scattered
(strip) peasant holdings and the prevention of excessive subdivision
of inherited holdings; land settlement (internal colonization); as
sistance to the cooperative movement, especially in the sphere of
agricultural cooperative credit ; organization of chambers of agri
culture with compulsory membership and the right of levying as
sessments and making grants for such purposes as experimental sta
tions, agricultural education, and cooperative propaganda; and ex
tension of emergency financial aid, as during the present agricultural
crisis. These and a host of similar problems of the countryside have
been objects of solicitude of the Government. But tariff protection
(understanding the term broadly to include all methods of shelter
ing domestic agriculture from foreign competition) has remained the
central feature of German agrarian policy.
Since the early eighties of the nineteenth century Germany has
built up a system of agrarian protectionism designed to shield do
mestic agriculture, and especially grain farming, from foreign com
petition. Germany may be considered an outstanding example of a
highly developed European industrial State with agricultural pro
tection as an important constituent element in its economic system.
The present system of grain protection dates back to the restoration
in 1879 of agricultural import duties after a period of free trade in
the sixties and seventies. These duties, originally moderate in
character, have undergone upward revisions as time has passed and
have tended to acquire a more extreme protectionist character.
With the declaration of war in 1914, grain duties in Germany were
abolished. The free importation regime in the case of grain and
most other foodstuffs prevailed in the early post-war period. In
1925 Germany regained freedom to shape its commercial policies,
which had been severely restricted by the provisions of the Treaty
of Versailles, and returned to the old regime of customs tariffs.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

105

With the réintroduction of tariffs, import duties on grain and
other agricultural products were also restored. The further history
of the German agrarian tariff policy since the autumn of 1925 may
be roughly divided into two periods. The first extended until 1929,
and the second began with the collapse of grain prices in that year
and coincided with the severe agricultural and general economic
depression that followed.
Upon the whole, the first period, between 1925 and 1929, was char
acterized by the application of the traditional methods of tariff pro
tection. The main reliance, as before the World War, was placed
upon import duties supplemented, in the case of grain, by import
certificates. It differed from the pre-war regime chiefly in a certain
lack of stability (growing out of the use of temporary duties that
were made necessary by the fact that the task of drawing up new
commercial treaties required time) and in its somewhat more com
prehensive character, especially as far as the protection of animal
and other products of intensive farming were concerned. It is note
worthy, however, that the duties on wheat, lard, and tobacco,74 which
constitute the principal agricultural exports of the United States to
Germany, exclusive of cotton, were lower than before the war, both
absolutely and relatively to the prices of these commodities.
In 1929 the German tariff policy entered a new phase. The sharp
decline of grain prices which began in that year and the general
economic depression and financial crisis which followed in the suc
ceeding years affected profoundly its entire character and emphasis.
From that time it became protectionist in the extreme, especially as
regards cereals. Duties were raised to such heights that they some
times greatly exceeded the world prices, as in the case of wheat with
a duty of $1.62 per bushel. Duties on feed grains were also greatly
increased. Another important change in the German tariff policy
was the introduction of flexible rates to cope, with price fluctuations,
in place of fixed tariffs theretofore prevalent. This process was ac
companied by a change in the tariff-making procedure involving a
transfer of the rate-making power from the legislative to the ad
ministrative authorities. Administrative rate making, introduced
first on a limited scale by the law of December 22, 1929, was gradu
ally extended, reaching its culminating point in a law passed by the
Reichstag in March 1931, which permitted administrative changes of
all agricultural duties and introduced provisions aiming to safeguard
the interest of the consumers in the process of tariff-making. These
extensive administrative tariff-making powers were exercised to in
crease duties on a large number of agricultural commodities, includ
ing bread and feed grains, livestock, and sugar beets. One of the
latest and, for American agriculture, the most important of these
changes was the successive increases in the duty on lard from 1.1
cents a pound (at par) in February 1933 to 10.8 cents in July.
Some important but usually temporary reductions of duties for
specific periods and purposes were also made under this power, as
in the case of certain varieties of wheat needed for mixing with the
74
A lth o u gh the im port duty on lea f tobacco w as low er du ring pra ctically the w hole
decade 1 9 2 1 - 3 0 than before the w ar, G erm an tobacco grow ers had the addition al protection
in the preferen tial rates o f the excise ta x granted on fine-cut tobacco con tain ing 50 percent
o f dom estic-grow n tobacco.

106

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

domestic product. Differentiation of rates for the same commodity
depending upon the quantities imported was effected through the
establishment of quotas. The amounts permitted under the quota
are admitted at a lower rate of duty, while imports in excess of the
quota are dutiable at a higher rate.75
The import certificate system,76 which before the war and in the
early post-war years played a vital part in the scheme of protection
of the German rye industry by helping to dispose of the surplus, was
gradually abandoned in the face of large surpluses, decreasing con
sumption in foreign markets, rapidly declining world prices, and
restrictions of grain imports into Germany by high tariffs.
The increasing difficulty of maintaining wheat and rye prices in
the face of a falling world market has been chiefly responsible for the
introduction since 1929 of a variety of new restrictive and pricelifting devices supplementary to the import duties. It became evi
dent that if German rye prices were to be maintained, new measures
must be devised to dispose of the rye surplus which had formerly
been drawn into export channels by means of the import certificate
system. Then, too, with a greatly increased domestic wheat pro
duction, the tariff in itself was becoming less effective in supporting
prices, especially since a considerable proportion of the increased
domestic output did not meet the prevailing quality requirements
of the German milling industry.
Next to the flexible duties, the wide use of such new devices constiutes the most distinctive innovation of the modern German pro
tective system. There is, first of all, a class of devices which are
definitely restrictive and protective in character. These include
milling regulations requiring a stipulated percentage of the grain
milled to be of domestic origin; baking regulations which require the
use of certain flour mixtures for baking bread and which aim princi
pally at increasing rye consumption; and finally, trading monopolies,
such as the corn monopoly, and restrictive import quotas, such as the
butter quota, both of which devices permit not only of direct limita
tion of the total quantities imported but also of discriminatory treat
ment of the various foreign countries competing for the German
market. In a closely allied group are government price-supporting
and stabilization operations.
In a second class are measures designed to relieve or remedy some
of the unfavorable consequences of extreme protectionism. The
so-called “ exchange plan55 which replaced the system of import
certificates, is just such an adjunct of the present grain protection
system. Its main purpose is to facilitate the imports of hard wheats
not grown in Germany but needed by the flour mills for blending.
Under this plan certificates are issued for exports of cereals which
allow the imports of an equal amount of a similar kind of grain at
reduced rates of duty.
The third class of measures is represented by such schemes as the
so-called “ combination 55 or “ linked 55 sales plan which aims to com
bine protection with the remedial features mentioned above. The
substance of the linked sale scheme is that domestic grain is offered
for sale jointly with imported grain in a certain ratio. The
75 Fu rther d etails o f these ad m in istrative changes in the G erm an tariff are given in the
appendix.
76 See appendix fo r a description o f th is p la n ; also ch. I V .

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

107

imported grain is admitted at a reduced tariff and, as a result, such
a combination of German and foreign grain can be offered at more
attractive prices than those in the open market. These operations
are especially important in feed-grain marketing.
Particular attention has been given in recent months to the protec
tion of the domestic livestock industry. The duty on lard has been
greatly increased, and import quotas have been established for butter.
Late in March 1933 the German Government established a govern
ment fat monopoly which has control of the production and sale of
products considered to be competitive with butter and lard. The new
measures are designed to restrict greatly the importations of fat and
to reduce competition w it h German farmers arising from domestic
production of margarine.
To sum up, the new period of German tariff policy which began
in 1929 has been characterized by a greatly accentuated protection
ism far surpassing the tendencies of this nature manifested during
the pre-war and first post-war decades. By introducing flexible
duties and forging a number of new weapons, a protective system was
evolved by trial and error which possesses considerable elasticity and
is readily adaptable to changing conditions of supply and demand.
State interference with foreign trade is much more extensive than
prior to 1929 or before the war, especially in the case of the grain
trade.
When the reasons for the increasingly protectionist character of
the German tariff policy are examined, it ivill be found that they are
in a large measure common to most of the European countries and
even to the world at large. But there were two factors especially
significant in Germany. The first is the considerable prestige and
political power which the large landlords have been able to wield
notwithstanding the revolution. This has been especially pronounced
in the last few years and accounts for the great length to which the
government has been willing to go in the matter of grain protection
as well as in the financial relief of the east German farmer. Both of
these are matters in which the large landowners are especially inter
ested. Another factor operating to intensify the German agrarian
protectionism has been the precarious position of the German trade
balance during the whole post-war period. This has made the re
duction of imports of foodstuffs that can be growm at home an
important national objective in connection with the immediate
problem of balancing Germany’s international payments. Especially
has this been the case since the onset of the world financial crisis
in 1931.
FRANCE

It has been, historically, the aim of the French Government to
maintain a self-sufficient agriculture and at the same time to pre
serve a strong and contented peasantry on the land. France has
sought to do this chiefly by restricting imports of foreign products
and preserving the French market to the f ullest possible extent to the
French farmers. The large agricultural resources of the country
have enabled France, in large measure, to achieve this aim of selfsufficiency but not, of course, without sacrificing to some extent the
expansion of French industry.

108

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

Under the shelter of protection, French agriculture has been main
tained, and the much-desired “ balance ” between agriculture and
industry has been made possible, although the relative position of
agriculture in the French economy has declined somewhat, especially
since the World War, with the growing industrialization of the
country.
Fundamentally, this policy of agricultural protection has been
made possible by virtue of the fact that, although the aggregate agri
cultural production of France is very large, it nevertheless falls
somewhat short of the domestic requirements for staple foodstuffs,
such as cereals and meat. The agricultural exports of France con
sist of a few specialties sold abroad, for the most part, on the basis
of quality. The French Government, therefore, has not had to be
concerned with the disposition of large exportable surpluses, and the
fact that there has been a deficit of the staple food products has made
the tariff effective in maintaining domestic prices for these products
above the world level.
In spite of France’s large agricultural resources and its more or
less stationary population, this long-continued policy of protection
ism has not led to exportable surpluses and the difficult problems that
such surpluses entail. The reasons are to be found partly in the lack
of technical efficiency in organization and methods of agriculture
which has tended to hold back expansion in production; and partly
in the fact that the French Government, in establishing import du
ties, has had to reconcile the desire of the farmers for higher prices
for their products with the equally strong and possibly more articu
late desire of the nonagricultural population for cheap food. The
result has been that, while duties have been sufficiently high to main
tain fairly well the status quo of French agriculture, they have not
been so high as to encourage, with prevailing farm organization and
methods, an expansion beyond domestic requirements. In fact, for
many years there has been a definite tendency away from extensive
field crop production toward the more intensive and relatively more
profitable animal husbandry. Thus in 1932 the acreage under wheat
was almost 20 percent under the average for the 5 years preceding
the war.
The maintenance of protective tariffs on agricultural products has
long been the outstanding feature of the French agrarian policy.
Import duties were imposed on grain in the last quarter of thte nine
teenth century as a protection against the flood of cheap grain from
the New World and Russia. The protective system was gradually
extended to include all competitive farm products. During the war
the tariff system was abandoned, and for a time imports for private
trade were entirely prohibited. After the war the protective regime
was gradually resumed. During the first few years a system of pro
hibition and licensing of imports of many products, including
cereals and cereal products, was in effect. This system was aban
doned in 1921; and thereafter import duties were changed rapidly,
almost entirely in an upward direction, to meet the exigencies of
the moment and, in particular, to counteract the depreciation of the
franc. These upward revisions were brought about chiefly by means
of tariff coefficients by which the specific duties were multiplied by
coefficients worked out on an automatic basis designed to stabilize
the protective effects of the rates.

WOKLD TRADE BARRIERS IN RELATION TO AGRICULTURE

109

On April 6, 1926, the duties on practically all products were in
creased by 30 percent, but the coefficient system was continued. On
August 14, 1926, a new law was passed whereby the duties then pay
able under the coefficient system, plus the 30 percent increase of April
6, were increased by a further 30 percent. The result of these measures
was a general increase in the protection of French industry, includ
ing agriculture. In 1927 France negotiated a new commercial treaty
with Germany, and the Government at that time took occasion to
stabilize the tariff schedule with the rates generally raised above
earlier levels. Increases in duties on agricultural products had a
prominent place in this revision. There has been no general upward
revision in the French tariff since 1927, although there have been in
creases in the duties on a considerable number of individual com
modities, including farm products.
In spite of the considerable increases in duties on agricultural
products it appears that, as compared with the situation before the
war, agriculture had relatively less protection than industry even up
to 1929. This was not due to a desire to favor industrial development
at the expense of agriculture but rather to the fact that agriculture
had been less affected by the war and that official attention was con
centrated on industrial organization and development. Agriculture
was not an immediately pressing problem.
But with the onset in 1929 of the world-wide agrarian crisis and
the acute repercussions which were felt in France, the Government
began to adopt unprecedented measures for the support and main
tenance of agriculture. These measures, which are reviewed in some
detail in the appendix, include, in addition to some increase in im
port duties, milling regulations requiring the use of stated percent
ages of domestic wheat (usually over 90 percent), import quotas on
fruit and other products, and increasingly stringent sanitary re
strictions.
France has not, as in the case of Germany, pursued a vigorous
policy in assisting agriculture in ways other than by means of tariffs
and other import restrictions. The reason lies partly in the fact that
French farmers, while welcoming legislation designed to maintain
or raise prices of their products, are opposed to government inter
ference with their traditional practices. Nevertheless, the French
Government has sought in various ways to improve the economic
status of the farmer and to encourage the adoption of newer methods
of farming. These have included extension work through provincial
experiment stations, agricultural education, rural electrification, and
especially the fostering of agricultural credit. Since the agricul
tural crisis became acute in France, there has been a tendency toward
subsidies and other price-supporting measures directed toward the
relief of minor agricultural industries such as flax, hemp, hops, olives,
and tobacco. The chief price-supporting measure affecting a major
agricultural product is to be found in the wheat-storage plan which
seeks to avoid a glut at harvest time, and thus to stabilize domestic
wheat prices, by withdrawing from market channels the equivalent
of about 1 month’s consumption of wheat.77
But perhaps the outstanding way in which the Government has en
deavored to assist agriculture, apart from restriction of imports, has
77 C oncerning

fu rther details, see the appendix.

110

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

been the encouragement, directly or indirectly, of cooperative asso
ciations. The preponderance of small and medium-sized farms, op
erated by owners, has been a fundamental factor favoring the de
velopment of cooperative associations. The rise of the cooperative
movement has been largely spontaneous, growing out of a realization
on the part of the farmers of the advantages of cooperative action;
but government support in the way of enabling legislation and, to a
lesser extent, in direct subsidies, has undoubtedly been important in
permitting the movement to attain its present proportions.
ITALY

Italy, like Germany and France, for many years has followed a
policy of protecting its domestic agriculture from foreign competi
tion by means of import duties and other forms of import restriction.
In Italy, however, aids other than through import restriction have
become so important in recent years that they also must be stressed.
Since the inception of the Fascist Government in 1922 Italy has
pursued an active agrarian policy involving vigorous efforts toward
strengthening the position of agriculture in the national economy.
This policy has sought, among other things, to make Italy agricul
turally self-sufficient for products, especially foodstuffs, which could
be successfully grown at home. Although Italy is a considerable ex
porter of certain specialty products, chiefly fruits, nuts, and vege
tables, it is dependent in greater or less degree upon imports of such
staples as wheat, corn, sugar, meats, wool, cotton, and various fats
and oils (other than oliye). Hence the policy of the Fascist Govern
ment, while it has sought to strengthen the position of agriculture as
a whole, including the export branches, has laid particular stress upon
the expansion of the domestic output of certain food crops now on
an import basis. The Government has gone much further, therefore,
than simply to impose heavy duties and other import restrictions
upon foreign products. In contrast especially to France, Italy has
a definite program for the expansion of its agriculture.
The program for agriculture is rooted in a broader program of
economic and social policy which contemplates the maintenance of a
larger fraction of the population, and an increasing future popula
tion, on the land. This program is an integral part of an ambitious
project launched in 1928. It contains two main features: (1) Pro
motion of an increase in the population and (2) production at home
of the necessary food supplies for Italian consumption, partly by
bringing new areas under cultivation and partly by increasing the
productivity of those already in use. An enlarged domestic market
for Italian industrial production, reduced dependence on foreign food
supplies, agrarian employment for the unemployed from the over
crowded urban centers, and absorption of unemployment in the vast
program of land reclamation and improvement and in other public
works related to the general reclamation project: all are factors
stressed in connection with the scheme.
Ambitious measures to insure the fulfillment of this program have
been taken by the Government. To increase the birthrate, generous
allowances are made in assessing income taxes, frequent payments
are made to large families, and the tax on bachelors has been doubled.
To retain the growing population within the country, drastic emigra

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

H I

tion regulations are in force. To bring under cultivation all of the
potentially arable land in the country, a far-reaching land improve
ment and reclamation scjieme has been adopted, including the com
pulsory use of the land for productive purposes. Laws have been
enacted relieving farmers from the excessively high mortgage rates
formerly prevailing throughout the nation, substituting therefor
rural credits backed by semigovernment agencies. To protect do
mestic producers from foreign competition, the tariffs have been in
creased on a long list of products and more drastic forms of import
restriction have been employed. Premiums and prizes are offered
for exceptional crops on new lands and for exceptional increases in
yield per acre on old land. A complete national system of highways
in conjunction with farm and local roads is under way in order to in
sure the rapid transportation of agricultural products to the railways
or directly to the markets and also to make the rural districts more
attractive to the population.
In addition, the Government is sponsoring extensive plans for rural
social improvement, such as adequate schools, churches, model vil
lages and farm buildings, and modern electrical facilities. Demon
stration farms have been established. Agricultural technicians are
provided for every part of the country to advise farmers in the
proper use of fertilizers, seed selection, improved methods of pro
duction, and the efficient use of modern agricultural machinery.
Finally, the government is endeavoring to build up a new public
psychology toward agriculture. On this score it seeks especially to
check the popular tendency to forsake agricultural life for the social
and commercial amenities of the metropolitan districts.
In order to understand how these objectives are promoted by the
Government it is necessary to know something of the economic organ
ization of the Fascist State and the place of agriculture in that or
ganization. To secure and maintain as large an influence as possible
in all matters affecting the economic interests of the country the
Fascist Government has established a unique organization known as
the “ Corporative State,” through the existence of which it has been
able to realize many of its objectives without resorting to the usual
legislative procedure. Fundamentally, the Corporative State is based
upon a classification of the population of the country into three
broad groups: (1) owners of enterprises or employers; (2) wage
earners or laborers; and (3) professionalists. With this as a basis
the Government then proceeds to apply the classification to the vari
ous branches of national economy. As far as agriculture is con
cerned, this classification of the population manifests itself in the
activities of three agricultural federations or associations sponsored
and subsidized by the Government. These three organizations are :
(1) the National Fascist Confederation of Master Farmers; (2)
the National Confederation of Fascist Agricultural Workers’ Syndi
cates; and (3) the National Fascist Syndicate of Agricultural
Experts.
Group (1) includes all landowners or renters who do no manual
labor on the farm, persons who only rent the land or are engaged
only in managing the farming activities. Group (2) includes the
direct cultivators; that is, small farm proprietors and tenants who
work the land with their families, and all other types of farm em

112

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

ployees excepting those who hold certain academic degrees. Group
(3) includes the agricultural experts and technicians and all those
who hold certain academic degrees either in agriculture or in related
subjects. Membership in these groups is not obligatory, but they are
the only organizations legally capable of representing the opinions of
the special class they represent.
Nominally, these groups are private associations with separate and
distinct legal personalities. Taken together, however, they constitute
what is known as “ the Corporation of Agriculture ” , which, in turn,
forms a part of the Ministry of Corporations. The functions of the
Corporation of Agriculture are to coordinate the interests of the three
groups it represents and to promote, encourage, and subsidize every
initiative aiming at the improvement of production. Any decision
taken by the corporation, which must be based on an agreement be
tween the three groups, is tantamount to an official decree, since it
must be approved by the Minister of Corporations, who is at the
present time the head of the Government.
Thus organized, the Government has undertaken in a host of ways
to support and strengthen the position of agriculture. Concerning
many of the detailed measures, a more complete account is given in
the appendix. More needs to be said here, however, concerning the
major lines of approach. These are largely epitomized in the pro
gram of land reclamation and utilization and in the so-called “ wheat
campaign ” or “ battle of wheat ” which is closely associated with
this program.
In its program of land reclamation and improvement the Govern
ment has followed two main lines of approach. One involves chang
ing the agricultural structure of entire regions of the country. The
o t h e r in v o lv e s th e c o m p u ls o r y a d o p t io n b y fa r m e r s of m o d e r n
scientific practices designed to increase the yield per acre. These
projects, of course, are beyond the means of the individual producer.
The Government is extending generous help, both financial and
technical, to the owners of land subject to improvement, but the
improvement must be undertaken at once and carried out under
penalty of expropriation.
Under the first phase of this program the Government has em
barked upon a number of projects many of which are paid for
entirely by public funds and others partly by the Government
and partly by the farmers. The projects financed entirely by Gov
ernment funds include such works as river regulation, power stations,
and electrification. Those financed jointly by the Government and
the farmers include such projects as irrigation, drainage, drinkingwater supply, farm road building, and farm-building activities. The
exact proportion of the total expenses borne by the Government in
the latter instances depends upon the nature and location of the
project. In general the contributions by farmers have not exceeded
one third of the total cost.
The second phase of the land reclamation and improvement scheme,
namely, increasing the average yield per acre, involves the idea of
direct government intervention in private farm management. To
understand the action of the Government in forcing land improve
ment, new methods of production, and the adoption of new systems
of farming upon private owners, one must bear in mind that the Fas

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

113

cist agrarian policy involves an entirely new concept of property
rights. According to the Fascist philosophy, the rights of the State
take precedence over those of the individual. If the owner of the land
does not attempt to make it more productive by cooperating with the
program of the state, the land is expropriated and the title is trans
ferred to individuals or organizations willing and able to do so. In
the event of expropriation the original owner is given an indemnity
that is supposed to represent the unimproved value of the land.
The general program of land utilization has found its chief expres
sion in the so-called u battle of wheat,” which is designed not only
to make Italy self-sufficient in regard to wheat, but also, by the same
token, to encourage the general production of all other crops that can
be grown in connection with wheat. The “ battle of wheat ” was
launched by the royal decree of July 4, 1925, which set up a per
manent wheat committee to study and submit proposals for making
Italy independent of foreign sources of supply for wheat.78 The
policy of the Government is to increase the production of wheat
partly by expanding the acreage but chiefly by increasing per-acre
yields through improvements in the technic of production, expert
seed selection, and the scientific application of fertilizers. Along
with these developments, others of a general character are expected
to result—greater diffusion of technical knowledge among producers;
better equipment of farms and consequent technical improvements
and increased production of all of the principal crops rotated with
wheat; and an increase in the livestock numbers of the country. In
general, the broad scheme of land reclamation and the changes in the
systems of farming and cropping are expected to result in an
increased production of all food crops.
78
C oncerning the organizations responsible fo r the conduct o f th e w heat cam paign, the
place o f the w heat cam paign in the gen eral agrarian policy o f F a scism , and the resu lts of
th e cam paign, see the appendix.
See also ch. V I I I .

CHAPTER VII
AGRARIAN POLICIES OF SELECTED COUNTRIES:
SURPLUS COUNTRIES
In the deficit countries discussed in the preceding chapter the main
emphasis of agrarian policy is on the protection of domestic pro
ducers from foreign competition and on the attainment of self-suf
ficiency with respect to branches of agriculture thus sheltered. In the
surplus countries, on the other hand, the most important objectives of
government policy are directed toward finding profitable outlets for
products grown in excess of domestic requirements. In these coun
tries, export and production aids of various kinds, including espe
cially efforts to conclude international preferential trade agreements,,
have been the most important types of intervention.
The surplus countries discussed in this chapter—the British Do
minions, the Danubian countries, and Soviet Russia—represent a
significant segment of world agriculture. Moreover, they consti
tute a fairly representative sample, from the standpoint of the rela
tion of government to agriculture in surplus countries, ranging from
Canada, where there has been until recently little direct government
intervention, to Soviet Russia, where government control is the
dominant feature of the economic system.
BRITISH D O M IN IO N S79

The agricultural policies of the British Dominions—Australia,.
Canada, New Zealand, and the Union of South Africa—are of special
significance to American agriculture because of the competitive char
acter of their exports and because this competition centers so largely
in our leading market, Great Britain, where Dominion products are
now enjoying preferential treatment.
Reciprocal imperial preference has been the leading objective of
Dominion commercial policy for many years. But before the World
War, Great Britain, unlike the Dominions, staunchly adhered to; the
free trade regime and refused to grant preference to Dominion prod
ucts. Inroads into the free-trade policy were made during the war
by such measures as the McKenna import duties in the Finance
Act of 1915 and various other war-time import restrictionsr and,
after the war, by the Safeguarding of Industries Act and the Dyestuffs (Import) Act. It was therefore in line with this change in
79
A m o n g the references consulted in the p reparation o f th is section on th e B ritish
D om in ion s, in addition to reports from foreign rep resentatives of the U n ited S tates, M e re :
D eu tsch e
A g rarp o litik -E rgä n zu n gstcil.
Veröffentlichun gen
der
F ried rich
L ist-G ese ll
sch aft, 3 4 8 p., B erlin , 1 9 3 2 [S ection s 63 and 72 to 75. inclusive, on G reat B ritain , Canada,
South A fric a , A u s tr a lia , and N ew Zealan d, respectively, by F . G ra n t, D ire cto r o f the
E m p ire M ark etin g B oard, L ondon] ; R oyal In stitu te of In tern a tio n a l A ffairs, W o r ld A g ri
culture : A n In tern a tio n a l Survey, 3 1 4 p., L ondon, 1 9 3 2 ; U nited S tates T a riff C om m is
sion, C olonial T a riff P olicies, 869 p., 1 9 2 2 ; T h e E conom ic R ecord, Jou rnal o f the Econom ic
Society o f A u s tra lia and N ew Zealand, vol. I l l , no. 15, D ecem ber 1 9 3 2 .
I n ad dition , oflir
eial docum en ts issued in connection w ith the O ttaw a C onference, 1 9 3 2 , w ere consulted.

114

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

115

tariff policy that a partial concession was made in the Finance Act of
1919 to the demand for establishment of preference to the Dominions.
The gist of this arrangement was that rebates on import duties al
ready in existence in the British tariff were to be made on certain
Empire products. It is of significance that the agricultural products
upon which duties were at that time levied consisted chiefly of com
modities such as tea, cocoa, coffee, and sugar in which the self-gov
erning Dominions of the British Empire had little or no interest
although they were of importance to India and some of the Crown
colonies. The importance of the legislation of 1919 lies in the fact
that the preferential principle became rooted in the British fiscal
system and henceforth whenever new import duties were imposed
preferential treatment was invariably accorded to the Empire
countries.
Great Britain continued, however, during the post-war years to
be essentially a free-trade country so far as agricultural products
were concerned. This was especially true with regard to cereals and
animal products, in which the Dominions are chiefly interested. In
1923 the British Government refused to act on a proposal for further
extension of preferences growing out of the Imperial Economic Con
ference of that year. At the same time, however, efforts were made
by the British Government, in conjunction with the Governments of
other Empire countries, to stimulate the use of home and Empiregrown goods in the United Kingdom. In 1926 an Empire Marketing
Board was created, with an annual appropriation of £1,000,000. The
primary objective of this board, as stated, has been to encourage the
use in the British market of Empire products in preference to foreign
goods. With this end in view the Empire Marketing Board has
encouraged scientific research into production and marketing meth
ods and has also attempted to stimulate the demand for British and
Empire products by various forms of publicity and propaganda.
In 1931 Great Britain materially modified its historic policy of
free trade and the road was opened to a more thoroughgoing applica
tion of Empire preference, which was accomplished at the Ottawa
Conference of 1932.
1.
The Ottawa agreements.—Twelve new preferential trade agree
ments were concluded at the Ottawa Conference. Seven were agree
ments between the United Kingdom and its various overseas domin
ions and colonies, namely, Canada, Australia, New Zealand, South
Africa, British India, Newfoundland, and Southern Rhodesia. The
remaining were inter-Dominion agreements. Attention will be con
fined here to the set of agreements concluded between the United
Kingdom and the four Dominions, Canada, Australia, New Zealand,
and South Africa, as being the most important from the standpoint
of their effect upon the agricultural export trade of the United
States.
The concessions extended by Great Britain to the Dominions in
return for the increased preference granted by them to various
British industrial products fall into four classes: (1) guarantees of
continued free entry of Empire goods; (2) agreement to increase the
existing rates of duty on various products when imported from
sources of supply outside of the Empire; (3) guarantees that certain

116

WORLD TRADE BARRIERS 11ST RELATION TO AGRICULTURE

ad valorem duties provided for in the Import Duties Act of 1932
would not be reduced, and (4) agreements to control by quotas the
importation of beef, mutton, lamb, and pork products, and possibly
later application of quotas to dairy products.
Under the first class, the British Government guaranteed continued
free entry for all products grown or produced in the British Empire
which were not dutiable prior to 1932, thus making permanent the
exemption adopted as a temporary measure in the Import Duties
Act of 1932. In addition it guaranteed that the existing margins
of preference on such Empire goods as were dutiable would not only
be maintained but also that no increase would be made in such duties.
There wTere two qualifications, however, to this last guarantee. In
the first place, the agreements provided that as regards eggs, poultry,
butter, cheese, and other milk products, free entry would continue
for 3 years. At the end of this fixed period the British Government
reserves the right either to impose a preferential duty on these
products or to bring them within some system for quantitative regu
lation of supplies from all sources. The second qualification applied
to tobacco. In this connection it was provided that the existing mar
gins of Empire preference over foreign tobacco would be maintained
for a period of 10 years, that is until 1942.
Under the second class the British Government has imposed duties
on such products of foreign origin as wheat, corn, and flaxseed which
were previously admitted free of duty from all sources; and has
increased the duties on a long list of other agricultural products
including rice, butter, cheese, eggs, condensed and powdered milk,
various fresh fruits, various preserved, canned, and dried fruits,
honey, and certain vegetable oils. Under the third class the Do
minions were assured that the duties levied on certain specific prod
ucts (of foreign origin) by the Import Duties Act of 1932 would
not be reduced except with the consent of the Dominion Governments
concerned. This guaranty applies to such products exported from
the United States to Great Britain as canned meats, meat extracts
and essences, barley, wheat flour, sausage casings, and certain dried
fruits.
The principles laid down and the concessions made under the
fourth class constitute probably the most important avenues of
approach for government intervention in behalf of domestic and
Dominion agriculture. To prevent the threatened serious decline in
meat production because of prevailing low prices, the British Gov
ernment agreed to take whatever steps might appear necessary to
raise prices to such a level in the United Kingdom that production
would be maintained. While it was definitely established that any
system set up by the United Kingdom for controlling imports of
beef, mutton, lamb, pork products, and dairy products would first
take into account the interests of domestic producers, it was also
stipulated that arrangements would be made for giving the Do
minions an expanding share of the import requirements. The agree
ments with respect to meats differ from others in the important
respect that no import duties are to be imposed at least for the
present and that imports into the British market are to be controlled
by means of quotas.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

117

The probable effects of these agreements on American agriculture
and on exports to the United Kingdom of specific agricultural prod
ucts will be considered in the commodity sections of this report.
But it will be useful to summarize at this point the commodities
principally affected. These are wheat, pork products, apples, oranges,
grapefruit, raisins, and prunes. The import duty on foreign wheat
amounts, at the par rate of exchange, to about 6 cents a bushel,
while Empire wheat continues to be admitted free of duty. The
duty imposed on foreign apples imported into the United Kingdom,
amounting at par to about 43 cents a bushel, will increase the competi
tion on the British market from Empire apples, particularly Cana
dian and Australasian. Similarly seasonal duties on foreign oranges
and grapefruit will affect to some extent our imports of these fruits
to Great Britain during certain months. Perhaps the most impor
tant effect of the Ottawa agreements relates to our exports of cured
pork. When taken together with the scheme for building up the
domestic hog industry in Great Britain, the quotas on foreign and
Empire pork provided for under the Ottawa agreements, if con
tinued, promise to decrease materially the outlet in the British
market for foreign bacon and ham, including that from the United
States.
2.
Other aspects of agrarian policy in the Dominions.—Canada,
Australia, New Zealand, and South Africa are the four leading
British Empire countries that are parties to the Ottawa agreements.
They possess the common characteristic of being largely dependent
for their national prosperity upon the prices obtainable for agricul
tural exports. Since the war, all four countries have given increas
ing assistance to agriculture, especially on the marketing side. The
assistance has been much more marked in the Southern Hemisphere
countries, especially with respect to perishable and semiperishable
products. Such government activities have been intensified greatly
since the drastic fall in agricultural prices starting in 1929.80
All four countries have a pre-war background of government aid
to farmers establishing themselves in new territories. In post-war
years, land policies have been pursued in the interest of returning
ex-soldiers to the land, and more recently, efforts have been made
to place unemployed workers in favorable agricultural situations.
Australia and New Zealand have been especially active in such work.
All four countries also have conducted government work in agricul
tural education, research, and extension, to increase the quantity and
improve the quality of plant and animal products while concurrently
reducing the unit cost of production. In both South Africa and
Australia the large areas subject to drought, the prevalence of plant
and animal pests and diseases, and the relative scarcity of favorable
producing areas in proportion to the total land area have given rise
to a large degree of state activity in the interest of agricultural
production. Progress made in all four countries is evidenced by the
improvement in the quantity and quality of their products.
All of the countries under consideration are utilizing import tariffs
in some degree in the interest of agricultural producers. The duties
are applied either as a protection for nonexport products or as an
80
D etailed statem en ts
appear in the appendix.

covering

the

m easures

undertaken

the

countries

indicated

118

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

adjunct to the several schemes in effect to bolster domestic prices
of products on an export basis. Another form of government aid
common to the whole group has been the adoption of legal grades
and standards for export products. Additional attention has been
given such measures in recent years with the intensification of inter
national competition. Progress along the lines indicated has been
especially marked in the wool, meat, fruit, and dairy products being
exported from Australia, New Zealand, and South Africa.
In Canada the central features of agricultural policy have been
the reduction of costs of production and marketing, and quality im
provement by education and example. Since wheat accounts for
the bulk of Canadian agricultural exports, most of the official efforts
have been applied to that product. Government activity has been
especially evident in bringing about reductions in freight rates on
wheat from the Prairie Provinces. Direct government aid to wheat
growers appeared in August 1931 under a law authorizing the pay
ment of a bounty of 5 cents a bushel on all wheat sent to market
during the 1931-32 season. This bounty was not continued during
the 1932-33 season. There has been also an increasing amount of
federal support of the Canadian wheat pools since late in 1929.81
The Imperial preference provisions of the Ottawa agreements are
expected to improve the position in British markets of such Cana
dian export products as wheat, meat, fruit, and dairy products.
Under the general protective policy now in effect for Canadian agri
culture and industry, however, it is anticipated that an improved
home market can be developed for agricultural products other than
wheat.
The Australian Government has emphasized cooperative market
ing as an aid to farmers in recent years, following a long period of
liberal land-settlement policies and state aid to improve production
conditions. The cooperative efforts have been both voluntary and
compulsory, the latter being fostered principally through the me
dium of commodity control boards. These control boards are statu
tory marketing monopolies, each established by a majority vote of
the producers and each consisting of representatives of the producers
and of the Government. The Federal Government is represented
in a Dried Fruits Export Control Board and a Canned Fruits Export
Control Board; and the States of Queensland and New South Wales
are concerned in compulsory marketing boards in connection with
wheat, sugar, and fruit, and eggs, rice, and honey, respectively. The
Federal Government, through the tariff, also supports the important
Paterson plan, which is a voluntary marketing scheme dealing with
butter. Some of the States also are concerned with voluntary pools.
At present a direct export bounty is being paid only on wine, but
production bounties are being paid on cotton and flax.
In New Zealand a larger share of the total land area is adaptable
to agriculture than in any of the other three Dominions under
consideration. There is less interest in nonagricultural enterprises
than in any of the other Dominions, the national economy being
practically devoted to the production and export of wool, frozen
mutton and lamb, dairy products, and fruit. The government has
been more closely identified with all public enterprises contributing
81 D eta ils covering these a ctivitie s appear in the appendix.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

119

to agricultural production than has the government of any of the
other countries in this group. A policy of self-sufficiency has been
pursued in cultivated crops, notably wheat, which is protected by
adjustable duties, with provisions made to take care of an exportable
surplus. Disposition of the important export products is in the
hands of export control boards. Each of the boards was established
after a poll of producers showed a majority in favor of it, except
the Meat Control Board, which was established after consultation
between producers and the government. All the boards strive to
regulate exports and thus support prices ; in all instances the activi
ties of the boards are financed by a levy on exports.
Direct export bounties are the feature of government aid to agri
culture in the Union of South Africa. Under the Export Subsidies
Act of November 1931 subsidies are paid on a large number of agri
cultural products. This measure was deemed necessary not only
because of the low world agricultural price levels, but also to offset
the disadvantages of holding to the gold standard while the cur
rencies of most competing countries were depreciating. When South
Africa departed from the gold standard in December 1932 the export
bounties were continued. Wheat, meat, dairy products, corn, and
tobacco are protected from outside competition by special control
bodies which limit or prohibit imports and promote exports. Most
of the money for paying export bounties is secured by a special duty
on all imports. In addition, since 1926, a Perishable Products Ex
port Control Board has had general supervision of all agricultural
exports. The board imposes levies on most agricultural exports to
raise promotional funds which are turned over to the interested
growers’ cooperative. Compulsory cooperation for export is now
enforced in the Union whenever T5 percent of the producers of a
commodity representing at least 75 percent of the output favor such
centralized control.
TH E D AN U BIAN COUNTRIES «2

Although the continent of Europe as a whole constitutes the most
important agricultural deficit area of the world, it nevertheless con
tains within its boundaries significant surplus regions. By far the
most important of such areas, apart from Eussia, is situated in the
Danube Basin, in the southeastern corner of Europe, comprising
roughly Hungary, Rumania, Yugoslavia, and Bulgaria. These four
countries have much in common, geographically and economically.
They are all predominantly agricultural countries, exporting cereals
and other farm products to western Europe and, in turn, serving
82
A m o n g th e references consulted in the preparation o f th is p a rt o f the chapter, in
ad d ition to reports from rep resentatives in Europe o f the U n ited S ta tes G overn m ent,
were : M ich ael, L ouis G ., A g ric u ltu ra l Survey o f Europe, T h e D anu be B a sin , P a r t 2 ,
U .S . D ept, o f A g ri., Tech. B u i. no. 1 2 6 , 1 9 2 9 , and A g ric u ltu ra l Su rvey o f E u rope, H u n g ary,
U .S . D ept, o f A g ri. Tech. B ui. no. 1 6 0 , 1 9 3 0 ; P a svolsk y, Leo, B u lg a ria ’ s E conom ic P o sition ,
4 0 9 p., T h e B rookings In stitu tio n , W a sh in gton , 1 9 3 0 , and E con om ic N a tio n a lism o f the
D an u bian S tates, 6 0 9 p., T h e B rookings In stitu tio n , W a s h in g to n , 1 9 2 8 ; M orga n , O. S.,
A g ric u ltu ra l Sy stem s o f M iddle Europe, N ew York, 1 9 3 3 ; D eutsch e A g ra rp o litik — E r g ä n
zu n gsteil, V eröffentlichungen der Fried rich L ist-G ese llsch a ft e. V . ; K n ig h t, B arn es, and
F lü gel, Econom ic H isto r y o f E u rope, pp. 7 1 4 - 4 7 , B oston , 1 9 2 8 ; L eagu e o f N atio n s, L e
C rédit A g ricole dans C ertain P a y s de l ’ Eu rope C en trale et O rientale, 65 p., G eneva, 1 9 3 1
(S érie de P u blicatio n s de la S o ciété des N a tio n s, I I . qu estions économ iques et financières,
1 9 3 1 , I I . A . 4 ) ; League o f N a tio n s, Econom ic C om m ittee, E tu des relatives au problèm e des
rapproch em ents économ iques européens, P rem ière série, Chiffres E sse n tiels du Com m erce
E x te rie u r des P a ys D anubiens, 70 p., G eneva, 1 9 3 2 (Série de P u blicatio n s de la So ciété
des N a tio n s, I I . qu estions économ iques et financières, 1 9 3 2 , I I . B . 3 ) .
1 7 9 5 6 3 — 3 3 -------- 9

120

WORLD TRADE BARRIERS

RELATION TO AGRICULTURE

as a convenient and potentially important market for the manufac
tures of the industrial nations of Europe. The expression “ granary
of Europe ” which has come to be applied to these Danubian coun
tries is suggestive of their agricultural unity, while the efforts made
by them since 1930 toward the adoption of a more or less common
commercial policy suggest the underlying community of their eco
nomic interests. It is natural, therefore, that the agrarian develop
ment and policies of the Danubian countries, although differing in
detail as between individual states, should have important features
common to the whole group. It is on such common phases of agra
rian policy that the chief emphasis will be placed in this discussion,
while additional information by individual countries will be found
in the appendix.
Two periods may be broadly distinguished in the post-war history
of the Danubian agrarian policies, with the severe agricultural crisis
which began in 1929 serving as a dividing line. Land reforms and
the attempts at industrialization characterize the first period, while
the problem of relieving the severe agricultural, economic, and finan
cial depression has been the keynote of government policy during the
second.
1.
The post-war period up to 1929.—In Rumania the land reform,
begun in December 1918, affected some 15,000,000 acres of large estate
lands, which were transferred (by 1924) to the possession of peasants.
The reform involved the transfer of about one third of the arable
land, pastures, and meadows from the management of large estates
to that of small individual holdings. The change from large- to
small-scale operation profoundly affected the character and volume
of agricultural production. In Yugoslavia, where the area affected
by the land reform was also considerable, the chief result was the
improvement of the situation of the poorer peasantry. In Hungary
the land reform was relatively limited in scope,83 and neither im
proved the situation of the poorer peasants to a significant degree
nor disturbed seriously the course of agricultural production. In
Bulgaria, where small-scale farming and peasant ownership had
long been the rule, the land reform also had a relatively small effect
on the distribution of land.
While the land reforms had many beneficial effects, particularly
in improving the lot of the poorer peasantry, they left some funda
mental difficulties unaltered and served only to intensify others.
They tended to increase the peasant’s need for financial assistance
and had an unfavorable effect upon the commercial positions of the
several agricultural countries of the Danube in relation to the inter
national balance of payments. The recipients of the newly allotted
land were for the most part required to assume mortgages which,
while very liberal in their terms, represented an additional financial
burden. Moreover, the small peasant cultivator, with his meager
financial resources, now had also to face the burden of financing farm
operations which formerly had devolved upon the large landowner.
Thus the peasants’ capital requirements increased, while on the other
hand, provisions for agricultural credit remained extremely inade
quate. Besides affecting the financial situation- of the small farmers,
83
In 1 9 2 3 the arable land ow ned by sm all
n a tion al to ta l a s a g a in st 5 5 .5 percent in 1 9 1 3 .

farm ers

con stitu ted

6 1 .6

percent o f

the

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

121

the land reforms, insofar as they disturbed the already chaotic con
dition of land-title records, rendered less secure the basis for long
term financing in the case of the wealthier agriculturists.
One of the greatest needs of the small farmer of southeastern
Europe is cheap, long-term credit. In Bulgaria and Hungary, where
banking facilities were much better at the close of the war than in
the other Danubian countries, interest rates on short-term loans until
1926 were well over 20 percent; from 1926 on1they were considerably
reduced, but even then were, on the whole, well over 10 percent- In
Yugoslavia, according to a high banking official, “ most of the peas
ants have suffered from usurers and paid interest at rates amounting
to over 40 percent and in some cases to 100 percent.” In Rumania
interest rates of from 25 to 40 percent were reported. To remedy this
situation several proposals for the setting up of government institu
tions to dispense low-cost agricultural credits or to furnish support
to institutions already existing were given serious consideration. But
the governments, hard pressed as they were, lacked the resources for
carrying out any project of significance.
Post-war financial difficulties are also related to the land reforms
from another angle—that of the balance of international payments*
Since the change from the more skilled, large-scale management of
estates to the less skilled, small-scale management by the peasant
owner, the volume of production of some of the major crops of the
Danube Basin has declined. Particularly in the case of cereals,
smaller sowings and lower per-acre yields have followed the change
in land tenure, partly as a consequence of lower efficiency and partly
as the result of a greater self-sufficiency of peasant farming. Lower
output of cereal crops has meant also smaller exports of cereals.
Accordingly, by diminishing exports, the land reform has con
tributed, at least temporarily, to the difficult commercial and financial
position of the Danubian countries.
With the cessation of hostilities in 1918 the countries of the Danube
Basin found it necessary to incur heavy debts abroad in furtherance
of the work of rehabilitation, from which little or no return could be
expected for a long time. Loans were also contracted abroad for the
purpose of paying reparations, for the maintenance of national de
fense, or for the refunding of old debts. From the funds disposed of
in such manner no income could be expected for the payment of debt
charges. Consequently, interest and other payments due on foreign
loans were met by fresh borrowings from abroad, and the total
mounted higher and higher, until in 1932 it stood at the tremendoui
sum of 2i/2 billion dollars for the four Danubian countries. Such an
amount required an annual outflow of some 70 million dollars in pay
ment of the interest and amortization.
These payments constituted a heavy burden on the balance of
international payments and furnished an added impetus to the pro
tectionist policies of the Danubian countries, which, as a result of
the unhappy experience of war-time scarcities and intensified post
war economic nationalism, made economic self-sufficiency the prin
cipal aim of their economic and commercial policy. This meant, in
agricultural countries like those of the Danube, an emphasis on
increasing industrialization and a tariff policy shaped to stimulate

122

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

industrial development and consequently favorable to the manufac
turing industry. On the other hand, agriculture, being almost en
tirely on an export basis in the Danubian countries, not only did not
benefit from the protectionist policies pursued by the latter but was
even injured through the aggravation of the unfavorable relation
between the prices of farm products and prices of manufactured
goods.
Not only was industrialization fostered by means of tariff favors
but also through direct participation of the State in industry, as for
example in Rumania, where the Government took an active part
in the development of mineral resources. Naturally such policies
proved burdensome to agriculture, which had to pay, at any rate
initially, the cost of such experimentation. The plight of Danubian
agriculture, moreover, was greatly aggravated with the depression
which began in 1929.
2.
The present crisis.—The present severe agricultural crisis in
the Danube Basin had its immediate beginning in the world-wide
debacle in prices of raw materials and agricultural products that
came in 1929. The low value of agricultural products drastically
reduced the income from exports by means of which the agricultural
countries of southeastern Europe had been maintaining the balance
of their international payments. The ensuing feverish piling up
of tariff upon tariff, quota upon quota, and administrative controls
one upon the other, had but little effect in diminishing a deficit in
the balance of trade. Both imports and exports continued to de
cline. Simultaneously with the curtailment of international trade
there occurred a suspension of international lending which pre
viously had helped to sustain the balance of international payments.
The climax came with the failure of the Kredit Anstalt of Austria in
July 1931, resulting in a hasty withdrawal of foreign funds from
the Danubian countries. This situation in turn engendered increas
ing restriction of the movement of international trade and capital
through the institution of a drastic control of foreign exchange,
with the result that the flow of international commerce has been
reduced almost to a minimum.
In the search for a solution of the ever-mounting economic diffi
culties of these countries it became recognized that the first step
was to attack the agricultural crisis. Reasons for this emphasis
were two-fold. In the first place, the acute financial crisis would be
alleviated if exports—predominantly agricultural—were to be in
creased, for with the correction of the maladjustment in balance of
international payments, domestic currencies would be stabilized and
capital would flow more freely. Secondly, an improvement in the
farmer’s lot would, of course, affect favorably the domestic business
situation. Thus, there was inaugurated in 1930-32, in the Danubian
countries, a series of emergency measures for the relief of the farmer.
Some of these measures were adopted by the respective countries
individually, others by concerted action of several' countries con
cerned.
In Hungary, most important of the wheat-exporting countries of
the Danube Basin, a scheme involving bounty payments to pro
ducers of wheat and rye was introduced (see the appendix). In

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

123

addition to this system an export bounty was provided for a short
time. In conjunction with participation by Hungary in the Inter
national Sugar Agreement the production and export of sugar
were brought under direct control. Rumania paid an export premium on wheat and wheat flour for about a year (from August 1931
to April 1932), and early in 1932 granted a reduction in the freight
rate on corn to be exported. In 1930 it also enacted measures for
organizing the export trade in livestock and fresh meat and for
improving the quality of eggs sold on the export market.
Bulgaria and Yugoslavia both embarked on ambitious ventures
for promoting the exportation of cereals and raising domestic prices.
In the former country the government exercised complete monopoly
over the wheat and rye trade through a newly established Central
Grain Purchasing Bureau. This bureau bought and sold grain on
the domestic market at high fixed prices and exported at world
parity prices. For a short time it also paid a premium on the ex
portation of corn. Another government institution, the Agrarian
Bank of Bulgaria, gave, and continues to give, assistance by sup
porting cooperative agricultural societies and even performing some
of their marketing functions for them. In Bulgaria, as in Hungary,
the sugar industry was brought under government control. In
Yugoslavia the Privileged Export Co. was given a complete mo
nopoly over internal and external trade in wheat. Through this
agency the government paid high prices to producers and disposed
of the surplus abroad for what it would bring. In addition to the
aiding of grain farming through the Privileged Export Co., assist
ance was extended to the grain export trade through the medium
of advantageous railroad and waterway transportation charges. Aid
to the exporters of other commodities was provided also in a law
for the organization of exports of livestock, meat products, and
animal products.
In addition to their individual efforts, the agricultural countries
of the Danube Basin have endeavored jointly to aid their agricul
ture, particularly through securing tariff preferences for their ex
port cereals. During the last three years, Hungary, Rumania, Yugo
slavia, and Bulgaria have held many conferences among themselves
and with neighboring countries and have participated in general
gatherings for the solution of economic problems. In January 1930,
they participated in a general gathering of agricultural experts held
by the economic committee of the League of Nations, and in Febru
ary and March they attended the so-called “ Tariff Truce Confer
ence ” held at Geneva.
In July 1930 Hungary, Rumania, and Yugoslavia met at Bucharest
for the purpose of formulating a joint reply to a questionnaire sent
by the League in accordance with a resolution of the Geneva confer
ence. At this meeting the community of interest among the Danube
countries received official recognition and it was agreed that special
preference should be sought by them from the cereal-importing
countries of Europe. Whereas the earlier meetings had aimed at
general international economic cooperation, without especially dis
tinguishing between the interests of agricultural- surplus nations on
the one hand and agricultural-deficit countries on the other, this

124

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

conference and those that followed during the next 12 months gave
emphasis to the idea of a united front by the Danubian group.84
In March-April 1931 the movement for grain preferences received
its first serious set-back at the Rome Wheat Conference, where the
obstacle presented by the existing most-favored-nation treaties was
brought to the fore. During the next year or so the movement
languished, while Bulgaria, Hungary, Rumania, and Yugoslavia
each negotiated individually for preferential tariff rates on grain.
In March 1932 France reopened the negotiations for a joint resolu
tion of the problem of the disposal of agricultural surpluses by
suggesting the establishment of a loose economic union among
Austria, Czechoslovakia, Hungary, Rumania, and Yugoslavia, based
on an exchange of tariff preferences. During the next month there
followed a conference in London of the four great powers of the
Continent—France, Great Britain, Germany, and Italy—to consider
the proposal. The plan was decisively rejected by the resolute op
position of Germany and Italy, who felt their commercial and
political interests to be adversely affected.
The movement for international joint action continued at the
Lausanne Conference held in July 1932. This Conference directed
a technical committee to work out a program for the solution of
the general problem of eastern Europe, to be submitted to the
(League’s) Commission of Enquiry for European Union. The com
mittee met at Stresa from September 5 to 20, 15 nations being repre
sented, including Germany, Austria, Belgium, United Kingdom,
Bulgaria, France, Greece, Hungary, Italy, Holland, Poland, Ru
mania, Switzerland, Czechoslovakia, and Yugoslavia. Latvia had
an observer present, and the League of Nations, the International
84
A n oth er m eeting between R u m an ia and Y u g o sla v ia a t S inaia, held J u ly 3 0 -A u g . 1,
fiealt chiefly w ith a possible custom s union betw een th ose tw o countries.
In A u g u st 1 9 3 0 ,
H u n g ary, R um ania, Y u goslavia, B u lgaria, P oland, C zechoslovakia, E sto n ia , and L a tv ia ,
m eeting at W a rs a w prim arily to deal w ith financial asp ects o f the a gricu ltu ral problem ,
placed em ph asis on the form ation o f agreem ents am ong the cereal-exporting cou ntries.
A t the m eeting of the League A sse m b ly at Geneva in Septem ber 1 9 3 0 , the cou ntries o f the
eastern European agrarian bloc, as it had come to be know n, jo in tly urged th a t Eu ropean
im porting countries should gran t preferential tariffs on agricu ltu ral products in fa v o r
o f the bloc.
In the next m onth (O ctober 1 9 3 0 ) th e second B u charest Conference urged
th a t th e G overn m ents of the agra ria n countries o f Europe should take concrete action
looking to an agreem ent am on g them selves before u n dertak in g extern al negotia tion s for
preference.
A t an other conference, at B elgrade, a m onth later, the fou r D anubian coun
tries and P oland agreed to recom m end to their respective G overn m ents the establish m en t
f)y M arch 31, 1 9 3 1 , o f nation al exp ort control boards w here such did n o t alread y exist,
and the establishm en t by July 1, 1 9 3 1 , o f a cen tral control board for the five cou ntries
represented.
Th ese countries also participated in the second (L ea gu e) C onference for
Concerted A ction held at G eneva in Novem ber ; here a special econom ic com m ittee gave a
lim ited and guarded endorsem ent o f the preferential idea.
Support w as also accorded to
th is idea at a Conference of A g ric u ltu ral E x p erts held a t G eneva in Jan uary 1 9 3 1 under
th e auspices o f the League, attended by H u n g a ry , R u m an ia, an d Y u g o sla v ia , as w ell as
by p ra ctically all o f the im portan t agricu ltu ral n ation s of the w orld.
A t an other con
ference, held in B ucharest in F ebruary, the entire eastern Eu ropean agrarian bloc re
affirmed its com m on aim s and m ade preparation s fo r the approaching conference to be
held in P a ris under the auspices o f the League C om m ittee o f E n qu iry fo r European U nion,
at w hich the problem o f dealing w ith the w h ea t surplus o f the D anu bian countries w as to
fee considered.
A t the P a ris conference, a t the end o f February, the idea o f p referential
im port quotas w as once more pressed, as it w as aga in at the R om e W h e a t C onferen ce in
M a r c h -A p r il, held under the au spices o f the In tern a tio n a l In stitu te o f A g ric u ltu re and
p a rticipa tion by m ost of the w heat im porting and exp orting cou ntries (th ou gh n ot by the
U n ited S t a t e s ) .
A t the R om e conference the obstacle presented by th e m ost-fa vored nation
clauses o f existin g com m ercial treaties, to th e establishm en t of a system o f ta riff or quota
preferences w hich favored Danubian grain w hile discrim in atin g aga in st overseas grain, w as
brought into sharp relief.
W o rld -w id e orga n ization o f producers in stead o f a sectional
grouping came to be em phasized and plan s wrere m ade for a m eeting o f the w h ea t-exp ortin g
countries o f th e w orld in London a m onth later. A t the L ondon conference in M a y (p ar
ticip ated in by th e U n ited S ta te s) the efforts o f a m a jo rity of th e cou ntries present to
secure the adoption of a program o f in tern ation al lim ita tio n o f exp orts failed to resu lt
in an agreem ent.
F o llo w in g th is set-back th e D anu bian cou ntries renew ed th eir inde
pendent pro gram s, each tu rn in g its efforts tow ard securing in dividu al preference for its
grain in the m ark ets o f con tin ental E u rope.

WORLD TRADE BARRIERS

RELATION TO AGRICULTURE

125

Labor Office, and the International Institute of Agriculture were
represented.
The object of the Conference, as set forth in the Lausanne agree
ment, was to seek measures to overcome “ transfer” (foreign ex
change) difficulties in the countries concerned, to suppress the existing systems of exchange control, to revive trade, and to improve the
situation in the cereal-exporting countries. Means were sought
whereby the industrial countries of Western Europe could absorb
the surplus agricultural products of the eastern countries, and the
latter in return lower their trade barriers. This necessarily involved
the controversial question of preferences and exceptions to the mostfavored-nation principle and raised anew the debate over multi
lateral tariff agreements as opposed to a system of bilateral treaties
based on generally agreed principles. The Conference, however,
made definite recommendations, which, among others, included the
following: (1) immediate reduction of quota restrictions, adjust
ment of those remaining to normal trade movements, and more
elastic application of trade regulations ; (2) progressive abolition of
restrictions on trade ; (3) development of a complete system of com
mercial agreements such as to permit a normal growth of trade;
(4) negotiation of an international convention for restoring prices of
cereals in eastern and central Europe ; and (5) establishment as soon
as possible of the International Agricultural Mortgage Credit Co.,
and support of the efforts of the International Institute of Agricul
ture to establish an International Short-Term Agricultural Credit
Bank. The introduction to the recommendations provided also for
the foundation of a fund to which all European countries would con
tribute and which was intended to be used for the reconstruction of
certain European currencies as well as for the improvement of the
agricultural situation in central and eastern Europe.
By far the most important result of the Conference was the draft
of the so-called “ agricultural agreement,” which stipulated that
those signatory countries that are exporters of cereals should benefit
from an artificial increase in the price of these cereals. This increase
in price would apply to a quantity of 59,000,000 bushels of wheat,
69.000.000 bushels of barley for fodder, 53,000,000 bushels of corn,
16.000.000 bushels of rye, 14,000,000 bushels of barley for breweries,
and 7,000,000 bushels of oats. A total amount of 75,000,000 Swiss
francs (about $14,500,000) would be made available for raising the
prices of the above-mentioned quantities of cereals. The fund was to
be made up of contributions from practically all of the European
countries, the contributions being either in the form of actual cash
or in the form of preferential tariff rates granted on the quantities
of cereals concerned. A committee of representatives of the signa
tory countries would decide the distribution of the fund. The com
mittee, which would have the technical assistance of the League
of Nations and the International Institute of Agriculture, was to
have authority to change the quantities of cereals subject to the arti
ficially increased price. It was planned to raise the price of wheat
by 2 gold francs per quintal (abeut 10^ cents a bushel) and the price
of oats and corn by about 1.5 gold francs per quintal (7.9 cents a
bushel). The committee was also to be entitled to grant advance
payment to the cereal-exporting countries which were to benefit from

126

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

this arrangement. In return for these concessions the agricultural
signatory states would undertake to grant adequate compensation to
the industrial countries through bilateral treaties, which would not
interfere with the rights of “ third countries55 under the mostfavored-nation clause and which would extend equally to all signa
tories of the convention. The convention would be of limited dura
tion, expiring in about 3 years unless renewed.
Although the conference was merely of an advisory character and
the attending delegations were not in a position to undertake definite
commitments for their respective countries, it nevertheless was in
dicative of the direction that future developments might take ; for the
delegations were composed of men of the highest standing, appointed
by their governments and in constant touch with them throughout
the negotiations. Moreover, their conclusions were referred to the
European Commission of the League of Nations as a more authorita
tive body, and presumably were destined to form one of the subjects
of discussion at the approaching World Economic Conference in the
summer of 1933. It is significant, therefore, to note that on the
closing day of the conference, Britain, Belgium, and Holland, all
cereal-importing countries which had at that time no import duties
on cereals, added reservations in which they indicated that they were
not prepared to grant financial contributions in lieu of tariff prefer
ences.
On the other hand, Germany and France both reaffirmed their
intention of granting tariff preferences. For this reason it has been
said that the Stresa Conference did not produce a practical program
for the solution of the difficulties of the Danubian countries. In two
respects at least, however, the conference did mark a closer approach
to a solution. In the first place the idea of a general fund was now
discussed and accepted for the first time independently of political
conditions or guarantees. Secondly, the agreement marks a further
important step in the crystallization of European sentiment in favor
of preferential tariff treatment for eastern European cereals. But
it is still far from certain what the outcome of this movement will
be, especially in view of the greatly diminished cereals surpluses of
the Danubian countries in 1932-33.
UNION OF SOVIET SOCIALIST REPUBLICS (SOVIET RUSSIA) 85

In approaching the problem of the relation of government to agri
culture in the Union of Soviet Socialist Republics, as Soviet Russia
is officially known, a fundamental distinction from the situation as
it exists in other countries must be made at the outset. It lies in the
pervasiveness of government control and administration of the whole
economic system of which agriculture forms an integral part. While
many other countries have gone far along the path of government
intervention, Russia has gone much farther.
The Soviet State exercises a monopolistic control over the whole
economic structure and resources of the country. It owns and
operates the large-scale industry, mines, power plants, railways,
shipping, and other means of communication. It engages in farming
on its own account through the institution of State farms, and it

85 T h e basic fa c ts in th is stu d y are derived fro m published Soviet sources.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

127

largely controls peasant agriculture through the organization of
collective farming. It has an exclusive monopoly of banking, cur
rency, foreign trade, and exchange operations. It controls the do
mestic channels of distribution in its capacity as a manufacturer,
farmer, merchant, shipper, and banker. Moreover, by administra
tive measures it can suppress such private competition as still exists.
All these branches of economic life are subjected to the system of
economic planning by the state; they are within the orbit of
“ planned economy” as it is understood and practiced in the Soviet
Union. Little scope is left in the economic sphere to private
capitalistic enterprise.
It is true that the private market, however diminished or limited
in scope, has never become entirely extinct, at any rate as far as
petty trade is concerned. The Soviet policy toward private enter
prise, which has been unmistakably restrictive in its general atti
tude, has on occasions relaxed in the direction of greater liberality,
at least in the realm of trade. This was notably the case in 1921
when the New Economic Policy, or the “ Nep ” , was introduced and
again to a much more limited extent in the summer of 1932.
But whatever the concessions made to private enterprise the domi
nance of the Soviet State in the economic sphere remains funda
mentally unaltered. From the fields of large-scale industry and
foreign trade, over which the Soviet State early asserted a monopoly,
it extended its dominance to domestic trade and finally, .during the
last few years, to agriculture—that branch of economic life which
had been the citadel of economic individualism in the Union of
Soviet Socialist Republics. Today the collectiv zation of agricul
ture is an achieved fact. For an understanding of how it has come
about it is necessary to review briefly the course of recent Russian
agrarian evolution.
The agrarian revolution of 1917-18 led to the enthronement of the
small peasant landholder. Even before the revolution he was an
important figure in the Russian land economy. For he was adding,
through purchase of the estate land owned by the large landowners,
to the area originally allotted to him during the emancipation from
serfdom in the middle of the nineteenth century. Notwithstanding
this general trend toward the liquidation of large landed properties,
they still accounted, on the eve of the Revolution of 1917, for approx
imately one third of the land area of European Russia in farms,86
although they showed considerable variation in importance from
region to region. Moreover, estate farming, notwithstanding the
86
M uch o f the estate land , how ever, w as in forest, w as uncropped, or w as leased to the
peasants, th u s d im inishing still fu rth er the significance o f e sta te fa rm in g as distinguished
fro m lan d ow nership, and increasin g the im portance o f p easant agricu ltu re.
B u t the
exten sion by th e p re-w ar R u ssian p e asan try o f its land area throu gh purchase and lease,
w as often due m ore to ad versity th an to prosperity.
F or the rap id ly grow ing rural popula
tion could not find, for variou s reasons— chiefly insufficient in d u stria lization o f the coun
try — an adequate ou tlet in n o n agricu ltu ral o cc u p a tio n s; w hile the hold in gs origin ally
a llo tted during the em ancipation w ere too sm all or ill-balan ced, and the intensification
o f fa rm in g w as too lim ited, to support the grow ing population.
A s a resu lt, the leasing
or purchase o f addition al land becam e the only w ay out o f distress for a large num ber o f
p easan ts.
U nder such con ditions they had to pay fo r the land a heavy tribute to the
land ow ners, in high ren ta ls and purchase price in addition to the h eavy redem ption p a y
m ents fo r the area origin ally allotted du ring the em an cipation.
On the other hand, there
w ere a good m an y peasants, am on g the better-to-do grou ps, w ho exten ded their area
throu gh purchase and lease— even le a sin g la n d from the poor p e a sa n ts w ho fivere not
able to cu ltivate th eir a llotm en ts— in order to engage in com m ercial farm in g.
F o r th e
R u ssian p e asan try has n o t been a s tric tly hom ogeneous econom ic g r o u p ; it h as been
m arked by division in to different layers o f prosperity w ith th e lan d less p ro le ta ria t a t the
bottom an d th e stron g p e asan t, ap proaching a ca p ita listic fa rm e r , a t the top.

128

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

encroachment of peasant agriculture, still played before the World
War a significant role in production of commercial crops such as
wheat, for instance.
Shortly after the Revolution of February 1917 and before the
Bolsheviki came into power, the peasants took/ the law into their
own hands and proceeded in many sections with the seizure of the
estates. The first step of the Soviet Government on coming into
power in the autumn of 1917 was to sanction the division of the
estate land among the peasants and to abolish private property in
land as a legal institution. It may be noted that the Soviet Govern
ment in its initial stage was actually a coalition of the Bolsheviki and
the left wing of the Socialist Revolutionary Party—the latter being
largely responsible for the early Soviet agrarian policy and legisla
tion. The Socialist Revolutionaries represent a current of Russian
socialism which has been favorably inclined toward small-scale,
family, peasant farming on the basis of a communal land tenure with
its periodic redistribution and equalization of land holdings—a
characteristic Russian system of peasant land tenure. On the other
hand, the Bolsheviki, who adhere to the Marxian theory with its
doctrine of the superiority of large-scale methods of production in
agriculture as well as in manufacturing industry, have regarded
small-scale farming in an unfavorable light. The exigencies of rev
olutionary politics, however, made it necessary for them to accept
at first a great extension of small-scale peasant agriculture.
The revolution thus swept the system of estate or large-scale capi
talistic farming entirely away and resulted in the transfer of prac
tically all the available farm land, as well as implements and live
stock, with the exception of a small area retained by the State, into
the hands of the peasants. This process did not stop simply with
additional allotment of land at the expense of the confiscated estates,
but involved also a very significant redistribution of the peasant
holdings. The net result was a diminution in the size and a general
leveling or equalization of peasant holdings with a consequent drastic
reduction in the number of the larger holdings and a decrease of the
landless peasant households. Many of the new farm units, however,
because of their small size and lack of necessary capital, were ill
fitted for production, especially commercial production.
With the break-up of the alliance between the Bolsheviki and the
Socialist Revolutionaries in the summer of 1918, and the developing
food shortage in the cities, a change in the Soviet agrarian policy
took place. The Soviet Government turned to socialist experiments
in agriculture, the organization of state farms, the encouragement of
various forms of collective farming, and later, toward the end of this
period of so-called “ war communism ” , it considered projects of even
more thorough-going control of all agricultural production. Thus a
decree of the All-Russian Central Executive Committee issued in
February 1919 states: “ * * * transition from individual to co
operative forms of farming (land utilization) is necessary. Large
Soviet farms, communes, cooperative cultivation of land, and other
forms of cooperative farming (land utilization) are the best means
for achieving this purpose. Therefore, all forms of individual farm
ing (land utilization) must be looked upon as passing and dying out.”

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

129

Even earlier the Government adopted the policy of requisitioning
the surplus produce in the hands of the peasants,87 enlisting for this
task the aid of the poorer groups among the peasantry together with
the city workers. This policy, coupled with the fact that the Soviets
could offer little to the producers of farm products in exchange
except heavily depreciated currency, greatly accentuated the decline
of acreage and production, especially commercial production and
cash crops, which set in with the war and revolution. The peasants
tended to produce only for their own needs, and resisted requisitions.
Thus a contest began between the Government and the peasantry,
which cannot even yet be said to have ended. The peasants won,
however, important concessions when the New Economic Policy, or
the “ Nep ” , was proclaimed in the spring of 1921.
The urgent need of solving the food problem and of allaying
serious discontent led the Soviet Government, in the spring of 1921,
to retreat from the regime of war communism, under which the
private market had been legally abolished, and to inaugurate a more
liberal policy toward private enterprise. The twin basic features of
this New Economic Policy, with which the “ Nep ” period was ushered
in, were the replacement of the requisitions of peasant produce by a
tax in kind (later commuted into money) and the legalization of the
free market.
In its subsequent development, however, the “ Nep ” involved a
realignment of the whole Soviet economic system. It divided Rus
sian economic life into two important sectors: the socialist sector,
which from the very beginning included practically all large-scale
manufacturing industries, mining, transportation, banking, and for
eign trade, and gradually embraced more and more of the domestic
trade; and the individualistic sector, which included retailing, handi
craft industries, and, above all, farming.
The land code of 1922 provided a legal basis for the new develop
ment of the peasant farming on individualistic lines. In contrast to
the policy laid down in the law of 1919, the new legislation permitted
the peasants to choose whatever form of land tenure or type of
farming they desired, subject, of course, to the general condition of
nationalization of all land, whereby it became the property of the
Soviet state. The land, therefore, still could not be legally sold or
bought, mortgaged or bequeathed by the holders. The land code of
1922, however, permitted, with important limitations, the leasing of
land and the use of hired labor, previously forbidden by the Soviet
laws. The lifting of this ban was especially important for the peas
ants who, whether because of the lack of livestock or implements or
for other reasons, found it impossible to cultivate their holdings.
The “ Nep ” period embraced roughly the years 1921-27. It was
a period of economic recuperation of Soviet Russia after the revolu
tion and civil war. The Soviet Government, interested principally in
securing for the needs of the country a sufficient supply of foodstuffs
87
T h e Soviet G overnm ent did not origin ate the system o f requisitions.
T h e system had
been gra d u a lly developed by its predecessors during the W o r ld W a r and a fte r the revo
lution o f February 1 9 1 7 ; but, faced by a critical situ ation w ith som e o f the m ost im
p o rta n t grain regions cut off by the spreading civil w ar, the Soviet G overn m ent w ent much
fu rth e r and in a m uch more drastic fash ion in ap plying th is system , and provoked, in
the process, an in ten sive struggle in the countryside. F o r d eta ils see : V . P . Tim oshenko,
A g ric u ltu ra l R ussia and the W h e a t Problem , 1 9 3 2 , chapter X I V ; N . D . K on d ratie v, The
G rain M ark et and Its R egulation D u rin g the W a r Period and R evolu tion (R u s s ia n ),
M oscow , 1 9 2 2 ; Food Supply in R u ssia D uring the W o r ld W a r , issued by the Carnegie
E n dow m en t for In tern atio n al Peace.

130

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

tind other farm products and in consolidating its position on the
industrial front, left the peasants for the most part alone. The
recovery of the greatly reduced crop area was at first retarded by the
disastrous failure of the crops and the famine of 1921, which even
led to a further serious decline of acreage. The year 1922, in which
the acreage sown reached a record low, served as a turning point, and
a rapid recovery ensued during the subsequent years. A similar evo
lution can be traced with respect to numbers of livestock. As the
natural process of division of the peasantry into different economic
strata or levels of prosperity began to take place under the influence
of the regime of free competition, the revived cooperative movement
under Soviet control began to be looked upon as a means of improving
the position of the less prosperous peasants.
Thus the third Soviet Congress in May of 1925 declared, with
regard to the poor and middle elements of the peasantry, that “ the
union of these classes of peasantry through cooperation and, in the
first instance, agricultural and credit cooperation, is the only correct
method of increasing their economic power and of waging the strug
gle against exploitation on the part of the wealthy usurers and mid
dlemen and of attracting the peasants to the task of socialist
construction. The first and principal objective of the Soviet Gov
ernment at the present juncture is to aid the small peasantry, united
in cooperatives, to enlarge its livestock and implements to the extent
called for by the requirements of family farming.” The same pro
nouncement declared the use of “ administrative ” (that is, coercive)
measures against the more prosperous peasants not to be feasible.
Another evidence of a more liberal policy toward individualistic
farming could be seen in the further relaxation in 1925 of the legal
r e s t r ic t io n s ( f r e q u e n t ly a v o id e d in p r a c t ic e ) o n the le a s in g o f la n d
and the use of hired farm labor.
Approximately since 1927, however, the Soviet agricultural policy
has been taking a new turn. The principal objectives of the new
Soviet agrarian policy became: first, the struggle against the more
prosperous strata of the peasantry, so-called u Kulaki ” (literally
translated from Russian as “ fists” ), which began over the matter
of the grain supply and which took various forms, from steep pro
gressive taxation to wholesale evictions and confiscation of property
as a culminating point; second, the development of socialist types
of farming—collective and state farms and machinery-tractor sta
tions—to replace farming on individualistic lines. The restrictions
on private trade in farm products which the “ Nep ” originally lifted
began even earlier and were greatly intensified with the new shift in
the Soviet economic policy.88
A number of reasons combined to bring about this change of pol
icy. Among the more important must be mentioned the radical, socalled “ left opposition ” to the policies of the “ Nep ” which developed
within the Communist Party, and which, although it was defeated,
still apparently influenced the official policy of the Soviet Govern
ment. Of even greater importance was the difficulty experienced in
88
Side by side w ith p riva te trad in g in farm products, legalized by “ N ep ” , there has
developed from th e very beginning o f the period a s y stem of So vie t procuring agencies
w hich has tended to become m ore and m ore unified in orga n ization and m onopolistic in
character.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

131

the matter of Soviet procurements of farm products, especially grain,
from the peasants, which had developed by 1927-28 and led to a
revival of coercive methods in government procuring operations.
With the suppression of much of the private trade, the Soviet Gov
ernment was assuming greater responsibilities for the feeding of the
growing urban population. At the same time the high prices of
manufactured goods and their shortage, poor quality, and inefficient
distribution caused a reluctance on the part of the peasants who had a
surplus, primarily the more well-to-do groups, to sell to the Soviet
organizations at the prices offered by the latter or to increase their
production.
The reduction in the prices paid by the Soviet procuring organi
zations for grain in 1926-27 and 1927-28, while the level of prices paid
for products of intensive branches of agriculture was maintained or
increased, accentuated the “ sales resistance ” of the peasants with
respect to grain. Moreover, the fact that the prices in the free grain
market were higher than government prices interfered with state
procuring operations while private trade was still of some impor
tance. All these factors tended to retard production, as did also the
unfavorable weather conditions in 1927-28 and 1928-29. Thus
difficulties in the matter of the grain supply were enhanced.
The situation was also felt to be unsatisfactory from the stand
point of the technical progress of agriculture. The continued subdi
vision of Russian farming since the revolution and the small size of
the average peasant holding were considered to be adverse to efficient
farming and tended to diminish the commercial output of agricul
ture. In 1916 it was estimated that within the present territory of
the Union of Soviet Socialist Republics there were 21,000,000 peasant
households, a great majority of which constituted independent farm
units, while by 1927 the number of peasant households increased to
25.000.000. In other words, the Soviet Union had, in 1927, more than
20.000.000 independent farms as against approximately 6,400,000 in
the United States, according to the Census of Agriculture, 1925.
The smallness of the farm units in the Union of Soviet Socialist
Republics can be best visualized when a comparison is made between
the average size of the farms in the important wheat regions of
that country and in some of the leading wheat-producing States of
the United States. Thus in North Caucasus, Crimea, Steppe Ukraine,
and Siberia, where the size of the farms as a rule was above the
average for the Union of Soviet Socialist Republics as a whole, the
average crop area per farm ranged between 17 and 35 acres, accord
ing to a sample census taken in 1927; while in North Dakota it
amounted to 284 acres; South Dakota, 222; Nebraska, 168; and
Kansas, 152 acres, according to the Census of 1930. The disadvan
tage of the small-size peasant holdings was aggravated by the fact
that they were made up of many scattered narrow plots or strips.
The peasant holding in some cases consisted of as many as 100 to
150 different strips dispersed over a considerable area. In general,
this system was an obstacle to progressive development of Russian
agriculture. The open-field, scattered-strip farming made for in
efficient cultivation ; it increased labor requirements, both human and
animal ; it involved a waste of land for numerous boundaries, which
helped to spread weeds; it precluded the use of modern machinery
and interfered with improvements in crop rotation.

132

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

Another unfavorable factor in the Russian agricultural situation
was the lack of draft animals on many of the smaller holdings. Thus
the sample census of 1927 showed that in such an important grain
region as North Caucasus 46 percent of the farms investigated were
without draft animals. In the Lower Volga region the percentage of
farms without draft animals was 36 percent, and in the Steppe
Ukraine 31 percent. The situation was rendered still more difficult
by the fact that many holdings which lacked draft animals were
really too small to make the use of such animals economical, and this
likewise applied to modern machinery.
The Soviet Government was thus faced with a dilemma: on the
one hand, technical inefficiency of the small peasant agriculture and
its ineffectiveness from the standpoint of commercial production; on
the other hand, opposition of the ruling Communist Party to the
development of stronger farming on individualistic or capitalistic
lines. The strong, better-to-do peasants or Kulaki were looked upon
as forming an opening wedge of capitalism, and were felt to consti
tute a sort of barrier or competitor to the soviet power in the coun
tryside, because of their influence on the poor, and especially the
middle peasants. Moreover, the Soviet Government, bent on the use
of all the resources for a speedy industrialization of the country, has
been anxious to secure at low prices the largest possible supply of
agricultural products for export and for the needs of domestic indus
try and the industrial workers. This applies particularly to grain.
The Kulaki, on the other hand, who had a surplus, would not part
with it under such conditions or even go so far as to curtail produc
tion. Hence the mutual hostility between the Soviet Government
and the Kulaki. The very fact, however, that as a result of this
conflict the development of strong individualistic farming of any
consequence was discouraged by the Government tended to accentu
ate the main obstacle to increased efficiency of Russian agriculture.
This was the extreme parcellation of land holdings, due in the first
instance to the agrarian revolution and the rapid growth of rural
population. The result was a sort of a vicious circle. Efficient agri
culture was desired, but the more efficient type of farming under
prevailing conditions was not acceptable to the Soviet Government.
It is an interesting question whether the impasse which the soviet
agrarian problem presented could have been surmounted and fur
ther progress made if the “ Nep ” policies, under which agricultural
production had after all shown a great recovery, had been continued,
as advocated by the so-called “ Right opposition55 group of the Com
munist Party. This, however, was ruled out by the Soviet Govern
ment. In May 1928 it adopted the first Five-Year Plan of economic
development, among the principal objectives of which were the rapid
industrialization of the country and “ the socialist reconstruction of
the village ” , although the latter was still projected on a modest scale.
The Government thus determined, as it did a decade earlier dur
ing the period of war communism, upon the collectivization of
peasant agriculture, the development of state farming, and the
elimination of the well-to-do peasants or kulaki, as a way out of the
dilemma. In this manner it was intended to bring Russian agriculture
under the Soviet control, as industry was brought under it earlier,
and to increase its efficiency, but on collectivistic instead of indi

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

133

vidualistic lines. The steps contemplated or taken for the latter
purpose included : The elimination of strip farming and consolidation
of the small holdings into larger units ; the pooling of the available
draft power and implements owned by individual peasants; the
mechanization of peasant agriculture; the development of largescale state power farming and the improvement of the systems of
crop rotation, which is especially stressed with the recent shift of
emphasis from mere expansion of acreage to improvement in produc
tion methods and yields.
Just as the “ New Economic Policy ” or “ Nep ” , which supplanted
the regime of war communism, found its legal expression, as far as
land relations were concerned, in the land code of 1922, so that
more recent agrarian policy which has replaced the “ Nep 55during the
last few years was reflected in the new land law of 1928. Article 4
of this law posits as the two aims of all activity in connection with
land and farm organization : “ The development of productive forces
of agriculture and the ever-increased socialist organization (con
struction) of farming.” As means to these ends and “ the related
object of increasing the well-being of the large masses of poor and
middle peasantry ” , the law specified the adoption of the following
measures : a The raising of the technical level of agriculture ; the in
clusion of wide masses of the working peasantry within the cooper
ative movement; the strengthening and development of a net of
collective and state farms and also the adoption of effective meas
ures for the defense of the interests of the weak classes of the coun
tryside and agricultural workers and for surmounting the kulaki.”
Unlike the code of 1922, which did not differentiate between types of
land tenure and permitted the peasants a free choice, the law of
1928 granted a preferential right in the matter of land allotment to
collective farms and to the poor and middle peasants whose holdings
were too small. Similar preference was given with respect to the
quality and location of the allotted land.
The collectivization of peasant agriculture had thus become once
more the central objective of the Soviet agrarian policy. The organi
zation of collective farms was first begun during the period of the
war communism, but the movement received a serious setback with
the introduction of the “ Nep ” and the restoration of the free mar
ket. Although collective farming had shown some growth with the
support of the Government during the later years of the “ Nep ”
(especially in the case of simpler forms of producers5 cooperative
associations), still in 1927 it accounted for less than 1 percent of the
acreage sown. A few years thereafter, as a result of a strong cam
paign by the Government, collective farming became the principal
form of Russian agricultural organization.
The collectivization campaign became especially intensive in the
fall and winter of 1929-30, when drastic measures were adopted to
“ liquidate ” the kulaki and to bring the middle and poor peasants
into the collectives. But the methods used by the authorities to
stampede the peasants into the collectives provoked a serious dis
content on the part of the peasantry. The peasants slaughtered their
livestock on a vast scale rather than see it become collective property,
inflicting a staggering loss the result of which has been a seri
ous shortage of animal products and draft animals. Thus the

134

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

number of horses decreased between 1929 and 1980 by 11 percent,
young cattle by 30 percent, sheep and goats by 23 percent, and hogs
by 35 percent. In many cases the collectives organized were of an
extremely large, unwieldly size and of the full-fledged commune
type with emphasis on consumption rather than on commercial pro
duction. The administration in Moscow realized that collectiviza
tion had been pushed too far and in wrong directions and it called
a retreat in the collectivization campaign early in the spring of 1930
with the publication in the Soviet press of the famous article by
Stalin, entitled “ The Dizziness from Success ” , followed by other
official pronouncements of a similar tenor.
While a temporary setback in collectivization occurred in the spring
of 1930, with a considerable exit of peasants from the collectives, the
Soviet Government did not abandon its goal of wholesale collectiviza
tion and the collectivization campaign shortly resumed its progress.
The collectives were given priority or exclusive advantages in the dis
tribution of agricultural implements, credits, and other state assist
ance; also taxation privileges and preference in the matter of land
allotment. On the other hand, peasants could no longer hope for an
economic advance on individualistic lines after the campaign to
u liquidate the kulaki ” , which was tantamount to the economic ex
termination of the more prosperous peasants. The whole status of
the remaining individual peasant farmers in fact came to be con
sidered as merely transitional and they were looked upon by the
Government as potential members of collective farms, who were
losing through their delay in joining the movement,89 The peasants,
therefore, flocked to collectives, whether because of the advantages
that the latter offered or the disadvantages of staying out.
State farming also has made considerable advance since the spring
of 1928 when its development once more became an important factor
in the Soviet agrarian policy, after relative stagnation in this field
during the period of “ Nep.” This time, unlike the period of War
Communism when Soviet state farms were organized in the few
estates that escaped complete destruction, the emphasis was put on
the organization of new large-scale mechanized grain farms in the
relatively undeveloped eastern and southeastern regions of the Union
of Soviet Socialist Republics. To surmount the difficulties in the
livestock situation which resulted from the drastic collectivization
campaign of 1929-30, various types of state as well as collective live
stock farms were organized.
The collective and state farms, which together constitute the socalled “ socialist sector ” , play today a predominant role in Russian
agriculture, especially in the grain surplus-producing regions. On
July 1, 1928, there were, according to official Soviet figures, a little
over 33,000 collective farms which combined approximately 417,000
peasant households with a total sown area of approximately 3,400,000
acres. On July 1, 1931, there were approximate^ 218,000 collective
farms, combining 13,562,000 peasant households with an area of
nearly 198,000,000 acres. Between 1928 and 1931 the number of state
89
“ B efore each poor and m iddle in dividu al p easan t there has arisen a fu n dam en tal
question : for or a ga in st the collective fa rm
Q uoted from the R eport o f th e C om m is
sar o f A g ric u ltu re o f U .S .S .R ., la . A . Ia cov lev a t th e V I C ongress o f S o v ie ts ( “ S o cia list
R e c o n s tr u c tio n ” , no. 3, 1 9 3 1 ) .

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

135

farms increased from 3,125, with an area of 4,290,000 acres, to 5,383,
with an area of 26,000,000 acres. Collective farms accounted for 69
percent and state farms for 11 percent of the total 1932 spring acre
age. In other words, four fifths of the 1932 spring acreage were
sown by collective and state farms and the remaining fifth by indi
vidual peasant farmers, while only a few years ago the situation was
the reverse and the “ socialist sector ” played an insignificant role in
Eussian agriculture.
The collective and state farms have undoubtedly shown great
progress during the last few years, when measured by such tests as
acreage or the number of peasant holdings collectivized. In these
respects collectivization went far beyond the maximum specifications
of the first Five-Year Plan which assigned a relatively modest position
to collective and state farms in the Soviet agricultural economy.9a
The process of collectivization and “ liquidation of the Kulaki,” how
ever, involved heavy costs, human and economic. Furthermore,
many shortcomings have been reported in the management, organ
ization, and functioning of these new types of farms by official
Soviet sources as well as by independent observers.91 There had
been frequent complaints of inefficient crop cultivation, harvesting,
and animal husbandry methods, aggravating the unfavorable effect
of climatic factors on yields.
The old problem of providing incentives to the peasants to expand
their output for the market is apparently still much to the fore, as
is evidenced, among other things, by the recent legislation modifying
the system of procurement of farm products. It is closely related,
of course, to the problem of the shortage of consumers’ manufactured
goods, due in part to inefficient distribution but rooted largely in the
emphasis laid in the first Five-Year Plan, and consequently in the
90 A ccord in g to the F iv e -Y e a r P lan th e sow n area o f collective fa rm s w as to reach
3 6 .0 0 0 .0 0 0 acres in 1 9 3 2 and o f s ta te fa rm s, 1 1 ,0 0 0 ,0 0 0 a c r e s ; a ctu a lly in 1 9 3 2 the area o f
collective fa rm s am ounted to over 2 2 :9 ,0 0 0 ,0 0 0 acres an d th a t o f sta te fa r m s to nearly
3 4 .0 0 0 .0 0 0 a c r e s .
B u t i t should b e noted t h a t the F iv e -Y e a r P lan in its origin al version
called fo r a t o ta l acreage to be sow n on all types o f farm s in 1 9 3 2 , o f betw een 3 4 5 ,0 0 0 ,0 0 0
acres (m in im u m ) and 3 4 9 ,0 0 0 ,0 0 0 acres (m axim u m or op tim al v e rs io n ).
T h e actu al acre
age seeded during the season 1 9 3 1 -3 2 am ou nted, according to p re lim in ary official figures,
to 3 3 7 ,0 0 0 ,0 0 0 acresi or 8 ,0 0 0 ,0 0 0 —1 2 ,0 0 0 ,0 0 0 acres less th a n con tem plated by th e F iv e -Y ea r
P la n for th a t year.
F o r a number o f individu al, prin cip ally in d u stria l, crops, however,
such as cotton an d su g ar beets, th e m axim u m acreage specified by th e plan has been
g rea tly exceeded.
M oreover, the to ta l sow n area on all typ es o f fa rm s increased, accord
ing to official Soviet figures, betw een 1 9 2 8 and 1 931 , by 5 2 ,0 0 0 ,0 0 0 acres, o f w hich
3 5 .0 0 0 .0 0 0 acres represent the increase between 1 9 3 0 and 1 9 3 1 .
B u t in 1 9 3 2 the acreage
w as slig h tly below th a t o f 1 9 3 1 .
T h e fra g m en ta ry d a ta a va ilab le on yields in 1 9 3 1 and
1 9 3 2 in dicate th a t the yields have been low and g rea tly under th e exp ectation s o f th e
F iv e -Y ea r P lan.
91A decree o f the central executive com m ittee o f the U nion o f S o viet S o cia list R epublics
o f Jan . 3, 1 9 3 3 , s ta tes th a t : “ In the w ork o f collective fa rm s as new enterprises*
only recently created, and m oreover, created under con ditions o f cu ltu ral and technical
backw ardness o f the villa ge, there are great defects w hich hind er th e Soviet s ta te and
the p e asan try o f the collective farm s from u tilizin g im m ediately a ll the ad van tag es o f th e
social fo rm o f the organization o f w ork .”
(R eported in “ So cia list A g ric u ltu re ” , Feb. 2,
1 9 3 3 .)
T h e sam e subject w as touched upon in a speech by the ch airm an o f th e Council
o f Peoples’ C om m issars o f th e U n ion o f Soviet S o cialist R epublics, V . M . M o lo to v , a t the
first A ll-U n io n Conference o f the Shock C ollective F arm ers on Feb. 1 8 , 1 9 3 3 , reported in
“ S o cia list A g ricu ltu re ” o f Feb. 2 1 , 1 9 3 3 : “ M illion s o f peasants m ade a sharp tu rn in to
the road o f collectivizatio n — in th is lies our strength .
B u t in th is la y also our difficulties.
T h ese difficulties con sist in the ach ievem ent o f an organization o f collectve farm ers w hich
sh a ll tra n sfo rm the m a jo rity o f collectives, and later all o f them , in to u n its th a t are
organized efficiently and along B olsh evist lines.
M ean w h ile w e have s till not a few
poor collective farm s.
A t th is conference are represented over 1 ,5 0 0 collective fa rm s
w hich m ay be considered as the better organized.
T h ere can be fou n d s till other
thou sand s o f collective fa rm s where the business is conducted properly.
B u t there are
not a few collective farm s in w hich the collective business is not properly organized and
in w hich there are n o t a few idlers and spongers liv in g a t the expense o f h o n est collective
fa r m e r s .”

179563— 33------ 10

136

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

whole economic and commercial policy of the country, on the develop
ment of the so-called “ heavy ” industries producing capital goods.92
Consequently the struggle of the Government with the peasants over
grain, which played so signal a role in recent Russian agrarian his
tory, has apparently not ceased with collectivization of agriculture.
Side by side with these old problems, however, new ones have
cropped up in the course of the recent transformation of Russian
agricultural organization. Many of them center around the difficult
question of the adjustment of peasants, who were only recently inde
pendent farmers, to the new government-sponsored scheme of col
lective farming and of making efficient farmers out of them in the
new environment.93
In this connection the problem of the distribution of income among
the collective farmers and its relation to productive efficiency is espe
cially significant.94 Likewise the question of the most effective size
of the new farm units and the stability of their area,95 the problem
of the effective training within a short time of the large managerial
and technical personnel,96 which is badly needed; and many other
problems of internal organization, management, accounting, and
planning have taxed the attention and required solution on the part
of the Administration.
In general, collectivization has resulted, as Stalin pointed out in a
recent speech on “ The Work in the Village ” ,97 in a greatly increased
responsibility of the Government for the task of managing agricul
ture which formerly devolved upon millions of independent peasant
farmers, and which became much more complicated with the integra
tion of the average farm unit. Thus, the problem of the assembling
92 In the opinion o f some observers such shortages o f variou s kinds o f articles o f con
sum p tion have been largely responsible fo r the great tu rn -over o f labor in the S o viet in
du stries and agricu ltu re, w ith its detrim en ta l effect on productive efficiency.
93 H ow th is m alad ju stm en t has affected the acute problem o f the c-are o f d ra ft horses
on collective farm s w as brought out by the chairm an of the C ouncil o f P eoples’ C om m issars
o f the U nion o f Soviet Socialist R epublics in an other speech : “ T h e essen tial fa ct m u st be
reckoned w ith th a t the horse w hich has been tran sferred fro m th e ow nership o f the in
dividu al p easant to th a t of the collective is no longer considered by som e collectivized
p e asan ts as their horse.
*
*
*
Th e psychology o f the sm all p roperty holder had a
sharp n egativ e effect (i.e. w as a severe hindrance) during th e first stage o f agricu ltu ral
collectivization pa rticu la rly in the m a tter of the horse ; fo r the p easant, h a vin g ceded his
horse to the collective farm , did n o t in all cases consider it his ow n as w ell as th a t o f the
collective and realize th a t he should take care o f it j u s t as w hen it w as his p riva te
p ro p erty.”
(T h e concluding rem ark s o f V . M . M o lo to v a t the I I I Session- o f the C entral
E x ecu tive C om m ittee o f the U nion o f Soviet S o cia list Republics.
Reported in “ Econom ic
L ife ” , Jan. 2 9 , 1 9 3 3 .)
94 T h e Soviet solution o f the problem has been along the lin es o f developing m ethods o f
p aym en t by resu lts (piece w ork) and the banning o f the principle o f equal distribution,
w hich m any collective fa r m s 'h a v e practiced, as detrim en ta l to efficient w ork.
T h e official
Soviet slogan in this m atter has become : “ H e w ho w orks m ore and better receives m ore ;
he w ho does n ot w ork does not receive an ything
95 There has been a tendency in the organization o f the state and collective farm s to
strive a fter size irrespective of w heth er it resulted in an econom ical u n it.
T h is tendency,
dubbed in Soviet criticism s as “ G igantom an ia ” , has n ecessitated in m any cases sub
division o f the very large farm s.
In ad dition to the process of subdivision and reor
gan iz ation o f state an d collective fa rm s to correct the m ista k es of “ G ig a n to m a n ia ” ,
there has been a lso introduced the principle o f division o f sta te and collective fa rm s into
sm a ller con stitu en t un its for the purpose o f a m ore effective ad m in istra tio n and organi
zation o f w ork.
On the other hand, there has been a great deal o f a rb itrary reshuffling
and ch ange in the holdings of collectives, from' w hich land w as often taken and allotted
to sta te farm s or other collectives.
T o put a stop to these practices, in terferin g w ith
efficient fa rm in g , a special decree wTas issued by the Soviet G overn m ent in the au tu m n
o f 193 2 .
96 T h is question has recently a ttracted considerable a tten tion on the pa rt o f the Soviet
a u th o ritie s w ho took steps to provide increased fa cilitie s for the tra in in g o f agricu ltu ral
sp e cia lists in the higher ranks.
In addition there is the problem o f tr a in in g a large staff
o f skilled fa rm w orkers.
T h e m agn itu de o f th is task m ay be gaged from the fa c t th at
th e plan for 1 9 3 3 calls fo r the tra in in g in special short-term courses o f as m an y as 4 7 3 ,0 0 0
skilled w orkers o f variou s kinds for collective farm s and m ach in ery-tractor station s, and
there are, o f course, addition al personn el requirem ents fo r th e sta te fa rm s.
97 “ E conom ic L ife ” , Jan. 17, 1933.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

137

of the seed supply, timely sowing and harvesting, the care of draft
animals, crop rotation and other details of farming, with which
formerly the Government rarely concerned itself directly, now
require its attention.
The fact that no improvement in the food supply has occurred
during the last few years and that, on the contrary, the situation has
grown more critical in important producing regions certainly re
flects seriously on the efficiency of the new Russian agricultural
organization; but poor crops and the drastic collection and export
policies98 must share the responsibility. It must be borne in mind,
however, that the new Russian agricultural organization is, to a con
siderable extent, still in a flux of experimentation. This is ap
parently designed, in part at least, to remedy the defects and dif
ficulties encountered. The fact that a new generation is growing up
which may show greater adaptability to the novel types of agricul
tural organization must not be lost sight of. Likewise, a more ex
perienced leadership may develop in time. Furthermore, the grow
ing industrialization of Soviet Russia is likely to result in better
equipment of the collective farms with tractors and implements and
may conceivably, if greater attention is paid to light industries and
they become more efficient, alleviate the shortage of consumers’ goods.
These, very briefly, are some of the more important items in the
balance sheet of the latest stage of soviet agrarian policy. In gen
eral, however, a definite appraisal at this juncture of the present
scheme of Russian agricultural organization is premature, as its
history is still too recent, and reliable data, especially quantitative
data on farm output, are insufficient. Furthermore, its future de
velopment is likely to be affected by a number of unpredictable fac
tors, among which the weather and the Government’s policy are not
the least important.
The soviet agrarian policy, although bent on socialization, has
been oscillating between the use of compulsion and a policy of con
ciliation of the peasants based on an appeal to their economic selfinterest. Of course, the Soviet Government has relied on both these
methods, but in varying proportions at different times. On the whole,
since 1928, the compulsory element has greatly predominated.
Recently it has been in evidence in the severe and repressive measures
adopted in connection with grain collections and preparation for
the spring-sowing campaign in the north Caucasus and in the drastic
penalties provided for offenses against collective property and breach
of working discipline committed by the members of the collectives.
On the other hand, the Soviet Government took steps in the summer
of 1932 to lift partially the ban which practically existed on the
98
The Soviet export policies have been dictated , o f course, by the need o f paym ent for
the heavy im port requirem ents o f the in du stria l program o f the F iv e -Y ea r P lan .
The
q u a n tity o f food stu ffs exported by the U nion o f Soviet Socialist Republics has g rea tly in
creased du ring the la st few years, according to official Soviet sta tistics.
In 1 9 3 0 and 1931
the exports o f foodstu ffs increased 5 to 6 fold com pared w ith 1 9 2 9 ; and even in 193 2 , when
exp orts declined heavily, they were 2 y2 tim e s as large as in 1 9 2 9 .
T h e value figures o f
th ese exports, however, showed a m uch sm aller increase during the yea r 1 9 3 0 , decreased
som ew h a t in 193 1 , and dropped in 1 9 3 2 below the level o f 1 9 2 9 , according to Soviet
s ta tistic s.
T h e exports o f food stu ffs n o t only increased abso lu tely but con stitu ted in
1 9 3 0 and 1 9 3 1 a larger proportion o f the total exports th an in 1 9 2 9 , the figures being
3 4 .2 , 3 7 .3 , and 2 4 .3 percent, respectively.
In 1 9 3 2 these exports again declined ap proxi
m a te ly to the level o f 1929 as fa r as the relative share in the total Soviet export trade
w a s concerned.

138

WORLD TRADE BARRIERS IN' RELATION TO AGRICULTURE

private trading of peasants, but without permitting the participation
of private middlemen, as was the case during the early part of the
“ Nep 55 period. The Government followed in the winter of 1932-33
with the modification of the procuring system of farm products, which
gradually lost its commercial character, into a legalized scheme of
taxation in kind. Thus, to stimulate the lagging interest of the
peasants in the expansion of agricultural production, some of the
principles of the “ Nep were restored on a limited scale."
The increase in the output of farm products is thus one of the
foremost objectives of the Soviet Government. It has been rendered
necessary by the rapidly increasing population1 and the need of
improving the domestic standard of living which has been char
acterized by serious food shortages during the last few years, as well
as by the desire to develop an extensive export trade to provide
means of payment for the import requirements of an ambitious in
dustrialization program.2 In striving to increase production, how
ever, the stress is at present laid not on further extension of acreage,
especially the acreage of industrial and cultivated crops, requiring
a great deal of labor and draft power, but on better cultivation of
land and increased yields “ as the main and central problem in the
field of agriculture in the present stage of its development.” 3
In the light of this situation considerable significance may be at
tached to the emphasis on scientific agricultural research by a num
ber of institutions for the coordination and systematization of which
there has been established the Lenin Academy of Agricultural
Sciences. Selected and pure seed, new crops, improved systems of
crop rotation, and other improvements in agricultural technic are
being introduced. But side by side with these progressive develop
ments there have been evident in recent years such unfavorable fac
tors in agricultural practice as sowings delayed partly through the
fault of management, weediness of the fields, and inefficient har
vesting, with resulting large crop losses. Serious losses of livestock,
especially young stock, due to poor handling, have also been re
ported.
A great deal of attention is paid by the Soviet authorities, as part
of the program of expansion of production, to the mechanization
of agriculture. The number of tractors on farms increased, accord
ing to Soviet official figures, from 24,504 on October 1, 1927, to over
140,000 in the spring of 1932. At first tractors were imported from
the United States,4 as the domestic production, which did not begin
on a commercial scale until 1925, was small for several years there
after. Two new tractor plants, however, have been constructed re
cently; in Stalingrad (lower Volga region) where production started
99
A ccord in g to th e new law , the peasants, a fte r m eeting a ll th eir obligations to the
sta te, w ill be free to dispose o f their produce, but on ly w hen th e procuring p lan fo r their
d istrict or region is fu lly executed.
! T h e population o f the U nion o f Soviet So cia list R epublics w as estim ated officially a t
1 8 8 ,1 9 9 ,0 0 0 on Jan uary 1, 1 9 1 4 ; 1 4 7 ,0 2 8 ,0 0 0 according to the C ensus o f D ecem ber 17,
1 9 2 6 ; and 1 6 2 ,1 4 3 ,0 0 0 on Ju ly 1, 1 9 3 1 .
2 Soviet exp orts have been affected ad versely by the w orld econom ic d e p re s s io n ; this
has led to a cu rta ilm en t o f im ports into the Soviet U nion.
3 D ecree o f th e Council o f Peoples’ C om m issars o f U .S .S .R . and the C en tral C om m ittee
o f the C om m u n ist P a rty , Septem ber 29, 1 9 3 2 .
( “ S o cia list A gricu ltu re ” , Septem ber 30,
1 9 3 2 .)
4 N early 8 6 ,0 0 0 tractors w ere shipped to the U nion o f So vie t So cia list R epublics from the
U n ited S tates during the period 1 9 2 5 -3 1 .
M ore than 2 3 ,0 0 0 w ere shipped during each o f
the years 1 9 3 0 and 1 9 3 1 .
In 1 9 3 2 , how ever, U n ited S ta tes exp orts o f tra cto rs to Soviet
R u ssia becam e insignificant, w ith on ly 32 tractors shipped.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

139

in June 1930 and in Kharkov (Ukraine) which began operation in
October 1931. Although considerable operating difficulties were ex
perienced, especially in the Stalingrad plant, and production lagged
behind schedule, nevertheless the total number of tractors manufac
tured in the Union of Soviet Socialist Eepublics increased from 4,569
in 1929 to 12,727 in 1930, and 39,879 in 1931. It was reported that
over 40,000 tractors were manufactured during the first 10 months
of 1932. Another new plant to manufacture tractors of the crawler
or track type was officially opened on June 1, 1933, in Cheliabinsk
(Trans-Ural). This factory has been projected for an ultimate pro
duction capacity of 40,000 tractors a year, but the program for 1933
calls for only 2,000 tractors.
The supply of tractors in Russian agriculture still lags considerably
behind that of the United States with its more than 900,000 tractors
on farms, according to the Census of 1930. Furthermore, with a
serious shortage of draft animals in the Union of Soviet Socialist
Eepublics, the tractor supplemented rather than displaced the badly
needed horse 5 in contrast to the situation in the United States during
the decade following the World War. This is evidenced by the
official slogan of the necessity of a “ combination of the tractor with
the horse in field work.55 A tractor in the Soviet Union, of course,
may work more acres than in other countries, as it was claimed. But
there is a counterbalancing factor, at least for the present, in the
considerable loss of* tractor working time in the Union of Soviet
Socialist Eepublics resulting from such causes as heavy wear and
tear, due to the handling of tractors by inexperienced or inefficient
operators; poor organization of repair work; shortage of spare parts;
and the wasteful movement of tactors from place to place.
Combined harvester-threshers have also been introduced in Eussian agriculture. On May 1, 1932, there were 8,904 combines on
farms in the Union of Soviet Socialist Eepublics. Over 3,900
combines were shipped from the United States to Soviet Eussia
during the 4-year period 1928-31. Domestic production of com
bines on a commercial scale began in 1930 in a plant in Ukraine
and a new combine plant was recently constructed and is now operat
ing in Saratov.
To facilitate the use of tractors and to make the area served by
them as large as possible, a new type of farm organization has been
evolved, called “ machinery-tractor station 55, in which a number of
tractors and tractor implements are operated as a unit, under single
management, with its own repair shops and staff of operators. The
machinery-tractor stations contract with collectives for the perform
ance of necessary field work, for which they are paid by the latter
with a share of the crop in “ kind.55 Thus machinery-tractor sta
tions also serve as an important instrument in the collection of farm
products by the state. At the end of 1932, there were 2,446 such sta
tions. They planted more than half of the 1932 spring acreage of
the collectives. In 1933 the organization of 322 new machinerytractor stations has been planned. The recently announced addition
5
T h e im portan ce o f the “ conservation and increasin g th e num ber o f horses ” has been
stressed in variou s official pronouncem ents, such as the decree o f th e C entral C om m ittee
o f the C om m unist P a rty of M a y 2 7 , 1 9 3 2 , w hich records the decrease in th e num ber of
horses and deterioration in their q u ality in m an y sections of the cou ntry.

140

WORLD TRADE BARRIERS IK RELATION TO AGRICULTURE

of special “ political departments ” to the machinery-tractor stations
and state farms is designed to tighten the Soviet control over the
collective and state farms and to promote their efficiency. In addi
tion to machinery-tractor stations, state farms have assisted collec
tives with field work.
Taxation abatements and exemptions and loans to farmers, with
whom contracts are made for acreage, have been used as a means
of encouraging the expansion of acreage and the growing of new
crops or the extension of cultivation into new regions.
In all measures of government aid in the Union of Soviet Socialist
Republics the attention is centered on state and collective farming.
The individual peasant farmers, who account for a fifth of the
Russian acreage, receive little if any government aid. Thus they
were not mentioned in official decrees announcing the granting of
seed loans in the winter of 1932 and again in the winter of 1933 in
regions affected by crop failure. Individual peasant farmers, how
ever, are required to deliver to the state larger quantities of farm
products than are the collective farms.
Centralized state planning constitutes a distinctive feature of
government control of agriculture as of other phases of economic life
in the Union of Soviet Socialist Republics. Its development has
paralleled the growth of collectivism and the decline of private enter
prise and of the free market. Agriculture is first of all subject to the
general planning, which embraces the whole national economy and is
exemplified in the well-known Five-Year Plan as well as in the annual
plans. On the basis of the larger general plans there are usually
elaborated special, more detailed, plans extending all along the line
to the smallest unit of economic activity. Of such specialized plans,
the scheme of regional agricultural specialization, the sowing
program, specifying the acreage to be sown to various crops
in different regions, and the plan fixing the quantities of farm
products to be delivered to the state, are the most important as far
as agriculture is concerned. The individual regions, districts, col
lective and state farms, are encouraged to propose so-called “ counter
plans ” , exceeding the requirements and tasks set up in the official
plans.6 The official plan may or may not be executed ; its execution
may be faulty, or it may be poorly drawn, seriously miscalculated,
and subsequently modified. These are all vitally important questions
of the technic of planning, but they do not affect the central position
of the plan in the Soviet system of economic administration.
All foreign trade, including exports and imports, has been a mo
nopoly of the Soviet Government since 1918, and this fundamental
principle has not been affected by changes in the soviet economic
policy during the last 15 years. With exclusive state monopoly
providing a complete control of foreign trade, the problem of foreign
competition in the domestic market, in the form in which it is met
in other countries, obviously does not exist in the Union of Soviet So
cialist Republics, even though Soviet economy is not entirely insulated
from the effects of world economic currents. Furthermore, export
and import trade in agricultural as in all other products is carried
on in the light of general objectives of economic and financial policy
6
T h e settin g up o f procuring cou nterp lan s at the behest o f the au th o rities is prohibited
by the new la w governing procurem ents.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

141

of the Soviet state. Attention is thus paid not only to prices and
the profitableness of individual transactions but also to the balance
of international payments as a whole. The state monopoly of for
eign trade, coupled with a virtual monopoly of the domestic market
and the power to ration consumption, endows soviet foreign trading'
with a certain degree of elasticity in the matter of expansion and
contraction of exports and imports, within the limits set by interna
tional market conditions. Thus commodities which under competi
tive conditions might be considered deficit products may be exported
by Soviet Russia when financial exigencies or other reasons so dic
tate; and likewise the regulation of imports may be quite different
from what would have been the case under free competition.

PART III
EFFECTS OF TRADE BARRIERS AND RELATED
MEASURES APPLYING TO AGRICULTURAL
PRODUCTS UPON PRICES OF SOME IMPORTANT
FARM PRODUCTS IN THE UNITED STATES

143

CHAPTER V ili
WHEAT
Of all the agricultural commodities, wheat has been subjected in
recent years to perhaps the most wide-spread legislation and govern
mental control. It has been subject to direct legislation and to legis
lation affecting it indirectly through flour, bread, and other products*
Most of the countries of the world, whether large or small, have pro
vided for some sort of restriction of imports, encouragement of ex
ports, control of prices, or other relief to wheat growers. In a num
ber of countries these measures have succeeded in maintaining prices
at levels substantially higher than those in the uncontrolled wheat
markets of the world ; in other countries the measures have had little
effect; in still others, virtually none.
The almost universal legislative and administrative attention
which has been given to wheat by the governments of the world
is largely an outgrowth of the development of the spirit of economic
nationalism following the war. Many nations, especially those of
Europe, were trying to become more self-sufficient in necessities of
life, such as wheat. Furthermore, wheat is very important in inter
national trade, and hence it is a major item in the balance of inter
national payments of many countries. Some of the important wheatimporting countries had for years had difficulty in getting a suffi
cient export market for their products to pay for their imports of
foodstuffs and raw materials. They were consequently faced with
the need of either increasing their exports or decreasing their im
ports. Owing partly to high tariffs of other countries, it was very
difficult for them to increase their exports of manufactured products,
and they resorted to methods of reducing imports. These included
attempts to increase their production of commodities of the kinds
imported, and also direct restrictions of importations through high
tariffs and other means. Since wheat was both a prime necessity
and one of the most important items in their balance of payments,
the importing countries were quick to turn their attention to at
tempts to decrease their wheat imports and increase their wheat
production.
After 1929 the need for improving or safeguarding balances of
payments became more imperative and helped to further the
movement for more drastic import restrictions. Furthermore, some
important wheat-exporting countries were likewise faced with ad
verse balances of payments, and these countries turned to measures
designed to increase their exports of wheat in order that their for
eign trade balances might benefit. Thus, in the process of the read
justment of the balances of payments, the wheat market suffered
greatly. Most importing countries tried to reduce imports, and some
of the exporting countries to increase exports.

145

146

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

To a considerable degree, however, legislation affecting wheat has
been the result of attempts by the various countries to maintain the
prices received by their wheat producers. World wheat prices de
clined rather sharply in the summer of 1928. This decline of prices
was largely the result of high yields in that year, but was augmented
by the increase of acreage which had been underway for some years
and by the effect of tariffs upon prices and consumption. The low
prices of that year, as well as subsequent declines, helped to bring on
an intensification of wheat trade barriers, indicating that price sta
bilization or price improvement itself was often the purpose of the
trade barriers. In many countries wheat is regarded as occupying
a key position in agricultural prosperity. Hence it is especially likely
to be the subject of measures the purpose of which is to stabilize or
raise its price at a time when prices are falling rapidly. Since wheat
is produced and sold by a large proportion of farmers in all parts
of the world, such measures received general approval by the agri
cultural classes.
Though the effect of a measure or system of measures, adopted in
any particular country, may have been to improve prices or otherwise
to aid wheat growers within that country, the effect upon prices and
growers in other countries has been adverse. In almost every case the
effect is in some degree to increase production or reduce consumption
within the country applying it.
On the whole, the exporting countries have fared worst in the
struggle for higher returns to wheat growers. In them, wheat grow
ing occupies a position of relatively great importance, and yet they
are at a particular disadvantage in attempting to improve the re
turns of their wheat growers. Merely raising prices in an exporting
country will shut off the outlet for its surplus production and result
in accumulating stocks unless some sort of measure for exporting at
a lower price is applied.
In an importing country, on the other hand, the mere restriction of
imports, whether by tariffs, quotas, or import monopolies, raises
prices. Furthermore, import restrictions may be applied which, in
stead of requiring to be financed, yield additional revenue. This
has made it easy for the importing countries to adopt import restric
tions or other price-enhancing measures. Hence, whatever the ef
fects upon other industries in the wheat-importing countries, their
wheat growers have usually fared well if the restrictions applied
have been drastic enough to do more than counterbalance the adverse
effects upon world markets of the measures adopted by all the other
countries of the world.
MEASURES

RESTRICTING TRADE AND OTHERWISE
WORLD W HEAT PRICES

AFFECTING

The measures adopted by the various countries have differed
widely. These differences have been due partly to the varying pro
portions which exist between the quantities of wheat produced and
consumed by the several countries. Thus, in exporting countries,
export bounties and export dumping plans have been put into opera
tion, and bargaining tariffs have been arranged which provide for
special preferences to be given their wheat by importing countries.
In the importing countries, on the other hand, the principal reliance

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

147

has been placed on import restrictions, including tariffs, import and
milling quotas, control and allotment of foreign exchange, and
license and monopoly systems. Certain other forms of governmental
aid, such as direct subsidies, price fixing, and measures to lower costs,
have been adopted in both exporting and importing countries.
Finally, what is commonly called u currency depreciation ” has, in
view of the decline of prices in terms of gold, resulted in less of an
increase in the value of currency as compared with commodities.
Consequently wheat prices in those countries are higher than they
would be if the value of their currency in foreign exchange had not
depreciated—higher, that is, in terms of currency; and it is in terms
of currency that debts have been contracted. Furthermore, in those
countries where “ currency depreciation ” has taken place, there tends
to be less disparity between wheat prices and prices of goods farmers
buy than in the United States, which until recently remained on the
gold standard. The world-wide prevalence of import restrictions,
export aids, and exchange control and depreciation is indicated by
tables 11 and 12.

Tariff duties 2

Domestic Produc
tion,
disap
1930-32
pearance

France.................

295, 933

247,000

Italy-----------------

278, 746

244,000

Netherlands —
Belgium_______

36,454
55, 909

8, 700
13, 700

D enm ark______

20, 207

10, 400

S w e d e n -...........

22,307

21, 600

Cents per 100 pounds
Percent
Cents per bushel
4.3 current (par, 6)
10 percent on nonEmpire.
on non-Empire.
A ad
162, durum 113____ 466.............. .............. 97 basic, 2X
mixture potato
flour.
M inim um (U .S.)
227 to 329..
100 (M ar. 26)_____
85,
maximum
171.
95 (Mar. 16)..
107— --------- ----------F r e e ...
do_do............ ...........

Free_____________
5, sales tax 2 per
cent.
Free_____________

18___

53—

Free.

95 wheat, 97 rye.

Czechoslovakia

61, 593

48, 500

195-

5 admixture po
tato flour.

Greece_________

29, 682

13,400

72_ _

25 (October-April)
current milling
requirements.

Austria------------Irish Free State

26, 434
19,705

11,400
« 1,200

61—
Free.

15,000

Fixed at time when imports are
permitted.
‘ 39 (free under per
mit).
214.................... .........
409________________

21,097

4,000

4,308
5,846

4,200
8, 700

Exchange surtaxes
(mostly 15 per
cent) .

Storage subsidy for price stabilization;
trade treaties with Danube wheat
countries.
“ Battle of wheat” campaign; storage
subsidy; agricultural loans.
Fixed prices (average for 1932-33 $1.32).
New areas subsidized.

Depreciated
percent.
Depreciated
percent.
Depreciated
percent.
Depreciated
percent.

Temporary leniency in tax and in
terest collection.
Export certificates; fixed prices for sur
plus June 1, 1933.
Bounty to producers for grain used,
also fixed prices.
M inim um price; wheat growing con
sidered public utility.

Import license____

Variable, to maintain minimum do
mestic price.

234..
30...
20 admixture rye
and corn.

Import monopoly.
Complete monop
oly of trade.
Import monopoly;
licensing, with
prohibition con
tingent on do
mestic price.
Import certificates
Grain
Syndi
cate.
Monopoly________

43
32
35
57

Controlled.

Controlled,
also
depreciated
about 57 per
cent.
Import license____ Rigid control_____
Import permit___ Depreciated
30
percent.
Complete mono -------do_____________
poly.
Licenses and fixed
quota.
M onopoly________ Controlled.

Compensation agreements and im
port contingents; price stabilization
b y syndicate.
Price stabilization by monopoly, loans,
production and marketing aids.
Trade treaties; sowing premiums.
Price fixing and acreage expansion pro
posed.
M inim um prices, production bounties
and loans.
M inim um price about $2 a bushel;
State storage reserves.
M inim um prices, trade treaties, loans.
M inim um prices, treaties, agrarian re
form.

AGRICU LTURE

700
154,000

Switzerland------

Empire preference treaties; domestic
production subsidized.
Price stabilization; exchange plan, re
lief by loans, reduced interest, etc.

7,950

L a tv ia ..........
Lithuania...........

Depreciated about
30 percent.
Alloted 50 percent
of 1931.

Import permit

126, 660

Portugal.............

Semiofficial trad
ing company.

____ do..............

S p a in ................

Norw ay...............

Other measures

RELATION

160,000

Foreign exchange
(February average)

181,551

Licenses and mo
nopolies

BARRIERS

1,000
bushels
41,000

Milling quota
(domestic)
Flour

W heat

TRADE

1,000
bushels
257,700

United King
dom.
Germ any______

Wheat and flour— import restrictions and other measures, February 1933

WORLD

Country

1 1 .—

able

148

Finland..

6,273

1,200

5 0 ...........

135-225

Estonia..

2,014

1,700

80______

220-353

* 40,766

66-108

124-193 5_.

905, 239

3 940,832

Free____

Free.........

Japan___

44, 662

31, 000

240..........

680___

Brazil___

37, 683

« 5,100

13_________________

53_____________

C uba___
12,636

3 8,126
90,000

Difference cost and fixed price.
8 2 .._______________

2 0 2 ...................

Exchange permits.

1.......... .

Depreciated about
30 percent.
Flour embargo____ Depreciated______

Import license..

1 W heat retained in country for all purposes except seed, average 1926-27 to 1930-31.
2 A t current exchange rates in case currency is depreciated.
3 Average, 1926-31.

4 Unsifted and sifted flour, respectively,
s Sliding scale.

RELATION
TO
AGRICULTURE

149

Depreciated about
36 percent.

10 yucca flour.

BARRIERS

Union of South
Africa.
T u rkey________

8.7_________________ 41_____________

Depreciated
30
percent.
Depreciated half
from 1930.
Depreciated about
60 percent.

TRADE

45,912

C h in a ....

Partial moratoria, credit aid.
M inim um prices, treaties, credit, and
mortgage aid.
Marketing aids, cotton area limited
1931-32.
Flour tax 2 cents a bag, wheat credit
purchase United States.
Governmental control of rice trade pro
posed relief; new 5-year production
plan.
D ebt moratoria; embargo on flour
August 1931 to February 1933.
Consumption tax on flour, as applied to
U .S ., of 35 cents per 100 lbs.
M inim um price $1.64; preferential
treaty with Canada.
Credit aids; consumption tax.

WORLD

E g y p t ...

41
Export certificate.. Depreciated
percent.
M onopoly_____
Controlled..............

150

WORLD TRADE BARRIERS IN' RELATION" TO AGRICULTURE
T a b le

Country

12.— Wheat, export and production aids, 1932

Domestic
Produc
needs
tion,
including
1926-30
seed

1,000

Australia—.
Canada___
India______
B ulgaria...

bushels
59,479
139,531
333,635
41,975

bushels
155,824
435, 744
332,416
43,666

H u n g ary...

58, 722

82,075

Rum ania...

103,147

110, 737

Yugoslavia.

71, 829

81, 323

Argentina..
Russia____

88,203
803,194

251, 257
837,690

Poland____

67,134

64,197

Country

Australia_______

Import certificates 18 cents a
bushel on wheat, 46-51 cents
on flour per 100 pounds.

Lowered costs

44 per

Fertilizer aid__________

16 per

Proposed
reduction
freight charges.

about 30
_________

_ d o _____ ________

Reduced freight to
Italy; tax conces
sions.
Remitted taxes__ _____

~R.nma.nia._______ .........do............................. . Temporary debt moratoria.
Yugoslavia.........
Argentina
Russia
Poland

Bargaining tariffs

Dual prices and export monop
oly, 1931-32.
12 cents a bushel export prem
ium July-October, 1931; dual
price and export monopoly,
1931-32.
16 cents a bushel export prem
ium August 1931 to April 1932.
High fixed domestic prices,
1931-32; and import monopoly,
1931-33.

Foreign exchange
(February average)

Depreciated
cent.
Canada_________ Depreciated
cent.
India___________ Depreciated
percent.
Bulgaria________ Controlled..
Hungary

Export subsidies

C on trolled , dep re
ciated about 23 per
cent.
Controlled and depre
ciated about 40 per
cent.
Controlled . _________

Reduced freight
charges; tax conces
sions.

Empire preference.
Do.
Do.
Clearing agreements.
Clearing agreements and treaties.

Preference treaty with France;
compensation agreements.
Preference treaty with France,
Austria, and Czechoslovakia.
Preference treaties with Baltic
States.
Negotiating treaties.

Other aids

Financing wheat pools; production
bounty 1931 limited; bonus 1932.
Guarantee bank loans to wheat pools;
production bonus 1931-32.
Reclamation aid; import duty of 39
cents a bushel at par on wheat.
Stabilization purchases at low levels;
seed loans; consumption tax.
Seed loans; temporary embargo on
exports, fall 1932.
Seed loans; bread consumption tax;
increased duties; domestic mixing
and substitution of corn and barley
for wheat.
Seed loans; increased duties.
Harvest and marketing loans; elevator
construction; marketing supervision.

Tax relief______________

Almost complete monopoly of trade,
business, agriculture, transportation;
tax abatements.
Export cartels; loans; export taxes;
standardization.

1 Balance retained within country, average 1926-27 to 1930-31.

At present only a half-dozen countries of the world allow duty
free imports of wheat and still fewer permit free imports of flour.
The tariffs affecting United States wheat range from about 3 cents
per bushel in Switzerland to $1.62 in Germany, while even higher
rates are recorded in some countries with a dual rate schedule.
The milling quotas and mixing regulations operative in about a
dozen countries appear to have played a very important part in
restricting the normal flow of trade in wheat and flour. Not only
do they ensure complete utilization of domestic wheat, which is

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

151

inferior for bread making, but by so doing they help maintain or
even increase production of such wheat. They tend to limit imports
to the strongest foreign wheats in order to produce as nearly as
possible a satisfactory milling mixture when blended with the weak
domestic wheat. Despite this blending the quality of bread suffers
in many cases, thus tending to reduce the amount consumed. Some
elasticity in the importation of special foreign wheat types is
afforded in some countries by changing the percentages of the mill
ing quotas from time to time during the season, depending on do
mestic supplies, or by using the import certificate system which
enables foreign wheat to enter duty free or at reduced rates for like
amounts of domestic wheat exported. This is the principle involved
in the so-called “ wheat exchange plan ” in Germany.
A definite centralization of import agencies or facilities has been
effected in a great many countries as a further method of control.
In some cases the method or policy appears to be a temporary one
as a matter of expediency in preventing depreciation of the country’s
foreign exchange during the depression; in others and more gener
ally there is a policy of more permanent state control. Requiring
permits from the government or from an agency working with the
government in order to import or obtain foreign exchange to finance
imports enables a definite control of imports. In Germany exchange
permits are allotted monthly, and the imports allowed are less by a
certain percent than the imports during the corresponding period of
last year. In most countries wheat and flour, however, have not
been subjected to as drastic exchange permit control as have many
other imports.
Further steps taken by several countries attempting control have
been the formation of specific organizations, as state import monop
olies or quasi-official monopolies with sole authority to import.
Complete monopoly of both the import and domestic grain trade is
not altogether uncommon. Though monopolies present a very for
midable type of trade barrier, they do not appear to have neces
sarily curtailed imports more than other types, and in some cases
they have even facilitated import purchases. On the other hand,
virtual embargoes on wheat and flour imports have been effected
through such monopolies. In some instances where state control or
close supervision is exercised, wheat growing is looked upon as a
public utility—a matter of national welfare and so the concern of
the state.
The most important export aids, in addition to bargaining treaties,
are definite export bounties or premiums and dumping schemes.
Export bounties, however, are not very prevalent on account of
stringent credit and financial conditions in most countries. Both
Rumania and Hungary used this form of aid during part of the
1931-32 season, but have discontinued it. In Poland it has played a
limited role with respect to wheat, but Poland has not had a large
export surplus, and the 1932 crop was materially reduced by rust
damage. Import certificates may be considered a form of export
bounty, since they tend to increase a country’s exports, but they do
179563— 83------ 11

152

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

not increase net exports and hence are not applicable in countries
with an export balance unless they provide for the free importation
of some other commodity. They sometimes enable exports to be
made from surplus regions of a country to adjoining countries, and
imports into the deficit areas at less cost than domestic transportation
might entail, but they have been especially important in permitting
imports of strong foreign wheats for blending with domestic wheat.
Wheat export-dumping schemes have been used primarily in the
Danube countries. They have varied in details but generally involve
a dual price structure. Domestic prices have been maintained con
siderably above world prices, while exports are made at regular mar
ket prices. In some cases the difference or loss has been met by
special forms of taxes or credit and in other cases by appropriations
from the general revenues of the Government. For the most part,
the few remaining export-dumping plans for wheat are of a less
ambitious nature for the 1932-33 season, partly as a result of reduced
crops but mostly on account of stringent financial conditions.
A multitude of other measures have been adopted in both import
ing and exporting countries in behalf of wheat producers during
recent years. These have included production bonuses and minimum
prices, credit extensions, reduced or remitted taxes, and reduced
freight rates. Numerous countries, primarily deficit areas, have
adopted price stabilization and control measures and now maintain
their level of wheat prices as high as $1 a bushel or more. Direct
production bounties or bonuses of 5 cents or more a bushel were paid
on wheat marketed during the 1931-32 season in the great surplus
areas of Canada and Australia. Agricultural credit aids and loans
have been particularly common forms of assistance, while tax and
other debt obligations have received special consideration in some
countries. Marketing, especially cooperative marketing, has been
aided notably by loans and storage subsidies to prevent seasonal
dumping after harvest and to encourage improved sales methods and
standards of quality.
EFFECT OF CONTROL MEASURES ON PRICES IN COUNTRIES
APPLYING THEM

The effect of the measures which have been adopted by the various
countries upon the prices in each of them can be measured fairly
well by merely comparing their prices with prices in a country where
trade has been free. Under conditions of freedom of trade in wheat,
prices of a given quality in all parts of the world would be substan
tially the same except for differences due to costs of transportation
from one market to another. Of course, whenever one country shifts
from a surplus to a domestic basis, or from a surplus to a deficit
basis, this involves a change in the price margin. Most countries,
however, are fairly regular exporters or fairly regular importers of
wheat. While there are changes from year to year in the amounts of
wheat exported and imported by the several countries, these do not
ordinarily greatly affect the price margins. A more significant
cause of differences in prices between different markets, under con

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

153

ditions of complete freedom of trade, would be the variations in the
cost of shipment from one market to another. Though there have
been rather large variations in ocean freight rates during the past
10 years, these changes have not been at all great compared with the
changes in the price margins between some of the most important
world markets. Indeed, under conditions of freedom of trade, all
the factors affecting the margins between prices in most of the im
portant world markets would have caused relatively little variation
as compared with changes in margins which have occurred between
some of the most important wheat producing and consuming coun
tries during the past 10 years.
Throughout the entire period and prior to the autumn of 1932 for
eign wheat in the United Kingdom was not subject to any tariff or
other direct restrictions. Consequently, except insofar as the restric
tions of other countries had an indirect effect upon them, prices in the
principal markets of the United Kingdom were unaffected by
restrictions. Because of this, prices in the United Kingdom, when
converted to a gold basis, may be used as a convenient “ bench mark ”
from which to compare prices in other countries. Thus wheat prices
at Liverpool or other markets of the United Kingdom may be com
pared with prices at Berlin, Paris, Milan, Chicago, Buenos Aires,
Sydney, Budapest, and other importing and exporting markets.
Whenever any important price-influencing measure has been in effect
in one of these other countries its influence will ordinarily be seen
upon the differential between prices in the markets of that country
and of Great Britain. It will consequently be convenient to refer
to prices in the United Kingdom as “ world55 market prices, and to
judge the effect of the price-control measure in each of the other
countries by comparing them with these “ world55market prices.
EFFECT

E X P O R T IN G

C O U N T R IE S

In most of the exporting countries wheat prices have not varied
greatly from their normal differential with prices in Great Britain
if all prices are converted to terms of United States money, or other
wise converted to a common basis. This is shown by table 13, which
compares prices of imported wheat in Great Britain with prices in
the United States and four other important exporting countries—
Canada, Argentina, Australia, and Hungary. These exporting coun
tries are the five largest wheat exporters of the world, except that
in the last few years Russia has risen to fifth place and Hungary has
fallen to sixth. The wheat trade of Russia, of course, is carried on
largely through procurings of the Soviet Government in such a man
ner that market prices, even if they are available, have very little
significance in indicating the returns which farmers receive for their
wheat. However, the prices that Russia has received for its exports
to other parts of the world have followed the same general course as
prices received by other exporting countries.

154
T a b le

WORLD TRADE BARRIERS 11ST RELATION TO AGRICULTURE
13.— Wheat prices per bushel in important exporting countries compared
with price of imported wheat in Great Britain

N o. 2 Hard
Winter,
Kansas
C ity i

Year beginning July 1

Actual prices:
1921-22 ____________________
1922-23_____________________
1923-24_____________________
1924-25_____________________
1925-26___________ _________
1926-27_____________________
1927-28_____________________
1928-29_____________________
1929-30_____________________
1930-31______________ _____ _
1931-32_____________________
Spread (amount below British
parcels):
1921-22
_
_
_____
1922-23_____________________
1923-24_____________________
19 2 4 -2 5 -.--________________
1925-26_____________________
1926-27_____________________
1927-28_____________________
1928-29_____________________
1929-30_____________________
1930-31_____________________
1931-32____________ ________

Great
Britain,
imported
parcels

Canada,
N o. 3, M an Argentina,
itoba
Buenos
Northern,
Aires
Winnipeg

Cents
120
113
107
150
162
136
138
111
113
73
50

Cents
148
136
121
179
170
164
154
129
131
80
59

Cents
119
106
92
157
143
135
133
113
123
62
47

Cents
126
120
104
156
143
128
130
108
110
59
44

28
23
14
29
8
28
16
18
18
7
9

0
0
0
0
0
0
0
0
0
0
0

29
30
29
20
27
29
21
16
8
18
12

22
16
17
23
27
36
24
21
21
21
15

Australia,
Sydney

Cents
140
106
146
147
141
132
114
119
56
44

Hungary,
Budapest

Cents
94
180
151
151
151
122
107
74
55

8
15
33
23
23
22
15
12
24
15

27
21
19
13
3
7
24
6
4

1 Represents, not seasonal weighted average, but a simple average of weekly weighted average prices in
order to be comparable with other series which are unweighted averages.
2 In 1924-25 the Hungarian prices averaged 1 cent per bushel above imported parcels at Great Britain.

From table 13 it is evident that during the past 10 years wheat
prices in these exporting countries have followed courses which are
almost parallel.

There have been year-to-year variations as between

the various countries, but these were mostly due to variations in the
size of crops of the respective countries and to differences in the
types of wheat represented by the quotations. Thus, in 1924—25,
Hungarian prices were higher than those of the other exporting
countries because of Hungary’s short crop, while in 1925-26 prices
in the United States were unusually high as compared with the
other exporting countries because of our very short crop of winter
wheat harvested in that year.
In some cases, however, the price differences between countries
were significantly affected by governmental intervention. The Hun
garian price was maintained at an abnormally high level by stabiliza
tion purchases and export sales of a government-controlled organ
ization, the “ Futura” (Hungarian Cooperative Unions Trading
Co.), in 1930-31, while during part of 1931-32 an export bounty
was in effect. In 1930-31 United States prices were supported by
the operations of the Grain Stabilization Corporation.
In a general way the course of prices of wheat at Budapest, Hun
gary, is fairly typical of the course which open-market prices have
followed in the other exporting countries of the Danube Basin.
Thus in 1931-32 the price of wheat at Yarna and Bourgas, Bulgaria,
averaged 45 cents per bushel; at Braila, Rumania, it averaged 49
cents. In Yugoslavia, however, the grain trade was under monopo
listic control of the Privileged Export Co., and no open-market
prices prevailed during most of 1931-32.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

155

In the United States, Canada, Argentina, and Australia the prices
received by farmers have been approximately equal to the market
prices given in table 13, minus marketing expenses. The only im
portant exception to this was in 1931-32 when the wheat growers of
the Prairie Provinces of Canada were given a 5 cent per bushel
bonus and those in Australia a bounty of 4% pence (9 cents at par of
exchange and about 5 cents at exchange rates then current). In three
out of the four exporting countries of the Danube Basin, however,
prices received by producers were maintained at much higher levels
than would have prevailed without governmental assistance.
In Hungary growers received “ grain tickets 55 in both 1930-31 and
1931-32. The 1930-31 grain tickets were the equivalent of 14 cents
per bushel, but could be used only for payment of taxes if the wheat
grower’s taxes had not been paid, while in 1931-32 the grain tickets
were worth 29 cents per bushel, half the face value of which was
redeemable in cash, while the other half was good for taxes only,
unless the grower had already paid all taxes due. In Bulgaria, dur
ing the latter part of the 1930-31 season the central grain purchas
ing bureau of the Government paid to producers a fixed price of
78 cents per bushel, and in 1931-32 a fixed price of 67 cents per
bushel. In both countries these prices were well above prices avail
able in the open market. In Yugoslavia, subsidized exports by the
Privileged Export Co. resulted in maintaining prices well above the
world market parity in 1930-31, while a combination of subsidized
exports and a complete monopoly of the grain trade during a part
of the 1931-32 season resulted in higher than world market prices
prevailing during that season also. During much of 1931-32 prices
were fixed, growers receiving from 74 to 87 cents per bushel, whereas
the price to mills was from 108 to 120 cents, depending on the quality
of the wheat. Wheat was exported at prices of around 45 to 50 cents
per bushel. In Rumania, on the other hand, wheat prices received by
growers appear to have been relatively little influenced by govern
mental action in spite of the payment of an export premium at 16
cents per bushel during most of the 1931-32 crop year. It appears
that prices received by producers in the Danube Basin as a whole
during the two seasons 1930-31 and 1931-32 averaged at least 20
cents per bushel higher than they would have without governmental
aid. As indicated above, however, wheat growers in Rumania re
ceived but little benefit during those seasons, the most governmental
aid having been given in Bulgaria, Yugoslavia, and Hungary.
A more detailed account of the operation of subsidies to growers
and of export aids in the countries of the Danube Basin is given
in the appendix.
In Argentina and Australia, and to a lesser extent in Canada,
the depreciation of exchange has been a significant factor in pre
venting wheat prices in terms of currency from declining as much
as they would have declined had the countries remained on a gold
standard. This is indicated by a comparison of prices in terms of
the currency of the several countries and in terms of United States
currency for the months of January 1929 and January 1933.
(Table 14.)

156

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

T a b l e 1 4 . — Wheat prices in selected countries in their currencies and measures

and in terms of United States cents per bushel at current exchanges rates

January
1929

United States, N o. 2 Hard Winter, at Kansas City: In United States
cents per bushel_______________________________ ______ _______ _____ _
Great Britain, imported parcels, at Liverpool:
Shillings and pence per quarter___________________________________
United States cents per bushel_________________ ________________
Canada, N o. 3 Manitoba Northern, at Winnipeg:
Canadian cents per b u sh e l_________________________ ______________
United States cents per b u s h e l..________ ___________ _________
Argentina, Buenos Aires Type, at Buenos Aires:
Argentine pesos per metric quintal_________________ ________
United States cents per bushel_____ _______ _______ _______________
Australia white milling wheat at Sydney:
Australian shillings and pence per bushel - ________________ United States cents per bushel___________________________ ________

January
1933

Percent
January
1933 is of
January
1929

114.5

43.6

38.1

42/11.4
130.6

23/10.7
50.2

55.6
38.4

112.4
112.1

40.0
35.0

35. 6
31.2

9.5
108.5

(5. 08)
(35. 6)

53.7
32.8

4/7.3
112.1

(2/9.1)
36.9

32.9

We find, then, that in the principal exporting countries other than
the United States, the decline of wheat prices has been considerably
relieved (as far as its effect upon the farmer is concerned) either by
special-aid measures as in Hungary and other Danubian countries or
by depreciated exchange as in Canada, Argentina, and Australia.
Nevertheless, the decline of prices in terms of gold has been so great
that in spite of depreciated currencies and governmental aid, there
has been no general acreage expansion since 1929-30 except in the
Danubian countries and in Russia, Governmental aid to wheat
growers and currency depreciation in the exporting countries may,
however, have reduced the tendency for acreage contraction. But
even if the wheat growers of these countries had borne the full effect
of the decline of wheat prices in terms of gold the acreage probably
would not have declined greatly, for in a time of severe depression
wheat growers have no profitable alternatives to which they can turn.
It is, however, significant to note from table 15 that the United
States is the only country which has materially reduced acreage since
1929.
T a b l e 1 5 . — Wheat acreage in specified countries, 1921-22 to 1932-33 1
Europe, excluding
Russia

Canada
Crop year

1921-22..
1922-23..
1923-24__
1924-25..
1925-26-.
1926-27..
1927-28-.
1928-29..
1929-30..
1930-31 <
1931-32 «
1932-33 <

Argen
tina 3

United
States

M illion
acres
64.6
61.4
56.9
52.5
52.4
56.8
59.6
59.3
62.7
61.1
55.3
55.2

Old
series

New
series 2

M illion
acres
23.3
22.4
21.9
22.1
20.8
22.9
22.5
24.1
25.3
24.9

M illion
acres

5 25.7
26.2
27.2

M illion
acres
14.2
16.3
17.2
17.8
19.2
19.3
20.7
22.8
20.5
21.3
17.3
19.8

Austra
lia

M illion
acres
9.7
9.8
9.5
10.8
10.2
11.7
12.3
14.8
15.0
18.2
14.7
15.6

Russia
Lower
Danube

Other

M illion
acres
15.0
16.1
16.2
18.1
18.5
18.7
18.9
19.6
18.4
20.0
20.9
18.8

M illion
acres
49.2
49.1
49.9
49.3
50.8
51.3
52.4
51.8
51.7
53.7
55.0
56.1

M illio n
acres
38.4
22.3
39.2
52.7
63.1
73.9
77.4
68.5
73.5
80.5
92.1
88.7

1 Data refer to area harvested except in case of Argentina for which the area sown is given.
2 Revised on basis of 1931 census.
4 Preliminary.
5 Estimated from revised figures for the Prairie Provinces.

3 Area sown.

WORLD TRADE BARRIERS 11ST RELATION TO AGRICULTURE

157

In 1932 the area harvested was only 55,200,000 acres, compared with
62.700.000 harvested in 1929. Although the 1932 acreage in the
United States was affected by heavy abandonment of winter wheat,
there has been a marked decline in the area planted. The total area
of wheat sown for harvest in 1929 amounted to 66,500,000 acres, while
in 1932 it was only 63,100,000 acres, whereas for 1933 the area is
indicated to be about 60,900,000 acres. The peak of the wheat area
sown in the United States was reached in 1928 with a total of
70.700.000 acres.
In Canada there appears to have been a slight increase in acreage
since 1929-30, though comparison is made difficult because of a revi
sion in the basis of estimating acreage when the results of the census
became available in 1931. The 1932 area of 27,200,000 acres appears
to have been abnormally large, because weather conditions were espe
cially favorable at planting time. The wheat area of Argentina has
shown a slight downward tendency, but the change has been small
compared with the year-to-year fluctuations. In Australia, save for
the abnormally large wheat area in 1930-31, there has been no signifi
cant change in the level of acreage since 1928-29. The 1930-31 area
was unusually large because of a campaign to increase the produc
tion and exportable surplus of wheat in the hope that this would
improve Australia’s foreign-exchange position.
In Europe there has been a very marked increase in the wheat area
since 1929, especially in the wheat-importing countries. In 1929 the
wheat area of the four exporting countries of the lower Danube Basin
amounted to 18,400,000 acres, and by 1931 it had risen to 20,900,000.
The acreage of 1932 was smaller, not because of a shifting to other
crops but because weather conditions were very unfavorable. In the
remainder of Europe, excluding Russia, the wheat area has risen
from 51,700,000 acres in 1929-30 to 56,100,000 acres in' 1932.
EFFECT

IM P O R T IN G

C O U N T R IE S

In the importing countries of Europe wheat prices and returns to
wheat growers have been much more affected by governmental inter
vention than has been the case in the exporting countries. In several
countries prices during the 1931-32 season were about three times as
high as were prices at Liverpool—the result largely of very stringent
restrictions upon the importation, sale, and milling of foreign wheats
and upon the importation and sale of flour from foreign countries.
Almost all of the wheat-importing countries of Europe except the
United Kingdom have drastic restrictions on the use of foreign wheat
and flour and maintain relatively high prices for their domestic
wheat. In the United Kingdom, though the market price of domestic
wheat is not artificially maintained, a large bounty was provided for,
beginning with the 1932 harvest.
While it is not feasible to take up each of the many small deficit
countries of Europe to study the effect of these measures on prices,
it is nevertheless possible to get a rather comprehensive view of the
situation. About two thirds of the wheat used in Europe (exclusive
of Russia) for purposes other than seed is consumed in five coun
tries—France, Italy, the United Kingdom, Germany, and Spain.
Their apparent consumption and net imports in the 5 years 1926-27
to 1930-31 averaged as follows:

158

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE
1

Apparent con
sumption ex
Net imports
cluding use for
seed

Countries

France.__________________________________ ___________________________________ __
Italy ___________ ______ _________________ ___________ _______________________ . . .
United K ingdom ___________ __________________________________ ____ _______ _____
Germ any_______ __ _______________ _________
__ ___________________________ .
Spain__ ________ _________________ _________ __ _______________ _______________
Total _____________________ _____ ________ __ ____________

_______________

Bushels
296.000.000
279.000.000
258.000.000
182.000.000
127,000,000

Bushels
54.000.000
78.000.000
211,000,000
69.000.000
6,000,000

1,142,000,000

418,000,000

The wheat consumption of these five countries amounted to about
75 percent of the consumption of all the wheat-importing countries
of Europe (all countries except Russia, Hungary, Yugoslavia, Ru
mania and Bulgaria). Wheat prices in these countries consequently
affect the major part of the wheat consumed in Europe. Spain im
ports almost no wheat and the net imports of the other four amounted
to 68 percent of the net imports of all the importing countries of
Europe.
1. Effect on price.—Representative prices of domestic wheat in the
five countries, together with prices of imported wheat in Great
Britain and the price of hard winter wheat at Kansas City, are shown
in table 16. It will be seen from the first section of this table (table
16) that Great Britain is the only one of the five importing countries
shown in which prices have not been maintained far above those of
the exporting countries since the 1929-30 season.
T a b l e 1 6 . — W heat: Price per bushel of domestic ivheat in important importing

countries and the United States compared with the price of imported wheat
in Great Britain

Year beginning July 1

Actual prices:
1921-22______________________
1922-23 ____________________
1923-24.
___________________
1924-25______________________
1925-26 _____________________
1926-27 _____________________
1927-28______________________
1928-29 _ ___________________
1929-30______________ _______ _
1930-31 _____________________
1931-32 _ ___________________
Spread (amount above or be
low British parcels 2) :
1921-22 _ ___________________
1922-23 _ ___________________
1923-24____ __________________
1924-25 _____________________
1925-26 ......... ..................... .......
1926-27 ___________ _____ ____
1927-28 _____________________
1928-29______________________
1929-30______________________
1930-31._ ____________ ______
1931-32______________________

N o. 2
hard
winter
Kansas
City i

Great Britain
Germany France Italy nondomestic domestic durum at
Imported
at Berlin at Paris
Milan
Domestic
parcels

Spain

Cents
120
113
107
150
162
136
138
111
113
73
50

Cents
148
136
121
179
170
164
154
129
131
80
59

Cents
140
125
120
158
155
158
139
128
122
83
63

Cents
115
109
106
150
161
178
162
142
162
171
152

Cents
171
166
139
174
152
185
173
169
145
183
174

Cents
152
146
117
181
205
208
191
188
188
161
148

Cents
184
185
152
186
196
217
233
220
179
134
114

-2 8
-2 3
-1 4
-2 9
-8
-2 8
-1 6
-1 8
-1 8
-7
-9

0
0
0
0
0
0
0
0
0
0
0

-8
-1 1
-1
-2 1
-1 5
-6
-1 5
-1
-9
3
4

-3 3
-2 7
-1 5
-2 9
-9
14
8
13
31
91
93

23
30
18
-5
-1 8
21
19
40
14
103
115

4
10
-4
2
35
44
37
59
57
81
89

36
49
31
7
26
53
79
91
48
54:
55

1 Represents, not seasonal weightèd average, but a simple average of weekly weighted average prices in
order to be comparable with other series which are unweighted averages.
2 A minus sign (—) indicates a price below that of British parcels.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

159

In the 4 years 1921-22 to 1924-25, inclusive, the crop-year average
price at Berlin was 26 cents per bushel below the British parcels price,
while the Paris price was 16 cents above, and the Milan price 3 cents
above.
In the case of Berlin and Milan, these differences may be consid
ered to be approximately the normal to be expected under conditions
o f free trade, for neither Germany nor Italy had a tariff during that
period. France, however, had a tariff of 14 francs per 100 kilograms
during the period, and this, converted at the current monthly ex
change rates, averaged 25 cents per bushel. It consequently appears,
since France was a large importer of wheat during each of these
years, that if France had had no tariff the price of domestic wheat at
Paris might have averaged close to 10 cents per bushel lower than the
price of imported wheat in Great Britain. In 1925, France had a
very large crop with the result that prices for its domestic grown

F i g u r e 7 .—W h e a t ; S p r e a d b e t w e e n P r ic e s a t B e r l in a n d B r i t i s h p a r c e l s
P r i c e s C o m p a r e d w i t h G e r m a n W h e a t T a r i f f R a t e s , 1 9 2 1 -2 2 t o D a t e .

wheat (a soft wheat) were perhaps a little lower relative to average
prices of imported wheat in Great Britain than they would ordi
narily have been without a tariff. No clear evidence is available as
to what the price in Spain would have been under freedom of trade,
for Spanish import restrictions are of long standing. Furthermore,
Spain does not regularly import wheat, but is at times an exporter.
The spreads between the average price of wheat in the various
countries and the price of imported parcels in Great Britain are
shown in the second section of table 16 year by year. The very
marked rise of prices in Germany, France, and Italy relative to
world-market prices is especially significant because of the domi
nant place which these countries and Great Britain occupy in the
import trade. It is also significant that beginning with the crop
o f 1932 Great Britain has guaranteed a return to wheat producers
equal to a price of 10 shillings per hundredweight, which is the equiv
alent of about $1.30 per bushel at the par of exchange and about $1.05
per bushel at the exchange rate of May 1933.
In the case of each of the three countries which are large importers
and which have had high tariffs in recent years, the increasing spread
since 1924-25 has accompanied an increasing tariff level. This is
shown by figures 7, 8, and 9.

160

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

The fact that the price spreads closely follow changes in the tariff
rates should not, however, be taken to indicate that the tariffs are
necessarily the prime factors influencing the amount of the spreads.
In case of each of the three countries the effectiveness of the tariff
has been augmented or modified by other measures which are also
of prime importance. All three countries have applied milling

F IG U R E 8 .—W H E A T : SPREAD BETW EEN PRICES A T PA R IS AND B R IT IS H PARCELS
P r i c e s c o m p a r e d w i t h f r e n c h w h e a t T a r i f f R a t e s , 1 9 2 1 -2 2 t o D a t e .

F i g u r e 9 .—w h e a t : S p r e a d b e t w e e n p r i c e s a t M il a n a n d B r i t i s h p a r c e l s
P r i c e s C o m p a r e d w i t h It a l i a n w h e a t T a r i f f r a t e s , 1 9 2 1 - 2 2 t o d a t e .

quotas requiring the use of a large percentage of domestic wheat.
In addition, Germany has promulgated baking regulations, provided
a system for allotting a very restricted amount of foreign exchange
to importers of wheat and other commodities, and has modified the
duty through the operation of an import certificate plan and a
“ wheat exchange plan.” France allows importation of wheat and
flour only under license and in addition has applied import quotas
or contingents.
Using the spreads which were arrived at above as the approxi
mate 44normal55 spreads to be expected under conditions of free

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

161

importation, it is possible to arrive at a rough estimate of the
extent to which tariffs and other price-raising measures have in
creased the price of wheat in these countries. Table 17 shows year
by year how much the Berlin, Paris, and Milan prices were above
or below their u normal ” relationship to the world market. No par
ticular significance is to be attached to the minor year-to-year varia
tions of these price spreads, for they are largely the result of changes
in the relative abundance or scarcity of wheat of particular sorts or
in particular regions or else of changes in quality. The upward
trend of prices in all three countries relative to their normal rela
tionship to British prices is, however, indicative of the effect of the
price-raising measures which these countries have adopted.
17.— W h eat: Spread between British parcels price and price in specified
markets, deviations from a “ norm al” spread under conditions of free im
portation 1

T a b le

Crop year beginning July 1

1921-22 _______________________________________________ _______ _______________
1922-23
. .
___________ _________________________________________
1923-24 ______________________________ ________________________ _______ ______
1924-25
_____
.
_______
____________________________________________
1925-26 ________________________ _____________________________________________
1926-27
_____________ ________ ______ _________________ ______ _____________
1927-28
______________________________________________ ________ ______________
1928-29 ___________________________ _____ ___________________ _______ _______
1929-30 ________ _________________________________________________ _______ ____
1930-31 _______________________________________________________________________
1931-32 _________ _______ ________ _____________________ ______ ________ ________

Beilin

Paris

Milan

Cents
-7
-1
11
-3
17
40
34
39
57
117
119

Cents
33
40
28
5
-8
31
29
50
24
113
125

Cents
1
7
-7
-1
32
41
34
56
54
78
86

1 As explained in the text, it is assumed that the Berlin price would normally be 26 cents below, Paris 10
cents below, and M ilan average 3 cents above, the price of imported parcels in Great Britain.

Although they are the largest consumers of wheat among the
importing countries, France, Germany, Italy, and Spain are by no
means the only ones which have effective import restrictions on
wheat. Table 11 (p. 148) presents in outline a classification of the
import restrictions and other price-raising measures applied by 27
importing countries, including the 4 mentioned above, together
with the yearly average utilization and production of wheat in each
country. It indicates how drastic are the tariffs of many of these
countries on wheat and flour and the types of other import restric
tions or price-enhancing measures that have been adopted. It bears
evidence as to how generally wheat imports are restricted by the
various importing countries.
2. Effect on production and consumption.—To arrive at any pre
cise estimate of the total effect of all the trade restrictions and other
price-enhancing measures upon the foreign market for and price
of United States grown wheat, a very exhaustive analysis would be
necessary. For the purposes of the present report, this is not feas
ible. Nevertheless, as a result of analyses for a few of the most
important countries, it is feasible to give some examples of the effect
which the maintenance of relatively high prices has had upon the
production and consumption of wheat and of the effect which this,
in turn, has had upon the American market.
(a)
Effect in Germany.—Germany provides perhaps the clearest
example of how the consumption of wheat has been decreased. Ac
cording to a wheat-consumption estimate of the “ Institute for

162

WOELD TRADE BARRIERS IN RELATION TO AGRICULTURE

Agricultural Market Research ” (Institut fur Landwirtschaftliche
Marktforschung) of Germany, the human consumption of wheat in
that country has declined from 189,000,000 bushels in 1928-29 to
151,000,000 bushels in 1931-32.1 This decline in consumption has
been accompanied by a rapid rise of the price of wheat compared
with the price of other products in Germany. This is indicated
by figure 10.
The adjusted price of wheat rose from 162 marks per 1,000 kilo
grams in 1928-29 to 234 marks in 1931-32. I f German wheat prices
had maintained their normal relationship to the world market,
wheat would have sold in that country in 1931-32 for the equivalent
of about 50 cents per bushel—that is, 73 marks per kilogram. Divid-

F lG U R E

10.— W H E A T :

C O N S U M P TIO N , AND PR IC E (ADJUSTED BY A L L -C O M M O D IT Y
I n d e x ) G e r m a n y , 1924-25 t o 1931-32.

ing this by the all-commodity index (1913 = 100) for 1931-32 results
in an adjusted price of 71 marks per 1,000 kilograms. Hence, in
the absence of tariffs and other measures affecting wheat prices in
Germany, the price during the crop year 1931-32, in terms of marks
having the same purchasing power as those of 1913, would probably
have been about 71 marks per 1,000 kilograms instead of 234 marks.
In such a case, with the “ real ” price declining from 162 marks in
1928-29 to 71 marks per 1,000 kilograms in 1931-32, and if no restric
tions had been placed on the use of wheat, consumption would
probably have increased to well over 200,000,000 bushels yearly in
spite of depressed business conditions. Hence the various restric
tions appear to have decreased the human consumption of wheat in
Germany by at least 50,000,000 bushels in 1931-32.
The sensitiveness of German wheat consumption to price changes
is no doubt due in considerable degree to the fact that rye is a
somewhat more important bread grain than is wheat in that country.
Due to the almost universal use of rye bread and the relatively
small amount of bread and rolls made from all-wheat flour, it is
relatively easy to shift from wheat to rye flour to a considerable
1 I n s titu t fü r L a n d w irtsch a ftlich e M ark tforsch u n g, B la tte r -fu r L a n d w irtsch a ftlich e
M ark fo rtsch u n g, Septem ber 193 2 , “ D ie D eutsch e G etreidebilanz ” , pp. 1 3 1 - 1 4 9 .

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

163

extent. Perhaps more important in the past 3 years has been the
increased use of potatoes both in unprocessed form and in the form
of potato flour for bread making, in part the shift from wheat to
rye and potatoes has been due to a price stimulus alone, but it has
also been partly due to governmental intervention acting in other
ways, for example, the compulsory use of potato flour by bakers.
During the same period there has also been evidence of a marked
response of wheat acreage to prices in Germany. Following in
creases in wheat prices relative to those of other farm products,,
there have been increases in the wheat area, and following price
declines there have been decreases in the wheat acreage. The great
rise of wheat prices (adjusted for changes in the index number o f
prices of farm products), especially from 1928-29 to 1931-32, has;
been followed by a correspondingly large rise in acreage. This is
shown by figure 11.

1924-25

'26-27

‘28-29

’30-31

’32-33

F ig u r e

11.—W h e a t : A c r e a g e , a n d P r i c e D u r i n g P r e c e d i n g Y e a r (A d
j u s t e d BY IN D E X OF FA R M PR O D U C TS), G E R M A N Y . 1924-25 TO 1932-33.

It thus appears that the advance of wheat prices in Germany since
1924-25 has resulted in an increase in area of about one and one
half million acres. This expansion of the wheat area was in part
a shift from rye. From 1925 to 1930, inclusive, the rye area was
almost constant at a little over 11,500,000 acres, but in 1931 it de
clined from the previous year’s level by 800,000 acres. It was in
the same year that the largest increase of wheat area took place, a
rise of 1,000,000 acres.
What would have happened to the German wheat area if prices
had been allowed to fall with the world wheat price level is more
uncertain. Assuming, however, a price of 73 marks per 1,000 kilo
grams in 1931-32 and dividing this by the index of prices of agri
cultural commodities for that year results in an adjusted price of
75 marks per 1,000 kilograms. A wheat price adjusted in this man
ner indicates, as it rises and falls, changes in the price of wheat rela
tive to other farm products. I f the wheat price as adjusted by the
agricultural index had fallen from 162 marks in 1928-29 to 75
marks in 1931-32, it seems likely that the wheat acreage, instead of
rising from 4,000,000 to 5,500.000, might have declined to about

164

WORLD TRADE BARRIERS 11ST RELATION TO AGRICULTURE

3,000,000 acres—a difference of 2,500,000 acres. In view of the fact
that yields in Germany average over 27 bushels per acre, the dif
ference of around 2,500,000 acres would, on the average, result in
an increased production of between 65,000,000 and 75,000,000 bushels
yearly. The increased acreage combined with the decreased con
sumption has resulted in Germany’s now being on a basis where it
will produce, on the average, about as much wheat as it consumes
instead of importing an average of 69,000,000 bushels yearly as was
done in the 5 years, 1926-27 to 1930-31.
(5)
Effect in France.—In France the wheat area has been very
stable. The estimated acreages of 1923, 1924, and 1925, however,
were considerably above those of any other post-war year. The
French Ministry of Agriculture inaugurated a “ raise-wheat cam
paign 55 in 1922, which may have been the cause of larger areas in
these years, though it may be that the effect of the campaign is re
flected in overestimation of the acreage. In any event, the acreage
changes of these years could scarcely be expected to bear any close
relationship to the changes in adjusted prices, both because of the
wheat campaign and because the franc was falling and prices in
terms of francs were rising rapidly during these years. From 1926
to 1932 there was no significant change in acreage, so we have no
evidence that the high prices of the past 2 years have increased
French wheat production. (See table 18.) There is, of course, the
possibility that the area might have declined had not prices been
maintained and also that long-continued high prices may eventually
result in an increase of the wheat acreage, but the statistics of acre
age and prices do not seem to warrant such a conclusion.
Consumption of wheat in France, on the other hand, has shown a
tendency to fluctuate slightly with changes in adjusted prices. This
is especially true if some allowance is made for the possible over
estimation of the crops of 1923, 1924, and 1925. Data of adjusted
prices and “ apparent utilization ” (not taking account of possible
overestimation of the crops above mentioned) are shown in table 18.
It should be borne in mind that the figures of “ apparent utiliza
tion ” represent estimated production plus net imports and take no
account of changes in stocks.
T a b le

18.— W h ea t: Acreage, adjusted prices, and apparent utilization in France,
1921-22 to 1931^32

Acreage

1921-22
1922-23
1923-24
1924-25
1925-26
1926-27
1927-28
1928-29
1929-30
1930-31
1931-32

____________ _____________________ _____ ___________________
_________ _____ _________ _____ _________________
________________ _____ _______________________________ _____ .
. ___________________________________ _________
- - - _______________________ _______________
____ _______________ - _____________
- - ________________________________________
___________ _____________________________ ______________
________________________________________ ______
___ _____ _______________________ _____
___________________ _______ _____________________ __________

M illion
acres
13.3
13.1
13.7
13.6
13.9
13.0
13.1
13.0
13.3
13.3
12.8

Price ad
justed by
all-com
modity
index
1913=100

Francs per
100 kilo
grams
17.7
21.0
20.4
24.8
23.0
21.9
20.9
30.0
33.6

Apparent
utilization

M illion
bushels
345
296
340
334
358
306
324
346
354
275
345

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

165

Insofar as years of low prices tend to result in a large carry-over,
these figures give a false impression that consumption has increased.
In any event it must be expected that the “ apparent utilization ” will
fluctuate more from year to year than does the actual utilization of
wheat. Thus the 1930-31 figure of 275,000,000 is probably less than
the actual consumption, while 346,000,000 bushels is probably more
than the actual consumption in 1931-32. Nevertheless it appears to
be significant that the average “ apparent utilization ” of the past 2
years is approximately 310,000,000 bushels, which is 37,000,000 bushels
less than that of the 5 preceding years, while the adjusted price of
domestic wheat at Paris averaged 31.8 francs per quintal (100 kilo
grams), compared with 22.2 francs for the preceding 5 years.
Had wheat prices at Paris fallen as much as world-market prices
they would probably have been the equivalent of between 50 and 55
cents per bushel in 1931-32; that is, about 50 francs per quintal.
Adjusting this by the index of all-commodity prices in France in
1931-32 gives 10.4 francs per quintal, which is less than one third
of the adjusted price which actually obtained in that year. While
there is much uncertainty how much effect such a low level of prices
would have on consumption, there is no doubt but that it would tend
to increase consumption through increasing its use as feed, if in no
other way.* Since the average apparent utilization of the past 2
years was 37,000,000 bushels below the average of the previous 5
years, it would seem conservative to estimate that a decline of 10
francs in the adjusted price in place of a rise of about the same
amount would have resulted in consumption in excess of the present
level by more than 50,000,000 bushels yearly. This would be an
increase of only about 15 percent resulting from a price decline of
70 percent.
(c) Effect in Italy.—In Italy there is evidence that both the area of
wheat and its consumption have been moderately affected by the
maintenance of a relatively high level of wheat prices. The rise of
adjusted prices from the low levels of 1922—23 and 1923—24 to a level
of about 50 percent higher in 1926-27 was followed by an increase of
approximately three quarters of a million acres in the wheat area.
As wheat prices declined relative to prices of other commodities in
the 2 subsequent years, about half of the gain in area was lost. In
each of the past 3 years, however, there has been a rise in the adjusted
price of wheat and a fairly steady increase in the wheat area. These
changes are shown by table 19 and by figure 12. The acreage in
crease since the level of the years 1922 to 1924 has been sufficient to
increase production by about 13,000,000 bushels yearly. In addi
tion, however, there is evidence that the “ battle of wheat55 has
resulted in an increase in the average yield per acre of between 1
and 2 bushels per acre, which is sufficient toi increase the annual
production by between 10,000,000 and 20,000,000 bushels yearly.

166

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

T a b l e 1 9 . — W h eat: Acreage, adjusted prices, and apparent utilization in Ita ly„

1921-22 to 1931-^32

Year

1921-22________________ ______ ________________
1922-23______________________________ _____ _
1923-24________ _____ ________________________
1924-25______________________________________
1925-26______________________________________
1926-27______________________________________
1927-28______________________________________
1928-29. ___________________________________
1929-30______________________________________
1930-31______________________________________
1931-3 2
________ ___________
1932-33

F ig u r e

Yield per
acre

Bushels
16. 3
14.1
19.5
15.1
20.6
18.2
15.9
18.6
22.1
17.6
20.6
22.6

Acreage

M illion
acres
11.9
11.5
11.6
11.3
11.7
12.1
12.3
12.3
11.8
11.9
11.9

Price adjusted by all
commodity i n d e x
1913=100
Nondurum

Durum

L ire per
quintal

Lire per
quintal

21.3
18.2
26.9
29.2
29.2
26.9
26.7
29.2
30.4
32.3

22.7
20.3
28.9
29.9
32.6
28.7
28.5
31.0
34.6
39.5

Apparent
utilization

M illion
bushels
295272
295
266*
305
308
283
318
304
294
278

12.— W h e a t : a c r e a g e , a n d P r i c e D u r i n g P r e c e d i n g Y e a r
b y A l l -C o m m o d i t y i n d e x ), I t a l y , 1922-23 t o 1932-33,

(A d

justed

If wheat prices in Italy had not been maintained by high duties
and other restrictions, but had followed the movements of prices in
world markets, nondurum wheat probably would have averaged
about 42 lire per quintal (equivalent to about 60 cents per bushel)
in 1931-32 instead of 105 lire. This price adjusted by the all-com
modity index of wholesale prices (so as to be in terms of lire of the
same purchasing power as in 1913) would have been about 13 lire
per quintal in place of the 32.3-lire-per-quintal figure as shown in
table 19 and in figures 12 and 13. Under such conditions it seems rea
sonable to suppose that the area would now be at least 1,000,000 acres,,
or nearly 10 percent below its present level. Taking account of the
effect of governmental measures on both acreage and yield, then,
it would appear that they have raised the Italian production about
35,000,000 bushels over what it would otherwise be.
As shown by table 19 and figure 13, there have been rather wide
year-to-year fluctuations in the apparent utilization of wheat in

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

167

Italy. As in the case of the corresponding figures for France, these
fluctuations are no doubt due in part to inaccuracies—especially to
lack of data on carry-over. From 1922 to 1928, however, there is
evidence of a marked upward trend. This probably was due partly
to post-war recovery and partly to a growing population. It was in
spite of an upward trend in the adjusted price of wheat. Even
during this period, however, there was considerable evidence of the
expansion of consumption being accelerated by declines in prices
and curtailed by rising wheat prices. The apparent utilization in
each year since 1928-29 has declined, and meanwhile adjusted prices
have advanced. The average apparent utilization of the past 2 years
is 286,000,000 bushels, compared with an average of 304,000,000
bushels for the preceding 5 years, a decline of about 6 percent. The
adjusted price of nondurum wheat (which constitutes about 75 per
cent of the Italian wheat consumption) averaged 31.4 lire per
quintal in the past 2 years, compared with 28.2 lire in the previous
5. This suggests a distinct sensitiveness of consumption to prices.
Since Italian prices (adjusted) would have been only about 13 lire
per quintal in 1931-32 instead of 32 lire if they had been on a parity
with the world market, it seems likely that the price-supporting
measures may have resulted in a consumption of at least 30,000,000
to 40,000,000 bushels less wheat than otherwise.

F ig u r e

1 3 .— w h e a t : C o n s u m p t i o n , a n d p r i c e (A d j u s t e d
i t y i n d e x ), I t a l y , 1 9 2 2 - 2 3 t o 1 9 3 1 - 3 2 .

C O M B IN E D

EFFECT

W HEAT

R E S T R IC T IO N S

ALL

A l l -C o m m o d

C O U N T R IE S

Combining the effects of the international trade and other wheatmarket restrictions in the three countries dealt with above, it would
appear that consumption was reduced in 1931-32 by fully 135,000,000
bushels while production was increased by about 105,000,000 bushels.
Hence, in these three countries the effect of restrictions to date has
probably resulted in a difference of at least 240,000,000 bushels an
nually in the balance between production and consumption. That
is, if world prices were maintained at present levels and prices in
179563— 33—

168

WORLD TRADE BARRIERS I X RELATION TO AGRICULTURE

these three importing countries were in line with the world level of
prices, and there were no other governmental interference with the
production and consumption of wheat in these three countries, total
world production would be fully 105,000,000 bushels a year less and
total world consumption about 135,000,000 bushels a year larger. If
absence of restrictions and other governmental measures were
assumed for the other countries, as well as for these three, the
difference would be larger.
While Germany, France, and Italy are the largest wheat-consum
ing countries that have taken drastic measures to restrict imports
and keep their prices far above the world market level, many others
have adopted similar measures with which it is not feasible here to
deal in any detail. In the case of Spain, prices have been influenced
by government action eve rsince the war, but most of the other
importing countries have applied drastic restrictions only within the
past 3 or 4 years. Some indications of how these restrictions have
affected total wheat production and imports of the importing coun
tries of Europe may be gained from a brief review of production and
imports of these countries since 1921-22.
From 1921-22 to 1928-29 there was a marked increase in the con
sumption of wheat in the 19 importing countries of Europe.2 The
trend of production, plus net imports of these countries, rose from
an average level of about 1,400,000,000 bushels in 1921-22 to 1,650,000,000 in 1928-29. Undoubtedly this rise was partly the result of
an increase in demand due to recovery from the World War, but
it took place in spite of a rise in prices, and hence it was indicative
of a basic upward trend in wheat consumption due to growing popu
lation and in some cases to a growing preference for wheat in place
of other breadstuffs. Following 1928—29, however, this upward trend
was arrested and there has even been an actual decrease in spite of
the tremendous decline in world prices. In no year since 1928-29
has the figure of production plus net imports reached as high a level
as that of 1928-29. If the consumption had continued to grow" at
the rate of 35,000,000 bushels yearly, the consumption of these coun
tries would in 1931-32 have been over 1,750,000,000 bushels, compared
with an average apparent consumption in the past 2 years of only
slightly over 1,600,000,000 bushels.
Presumably if the reduction in the levels of world prices since
1928-29 had been effective in all of these importing countries instead
of being largely confined to Great Britain, consumption might have
increased more rapidly instead of falling off as has actually been
the case. Hence, it would seem likely that the high prices and other
effects of import restrictions have been to decrease consumption of
these importing countries by well over 150,000,000 bushels yearly.
The exact extent of the decrease is, of course, uncertain, for we have
no very definite measure of the extent to which lower prices might
have increased consumption for Europe as a whole.
Meanwhile, the acreage of these countries has also increased. For
the 5 years 1924r-25 to 1928-29 the wheat acreage of Europe exclud
ing Russia and the four exporting countries of the Lower Danube
2
T h ese include th e U nited K in gdom , G erm any, Ita ly , France, B elgiu m , N etherlan ds,
Greece, C zechoslovakia, Irish Free State, S w itzerland , A u stria , D enm ark, Sw eden, N orw ay,
F in lan d , Spain, P oland, L a tv ia , and E ston ia.

WORLD TRADE BARRIERS 11ST RELATION TO AGRICULTURE

169

Basin averaged 51,100,000 acres. By 1931-32 it had increased to
£5,000,000, and by 1932-33 to 56,100,000. The increase of 5,000,000
acres in area is sufficient to increase production in these countries
if yields are average by about 100,000,000 bushels yearly. It is to
be borne in mind, however, that this increase in acreage is in spite of
decreases in some countries, such as the United Kingdom where
through 1932-33 practically the full effect of lower prices was felt by
growers, and in consequence the area was materially reduced. This
increase of production in Europe as a whole tends to confirm the
estimates arrived at for the three countries, and suggests that if the
prices in all importing countries have fallen along with world prices,
the total production in the importing countries of Europe might have
been smaller in 1931-32 by fully as much as 150,000,000 bushels.
We have still to consider, however, the effect of governmental meas
ures upon production and consumption of wheat in the countries of
the Lower Danube Basin and in Russia. Concerning Russia, there
is little to be said save that there has been a tremendous increase of
acreage in the past 10 years and that the planting of wheat has been
greatly subject to control by the Soviet Government. Every effort
has been made by the Government to increase wheat area. In large
part, however, the increased production has been consumed within
Russia, and the effect upon the wheat markets in the rest of the
world has not been greatly to increase supplies on the world market.
Nevertheless, under the influence of governmental control, exports
from Russia have become a material factor in the world market and
in the past 3 years they have averaged nearly 70,000,000 bushels
yearly as compared with 15,000,000 bushels for the 9 preceding years.
Hence, it would appear that under governmental influences, Russian
exports have been increased by over 50,000,000 bushels yearly.
In the case of the Lower Danube Basin (Hungary, Rumania,
Yugoslavia, and Bulgaria) wheat acreage recovered following the
war and for the 5 years 1924 to 1928 averaged 18,800,000 acres.
There was little change in this area through 1929-30, but there were,
of course, minor fluctuations. Under the influence of governmental
aid to wheat growers, the wheat area of these countries rose to
20,000,000 acres in 1930-31 and 20,900,000 in 1931-32. There was a
decline in 1932-33 to 18,800,000 acres, but this was due to very
unfavorable weather for planting, and the 1933 area for harvest is
tentatively estimated to be 20,400,000 acres. The increase of over
4,500,000 acres in the area of these countries would, with average
yields of 15.4 bushels per acre, result in increasing the average pro
duction by about 25,000,000 bushels yearly.
There have, of course, been some other countries in which price
raising or other control measures have tended to increase acreage
or decrease consumption of wheat, but these have been minor.
Hence, by adding together the figures already arrived at, we have
approximately the effect that the various control measures had upon
increasing supplies and decreasing consumption for the world out
side Russia. The result is an increase of production of 225,000,000
bushels yearly and a decrease of consumption of 175,000,000 bushels,
or a change m the balance between production and consumption of
around 400,000,000 bushels yearly.

170

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

Increase Decrease
in con
in sup
sumption
ply

Germany______________________
France _______________________
Italy
________________________
Total of 3 countries__

Increase Decrease
in con
in sup
sumption
ply

Importing countries of Europe
Russia (average exports)_____
Lower Danube Basin________

M illion
bushels
150
50
25

M illio n
bushels
175

M illion
bushels
50
50
35

105

135

Grand total___________ _

225

175

M illion
bushels
70

It should be borne in mind that if the analysis by which they have
been arrived at is substantially correct, the above estimates are con
servative. They are underestimates rather than overestimates. No
account has been taken of the effect which price-raising measures of
the lower Danube Basin countries have had in decreasing consump
tion, nor of the effect which governmental measures in Canada,
Australia, and other exporting countries have had in increasing pro
duction. While the effect of these must have been small, it never
theless would tend to increase the estimates. Furthermore, in
estimating the effect of price maintenance in the European countries
upon consumption, little weight has been given to the possibility of
a large increase in the use of wheat as a feed in the absence of such
measures. The increased use for feeding might have been very large,
as is indicated by the fact that in the United States, in each of the
years 1930-31 to 1932-33, from 100,000,000 to 120,000,000 bushels more
wheat has been fed than was usual in earlier years.
P O S S IB L E

EFFECT

UPON

P R IC E S

E L IM IN A T IO N

IN T E R V E N T IO N

I f in 1931-32 there had been no restrictions, and supplies had been
decreased by 225,000,000 bushels, and consumption increased by 175,000,000 bushels, the carry-over would have been reduced by 400,000,000 bushels. Such a reduction would have been sufficient to
wipe out the surplus carry-over under which the world wheat market
is suffering. It would presumably have reduced the accounted-for
stocks (stocks in four principal exporting countries, plus United
Kingdom port stocks and quantities afloat) to about 300,000,000
bushels in place of the actual total of 665,000,000 bushels.
Of course, even if all restrictions were done away with, so great a
result could not be expected in a single year. While consumption
might increase promptly, it probably would take several years for
the acreage of Europe to be reduced to a level which would have
prevailed if there had been no such restrictions. Furthermore, to
reduce restrictions greatly or to eliminate them altogether, would
affect prices as well as carry-over. Just to what extent the initial
effect would be upon carry-over and to what extent it would be upon
prices is uncertain. However, within a few years at most the carry
over would be reduced to normal proportions and from then on the
ful'l effect would be upon prices.
Under normal conditions, and if the general level of prices is about
the same as in 1932, a change in total accounted-for world supplies
of 400,000,000 bushels may be expected to result in a change of be
tween 15 and 20 cents per bushel in the price of wheat at Liverpool

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

171

and a similar change in the price in exporting countries such as the
United States. With accounted-for stocks reduced to normal pro
portions, or about 360,000,000 bushels less than they were at the
beginning of the 1931-32 season, and with the y e a r l y contribution
to supplies through production, and through exports from Russia,
reduced by 225,000,000 bushels, supplies would average 585,000,000
less. Under such conditions, prices would presumably average some
where around 25 cents per bushel higher. Such an improved average
level of prices might be expected to continue until it was either raised
or lowered by later adjustments of acreage by the exporting countries
or by changes in demand. Nevertheless, whatever may be the other
factors influencing wheat prices, a large part of the benefit to wheat
growers in the United States, resulting from reduced wheat barriers,
would remain. Prices would be permanently higher as the result of
doing away with, or reducing substantially, the trade restrictions
and similar measures in effect in foreign countries.

CHAPTER IX
HOG PRODUCTS
Pork and lard are the only livestock products exported from th<*
United States in significant quantities. Exports of these products
have been trending downward during recent years. Lard exports
during 1932 were about 24 percent of the quantity of lard produced
in this country, and pork exports constituted only about 1.5 percent
of total pork production. European countries provide the principal
foreign outlets for our hog products although small quantities areshipped to Cuba, Canada, and a few other non-European countries.
Exports of hog products gradually decreased from 1900 to 1914.
The World War proved a great stimulus to our foreign trade, how
ever, and exports of both pork and lard increased sharply from 1915
to 1919, the greatest increase being in pork. Since 1919 the trend o f
total exports has been sharply downward, although lard exports con
tinued upward until 1923. Lard has represented an increasing pro
portion of our total export trade in hog products during most of the
last 50 years.
In three periods of the history of our export trade in hog products
foreign government intervention has been an important factor af
fecting the foreign outlet for United States pork and lard. The first
of these periods was during the 1880’s when high tariff duties and
other regulations were adopted in many foreign countries, because the
presence of trichinae had been discovered in the imported pork prod
ucts. With the adoption of a satisfactory system of inspection of
these products before exportation, most of the import restrictions
were modified during the 1890’s. Shortly after the beginning of
the century the second wave of import restrictions was initiated.
The regulations during this period were largely designed to encour
age hog production in the countries adopting the measures, but with
the growing need for imported food supplies in Europe the restric
tions were again modified in the allied countries soon after the begin
ning of the World War.
During the post-war period prior to 1930 a moderate increase in
restriction occurred in a number of countries, but government inter
vention was not of much significance to our export trade in pork
and lard until the current world-wide business depression got well
under way. Export aids in competing countries, higher tariff duties,
limited quotas, and other forms of intervention have been increasingly important during the last 3 years, the movement being espe
cially wide-spread during 1932.
The following discussion will be confined to the various forms of
Government intervention affecting the international trade in hog
products during the post-war period, and most attention will be
172

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

173

given to the developments since 1930. An attempt will be made to
point out the relative significance of the various measures and to
indicate the effect of the measures wherever it is possible to do so.
The most common forms of international trade restrictions affect
ing hog products may be classified into two general groups: (1) Im
port duties and (2) direct export and production aids. Practically
all countries involved in the world pork and lard trade have adopted
one or both of these forms of restrictions, and in some cases quotas,
control of foreign exchange, or other miscellaneous measures have
been placed in effect. Import duties on pork and lard as of February
1933 in countries that take a total of about 90 percent of the exports
of hog products from this country are shown in table 20. In table
21 the principal export and production aids in effect in February
1933 are presented. The production aids are of special significance
in considering the relative position of countries competing with the
United States for the world trade in hog products. In order to
appraise the effects of these various measures, it is necessary to con
sider them in relation to the pork and lard production and consump
tion in the country applying the measures.

Country

30 percent ad v a lo re m ______. . .

2, 636
26,147

Smoked bacon
Ham s and shoulders
D o . _____
Fresh or frozen pork______ _____
Ham s and shoulders and bacon___
Bacon___________________ _____ _____

16. 21
30. 25
1.37
1. 52
1.09
1. 52
1.52
3.25
6. 50
5.57
8.12

Plus manipulation tax of one
fifth of duty,
12.19
do____________ ____________ « 4.06
do___ _______ __ _____ ________
6 5.08 __ _ do______________ ____________
1.68
2.19
7.62

153, 353

Free
Free
4 $5. 40

35,286

Free
2 percent ad valorem sales tax.

13, 467

15, 059

3.48

15,494

10.15

5, 045

.40

63, 305

8. 76

Plus manipulation tax of one
fifth of duty.
Do.
Do.
Do.
Plus a consular visa fee of 5 per
cent ad valorem and sales tax
of 1.5 percent of duty-paid
value.

AG RICU LTU RE

3, 632

$12. 87
8. 58
3.89
10. 80

6,189

Pig meat, except heads and feet___
do. .
_______
Unsmoked bacon_____ _________ .
Fresh pork
___
Hams, shoulders, and pickled pork:
Simply prepared
Finely prepared
Bacon, hams, shoulders, and fresh
pork.
Fresh pork_______ ___ _______ ____
Frozen pork
H am s and shoulders
Bacon, other than simply salted—
Fresh and frozen p o r k .....................
Ham s and shoulders
Bacon
Green bacon........... ............... ...............

RELATION

Italy

10 percent ad valorem.
Do.
237

5,295

3, 669

Cuba

1,000
pounds
243,964
Free

Belgium

Finland

A d valorem or other charges

1,620

1, 519

________

Per 100
pounds 3

1,000
pounds
137,300

Netherlands

Poland

Description of pork

Tariff rates in effect, Feb. 15, 1933
United
States
exports
to coun
tries
named,
Per 100
Ad valorem or other charges
average
pounds 3
calendar
years,
1929-312

BARRIERS

United Kingdom
Against Irish Free State
Other
Irish Free State
Full rate
Empire preference rates
Germany

Tariff rates in effect, Feb. 15, 1933

TRADE

United
States
exports
to coun
tries
named,
average
calendar
years,
1929-312

Lard 1

WORLD

Pork

174

T a b l e 2 0 .— Tariff duties on pork and lard in countries that take a total of about 90 percent of United States exports of hog products

C u red or sm oked hams and
shoulders.
Sugar-cured ham s and sh o u ld e rs..
P ork, p ick led or salted____________

20,004
758

B acon , ham s, and shoulders,
fresh and frozen pork.
Fresh p o rk ________________________

D iv is io n of Statistical an d H istorical Research.

7. 01

13,182

1.68

60,856

7 2.93

Plus excise tax of 3 percent of
d u ty -p a id value.
A ll lard im p orts subject to sur
tax of 3 percent of d u ty.

6 4.08

T a riff rates from Foreign A gricultu ral Service.

IN
RELATION
TO
AGRICULTUUK
175

BARRIERS

1 E x clu d in g neutral lard.
2 R ep resen ts exports to co u n try of first destination.
3 A ll conversion s of foreign currencies to U n ited States equivalents are m ade on the rate prevailing F eb . 15, 1933.
4 T h e G erm an d u ty on lard w as a d va n ced to 75 reichsm arks per 100 kilos, effective M a y 16, 1933, an d equ ivalen t to $9.12 per 100 p ou n d s on that date, and again to 100 reichs
m arks on J u ly 19, 1933, e q u iv a le n t to $15.71 per 100 poun ds.
5 In air-tight containers.
6 In other containers.
7 In tan k cars.

TRADE

H am and b a c o n .

P lus co n su m p tio n tax o f 91
cents per 100 poun ds.
P lus 10 percent surtax_____ _____
A ll pork im p orts subject to con
sular charge of 5 percent ad
valorem and sales tax of 1.5
percent on d u ty -p a id value.
Plus excise tax of 1 percent of
du ty -p a id value.
A ll p ork im p orts subject to sur
tax of 3 percent of d u ty .

WORLD

Canada..

Mexico

8.71
10.89
6. 53

176

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

T a b l e 21.— Direct export and production aids to hog producers in selected

countries, February 1933
K in d of aid

D escription o f aid

Germany________

T a riff exem ptions .

The Netherlands..
Poland___________

P rod u ction
co n
trol and price
stabilization.
E x p ort b o u n ty ___

Lithuania________

E x p ort s u b s id y .

Estonia..................

P rice stabilization
and q u a lity im
provem ent.

Specified am ounts of feedstuffs, im p orted duty-free or at re
du ced rates of d u ty .
G ov ern m en t agency: (1) C on trols p rod u ction ; (2) collects
slaughter tax; (3) determ ines basic price o f hogs; (4) controls
export and im p ort business; (5) fixes im p ort duties.
$1.02 per 100 pou n ds on b acon and p ick led ham ; $1.27 per 100
p ou n ds on lard and sm ok ed or salted ham and pork fat; $0.51
per 100 pou n ds on fresh or frozen pork.
$6.12 to $7.26 per 100 p ou n d s dead w eight pa id for hogs b y
G overn m en t-con trolled abattoirs; losses on exports paid b y
G overn m en t.
G overn m en t sets price o f hogs, the produ cts from w h ich are ex
p orted, and fosters im p rov em en t in q u a lity of p rodu cts; plan
financed th rough tax on slaughter of hogs and trade in hog
p rodu cts.
$6.57 to $7.44 per 100 p ou n d s live w eight is guaranteed for hogs
slaughtered for export trade.
$1.53 per 100 p ou n d s on bacon, ham s, and other m anufactured
pig products; $1.15 per 100 pou n ds on p ork carcasses; 77 cents
per 100 pou n ds on pig offal.
G ranted free m arket in G reat B ritain for 280,000,000 p ou n d s of
b acon and ham s ann ually; selected breeding stock sold to
farmers at low prices.

C o u n try

Latvia............. ......

E x p ort s u b s id y ,

Irish Free State...

E x p ort b o u n ty ___

Canada__________

Preference in B rit
ish m arkets and
quality
im
provem ent.

The United Kingdom has absorbed nearly 60 percent of the cured
pork and about 40 percent of the lard exported from the United
States during recent years. Any action by foreign governments
with respect to international trade in hog products, therefore, is
reflected in the United States principally by the effect that such
action has on the British market. Thus in appraising the effects of
foreign governmental intervention in the international trade in hog
products, the principal countries are classified as follows: (1) The
United Kingdom, (2) countries important in the British pork and
lard trade, and (3) other countries.
THE UNITED KINGDOM AS THE PRINCIPAL MARKET FOR UNITED
STATES HOG PRODUCTS

Sanitary restrictions were the only significant Government
measures in the United Kingdom affecting American hog products
during the post-war period prior to 1932. The sanitary embargo of
June 1926 against fresh meat from the European Continent tended
to narrow somewhat the British outlet for American cured pork,
especially bacon, since it resulted in increased continental shipments
of cured pork, especially from the Netherlands, European supplies
of bacon available for the British market have increased since 1926,
and United States exports to the United Kingdom have declined dur
ing this period.
On July 1, 1927, the British Government made effective a regula
tion prohibiting the use of borax or boric acid, in the curing of pork,
this measure placed shipments from both the United States and Can
ada at some disadvantage with respect to continental European ex
porters. American exporters had been using borax to avoid the
necessity of a “ hard ” cure, in view of the British preference for the

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

177

light cure commonly used in nearby European countries. The qual
ity of American nonboraxed bacon with a light cure cannot be main
tained without refrigeration in exporting to Great Britain because
o f the length of time involved in delivering the product to British
consumers. The small quantities of bacon now going to England are
marketed almost at once in certain areas w^here some preference for
the American product is in evidence. United States exports of hams
and shoulders to the United Kingdom since 1926, while showing a
tendency to decline, have held up much more satisfactorily than
the exports of bacon. So far, continental European competition in
those cuts, as such, has not developed to the degree reached in the
bacon trade.
An agreement with Canada drawn at the recent Imperial Eco
nomic Conference at Ottawa and subsequently ratified provides for
a free market for Canadian hams and bacon up to 280,000,000
pounds annually. During 1932, exports of bacon and hams from
Canada totaled only 35,800,000 pounds. The agreement provides
that the liberal Canadian quota is to be a part of any program
adopted in Great Britan, based on the recommendations of the na
tional committee as to methods of improving the British hog and
pork industry.
As a part of the program for improving this industry, monthly
shipments of bacon and hams from non-Empire countries to the
United Kingdom were limited from November 23, 1932, to February
22, 1933, to a level 15 percent under the average monthly shipments
from August to October 1932. This restriction of supplies was de
termined by agreements with the countries involved in the British
pork trade. Total receipts during the November to February period
were well under the contemplated volume. About 274,740,000 pounds
of imported bacon and hams were anticipated under the voluntary
agreements during the period and actual imports totaled 267,838,000
pounds. The Netherlands, Poland, and Argentina were the only
countries to exceed their respective quotas. The monthly imports
o f bacon and hams into the United Kingdom from the principal
countries, August 1932 to February 1933, are shown in table 22.
T a b le

22.— Imports of 'bacon and hams into the TJnMed Kingdom from selected
countries, August 1982 to February 19S3

D ate

D en m ark

1932:
A u g u st____________________
Septem ber_________________

Pounds
70,019,000
67,587,000

N o v e m b e r _______ _________
D ecem b er_____ __________
1933:
Jan uary-----------------------------F eb ru a ry __________________

N eth er
lands

P olan d

U n ited
States

O ther cou n
tries

70,445,000
59,332,000

Pounds
Pounds
Pounds
P ounds
9,001,000
14,095,000
5,385,000
14,986,000
11,679,000 11,742,000
3.523.000 14.018.000
16,872,000
O cto b e r____________________
9,161,000
4.850.000
75, 730,000
15.194.000
15, 765,000
9, 595, 000
4,889,000 21, 761,000
10, 548,000
8,136,000
4,135, 000 17, 244,000

Pounds
113,486,000
108, 549,000
121,807,000
122,455,000
99, 395,000

57,307,000
50, 495,000

11,827,000
8,486,000

103, 702,000
83, 787,000

10,420,000
9,199,000

4, 398,000
3, 467, 000

19, 750,000
12,140, 000

C om piled from accounts relating to T rad e and N av igation o f the U n ited K in g d o m .
1 R eexports not d e d u cte d .

T o ta l1

178

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

It may be observed that receipts from Denmark, the Netherlands,
and Poland—the principal sources of imported supplies—were cur
tailed sharply during the 3 months, December to February. Ship
ments from the United States were reduced only moderately, even
though they were smaller than the quantity allotted.
The agreements are being continued with a few modifications until
June 22, 1933. The allotment to the United States for the 3-month
period ending June 22, 1933, is slightly smaller than the total British
imports of bacon and hams from the United States during the cor
responding period of 1932. Largely as a result of the restricted sup
ply, pork prices in British markets have advanced materially during
recent months, with continental Wiltshire sides showing the greatest
improvement. Prices of Danish Wiltshire sides in terms of both
British and United States currency have advanced since January.
The rise in prices of the American cuts has been less marked than
that of continental cuts. (See table 23.) The demand for American
bacon is affected more by the supply of British pork than by the
supply of the continental product, and hog marketings in Great
Britain have been relatively large during recent months. Pork prices
in the British market usually decline during the last 4 months of the
year, but they normally remain at a fairly stable level from January
to March.
The British Government has declared its intention to establish
quotas of a more permanent nature within the near future and to re
duce further the quotas to non-Empire countries, if and when produc
tion in the United Kingdom increases sufficiently to justify such
action, or colonial quotas are increased.
Effective July 15, 1932, the United Kingdom imposed “ disciplin
ary ” duties of 20 percent ad valorem on a number of commodities
imported from the Irish Free State, including hogs and pork. This
measure in itself might have benefited American bacon to a very
limited extent by hampering the relatively small movement of Irish
bacon to England. Indications are, however, that the British duties
were a factor in increasing Irish import duties on bacon. This action
not only cut down the movement of American bacon direct to Ireland
but also reduced the volume reaching that market via British ports.
For a considerable period of years there has been a small but con
sistent Irish demand for American bacon. As a result of general re
visions in the British duties on Irish goods effective November 9,
1932, the ad valorem rate was raised to 40 percent on live animals
for food and to 30 percent on pork.
The United States lard trade with the United Kingdom has been
maintained at a fairly stable level during the post-war period. The
United States furnishes about 85 percent of the total lard imported
into the United Kingdom. Since March 1932 these imports have paid
a duty of 10 percent ad valorem, but import figures indicate little re
duction in volume as a result of the duty. Restrictions on lard im
ports are not included in the program for improving the British hog
industry. The yield of lard from hogs produced in Great Britain
and other European countries is very small. The United States is
the principal lard-producing country of the world.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

179

T a b l e 2 3 . — P ork: Average price per hundred pounds, at Liverpool, by months,

July 1932 to March 1933

D ate

1932:
J u ly ___________________________________________________
A u g u st_________________________________________ ______
S eptem ber___________________ _____ ______ _____ _______
O ctob er _______________________ ______________________
N o v e m b e r ___________ _________________ ____ __________
D e c e m b e r ___________________ ____________ ______ __
1933:
Jan uary___ __
___
___________ ________ __
__
F eb ru ary _ _________ ________ _____ __ _ _________ .
M a r c h ________ __ ___ ______
_ _______________

D anish
W iltshire
sides

A m erican
green
bellies

A m erican
short-cut
ham s

Dollars 1
9.05
10. 53
10. 65
8. 48
8. 37
9. 60

Dollars 1
7.18
7.56
8.94
8. 63
7.98
7. 47

D ollars 1
12. 66
11.05
11.16
9. 81
8. 82
9.16

Cents
355.1
347.6
347.2
340.8
327.2
328.4

8. 77
9. 29
2 11. 06

6.83
6.82
2 7. 34

8. 66
8. 55
2 10. 28

336.3
342.8
343.3

A v erage
exchange
rate

C om p iled from records of the D iv is io n of Foreign A g ricultu ral Service.
1 C on verted at current rates o f exchange.
2 3 w eeks, on account o f suspension o f exchange.

COUNTRIES IMPORTANT IN BRITISH PORK AND LARD TRADE
AND OF SIGNIFICANCE TO UNITED STATES EXPORT TRADE IN
HOG PRODUCTS

The principal countries with which the United States competes in
supplying the British markets with hog products are: Denmark,
The Netherlands, Poland, the Baltic States, Canada, and Irish Free
State. Some of these countries also import hog products from the
United States. Thus in the following discussion of Government
action pertaining to pork and lard, such countries will be considered
as customers as well as competitors of the United States.
1.
Denmark.—Denmark is the most important source of cured
pork supplies in British markets. For many years, the swine in
dustry in Denmark was developed with the view of producing a
product that would be well adapted to consumer requirements in
Great Britain and in recent years about two thirds of the pork pro
duced in Denmark has been disposed of in British markets. A l
though national standard^, brands, and sanitary measure© were
adopted by the Danish Government in order to assist in fulfilling
this aim, no direct export and production aids, such as those in some
European countries, were established. Following the World War,
hog production and bacon exports were expanded to new high levels,
reaching their peaks in 1931. As a result of record supplies and the
sharp curtailment in consumer demand, pork prices in British mar
kets dropped to extremely low levels, and because of the unfavorable
returns from the industry, hog production in Denmark turned down
ward in 1931. Although Danish hog numbers at the beginning of
1933 were considerably below those of a year earlier, much difficulty
has been encountered in disposing of the supply in excess of the
British quota. The allotment to Denmark has been about 80 percent
of the quantity of the Danish product shipped to British markets a
year earlier, and in view of the British program it appears likely
that the quota will be further reduced.
Danish hog producers have been given individual quotas for hog
marketings during the 4 months, January to April 1933. Hogs de

180

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

livered in excess of the quota are not necessarily refused, but they
are purchased only at a sharp discount. The Danish Government
has enacted legislation authorizing definite control of hog production,
but steps in this direction await the adoption of a more definite
policy as to future quotas in the United Kingdom. The authoriza
tion includes the right to adopt measures for fixing prices, regulating
slaughterings, and limiting production. In fixing prices, the law
provides for the payment of a higher price for hogs required for
the export trade, than that paid for hogs for domestic consumption.
The expense of administering the law is to be defrayed by the col
lection of a tax on hogs slaughtered.
2.
The Netherlands.—Following the World War, the Netherlands
resumed its pre-war exports of fresh pork to Great Britain, but the
British embargo on fresh pork in 1926 shut off that outlet for the
Netherlands product. As a result, the Netherlands began curing
pork for export to the United Kingdom. Table 24 shows the number
of hogs slaughtered in the Netherlands and cured pork exports from
that country to the United Kingdom, from 1924 to 1930. It may be
observed that exports increased sharply relative to slaughter during
the years following 1926.
T a b le

24.— The Netherlands: Hog slaughter and cured pork exports to the
United Kingdom, 1924-80

Y ea r

1924______ ____________________ _________ ______ ___________ _________ _________ _______
1925 ________________ _________________________________________________________ _____
1926_____________________________ _____ __________________ ________ ____________________
1927
............................................ ......................... ....... .......................................................
1928
. _____________ ______________________________ _________ ______ _______
1929_______________________________________________________ _______ ________ __________
1930
_____________ ________ ____________________
_________ __________
___

Slaughter 1

E x p orts o f
b a co n and
salted,
sm oked, or
dried p ork *

1,000 head 1,000 pounds
2, 768
6,907
2,810
31,481
2,440
72,376
3,041
96, 039
3, 077
123, 618
2,415
104, 228
2, 746
95, 920

1 C om p iled from Jaarcijfers voor N ederlan d, 1931, p. 229.
2 C om piled from Jaarstatistiek v a n den In-, U it- en D o o rvo e r, and M aan d statistiek v a n den in-, U iten D oorv oer.

The Netherlands has gone further than most countries in the mat
ter of setting up machinery for controlling hog production. The
emergency hog act of July 1932 set up the Netherlands Hog Central,
the important duties of which are : (a) The enforcement of a system
of hog-production control, ( b ) the establishment of a price-stabilization fund, (c) the management of all imports and exports of hogs
and hog products, and (d) the application of import duties on those
commodities.
A system of earmarkings is an important feature of the productioncontrol mechanism. The Minister of Agriculture is given the au
thority to determine periodically and for specific periods the num
ber of mark^ to be issued, both for the country as a whole and for
the several regions. The Netherlands Hog Central and its local
agencies are responsible for the distribution of the marks specified.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

181

No hog weighing over 22 pounds may be kept, marketed, or trans
ported unless it bears this official earmark. A fee of about 10 cents
each is collected for the earmarks which the Central allots to each
producer. Additional earmarks may be purchased for about $2
each, but few producers are interested in paying that much in order
to raise more than their allotment of hogs.
The source of revenue for the price-stabilization fund is a slaughter
tax paid on practically all hogs killed in the Netherlands. The
tax was fixed on August 15, 1932, at FI. 0.09 per kilo ($1.64 per
100 pounds) and was raised on January 15, 1933, to FI. 0.10 per
kilo ($1.82 per 100 pounds).3 The tax is paid to the Hog Central
at the time of official inspection as provided for in the inspection
act of 1919. The Minister of Agriculture is authorized to fix and
announce periodically the amount of tax covering specific periods.
The law stipulates, however, that the amount must always be such
that by means of the stabilization fund a basic price may be obtained
for the hogs, corresponding as far as possible with the “ indispensable
costs of production.”
Payments to producers were set in September 1932 at FI. 0.30 per
kilo ($5.47 per 100 pounds) live weight for hogs of less than 330
pounds, a rate higher than the prevailing world price of FI. 0.16 to
FI. 0.20 per kilo ($2.91 to $3.64 per 100 pounds). On January 15,
1933, the basic price was lowered to FI. 0.28 ($5.10). The Central
is charged with maintaining a regular and consistent quality of pork
products to foreign markets. As a result of its export monopoly,
the Central has complete control over the 25 factories producing
bacon for export. All losses incurred in the exporting of hog prod
ucts are absorbed by the Hog Central.
In view of the short time in which the emergency hog act has
been in effect, no definite appraisal of the effects of the operations of
the Hog Central upon the hog situation in the Netherlands can be
made. During the first half of 1932, before the emergency hog act
became effective, hog slaughter for domestic consumption was 28
percent larger than in the corresponding period of 1931. During the
third quarter of 1932, after the adoption of the act, domestic slaughter
was 6 percent smaller than in the same quarter a year earlier.
Exports of hog products were smaller during the first half of 1932
than in 1931, but after the operations of the Hog Central were in
itiated, exports increased materially. This increase continued until
the British quota agreements on pork imports were made in late
November, after which some restriction was necessary. Retail prices
of hog products in the Netherlands averaged somewhat higher during
the last half of 1932 than in the first 6 months of the year.
The Netherlands is second to Germany as a continental European
buyer of American lard. The Netherlands has a considerable busi
ness with other European countries in the reexporting of lard. In
addition, the Netherlands has an export surplus of domestic lard.
Imported lard is not subject to duty.
3. Poland.—During 1932, Poland became second to Denmark as a
source of bacon imports into the United Kingdom. As early as 1924,
3 A ll conversions of foreign currencies to United States equivalents contained in this
chapter are based on exchange rates as of Feb. 15, 1933, unless otherwise specified.

182

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

Polish cured pork began arriving in British markets. The develop
ment of the Polish hog industry has been accompanied by consider
able friction with neighboring countries, most of which have sought
to limit their takings of Polish hogs and pork. Germany, Austria,
and Czechoslovakia, all of them regarded by Poland as convenient
outlets, have made liberal use of sanitary embargoes and import
duties. The Polish Government, however, has encouraged curedpork production, especially during the last 2 or 3 years, with a view
toward utilizing the British market more extensively.
Polish export premiums have been paid on bacon, ham, and salted
and pickled pork, in other forms, since early in 1930. Originally
the certificates issued under this system were negotiable only as pay
ment for import duties on a list of specified products. On August
28, however, the value of the certificates was raised, and those issued
on exports of bacon and ham were made redeemable in cash. The
rates were raised on January 18, 1932, but on May 1, 1932, the rates
on bacon, pickled hams, and other pickled and salted products were
reduced to 20 zlotys per 100 kilos ($1.02 per 100 pounds). The rate
of refund on other products, including smoked hams, continues at 25
zlotys per 100 kilos ($1.27 per 100 pounds), gross weight, if pickled
in airtight containers. The increase in pork imports into the United
Kingdom from Poland from 1929 to 1932 as shown in table 25 is to
a considerable extent a reflection of the effects of their efforts to
broaden their outlet in British markets. It cannot be said, however,
that this increased movement is due entirely to the export bounty
system, since hog production in Poland has been gradually expanding
since the World War, and shipments to the United Kingdom might
have increased without the adoption of export aids.
25.— Imports of bacon and hams into the United Kingdom from Poland,
1929-32
Calendar year :
L 000pounds
192 9
37, 395
193 0
58, 926
193 1
132,024
193 2
127,963

T a b le

C o m p ile d f r o m t h e A n n u a l S t a t e m e n t o f th e T r a d e o f t h e U n it e d K in g d o m , 1 9 2 9 —31 ;
a n d A c c o u n t s R e l a t i n g t o T r a d e a n d N a v i g a t io n o f t h e U n it e d K in g d o m , 1 9 3 2 .

Since 1928 Polish import duties on cured pork have had an up
ward tendency. On October 6, 1928, there was an increase; and
again on August 1, 1930; and again on November 20, 1931. The
November 1931 rates on bacon were double those immediately pre
ceding. In addition, such imports pay a “ manipulation tax 55 of one
fifth of the duty. Sanitary restrictions, especially in connection with
imports of live hogs, also have been an important protective factor
in recent years.
4.
The Baltic States.—The Baltic States have become of increasing
importance as a source of pork supplies in British markets during
recent years, but they still hold a minor position in this respect. Dur
ing 1930 imports of bacon and hams into the United Kingdom from
the Baltic countries constituted about 1.5 percent of the total imports,
whereas during 1932 those countries supplied 5 percent of the total.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

183

Lithuania, Estonia, and Latvia rank in the order named with re
spect to the volume of bacon they delivered to British markets in
1932. All three countries have granted direct export aids in various
forms, and these aids apparently are largely responsible for the ex
pansion in exports since 1930. (See table 21.)
In Lithuania the leading cooperative export abattoirs became vir
tual Government property in October 1930. Specified prices are
paid for hogs sold to these abattoirs and the Government makes up
losses sustained from sales in foreign markets.
In Estonia a law of April 1930 established a fund “ for the pro
motion of hog rearing and for the stabilization of bacon prices.” The
fund is derived from a special system of taxes on domestic hog
slaughter and trade in hog products. The Government establishes
a price for hogs from time to time. I f the free market price falls
below the Government price, the producer gets the difference from
the Government for hogs entering export trade.
In Latvia an export bounty is paid in the form of a guaranteed
price for hogs suitable for bacon production sold to slaughterhouses
for export. The Government also pays the freight on hogs moving
to export abattoirs. The law providing for this export subsidy to
hog producers was passed in July 1930. The guaranteed price was
raised in August 1930 and again in July 1932. In Latvia, and in
the other Baltic countries as well, the export aids have been ac
companied by more stringent restrictions on imports of hogs and
hog products.
5. Canada.—Exports of hog products from Canada to the United
Kingdom have increased during the last 3 years, but Canada is still
a relatively unimportant source of supplies in British markets. In
view of the potentialities of the Ottawa agreements with respect to
Canadian cured pork in Great Britain, developments in the Canadian
pork industry have assumed larger significance than heretofore.
The Canadian yearly allotment of 280,000,000 pounds of bacon and
ham of good quality is many times larger than the current rate of
exports from that country. Efforts are being made to increase the
production of pork of high quality in order to get greater benefits
from this liberal allotment. The Government makes available to
farmers, at cost, sows of good quality which have been bred to
selected boars. There is considerable agitation for granting export
bounties on hog products.
Canada has adopted a definite protectionist policy with respect
to imports of hog products. In 1930, the general tariff schedule
was given the most drastic upward revision since 1907, and tariffs
on livestock and meat were raised again in 1931. The duty on lard
has remained at $2 per 100 pounds since 1923.
6. Irish Free State.—The Irish Free State inaugurated a system of
export bounties on hog products in September 1932. The bounty
system was adopted as a result of the “ disciplinary duties ” against
Irish pork in the United Kingdom and other difficulties confronting
hog producers in the Irish Free State. The bounty rates on the
various products are shown in table 21.
The United States had a special market for “ green clear backs ”
in the Irish Free State prior to 1931. But during 1931 large sup

184

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

plies of low-priced continental bacon were shipped to Irish markets,
and in December 1931 import duties were imposed. The rates were
revised in January 1932 and again in July of the same year. The
high duties have practically stopped the importing of United States
bacon, most of which moved through English ports.
OTHER COUNTRIES OF SIGNIFICANCE TO THE UNITED STATES
EXPORT TRADE IN HOG PRODUCTS

Germany and Cuba rank next to the United Kingdom as foreign
outlets for our pork and lard. A number of other countries in
addition to those considered in the foregoing discussion import
hog products from the United States, but they are of minor im
portance, collectively as well as individually.
1.
Germany.—Although Germany is the largest hog-producing
country in Europe, except Russia, it is a deficit country with respect
to hogs and pork, and German hog products do not enter other im
portant European markets in competition with United States hog
products. Variations in German hog numbers and pork production,
however, have an influence upon the price of hogs in other European
countries, and, therefore, have an indirect influence upon the prices
at which European pork products are offered in competition with
American products.
German hog producers have received state aid during recent years
in the form of advancing import duties, sanitary restrictions, tariff
drawback on hogs exported, and efforts to make feedstuffs avail
able at lower prices. From 1928 to date, exporters of hogs and hog
products have been given the privilege of importing duty free or at
reduced rates of duty, certain specified amounts of feedstuffs. In
fact, during 1932 practically all of the feed-importing business in
Germany has become a Government monopoly in the interest of keep
ing feed costs for livestock down as low as possible. Variations
in hog prices reflecting the usual cyclical movements in production,
also have engaged the attention of the Government. Efforts have
been made to get producers to flatten out as much as possible the
peaks and declines in the hog production cycle.
The rates on bacon have been changed several times since 1925
but have shown no definite tendency either up or down. The same is
true of the rates on pickled pork, but the rates on fresh pork have
been increased considerably in recent years. United States exports
of pork to Germany have been negligible during these years.
Normally Germany secures from 75 to 85 percent of its lard im
ports from the United States, with Denmark supplying most of the
remainder. In 1931 the Danish percentage advanced materially as
hog slaughter in that country reached new high levels. During 1932,
however, the proportion from Denmark fell off, with total lard im
ports into Germany for the season ended September 30 reaching the
highest levels since 1926-27. The movement of American lard to
Germany in 1932 was considerably larger than in 1931, but compared
with earlier years it was relatively low.
In view of the important position of lard in the diet of the poorer
classes in Germany there has been until recently a more liberal

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

185

tendency with respect to lard imports than other pork products. In
Germany and other European countries the yield of lard per hog is
lighter than in the United States, since European producers ap
parently have been more interested in producing meat than fat. For
several years prior to 1932 the import duty on lard was 6 marks
per 100 kilos (65 cents per 100 pounds). On July 5, 1932, the rate
was raised to 10 marks per 100 kilos ($1.08 per 100 pounds). That
rate, however, was contingent upon a trade treaty with Sweden,
which expired February 15, 1933, and the new rate was set at 50
marks per 100 kilos ($5.40 per 100 pounds). (See table 20, p. 174.)
Other measures to protect the animal-fat industry in Germany
also have been adopted. A Government monopoly of the sale of
competing fats has been established, and production quotas have
been adopted on margarine, edible vegetable oils and fats, and hard
ened fish oils. All of these products are regarded as being highly
competitive with butter and lard. The quotas granted for the 3
months ending June 30, 1933, are about 40 percent below the pro
duction during the last quarter of 1932. In addition, higher import
duties and new domestic taxes have been levied on these competing
products. The tax on both imported and domestic margarine and
other fats competing with butter and lard amounts to $5.40 per 100
pounds. From the standpoint of competition the restrictions on com
peting fats at least fully offset the increased duty on foreign lard.
Hence if present taxes and import duties are maintained in Germany,
the principal depressing influence of the various restrictions on fats
in that country on the demand for American lard will be through
the curtailment in consumption of all fats that will accompany a
general increase in fat prices.
Foreign exchange control has tended to limit imports of pork and
lard into Germany during the last 2 years. Nevertheless, the quan
tity of lard taken during 1932 was 41 percent larger than that of a
year earlier. The 1<
'
1_ ‘
’tted a larger
amount o f imports

quantity o f

foreign exchange.
2.
Cuba.—Cuba ranks third as a foreign market for United States
hog products. During 1931 Cuban takings of lard from the United
States were 8 percent of total exports of lard from this country, and
United States exports of hams and shoulders to Cuba were about 6
percent of the total movement of these cuts. Lard is by far the
most important hog product imported into Cuba, and practically all
of the lard is purchased from the United States.
Import duties on hog products in Cuba have increased sharply dur
ing recent years. Increases occurred in 1927, 1930, 1931, and 1932.
Cuban takings of United States lard have declined materially since
1930, but it is impossible to determine how much of the decline is
due to the higher duties and how much is due to reduced consumer
purchasing power. Cuban lard imports during the post-war years
have been closely associated with the returns from the Cuban sugar
crop, and returns from that crop have been sharply curtailed since
1930.

186

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

CONCLUSIONS

The net effect that the various measures described above have had,
or will have, on hog prices and exports of hog products in the
United States cannot be determined accurately. It is fairly evi
dent, however, that during the post-war period prior to 1930, import
restrictions were of some significance, but that they were of minor
importance compared with other factors affecting our volume of hog
products exported. The United Kingdom, the principal foreign outlet
for both pork and lard, imposed no restrictions, other than sanitary
regulations, throughout the period. The embargo on fresh pork from
continental European countries established in 1926 stimulated the
movement of cured pork to British markets from those countries but
since the increased shipments resulting from the embargo represented
a relatively small proportion of the total supply in the United King
dom they did not materially affect the British demand for United
States pork. Imports of lard into the United Kingdom were unre
stricted during the post-war years prior to 1932, and the quantity
taken annually from the United States remained fairly stable during
the period.
Available evidence indicates that the moderate increases in tariff
duties in Germany, Cuba, Canada, and countries of lesser importance
from 1920 to 1930 did not restrict the outlet for United States hog
products appreciably. Of these countries, Germany provided the
broadest outlet for such products and the bulk of the trade with
Germany was in lard. The relationship between the consumption
and price of lard in Germany, United Kingdom, and the United
States during post-war years indicate that the tariff duty of 65 cents
per 100 pounds, which was in effect in Germany from September
1925 to July 1932, may have depressed the price of lard in the United
States by as much as 10 or 15 cents per 100 pounds. The effect of
such a decline in lard prices on the price of live hogs would be
negligible.
On the whole, therefore, it is apparent that only a small portion of
the reduction in the foreign outlet for United States hog products
during the post-war period prior to 1930 can be attributed to im
port restrictions on those products. The principal factor responsible
for this declining foreign demand was the marked expansion of hog
production in foreign countries. (See fig. 14.) This expansion rep
resented, for the most part, a restoration of the hog industry in
foreign countries to the position it held prior to the World War, and
very little of it was prompted by the adoption of price-supporting
measures. Hog production in Europe was greatly reduced during the
war, and this reduction, together with an increased demand for pork
by the allied armies, resulted in a sharp increase in United States ex
ports of hog products. Obviously, pork exports could not continue
at or near the extremely high level that prevailed from 1917 to 1919
after European agriculture was readjusted from the abnormal condi
tions caused by the war. Most of the increase in production in
Europe since the war has occurred in Germany and Denmark.
United States exports of hog products have geen affected to some
extent by change in domestic production. When production in this

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

187

country has increased, there has been a tendency for exports to in
crease, and when production has declined, exports have tended to de
crease. Thus when hog slaughter has been relatively large, the ex
port outlet has helped to relieve the pressure of excessive domestic
supplies, thereby exerting a stabilizing influence on hog prices in this
country. The proportion of the total quantity of pork and lard pro
duced in the United States sold in foreign markets has declined from
IT percent in 1921 to less than 6 percent in 1932.
Although changes in foreign governmental regulations apparently
were of little significance to United States hog producers during the
post-war period prior to 1930, they have been a factor of increasing
importance from 1930 to date. During the last 3 years the pricesupporting measures adopted in Poland and the Baltic States have

A COUNTRY BOUNDARIES CHANGCO

F ig u r e

14.— I n s p e c t e d H o g S l a u g h t e r in G e r m a n y a n d D e n m a r k ,
u n i t e d s t a t e s E x p o r t s o f H o g P r o d u c t s , 19 11 -32.

and

The inverse relation between hog slaughter in Germany and Denmark, and United States
exports of hog products, indicates effect of competition from European countries upon
our export trade in hog products. Hog slaughter in Germany and Denmark was at a
relatively high level just before the war, but during the war period, slaughter supplies
decreased materially. Our exports increased sharply during war years, owing to the
unusually strong demand in which the decline in European hog production was a factor.
Since 1920, hog slaughter in Germany and Denmark has increased greatly, and trend of
our exports of hog products has been sharply downward.

stimulated the movement of pork from those countries to British
markets, the principal foreign outlet for United States pork. Fur
thermore, since the beginning of 1932, additional import restrictions
have been adopted in practically all countries that import United
States hog products. The duties imposed on bacon in the Irish Free
State have eliminated almost entirely the United States pork trade
with that country. Maintenance of the higher import duties on lard
in foreign countries, especially Germany and Cuba, probably will
curtail the foreign demand for Anlerican lard considerably and have
a significant effect on lard prices.
The future effect of the British program of pork-import restric
tions on the United States are as yet uncertain. I f future quotas are
based on an average of imports during recent years, this country

188

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

would be permitted to export a larger quantity to the United King
dom than the very small volume sent to that country during 1932,
but the quantity allotted to non-Empire countries would be consider
ably smaller than their 1932 shipments to British markets. For a
while, at least, total supplies in British markets would be smaller
than they would be otherwise. Although there is a possibility of
a marked increase in hog production in Canada, it is very doubtful
that the production of high-quality bacon will be sufficient to permit
that country to take full advantage of its quota for many years.
I f British import restrictions on non-Empire pork comparable to
those under the temporary agreements should be continued for a year
or more, hog production in European countries contributing to the
British pork supply undoubtedly would be curtailed sharply, but the
restrictions would have little effect on production in the United
States. It appears, therefore, that the effect of the British program
on the United States hog industry will depend not only upon the
extent of the restrictions but also upon the length of time such
restrictions remain in force.
It is of interest to follow the sequence of the events which have been
associated with the pyramiding of international trade barriers with
respect to hogs and hog products since the beginning of the current
business depression. On the whole, there has been a tendency for
the principal types of governmental intervention to be adopted in
the following chronological order, each type being prompted to a
considerable degree by the preceding one : (1) Import duties and
sanitary regulations, (2) export bounty schemes, (3) import quotas,
and (4) production control schemes. This is best illustrated by re
stating briefly some of the events in Europe since 1930.
Prior to 1930 the principal foreign outlet for hogs and hog prod
ucts in Poland was in Germany, Czechoslovakia, and Austria. As a
result of reduced consumer purchasing power and difficulties in ex
change transactions in the latter countries, embargoes and higher
import duties were adopted in order to limit shipments of hogs and
pork from Poland. With these outlets greatly restricted, Polish
authorities sought to improve the market outlet for Polish cured
pork in Great Britain, and to aid in this accomplishment export
premiums on hog products were increased sharply. Because of simi
lar difficulties in disposing of surplus hog products, export bounty
systems also were established in the Baltic countries.
These stimulants to pork exports increased further the large move
ment of pork to Great Britain and as a result of the large supplies,
together with continued declines in consumer buying power, British
pork prices declined to extremely low levels. This unfavorable situ
ation caused much agitation for some form of relief for British hog
producers. It was evident by midsummer of 1932 that Great Britain
was going to take steps to restrict imported pork supplies, and in
November 1932 the quota system was put into effect. By this time
the desirability of more effective measures than those adopted pre
viously in various countries had prompted an increased interest in
plans for controlling production. In the autumn of 1932 the Neth
erlands plan for controlling production was put into operation.
Furthermore, the difficulties experienced by Denmark in keeping

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

189

Avithin the restricted quota of exports to the United Kingdom re
sulted in the enactment of legislation for curtailing Danish hog
production.
Varying circumstances surrounding the situation in each of the
countries involved in the international pork and lard trade have
resulted in widely differing developments as to the trade barriers
established. The sequence of events described above, therefore, falls
far short of a description of developments in all countries. How
ever, they illustrate that the general tendency has been for the forms
of governmental intervention to become more drastic as the severity
of the depression has increased and that the need for more drastic
action has been due in part to previously adopted governmental
regulations.

CHAPTER X
TOBACCO
Prices in the United States for practically all types of tobacco have
declined drastically during recent years. A part of the declines have
been due to reduced outlets in foreign countries resulting from trade
restrictions.
The production of tobacco in the United States represents about
30 percent of the total production of the world, exclusive of China.
Tobacco exports from this country probably represent more than one
third of the total exports of all countries. Usually from 40 to 50
percent of our production is exported, principally as unmanufactured
tobacco, to approximately 100 different countries.4 During and im
mediately following the war, approximately 12 percent of the total
volume of exports, on a leaf-equivalei}t basis, was manufactured,
chiefly in the form of cigarettes, and chewing and smoking tobacco.
Since then, however, exports of manufactures have declined and
recently have represented only about 5 percent of the total, or roughly
the same proportion as before the war. In 1931-32, manufactures
were only 2.5 percent of the total exports. (Table 26.)
In analyzing the factors affecting the exports of American tobacco
it is necessary to keep in mind the following facts concerning the
tobacco industry.
(1) From the beginning, leaf-tobacco production has been highly
localized. Not all countries have been able to grow the crop success
fully, and areas suited to the production of tobacco of one type
usually are not suited to the production of a different type.
(2) Practically no country is self-sufficient in production. Most
manufacturers have established blends in which several kinds of leaf
are used, some of which usually are imported. In the United States,
for example, where 25 separate types of tobacco are produced, about
10 percent of the leaf used in manufacture is imported from approxi
mately 25 different countries.
(3) Types of tobacco grown in each country and locality usually
differ materially from those of other nations and localities; hence,
the prices seldom have clearly established relationships between theim.
For this reason it is not possible to show definitely how much effect
trade restrictions have had upon prices paid to growers in the United
States.
(4) In most tobacco products the leaf has been aged from 1 to 3
years or more before manufacture. Thus, large stocks normally are
kept on hand. As a rule, new supplies are purchased at about the
same rate that old stocks are used up, but the replacements may not
4 In addition, small shipments are made to the noncontiguous possessions of the United
States in the form of both leaf tobacco and manufactures.

190

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

191

be made immediately. In periods of increasing consumption the need
for larger stocks causes imports to exceed manufactures, whereas in
periods of declining consumption the need for reducing stocks allows
imports to fall below manufactures.
(5) The consumption of tobacco products is distinctly habit-form
ing. Persons accustomed to given kinds and rates of consumption
are slow to change. With major changes in prices of products or
drastic reductions in income, however, individuals may modify their
consumption habits considerably.
(6) With its relatively stable rate of consumption, tobacco has
become a popular source of public revenue in nearly all parts of the
world. The burden of taxation is heaviest upon the more popular
forms for consumption, such as cigarettes; in many countries one half
or more of the retail price to consumers represents import tariffs and
excise taxes. Tobacco and its products recently have been providing
from 12 to 15 percent of the total Federal revenue of the United
States. The proportion of revenues obtained from this source in
other countries also is large.
T a b l e 2 6 . — Tobacco: Domestic production and exports of the United States,

1909-10 to 1981-32
Total exports converted to farmers’
sales weight basis i
Year beginning July 1

.....................................

) ___
1909-101910-11_
>
1911-12_
!
1912-131913-14.
L _ ................................................................ .............
1914-151915-16.
1916-17.
1917-18i
1918-19,
1
1919-201920-211921-22.
1922-231923-241924-251925-261926-27(
1927-281
1928-29L
1929-30.
1930-31>
1931-32-

___ ____________ ___ __

________________ __ __

____ ____ __ _________
_____________ ________
......................................

Total
domestic
production

M illion
pounds
1,055.1
1,103.4
905.1
962.9
953.7
1,034. 7
1, 062. 2
1,153. 3
1, 249. 3
1,439.1
1, 444. 2
1, 509. 2
1,004. 9
1, 254. 3
1, 517. 6
1, 244. 9
1, 376.0
1, 289. 3
1,211.3
1, 373. 2
1, 537. 2
1, 647. 2
1, 604.4

Unmanu
M anufac
factured
tures (leaf
tobacco
equivalent)
M illion
pounds
396.9
394.8
422.0
465.3
499.7
387.1
492.5
457.3
321.3
699.2
720.0
562.8
514.9
504.9
664.0
478.5
596.9
573.8
544.4
628.8
666.9
656.7
480.4

M illion
pounds
14.4
13.3
15.1
15.9
18.0
17. 0
18.4
35.2
46.8
72.1
85.8
62.6
45.3
43.4
45.5
36. 7
32.1
32.5
31.7
39.5
23.8
15.8
11.3

Total
exports

M illion
pounds
411.3
408.1
437.1
481. 2
517. 7
404.1
510.9
492.5
368.1
771.3
805.8
625.4
560.2
548.3
709.5
515.2
629.0
606.3
576.1
668.3
690.7
671.8
491.7

Exports
as a per
centage
of pro
duction

P ercent
39.0
37.0
48.3
50.0
54.3
39.1
48.1
42.7
29.5
53.6
55.8
41.4
55.7
43.7
46.8
41.4
45.7
47.0
47.6
48.7
44.9
40.8
30.6

Compiled from records of Division of Crop and Livestock Estimates and official reports and records of
the U .S. Department of Commerce.
1 Does not include shipments to noncontiguous possessions. In recent years these have aggregated ap
proximately 5,000,000 pounds divided about equally between leaf and manufactures. Conversions to
farmers’ sales weights have been made upon the assumption that 10 percent of the farmers’ sales weight is
lost in redrying and preparing the tobacco for export.

CHARACTER OF THE UNITED STATES EXPORT TRADE

This report will consider separately the different types of tobacco
produced in the United States and attempt to show the effect of
trade restrictions upon the outlets for each. This is because of the

192

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

wide differences in the character and uses of the separate types and
because of the varying influences of trade restrictions and other fac
tors upon their respective production and prices. Figure 15 shows
the course of season average prices in the United States, by types
and type groups, for the period 1909 to 1931. It will be observed
that great disparities frequently have occurred in the price move
ments of these groups, indicating the varying relationships between
them and emphasizing the need for separate treatment in the
analysis.5 The production for each group is shown in table 27.
The principal types of tobacco exported from the United States
are flue-cured, dark fire-cured, dark air-cured, and Maryland. In
the years before the World War the dark types apparently repre
sented the bulk of export shipments, but in recent years exports of
flue-cured tobacco have been the most important. The export data

F ig u r e

1 5 .— T o b a c c o : P r i c e s

in t h e
U n it e d s t a t e s , b y
G r o u p s , 1 9 0 9 -3 1 .

Types

and

Type

Prices received by farm ers in th e U n ited S ta tes fo r tobacco h ave fluctuated g re a tly since
1909.
Som e o f these fluctuations h ave been due to changes in the general price level, a s
th ey have follo w ed sim ilar m ovem ents in the prices o f other com m odities, but m ost o f
them have resulted from vary in g relationsh ip s betw een a va ilable supplies and the com
bined influences o f foreign and dom estic dem and.

were not separated as to type, prior to 1923. The share of the
production of the various types exported in recent years has
been approximately as follows: dark air-cured, from one fifth to
two fifths; flue-cured, Virginia fire-cured, and Maryland, from one
half to two thirds; Kentucky-Tennessee fire-cured, from two thirds
to four fifths. Burley and the cigar types are practically all used
in this country. (See fig. 16 and table 28.)
Most of the exports of American-grown tobacco have always been
taken by the countries of Europe. The United Kingdom has long
been the largest individual buyer. Prior to and during the World
War, continental Europe took most of the remaining exports, but
since that time the aggregate shipments to these countries have
5
H a d the ch art been m ade to show prices fo r each o f the 2 5 types these disparities
w ould have been even m ore pronounced.
F o r purposes o f th is report it w as necessary to
group certain types, hence prices are show n on the basis o f these groups.

193

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

T a b l e 27.— Tobacco: Production in the United States, by classes and types,

1909-1982
Dark fire-cured

Year

1909..
19101911.
1912_.
1913..
1914..
1915..
1916..
1917..
1918..
1919..
1920..
1921..
1922..
1923..
1924..
1925..
1926..
1927..
1928..
1929..
1930..
1931..
1932 4.

Fluecured

Dark aircured 2

Virginia

Kentucky
and Ten-

Million
pounds

222.5

62.8
64.0
51.0
49.5
58.4
37.0
54.6
53.8
51.5
60.2
29.8
45.7
24.7
49.2
43.7
43.2
42.0
43.8
26.5
21.9
22.8
23.3
28.3
14.6

135.7
165.6
132.9
141.2
139.0
133.7
157.0
176.8
190.4
153.0
257.5
195.0
145. 7

107.2
118.3
91.7
110.4
84.9
113.9
110.9
145.3
144.2
141.9
134.7

206.8
176.2
187.5
282.8
275.4
312.0
263.3
358.8
487.1
476.9
616.0
358.8
415. 4
580.7
437.3
575.1
560.1
718.8
739.1
749.7
864.3
665.0
362.0

201.0
217.7
170.7
168.7
145.0
86.9
114.6
164.5
143.0
162. 5
113.0

M ary
land

Cigar

Miscel
laneous 3

Million

Million
pounds

255.4
273.9
174.8
196.1
176.8
224.7
217.3
257.0
251.5
312.0
300.3
287.7
175.7
276.4
340.4
295.8
277.8
288.8
176.2
269.1
342.2
357.7
454.2
344.2

17.8
20.7
19.1
17.2
18.5
17.6
16.3
19.6

196.0

Burley

110.2
66.9
117.5
120.3
92.2
92.3
78.4
36.7
43.9
61.4
61.0
75.9
42.0

22.6
26.6
19.6
27.1
18.6

20.0
21.4
24.5
24.7
26.0
26.2
20.5
24.8
18.7
29.6

22.8

202.2
218.1
231.0
183.3
215.8
183.8
224.6
218.6
245.1
219.6
223.4
212.6
172.2
191.2
179.9
194.5
146.5
139. 0
162.9
169.4
178.3
187.2
134.0

7 .7
51.9
41.3
40.0

10.0
16.6
10.3
12.9
11.7
13.2
5.8
4.1
1.9

2.6
2.2
1.3
.9
.7

1.0
1.2
2.4
.9
1.7
.7

Compiled from records of Division of Crop and Livestock Estimates.
i From 1909 to 1918 includes types 22 and 23; after 1919 type 24 also included.
* Includes types 35, 36, and 37. Prior to 1919 type 24 also included.
3 Prior to 1919 probably includes some tobacco not classified as to type.
< Estimted, December 1932, Division of Crop and Livestock Estimates.

POUNDS
MILLIONS

POUNDSI

FLUE-CURED

700
600
500

-¿»00
300

200
100
1923-24- ’27-28 31-32

1923-2** 27-28 ’31-32

0 Domestic consumption

1923-24 ’27-28 ’31-32

ft Exports

* TOTAL DISAPPEARANCE LESS CALCULATED GREEN WEIGHT O F E XPO RTS

F ig u r e

1 6 .— T o b a c c o . U n m a n u f a c t u r e d : T o t a l D i s a p p e a r a n c e , D o m e s t i c
C o n s u m p t i o n , a n d E x p o r t s , 1 9 2 3 -2 4 t o 1 9 3 1 -3 2 .

F o llo w in g the W o rld W a r the exp orts of flue-cured tobacco began to increase a t a pro
nounced rate, w hereas th e exports o f m ost other types began to decline.
In the 5-y ea r
period, 1 9 2 7 -2 8 to 1 9 3 1 -3 2 , exports accounted fo r about tw o thirds o f the U n ited S tates
disappearance o f a ll flue-cured and fire-cured tobacco, around 55 percent o f M arylan d , 25
percent o f dark air-cured, 3 percent of B u rley, and 2 percent o f the cigar typ es.
(C h a rt
based upon estim ates subject to revision .)

194

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

shown some decline. Exports to Asia, particularly to China, have
increased greatly during recent years and the exports to other coun
tries have increased to some extent (fig. 17).
T a b l e 2 8 . — Tobacco: Exports from the United States, by classes and types,

1923-24 to 1931-32
Dark fiire-cured
Crop year beginning
Oct. 1

1923-24..........._...............
1924-25............................
1925-26.............................
1926-27.............................
1927-28..........................
1928-29.............................
1929-30-...........................
1930-31...........................
1931-32......................

Fluecured 1

M illion
pounds
266.0
207.5
324.4
288.7
328.9
411.8
429.9
432.7
285.5

Virginia

Kentucky
and Ten
nessee

M illion
pounds
27 A
25.7
19.3
22.0
21.2
18.1
18.1
11.8
13.3

M illion
pounds
167.1
125.3
110.0
128.4
84.7
75.4
104.5
74.1
82.4

Dark aircured

Burley

M ary
land 2

Cigar

Miscel
laneous 3

M illion
pounds
16.2
16.8
14.4
14.2
11.5
12.8
12.1
7.2
5.3

M illion
pounds
7.7
6.0
5.8
18.1
7.1
6.1
9.7
8.7
11.0

M illion
pounds
19.2
13.7
12.3
18.8
12.6
13.1
7.8
10.5
8.5

M illion
pounds
1.5
.7
.7
.6
.6
4.4
4.2
3.7
.8

M illio n
p ounds
44.9
20.8
19.4
9.7
7.1
6.1
8.3
7.7
9.7

Compiled from official reports and records of the U .S. Department of Commerce.
i Year beginning July 1.
* Includes small quantities of miscellaneous type grown in eastern Ohio.
* Does not include stems, trimmings, and scrap. From 1923-24 to 1925-26 some tobacco not classified
as to type is included; after that date, only Black fats (a rehandled form of the dark types) and Perique
are included.

POUNDS
MILLIONS

1900

1905

1910

1915

1920

1925

1930

F i g u r e 1 7 .— T o b a c c o , U n m a n u f a c t u r e d : E x p o r t s f r o m t h e U n i t e d s t a t e s ,
b y C o u n t r i e s , 1 9 0 0 -3 2 .

Before the World War most of the unmanufactured tobacco exported from the United
States went to the United Kingdom and continental Europe. The United Kingdom still is
the largest importer of United States tobacco, but in recent years China has ranked as a
close second.

FOREIGN RESTRICTIONS AND OTHER FACTORS AFFECTING THE
TRADE

Possibly in no other commodity has governmental intervention in
trade and consumption been carried so far as in the case of tobacco.
This intervention, embodied in monopoly control and revenue-taxation measures, is of such long standing that it has come to be

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

195

accepted as a normal Government function and the public generally
does not take cognizance of its far-reaching influence upon inter
national trade.
Trade restrictions affecting tobacco may be classified broadly into
two groups, depending upon whether they affect the production of
leaf tobacco in foreign countries or whether they affect the consump
tion of tobacco products. Those that affect production include im
port duties, monopoly policies with respect to the prices of domesticgrown leaf tobacco, and other forms of Government influence upon
individuals who otherwise would not produce tobacco. The restric
tions affecting consumption of tobacco products include import duties,
excise taxes, and monopoly policies with respect to the prices and
content of tobacco products.
In countries in which the tobacco industry is operated as a State
monopoly, the monopolies control the acreage, prices, and purchases
of leaf tobacco as well as the manufacture, prices, and sales of tobacco
products. Under monopoly control the content of tobacco products
may be changed arbitrarily, and prices of both leaf tobacco and to
bacco products may be so adjusted as to result in the displacement of
large quantities of imported tobacco within relatively short periods.
FACTO RS

A F F E C T IN G

P R O D U C T IO N

AND

C O N S U M P T IO N

During the period 1920-29 there was a marked increase in the
production of leaf tobacco in Europe, in the colonies of the British
Empire, and in China. This increase came about largely because the
several countries desired to be more nearly self-sufficing with respect
to tobacco and because of the willingness of governments and private
capital to subsidize the growing of tobacco.
Meanwhile consumption of tobacco products increased materially.
With respect to the different classes of products, consumption
changes differed from country to country, but in general there was a
marked increase in the use of cigarettes, a small increase in cigars,
and small declines in most other tobacco products.
These changes came about largely because of an increased con
sumer demand for cigarettes, but partly because of a lowering of the
quality of the smoking mixtures by substituting domestic-grown
tobacco for types formerly imported from the United States.
Increased quantities of domestic and colonial-grown tobacco were
used in European countries to displace United States fire-cured, dark
air-cured, and Maryland tobacco in the blends. In the case of Mary
land substitutions of other tobacco were made largely because of the
high prices prevailing for this type. These high prices were due in
part to the rather limited production area and the larger demand for
purposes of blending with other tobacco in cigarettes in the United
States. Declines in the consumption of fire-cured and dark air-cured
types were largely the result of substitutions of European and British
Empire tobacco, due in large part to trade restrictions. To a small
extent they resulted from declines in the consumption of products in
which these types have been used.
The fire-cured and dark air-cured types have been used largely in
pipe mixtures, low-priced cigarettes, chewing tobacco, and snuff. All
these products are consumed largely by persons who have low in

196

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

comes. In the monopoly countries domestic-grown leaf was substi
tuted arbitrarily in these products, and in some cases no similar prod
ucts were offered at prices within the reach of these low-income
groups. In the nonmonopoly countries import duties and preferen
tial rates were used to encourage the substitution of other types of
tobacco.
The consumption of flue-cured tobacco from the United States
increased during this period. The United Kingdom and China made
the greatest increases, and countries like Australia, Japan, and the
'Dutch East Indies also enlarged their takings. The flue-cured types
are used largely for the manufacture of cigarettes and high-priced
smoking mixtures; cigarettes enjoyed a growing public favor during
this period and both products are consumed largely by the higherincome groups. Thus, although flue-cured tobacco was subject to the
, 0 Cigars

Q S nu ff Q Smoking _
~] Chewing | Cigarettes

■K«r
UNITED STATES i
GERMANY
CZECHOSLOVAKIA.:
HUNGARY
NETHERLAND
AUSTRIA
GREAT BRITAIN
FRANCE

F ig u r e

SPAIN
GULGARIA

GREECE
ITALY
YUGOSLAVIA

1 8 .— T o b a c c o P r o d u c t s : C o n s u m p t i o n p e r C a p i t a i n t h e
STATES AND SELECTED EUROPEAN C O U N TR IE S , 1 9 2 6 - 3 1 .

U n it e d

Th e per c a p ita con sum ption o f tobacco products in im p ortan t Eu ropean countries in
creased about 2 .5 percent a year from 1 9 2 6 to 1 9 2 9 , la rg ely through increased use o f
cigare ttes.
L it t le change w as show n in the average in 1 9 3 0 , but in 1 9 3 1 it declined to
ap p roxim ately the level o f 1 9 2 6 .
In com p lete reports fo r 1 9 3 2 in dicate declines o f 2 to 5
percent in m ost countries.

same general restrictions as the other types, imports continued to
increase, though it is true that the consumption of these types appar
ently was slightly lower than it would have been without trade
restrictions.
From 1930 to 1932 the production of tobacco in foreign countries
continued to expand. European and British Empire countries con
tinued their efforts toward self-sufficiency, and Australia enacted sev
eral new measures designed to make that country more independent
of foreign supplies. The production of flue-cured tobacco in China
reached a record level during these years.
Consumption of practically all classes of products declined, the
declines being largest for cigars and high-priced cigarettes. (Fig.
18.) These declines were due chiefly to the reduced purchasing
power of consumers and to higher prices of tobacco products result
ing from revenue-taxation measures. All important types of tobacco
from the United States were adversely affected by the declines.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

197

The consumption of dark air-cured and fire-cured tobacco declined
largely because of further substitutions of home-grown and colonialgrown tobacco in the products in which, they were used, as a result
of trade restrictions. A part of the decrease in these types, how
ever, resulted from diminished European consumption and exports
of the principal products in which they were used. The continued
high prices for Maryland tobacco led to further substitutions of
European-grown tobacco for that type. Flue-cured consumption
declined largely because of reduced consumption and exports of
cigarettes in which these types are used, but also to some extent be
cause of increased substitution of other tobacco resulting from trade
restrictions.
IM P O R T A N C E O F R E S T R IC T IO N S IN IM P O R T IN G C O U N T R IE S

In attempting to ascertain the particular countries in which trade
restrictions have caused reduced consumption of tobacco from the
United States the countries have been classified with respect to the
relative importance of production and consumption. Where available
data indicate that trade restrictions have been effective, the nature
,of such restrictions is briefly indicated. A more detailed discussion
of the development of these restrictions is presented later, together
with estimates as to their effect upon the consumption of tobacco from
the United States.
For reasons suggested previously this analysis is confined chiefly
to European countries,6 but other important countries are considered.
Following the above classification, based upon the relationship be
tween production! and consumption, the countries of Europe have
been divided into four groups:
(1) Little or no tobacco produced domestically: The United King
dom, the Irish Free State, the Netherlands, Norway, Sweden, Den
mark, Austria, Portugal, Finland, Lithuania, and Estonia.
(2) Domestic production provides a portion of the quantity con
sumed : Germany, France, Spain, Belgium, Poland, Czechoslovakia,
and Switzerland.
(3) Production approximately equal to consumption: Italy, Yugo
slavia, and Rumania. Each of these countries imports some types of
tobacco and exports other types.
(4) Production considerably in excess of consumption: Greece,
Turkey, Bulgaria, and Hungary.
Considering the first group as a unit it appears that, except in the
United Kingdom, trade restrictions other than depreciated cur
rencies and revenue-taxation measures have not resulted in a reduc
tion of tobacco imports from the United States. In the United King
dom preferential import duties on Empire-grown tobacco have been
in effect since 1919. The present differential of 2s. 0%d. per pound
(approximately 50 cents at par), in effect since July 1925, amounts
to about 23 percent of the full duty. These preferences have resulted
in the displacement of considerable quantities of tobacco from the
United States by that grown in the British Empire. In Sweden and
6
E stim a tes and conclusions for the European countries w ere supplied by J. B . H u tson ,
tobacco m ark etin g specialist o f th e U n ited S tates D epartm en t o f A gricu ltu re, B erlin,
G erm any.

198

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

Austria, where State monopolies have control over the tobacco indus
try, there has been no evidence that policies in respect to purchases
have shown any preferences among individual countries. In each of
the other countries in this group import and excise duties are levied
on tobacco and tobacco products but it does not appear that prefer
ential rates have been in effect in any of these countries.
In the group of countries in which domestic production provides a
portion of the quantity consumed, trade restrictions have resulted in
the displacement of tobacco from the United States in France, Spain,
Poland, Czechoslovakia, and Germany. Government monopolies
have control of tobacco production in each of the first four of these
countries, and operating policies have been such as to bring about
expansion of production, particularly in Spain, Poland, and Czecho
slovakia. Prices paid growers for tobacco have been somewhat
higher in each country than those at which tobacco of similar quality
could be purchased in outside markets. In making purchases in for
eign countries apparently no preference has been shown. In Ger
many displacements of tobacco from the United States by domesticgrown types have resulted from higher import duties on tobacco and
tobacco products, and, in some cases, differential rates of excise taxes
favoring products in which domestic-grown tobacco is used. In
Belgium and Switzerland trade restrictions other than revenue meas
ures appear not to have affected materially the takings of tobacco
from the United States during recent years. In Belgium the import
duty is low and there is a tax on tobacco production. In Switzerland,
although the rates of duty vary in accordance with the use of
tobacco, the particular rates applying to tobacco imported from the
United States are lower than those applying to most of the tobacco
imported from other countries.
Each of the countries in the third group—Italy, Yugoslavia, and
Rumania—has a tobacco monopoly. In Italy, where until recent
years large quantities of tobacco have been imported from the
United States, extensive displacements have been made by domesticgrown tobacco. Prices paid to growers for these types have been
somewhat higher than those at which similar tobacco could be pur
chased in outside markets, and production has increased greatly.
No large quantities of tobacco from the United States have ever
been consumed in the area within the present boundaries of Yugo
slavia and Rumania.
Of the countries listed in the fourth or surplus-producing group
monopolies are in operation in Turkey and Hungary. No large
quantities of tobacco from the United States have been consumed
in any of these countries in recent years, and it is not likely that
large quantities would be used if the industry in each country were
on a freely competitive basis.
It will be noted that Russia was not included in the above classi
fication. No large quantities of tobacco from the United States have
been imported into Russia during recent years, and exports from
Russia to other countries apparently have not displaced any consid
erable quantities of tobacco from the United States. During the
next few years it is possible that Russian exports to some European
countries may increase sufficiently to displace some of the lower
grades of dark air-cured and fire-cured tobacco from the United
States.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

199

Outside of Europe the principal countries importing tobacco from
the United States are China, Japan, the Dutch East Indies, Aus
tralia, and Canada. Trade with some of the colonies of British and
French Africa also is important, particularly with respect to dark
tobacco in the form of both raw leaf and rehandled 7 tobacco. Im
ports of United States flue-cured tobacco into New Zealand have
increased materially in recent years, but still represent only from
1,000,000 to 2,000,000 pounds annually. South American imports
from the United States also have been relatively insignificant, being
confined mostly to small though regular purchases of fire-cured
tobacco by Argentina.
For the Dutch East Indies and the British and French Colonies
of Africa data have not been adequate to determine definitely
whether trade in tobacco from the United States has been influenced
by governmental restrictions. Available information indicates that
the influence of the depression itself, rather than direct action by
the Governments, has been the principal factor affecting imports.
Exports to these countries during the last 5 years have represented
about 5 percent of the total volume of exports from the United
States.
In Japan the tobacco industry is controlled by a monopoly. Do
mestic manufacture provides nearly all the products consumed, and
approximately 90 percent of the leaf is produced within the country.
Of that imported, more than half is obtained from the United
States. Total tobacco acreage in Japan has shown little change since
1920, but the production of American flue-cured types has increased
materially.
Canada has no tariff on leaf tobacco imported from other coun
tries, but imports are not permitted except under provisions of the
Canadian Excise Act. This act provides for the payment of an
excise tax on all foreign tobacco, as contrasted wTith domestic
tobacco, when removed from the warehouse for manufacture.
In Australia the import duty prior to 1929 apparently was more a
revenue measure than a protective measure. Beginning in September
1929, however, and subsequently in November 1929, and July and
December 1930, the rate of duty was increased until it was deemed
adequate to bring about a desired expansion of tobacco production in
Australia. This was part of a program fostered by a combination of
tobacco manufacturers and Government agencies to make Australia
independent of tobacco imports as far as possible.
Imports of American-grown tobacco into China increased from
less than 10,000,000 pounds before the World War to an average of
around 20,000,000 pounds for the years 1918 to 1921. Beginning in
1922, imports from the United States were greatly increased, and for
the period 1928 to 1931 averaged more than 130,000,000 pounds an
nually, practically all of which was flue-cured tobacco from the
United States. The reason for this increase of imports was the rapid
growth of cigarette consumption, which increased from an estimated
quantity of 7,500,000,000 cigarettes in 1910 to around 75,000,000,000
7
A special tra d e term referring to certain treated form s o f dark air-cured and fire-cured
tobacco, includ in g “ black fa t ” , “ w ater bailer ” , and “ dark A fr ic a n .”
T h e treatm en t
u su ally con sists o f h e atin g and other processes to blacken the tobacco.
F o r sh ipm ents to
som e o f the countries a h eavy coa tin g o f m ineral oil is applied as th e tobacco is packed
into cases under hea.vy pressure, hence the nam e black fa t.

179563— 33------ 14

200

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

in 1931. The domestic production of flue-cured tobacco from Ameri
can seed, which was introduced into China about 1920, also increased
rapidly during this period, and by 1931 had reached between 85,000,000 and 90,000,000 pounds. This apparently was sufficient to supply
about one third the Chinese manufacturing requirements. Beginning
in 1930, import duties on cigarettes were increased sufficiently to bring
about a material reduction in the number imported, but import duties
on unmanufactured tobacco have remained low and apparently were
levied primarily for revenue rather than protection. The initiative
for introducing the production of flue-cured tobacco into China was
taken by the large foreign manufactures of cigarettes, and Govern
ment agencies gave practically no encouragement to the enterprise.
Thus, while the total consumption of tobacco from the United States
is less than it would have been without any Chinese production, it
does not appear that trade restrictions have had an important part
in the displacement.
EFFECTS OF FOREIGN RESTRICTIONS UPON UNITED STATES
TRADE

The countries in which restrictions have brought about displace
ments of tobacco from the United States will now be examined in more
detail and estimates made as to the quantity of such displacements.
BASES

E S T IM A T IN G

IN F L U E N C E

TRADE

R E S T R IC T IO N S

The principal factors that have been considered in estimating
the quantities of United States tobacco displaced in the various
countries because of trade restrictions are: First, changes in the
domestic production of leaf tobacco as determined by comparisons
of the production before and after restrictions became effective;
pecond, changes in blends and in the quantity and quality of products
sold in a given country compared with such changes in other coun
tries where restrictions have not been operative but where other
conditions are similar; third, prices paid to growers for tobacco
produced within the country compared with prices for which leaf
of similar quality could be purchased in outside markets. As pointed
out previously, attempts to compare prices in one country with those
in another country often are of limited value and may lead to erro
neous conclusions; however, such price data as are available have
been used to supplement the other factors. Statistics on all these
points are incomplete and subject to error so that it has not been
possible in any case to determine the exact quantities of tobacco
displaced. For this reason a range of estimates is given.
Types of restrictions considered in making these estimates have
been those influencing the substitution of tobacco from other coun
tries for that produced in the United States. These have all oper
ated through expanding production in foreign countries and include
such measures as the policies of tobacco monopolies for stimulating
new production, rates of excise and import duties giving preference
to the use of domestic or colonial-grown tobacco, and import duties
high enough to increase domestic production.
In addition to these protective measures, which increase production,
are the various revenue measures for taxing tobacco products, which

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

201

restrict consumption and thus reduce the volume of world trade
in leaf tobacco. In most cases these revenue taxes have been in
effect so long that it would be impossible at this time to determine
what the quantity of consumption would be without them. Hence,
no attempt was made to estimate how much loss in trade they have
caused, in addition to that attributed to the factors indicated above.
The estimates are based largely upon data for the years since
1920, because of the disturbing influences of the World War upon
trade and consumption of tobacco and because of the limited clas
sification of export data for earlier years. In drawing conclusions,
however, account has been taken of pre-war trends of consumption
and production in different countries, particularly as regards the
position of competing types of tobacco. To indicate the extent
to which the influence of the above restrictions may have been an
outgrowth of the depression, separate estimates are shown for the
periods 1920-29 and 1930-32.
D IS P L A C E M E N T S

U N IT E D

ST A T E S TOBACCO
R E S T R IC T IO N S

R E S U L T IN G

FROM

TRADE

It is estimated that from 1920 to 1932 trade restrictions in foreign
countries resulted in displacements of tobacco from the United
States aggregating between 100 and 150 million pounds annually
during the last few years. These restrictions, in the individual
countries in which they have been applied, are here considered.
1.
United Kingdom.—A preference was accorded in September
1919 to Empire-grown tobacco imported into the United King
dom by the grant of a rebate of one sixth the full duty then in
effect. This represented an advantage to Empire-grown tobacco
of Is. 4-5/12d. per pound. In July 1925 the rebate was increased
to 2s. 0%d. per pound, or one fourth of the full duty of 8s. 2d. on
unstemmed tobacco. The following year the preference was stabi
lized at this figure for 10 years, beginning July 1, 1926.
The rates of import duty on tobacco were increased April 12, 1927,
and again September 11, 1931, the amount of increase in each case
being 8d. per pound. The rates on Empire-grown tobacco were
advanced by the same amount as the rates on tobacco from nonEmpire countries, leaving the rebate unchanged at 2s. O^d. The
Ottawa conference of 1932 made no change in the amount of this
rebate but extended the period during which it is to be in effect to
1942. The present duty in terms of United States currency amounts
to $2.31 per pound (with exchange at par), or from 7 to 10 times the
cost of most United States types of tobacco when ready for ship
ment. The rebate to Empire growers (approximately 50 cents at
par) is more than twice the usual cost of these types.
The preferential rates resulted in the displacement of considerable
quantities of tobacco from the United States prior to 1929. A l
though the amount of preference since 1929 has not been changed
it has resulted in still further displacements. With the higher rates
of import duty on all types of tobacco and the lowered purchasing
power of consumers, many manufacturers increased the proportion of
Empire tobacco in their blends rather than increase the prices of

202

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

tobacco products. Then, too, a large number of new blends, made
entirely of Empire tobacco, were introduced (fig. 19).
In 1919 almost no Empire-grown tobacco was used in the United
Kingdom, and around 90 percent of that consumed was imported
from the United States (table 29). In 1929 approximately 29,000,000 pounds of Empire-grown tobacco were consumed, most of which
displaced tobacco from the United States.
U.S.
DOLLARS
PER POUND

IMPORT DUTY ON UNSTEMMED LEAF TOBACCO
(EXCHANGE AT PAR)

2.00

1.00

1919

1921

1923

1919

1921

1923

1925

1927

1929

1931

1933

1927

1929

1931

1933

POUNDS
MILLIONS

150

100

*csnuA TC

F ig u r e

w aco

1925
u p o n cut *

ron io m o n t h s

19.— U n i t e d K i n g d o m : T a r i f f P r e f e r e n c e a n d H o m e C o n s u m p t i o n
o f T o b a c c o G r o w n in t h e E m p i r e , 1919-32.

T obacco im ported fro m B ritis h cou ntries h as been accorded a p referen tial rate o f du ty
in the U n ited K in gd om since Septem ber 1 9 1 9 .
In recent yea rs th is preference, now rep
resen tin g 23 percent o f the fu ll du ty, has had a significant influence upon the consum ption
o f E m p ire tobacco.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

203

T a b l e 2 9 . — United Kingdom : Imports of unmanufactured tobacco from United

States, British countries, and other countries, 1909-32
Quantity
Year

Total
United
States

1909......... .................
1910...........................
1911________ ______
1912. ........................
1913............... ............
1914....................... ..
1915_______ _______
1916...........................
1917________ ______
1918..........................
1919............... ............
1920_.........................
1921...........................
1922______ ________
1923_______ _______
1924_______ _______
1925..........— ............
1926_____ _____ _
1927...........................
1928_________ _____
1929............... ...........
1930...........................
1931_................. ...
1932...........................

Percentage

M illion
pounds
127.9
112.8
120.9
139.3
164.5
161.8
207.0
171.6
50.2
180.1
362.9
219.0
227.8
184.6
173.9
182. 7
189.5
197.5
222.3
219.5
239.9
237.0
194.0
175.2

M illion
pounds
114.0
99.0
104.3
121.9
142.0
139.0
184.2
152.6
40.8
164.3
315.9
177.5
214.7
166.4
155.4
156.9
163.0
161.7
177.5
172.3
205.3
197.8
157.2
125.3

British
countries

Other
countries

M illion
pounds
1.0
1.5
2.1
1.8
2.2
3.1
4.4
7.3
3.7
6.9
14.0
18.2
7.5
12.7
12.9
19.1
19.0
30.1
41.3
44.3
31.7
35.3
34.3
47.9

M illion
pounds
12.9
12.3
14.5
15.6
20.3
19.7
18.4
11.7
5.7
8.9
33.0
23.3
5.6
5.5
5.6
6.6
7.5
5.7
3.5
2.9
2.9
3.9
2.5
2.0

United
States

Percent
89.1
87.8
86.3
87.5
86.3
85.9
89.0
88.9
81.3
91.2
87.0
81.0
94.3
90.1
89.4
85.9
86.0
81.8
79.8
78.5
85.6
83.5
81.0
71.5

British
countries

P ercent
0.8
1.3
1.7
1.3
1.3
1.9
2.1
4.3
7.4
3.8
3.9
8.3
3.3
6.9
7.4
10.5
10.1
15.3
18.6
20.2
13.2
14.9
17.7
27.4

Other
countries

P ercent
10.1
10.9
12.0
11.2
12.4
12.2
8.9
6.8
11.3
5.0
9.1
10.7
2.4
3.0
3.2
3.6
3.9
2.9
1.6
1.3
1.2
1.6
1.3
1.1

i
Division of Statistical and Historical Research. Compiled from Trade of the United Kingdom, Annual
Report in 4 volumes, and Tobacco, a m onthly trade journal of the United Kingdom.

These displacements, divided according to type, are estimated to
have been as follows: flue-cured, 7,000,000 to 8,000,000 pounds; firecured and dark air-cured, largely the Henderson stemming and
Green River types, 16,000,000 to 18,000,000 pounds. It is estimated
that by 1932 displacements reached 30,000,000 to 34,000,000 pounds,
divided as follows: flue-cured, 10,000,000 to 12,000,000 pounds; firecured and dark air-cured, 20,000,000 to 22,000,000 pounds.
2.
Germany.—The import duty on leaf tobacco in Germany was
less than 3.3 cents per pound during each year from 1920 to 1925.
On August 16, 1925, the rate per pound was increased to 8.6 cents
and on December 1,1930, it was further increased to 19.4 cents. This
latter rate is still in effect. Since 1919 preferential rates of excise tax
have been granted on fine-cut tobacco containing 50 percent or more
of domestic-grown leaf. Beginning January 1, 1930, the excise rate
on the mixtures containing 50 percent or more of domestic-grown
tobacco was 33 percent of the retail price, compared with 60 percent
on other mixtures. The rates were changed toward the end of 1930
and again early in 1931. Regulations as to the width or fineness of
cut in these mixtures also were provided with the latter changes.
Because of the drastic declines in consumption which followed, these
rates and regulations were modified in October 1931, when the pres
ent law became effective. At the end of 1932 excise taxes on fine-cut
mixtures containing 50 percent or more of domestic tobacco were 38
percent of the retail price, compared with 50 percent of the retail
price on other fine-cut mixtures.
The production of leaf tobacco in Germany was increased and
maintained at a comparatively high level during the World War

204

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

because of difficulties in obtaining tobacco from other countries.
Following the close of the war production was gradually reduced
until 1923, when approximately 30,000,000 pounds were grown. Since
that time production has increased, and in 1928 and later years the
annual production has been around 50,000,000 pounds. The 1932
acreage was near the maximum permitted under a decree effective
December 1, 1930, providing that the area planted to tobacco in the
different Provinces shall not exceed the area grown during one of the
crop years 1927, 1928, or 1929. Prices paid to growers have in
creased materially since the import duty was raised to its present
level, and growers5organizations have been requesting measures that
will permit further increases in production.
It is estimated that between 3,000,000 and 5,000,000 pounds of firecured tobacco, largely of the Clarksville and Hopkinsville type, and
between 3,000,000 and 5,000,000 pounds of flue-cured tobacco were
displaced by 1929 because of protective import duties and preferen
tial excise rates. The amount displaced by these measures in 1932
. is estimated to be from 6,000,000 to 8,000,000 pounds of fire-cured and
4,000,000 to 6,000,000 pounds of flue-cured. A considerable part of
the displacement in these types since December 1930 has been due
to the substitution of tobacco stems for tobacco leaf, the stems being
imported largely from the United States (table 30). The import
duty on stems is only about one fourth that on leaf.
T a b le

30.— Stems, trimmings, and scrap: Exports from the United States to
Germany, Netherlands, China, and other countries, 1923-32

Year

1923.............................................................................
1924.............................................................................
1 9 2 5 ..........................................................................
1926.............................................................................
1927.............................................................................
1928. .................................................................. .......
1929............................. ...............................................
1930............................................................. ................
1931......................................................... ..................
1932............................................................................

Germany

Nether
lands

China

Other
countries

Total

Million
pounds

11.7
9.4
1.8
3.0
.6
.2
.5
1.0
2.0
10.8

5.1
12.7
.3
.3
.2
.7
(0
0)

.3
2.0

0.8
.9
1.0
3.2
1.8
3.6
8.0
14.5
12.7
7.0

5.2
5.8
5.9
1.8
3.0
3.9
2.1
3.2
5.9
3.6

22.8
28.8
9 .0
8.3
5.6
8.4
10.6
18.7
20.9
23.4

Compiled from official reports and records of the U .S . Department of Commerce,
i Less than 50,000 pounds.

3. France.—Consumption of tobacco in France is influenced by
policies of the French tobacco monopoly. These policies have re
sulted in an increase in the use of Algerian and French-grown
tobacco. Since 1920 domestic production has ranged between
40,000,000 and 60,000,000 pounds annually, and the consumption of
tobacco imported from the United States, largely of the Paducah
type, has ranged between 35,000,000 and 45,000,000 pounds annually.
Prices for domestic-grown tobacco have been somewhat higher than
those at which tobacco of similar quality could be purchased on
outside markets. For each of the years 1929, 1930, and 1931 the
prices paid to French growers for their tobacco averaged from 25
to 75 percent higher than those paid for Paducah fire-cured tobacco
imported from the United States.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

205

Price per pound
Price per pound
for Paducah
paid to French
tobacco from
growers
United States

1929........................................................ ............. ....... ......... ................... ................... .......
1930 .... ................................................................. ......................... ........... ..................... ..
1931...................................................... ......................................................... - .....................

Cents
12
11
8

Cents
15
15
14

The tobacco monopoly of Algeria is closely associated with the
tobacco monopoly of France. Definite information is not available
as to prices paid to growers in Algeria, but French takings of Al
gerian tobacco have increased substantially in recent years, from
less than 10,000,000 pounds in 1920 to almost 20,000,000 in 1930.
Total consumption of products in which tobacco from the United
States is used in France appears not to have changed greatly since
1920. It is estimated that in 1929 between 8,000,000 and 10,000,000
pounds of tobacco from the United States, largely of the Paducah
type, would have been used in addition to that which was used, had
the industry of France been on a competitive basis without import
duties. This displacement resulted from policies of the monopoly
with respect to domestic production and purchases in Algeria. The
situation had not changed materially by 1932.
4. Spain.—The domestic production of tobacco in Spain has in
creased greatly in recent years, largely as a result of monopoly poli
cies for expansion. Practically no tobacco was grown prior to 1921,
and production did not exceed 1,000,000 pounds in any year until
1924. During 1930, 1931, and 1932 production ranged between 12,000,000 and 15,000,000 pounds annually. In recent years prices
paid for imports from the United States have ranged from 5 to 10
cents per pound. These have consisted largely of seconds and lugs
of the Paducah fire-cured type. During the same period the cost
to the monopoly of Spanish-grown leaf has been slightly above 10
cents per pound.
The principal use of tobacco imported from the United States has
been in the manufacture of smoking mixtures. The annual consump
tion of smoking mixtures has increased about 6,000,000 pounds since
1920. The consumption of cigarettes has increased at a correspond
ing rate and the consumption of cigars at a somewhat lower rate.
Imports from the United States from 1920 to 1924 averaged approxi
mately 15,000,000 pounds annually. During 1929, 1930, and 1931
consumption of United States tobacco was about 10,000,000 pounds
annually.
In 1929 the consumption of tobacco from the United States appar
ently was between 4,000,000 and 6,000,000 pounds smaller than would
have been true if the industry had been on a competitive basis with
out import duties. The displacement in 1932 is estimated to be
1,000,000 pounds larger than in 1929.
5. Poland.—Tobacco production in Poland prior to 1926 was small,
the crop of that year amounting to approximately 5,000,000 pounds.
The area was then expanded until in 1929 approximately 20,000,000
pounds were produced. The crop was reduced materially in 1930
but was increased in 1931 and again in 1932. Early estimates for
1932 indicate a production only slightly below that of 1929. This
rapid increase of production has been due largely to the policies of
the monopoly with respect to imports and prices.

206

WORLD TRADE BARRIERS 11ST RELATION TO AGRICULTURE

Imports from the United States consist chiefly of fire-cured to
bacco of the Clarksville and Hopkinsville. type. The quantity of
this tobacco used in Poland was reduced from approximately 10,000,000 pounds in 1925 to approximately 5,000,000 pounds in 1929.
Preliminary estimates for 1932 indicate a consumption of only about
2,000,000 pounds. Since there has been little change in the consump
tion of products in which this tobacco is used it is estimated that
from 3,000,000 to 5,000,000 pounds were displaced by domesticgrown tobacco in 1929. For 1932 the displacement is estimated at
between 5,000,000 and 8,000,000 pounds.
6. Czechoslovakia.—The production of tobacco in Czechoslovakia
has increased substantially since 1921 when approximately 2,500 000
pounds were produced. In 1929 production had increased to 20,000,000 pounds, and by 1932 it had reached approximately 33,000,000
pounds. Domestic production exceeded imports for the first time
in 1931. The principal reason for this increase of production has
been the policy of the monopoly with respect to imports and prices.
Prices received by growers ranged between 7 and 10 cents per pound
during the period indicated.
Imports of tobacco directly from the United States into Czecho
slovakia have been extremely irregular, because some of these im
ports have been shipped first to other European countries and later
reconsigned to Czechoslovakia. Therefore, it is difficult to deter
mine the exact quantities of United States types consumed. It is
estimated that between 6,000,000 and 8,000,000 pounds of tobacco
from the United States, largely fire-cured, were used annually from
1921 to 1923. By 1929 consumption of this tobacco had been re
duced to between 1,000,000 and 2,000,000 pounds, and apparently
the rate of consumption has not changed materially since that time.
The increased use of domestic-grown tobacco appears to be largely
responsible for the reduced takings from the United States, as only
small declines have occurred in the consumption of products in
which the United States types have been used. It is not believed
that any considerable quantities of tobacco would have been grown
in Czechoslovakia had it not been for the control measures put into
effect by the monopoly. The estimated displacements of tobacco
from the United States resulting from these measures was between
5,000,000 and 6,000,000 pounds in 1929, and it has remained near that
level since.
7. Italy.—Prior to the World War the annual production of to
bacco in Italy was between 20,000,000 and 25,000,000 pounds. In
1921 and 1922 production was around 50,000,000 pounds and by 1929
it had reached approximately 105,000,000 pounds. Since 1929 the
production has been near this latter figure.
This increase of domestic production has resulted from the con
trol of prices and imports by the monopoly. During most years
domestic prices have been above those at which similar tobacco could
be purchased in outside markets. Prices for the 3-year period, 1931
to 1933, as announced October 15, 1930, have been well above those
at which similar tobacco has sold in outside markets. For Italiangrown Kentucky tobacco, fermented and in bales, the prices set by
the monopoly of from 15 to 35 cents per pound are probably from
60 to 100 percent higher than would be the delivered cost of Ken
tucky tobacco purchased from the United States. It is generally

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

207

known that the imported tobacco would have been preferred by
consumers.
Before the war approximately 40,000,000 pounds of fire-cured to
bacco from the United States, largely the Paducah type, were con
sumed in Italy. For a few years following the war the annual conPOUNDS
MILLIONS

100

1910* 11

1915-16

1920-21

1925-26

1930*31

1935-36

1910

1915

1920

1925

1930

1935

125

100

t GREECE, TURKEY, AND BULGARIA

F ig u r e

* NOT AVAILABLE BY COUNTRIES

2 0 .- - I t a l y : I n f l u e n c e o f C o n s u m p t i o n o f I t a l i a n
IM P O R TS FROM T H E U N IT E D STATES, 1910-3 L

Tobacco

upon

Prior to 1922-23 from 75 to 80 percent of the tobacco used in factories of the Italian
monopoly was imported, chiefly from the United States. In recent years more than 80
percent has been produced in Italy. The principal part of the reduction of imports has
been borne by the United States.

sumption was around 45,000,000 pounds. With the rapid increases
in the production of tobacco in Italy imports from the United States
were displaced from year to year until in 1929 only about 5,000,000
pounds were used. Consumption of these types in 1932 appears not
to have exceeded 2,000,000 pounds (fig. 20).

208

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

Most of this decline in the consumption of tobacco from the United
States may be attributed to the policies of the monopoly. A part
of it, however, has been due to the general decline in the consumption
of tobacco products and to recent changes in consumer preferences.
The estimated displacement in 1929 resulting from trade restric
tions was from 30,000,000 to 35,000,000 pounds, nearly all of which
was of the Paducah type. It now appears that displacements in
1932 exceeded slightly those of 1929.
Recently small quantities of Italian-grown Kentucky tobacco have
heen exported to other countries, through an export organization
mantained by the Italian Government. It is possible that some of
this may have displaced fire-cured tobacco from the United States,
in addition to the quantities estimated for the countries above
(fig. 21).

F i g u r e 2 1 .— E x p o r t s o f F ir e - C u r e d T o b a c c o f r o m t h e U n it e d s t a t e s a n d
PRODUCTION IN SELECTED EUROPEAN COUNTRIES, 1 9 2 3 - 3 1 .
T h e recent increases o f tobacco production in I ta ly , Spain, P oland, and C zechoslovakia
h a v e accounted for m ost o f the reduced exports o f fire-cured tobacco from the U n ited
States.
O nly a sm all part o f the fire-cured exports now goes to these countries.
In the
■case o f each cou ntry, the tobacco in du stry is con trolled by a m onopoly.

8.
Japan.—The tobacco industry in Japan has been controlled by
a monopoly since 1904. An import duty of 355 percent ad valorem,
effective since 1911, helps to safeguard the effectiveness of this con
trol. Imports each year are kept at a minimum, usually less than
10 percent of total consumption, and are confined chiefly to types
required for blending with the domestic-grown leaf. The United
States usually supplies more than half the quantity obtained from
other countries, with China and Chosen furnishing most of the
remainder.
In 1913 the consumption of tobacco products in Japan consisted
largely of pipe tobacco, with cigarettes representing only about 25
percent of the total. From 1919 to 1921 cigarettes represented about
one half the domestic consumption, and from 1929 to 1931 they repre

WORLD TRADE BARRIERS IIST RELATION TO AGRICULTURE

209

rented about two thirds. The increase in cigarettes since 1920 has
been in the flue-cured or “American yellow leaf ” types, which in 1931
had become equal in number to the Japan proper types. The con
sumption of flue-cured tobacco from the United States increased
materially from 1920 to 1931, reaching around 10,000,000 pounds
annually in the latter part of the period. The domestic production
of flue-cured tobacco from American seed also increased greatly dur
ing this period, having reached 22,000,000 pounds in 1932. Prices
paid growers by the monopoly appear to have been high enough to
bring about expansion in production as rapidly as desired.
It is estimated that in 1929 the quantity of flue-cured tobacco from
the United States used in Japan was from 8,000,000 to 12,000,000
pounds less than would have been true if the industry had been on
a competitive basis without import duties. By 1932 it appears that
the substitutions were fully 2,000,000 pounds greater than in 1929.
9. Cconada.—Tobacco production in Canada increased from around
10.000.000 pounds before the war to the high level of 33,000,000 dur
ing the war. Following this, production declined to 13,000,000 in
1921, but increased to 51,000,000 pounds in 1931. Preliminary esti
mates for 1932 indicate a production of 54,000,000 pounds. Nearly
all this increase occurred in southern Ontario, where the production
of flue-cured and Burley has been expanding rapidly. The increase
in flue-cured production has been especially pronounced, with a crop
of 28,000,000 pounds indicated for 1932. Exports have become of
some importance in recent years, especially in the case of the United
Kingdom, but domestic consumption still provides the outlet for
85 to 90 percent of the production.
Prior to the war most of the leaf tobacco consumed in Canada was
imported, largely from the United States. Imports from the United
States increased during the war and reached a record level of
20.000.000 to 25,000,000 pounds in the period 1918 to 1922. They have
not exceeded 17,000,000 pounds since 1922, although the consumption
of tobacco products has continued to increase. In 1931 imports de
clined to 13,000,000 pounds, and preliminary data for 1932 indicate
that takings were only about 9,000,000 pounds.
Thus, the use of Canadian tobacco has increased greatly during
recent years. In a report for 1929 it was estimated that 60 percent
of all leaf used in smoking mixtures, 40 percent of that used in
cigars, and 25 percent of that used in cigarettes was of domestic
origin. The percentage of Canadian-grown leaf has increased since
1929, especially for cigarettes and smoking tobacco.
Canadian growers have benefited by trade restrictions in both the
domestic and the export markets. At home they have had the ad
vantage of a 40-cent-per-pound differential over imported tobacco,
which is subject to a special excise tax when ready for manufacture.
In the export market they have had the advantage of the preferen
tial import tariff granted to British countries in the United King
dom. Prices to growers in Canada, especially for flue-cured tobacco,
have been higher than in the United States in recent years. But
now that the new area has been developed some flue-cured tobacco
doubtless would be produced even if there were no protection.

210

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

It is estimated that the quantity of American flue-cured tobacco
displaced by Canadian flue-cured tobacco because of the special
excise tax in 1929 was from 4,000,000 to 6,000,000 pounds. In 1932
it is estimated that the amount of displacement was from 6,000,000
to 8,000,000 pounds.
10. Australia.—Some tobacco has been produced in Australia for
the past 75 years. The average annual production for the years
1910-11 to 1913-14 was only 2,300,000 pounds, and for the 10-year
period 1919-20 to 1928-29 production averaged less than 2,000,000
pounds. Domestic leaf consumption averaged about 22,000,000
pounds during the latter period, with approximately 95 percent of
the imports, largely flue cured, coming from the United States.
The import duty on leaf tobacco to be manufactured into tobacco
or cigarettes in Australia was 2s. per pound from 1915 to August
1929. On August 23, 1929, the rate of duty was increased to 2s. 8d.
This was followed by further increases in November 1929, and in
July and December 1930, until the rate per pound became 5s. 2d.
In addition to the import duty a primage duty of 2y2 percent ad
valorem became effective on July 10, 1930. This duty was increased
to 4 percent ad valorem on November 16, 1930, and finally to 10
percent ad valorem on July 11, 1931.
As a result of these acts, tobacco prices increased greatly, and
the crop became very profitable to Australian growers. Acreage was
increased from 2,200 acres in 1928-29 to 20,200 in 1931-32, and
production in the latter year was estimated at 10,880,000 pounds.
Such a rate of increase was considered too rapid for the welfare
of the industry and on February 26, 1932, the import duty on leaf
to be manufactured into tobacco was reduced from 5s. 2d. to 3s. Od.
At the same time, the excise tax was increased from 2s. 4d. to 4s.
6d. per pound. The import duty on cigarette leaf remained un
changed at 5s. 2d. per pound. In 1930-31, manufactured tobacco
represented about 70 percent of the product consumed in Australia
and cigarettes represented 29 percent.
These trade restrictions have not been in effect long enough to
determine how much influence they may have upon imports from
the United States. Available data indicate that actual displace
ments in 1932 probably did not exceed 2,000,000 or 3,000,000 pounds,
but it appears that some 6,000,000 or 8,000,000 pounds may be dis
placed in 1933.
11. Summary of estimated displacements.—For the convenience
of the reader the estimated displacements are here summarized in
tabulated form. It is an interesting fact that nearly one half the
estimated displacements took place in countries in which monopolies
are in operation.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE
T a b l e 31

211

.— Summary of estimated displacements by countries and types of
tobacco, 1929 and 1932

Country

United Kingdom..

Type of
tobacco

Flue-cured___
Fire-cured and
dark air-cured.

Germany..............

Fire-cured____
Flue-cured___

France..

Fire-cured..

Estimated quantity
displaced
Nature of restriction and manner of operation
1929

1932

M illion
ids
7-8

M illion
pounds

16-18

20-22

3-5
3-5

6-8
4-6

8-10

4-6

5-7

10-12

Spain.

.d o ..

Poland..

_do_.

Czechoslovakia..

,.do..

5-6

Ita ly ...

..do..

30-35

31-37

8-12

10-14

4-6

6-8

22-31

32-43
80-98

91-117

112-141

Japan..

Flue-cured. .

Canada.

..do..

Australia..

_do..

Total flue-cured_____
Total fire-cured and
dark air-cured.
Total all types.

Empire-grown tobacco is granted an import
duty 2s. 03^d. per pound lower than foreigngrown tobacco. Consumption of Empiregrown tobacco has increased substantially.
Imports are subject to a duty of 19.4 cents
per pound and fine-cut smoking mixtures
containing 50 percent or more domesticgrown tobacco are granted a preferential
excise rate. Domestic production has
increased moderately.
A State monopoly has control of the tobacco
industry. Domestic growers are paid
prices higher than those at which tobacco
could be purchased in outside markets.
Consumption of domestic and Algerian
tobacco has been increased.
State monopoly. Domestic growers are paid
prices higher than those at which tobacco
could be purchased in outside markets.
Production has expanded materially since
1926.
State monopoly. Domestic growers are paid
prices higher than those for which tobacco
of similar quality could be purchased in
outside markets. Production has expanded
materially since 1925.
State monopoly. Domestic growers are paid
prices higher than those at which tobacco
could be purchased in outside markets.
Production has increased twelve-fold since
1921.
State monopoly. Domestic growers are paid
prices higher than those at which tobacco
could be purchased in outside markets.
Production began to expand in 1922.
State monopoly. Domestic growers are paid
prices higher than those at which tobacco
could be purchased in outside markets.
Flue-cured production has increased greatly
since 1920.
A n excise tax of 40 cents per pound is levied
on foreign-leaf tobacco, with no correspond
ing rate on domestic tobacco. Flue-cured
production has increased tenfold since 1921.
High import duties are levied on tobacco,
5s. 2d. per pound on leaf used in cigarettes
and 3s. Od. on leaf used in manufactured
tobacco, plus a primage duty of 10 percent
ad valorem. Production has increased
greatly since 1929.

CONCLUSIONS

The 1931 prices received by growers in the United States for
flue-cured, fire-cured, and dark air-cured tobacco were approximately
one fifth those received in 1919 and from one third to one half those
received in 1929. Prices for most other types of tobacco in th<
United States also declined during this period, but the declines gen
erally were less severe than for these export types (fig. 15).

212

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

Some of the fluctuations in prices of the different types of tobacco
have been due to changes in consumer demand and in the general
price level, as well as to variations in the quality and abundance of
available supplies. For a number of the types, particularly dark
air-cured and fire-cured, however, the influence of trade restrictions
has been a major factor.
Prices in the United States have been influenced by prospective
displacements in foreign countries as well as by displacements
already made, since the sale of tobacco by farmers precedes its con
sumption in manufactured products by 1 to 3 years, or more. A l
though it is not possible to indicate definitely how much of the
recent declines in prices were due to trade restrictions or how much
of the declines would be regained if these restrictions were removed,,
attention is called to some of the factors to be considered.
(1) Over a long period the supply of leaf tobacco is more elastic
than the demand. That is, farmers react more promptly than con
sumers to moderate changes in price. The cost of leaf tobacco in
most tobacco products is small compared with manufacturing costs,,
advertising, profits, and taxes, and manufacturers do not often
change blends unless there is a substantial saving from doing so.
(2) The immediate effects of changes in consumption upon price
are likely to be greater than the more permanent effects. As a rule,
the price changes immediately following an increase or decrease in
consumption are determined largely by market conditions at that
time, particularly the supply situation and the degree of strength
in which the supplies are held. The more permanent price changes,
on the other hand, depend largely upon farmers’ reactions to the
changed situation and the extent to which they modify their pro
duction to bring it into line with the new level of consumption.
(3) Conditions such as business activity, industrial employment,
and purchasing power of consumers, which are themselves influenced
by trade restrictions, may have affected prices paid to growers as
much as, if not more than, the changes in consumption caused di
rectly by the trade restrictions. To illustrate, from 1929 to 1932 the
European consumption of tobacco from the United States declined
approximately 50,000,000 pounds. About one third of this decline is
estimated to have resulted from trade restrictions. The remainder
was due largely to other factors, to which the trade restrictions con
tributed, and removal of the trade restrictions would undoubtedly
help to regain a large part of the losses due to these factors.
(4) The gains in trade resulting from the removal of restrictions
that have been in effect for a considerable period would be less than
the losses following their enactment. In other words, if the restric
tions were removed, consumption would not be expected to rise to
the level at which it would have been had the restrictions not been
imposed. When consumers as a group turn from the use of an estab
lished blend of products to a new blend they do not soon return to
the old blend even though the causes that induced them to turn away
from it are removed. Some may never return to the old blend. The
new consumers whose habits were formed during this period are
slow to change from the products to which they have become accus
tomed. Thus, considering the nature of the restrictions affecting
tobacco and the length of time they have been in operation it appears

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

213

that a substantial part but not all the losses caused by them might be
regained if they were removed.
(5) For any particular type or group of types of United States
tobacco some countries normally take higher-priced grades and qual
ities than others. Thus, while trade restrictions in 1932 were esti
mated to have displaced about equal quantities of fire-cured tobacco
in Germany and Spain the loss in terms of dollars was much greater
in the case of Germany. The value per pound of German imports
usually is about twice the value per pound of Spanish imports.
Similar comparisons for flue-cured tobacco indicate that the value
per pound of imports for the United Kingdom is materially higher
than for most other countries.
(6) The importance of trade losses resulting from substitutions
of competing types of tobacco has been much greater for fire-cured
and dark air-cured than for flue-cured, consequently the regaining
of a given quantity of foreign trade for the former would have more
influence upon prices than the regaining of a similar quantity of
trade for the latter. Estimated displacements in 1932 were from
80,000,000 to 98,000.000 pounds for the fire-cured and dark air-cured
types but only 32,000,000 to 43,000,000 for flue-cured. On the other
hand, the total annual consumption during the past 3 years has been
only about 200,000,000 pounds for fire-cured and dark air-cured, com
pared with 500,000.000 to 550,000,000 for flue-cured. Thus, foreign
displacements were from two fifths to one half as great as the con
sumption of fire-cured and dark air-cured, but only from about 6 to
8 percent as great as consumption in the case of flue-cured.

CHAPTER XI
FRUIT
In contrast with other agricultural products the trend of fruit
exports from the United States has been strongly upward daring
post-war years. This trend has been due to a marked increase in
commercial fruit production in the United States and to increasing
demand for fruit in foreign countries. Trade barriers in foreign
markets have increased greatly since 1929, but the volume of exports
of fresh and dried fruit has continued to increase. Exports of
canned fruit, on the other hand, have declined. See table 32.
The continued heavy volume of exports of fresh and dried fruit
is explained in part by the decline in fruit prices in the United
States, to which foreign trade restrictions have themselves contrib
uted. Probably of greater importance, however, is the fact that
the nature of orchard industries is such as to make impossible a quick
readjustment to changing demand conditions. Finally, it should
be noted that the fruit industries in some sections of the United
States have been greatly dependent in the past upon foreign markets
as an outlet for small sizes and for certain varieties for which the
foreign demand in spite of the trade barriers, has continued to be
better than the domestic. For canned fruit the shrinkage of foreign
outlets because of reduced purchasing power and increased trade
restrictions has led to a sharp curtailment in United States produc
tion and export.
It is not practicable in this report to analyze the trade-barrier
situation for each of the numerous items entering into the fruitexport trade of the United States. It is proposed to discuss only
apples and citrus fruit in detail. But tables 33 to 37 provide, in
summary form, information on United States fruit exports and sum
marize the import restrictions in the principal foreign markets for
pears and certain dried and canned fruit.
Tabuj

32.— F ruits: Quantity and value exported from the United States, average
1925-26 to 1929-30, 1930-31, and 1931-32, July to June

Commodity

Fresh fruit:
Apples....................... ..
D o ______ ________
Apples, total........... ..
Pears. _ . .........................
Oranges______ _____
Grapefruit...... .............
Lemons..........................
Grapes....... ...................
Berries......... . . ..............
P e a c h e s ......................
Other fr u it..................

Unit

Boxes. __
Barrels..
Bushels.
____ d o ...
B o x e s...
____ do _„
____ do—
Pounds.
____ d o ...
........ do—
____ d o ...

Total fresh fru it.. _ Tons 4See fo o tn o te s on n e xt page.

214

Average
1925-26 to
1929-30

1930-31

1931-32

Thousands Thousands Thousands
7, 343
12,904
9,466
2,423
2,479
» 2,855
14, 612
20,341
18,031
1,142
2, 693
1,814
3,293
3, 984
3,534
701
1, 222
1,202
258
268
258
39,135
49, 799
27, 613
11,192
7,903
6,263
29,133
12,859
10,731
53,431
3 63, 710
41,960
580

789

678

Average
1925-26 to
1929-30

1930-31

1931-32

Thousand Thousand Thousand
dollars
dollars
dollars
16,461
24,219
14,220
12,047
2 12,339
11,777
28, 508
35,996
26,559
4,142
6,614
3.921
14,015
13,032
9,118
2,884
4.121
2.922
1,314
1,164
1,003
2,003
2.121
1,385
1,154
864
464
711
491
330
2,044
2,128
1,206
56,775

66,531

6,908

215

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

T a b l e 3 2 .— F ru its: Quantity and value exported from the TJmted States, average

1925-2& to 1929-30, 1930-31, and 1931-32, July to June— Continued

Commodity

Unit

Dried fruit:
Prunes_______________
Raisins______________
Apples----------------------Apricots_____________
Peaches______________
Pears________________
Salad fruit___________
Other dried fruit..,.,

Pounds____
____ do_______
_____do_______
____ do_______
_____do______
____ do............
_____do_______
_____do______

Average
1925-26 to
1929-30

1930-31

1931-32

Thousands Thousands Thousands
200,723
296,254
243,935
122, 214
166,183
125,100
30,600
31, 557
38,120
20, 694
37, 622
23, 647
8, 482
6,629
8, 490
8, 037
6, 079
(5)
14, 518
15, 561
(5)
17, 669
2,934
2,182

Average
1925-26 to
1929-30

1930-31

1931-32

Thousand Thousand Thousand
dollars
dollars
dollars
13,274
14, 253
10,166
10,741
6,504
7,357
3, 535
3, 615
2,446
2,854
3, 503
3,731
722
676
675
640
457
(5)
944
876
(5)
1,688
176
160

Total dried fr u it...

Short tons__

221

258

234

33,463

29, 662

25,868

Canned fruit:
Pears..............................
Peaches ......................
Pineapples__________
Apricots_____________
Salad fruit___________
Berries_______________
Apples and sauce___
Grapefruit___________
Jellies and jams..........
Other canned fruit

Pounds_____
____ do_______
____ do_______
_____do_______
_____do_______
------- d o ...____
_____do_______
___ do________
____ do______
_____do_______

66,402
85, 520
44,008
30, 785
(5)
6,919
18,107
(5)
2,087
51, 691

74,355
75, 763
35, 308
19,024
31, 619
5, 575
15, 368
6 16,304
1,180
14,935

71, 570
66, 300
20, 920
23,161
32, 202
8,882
16, 674
6, 649
639
8,186

7, 054
7, 617
4,143
2, 937
(5)
736
1,028
(5)
400
6,663

6,065
5,818
3,238
1, 631
4, 273
638
749
484
225
1,272

4,966
4, 344
1,523
1,608
3, 689
827
735
400
119
697

Total canned fruit.

Short tons.__

Grand total of fruit _____do______
and fruit prepa
rations.

153

140

128

30, 578

24, 393

18,908

954

1,187

1,040

121,016

120, 586

91, 684

Compiled by the Foreign Agricultural Service, from official records of the Bureau of Foreign and Domestic
Commerce.
1 Includes 111,000 baskets exported from January to Jqne, 1931.
2 Includes $192,000 for baskets, January to June.
3 Includes estimates for miscellaneous fruits for which value only was given; 1930-31, 30,000 tons; 1931-32,
20,000 tons.
* Conversions to short tons made as follows: Apples, 144 pounds to the barrel, 44 pounds to the box or
basket; pears, 50 pounds to the bushel; grapefruit and oranges 70 pounds to the box; and lemons 74 pounds
to the box.
5 Not available.
6 Six months, January to June.

179563— 33------ 15

able

3 3 .—

216

United States: Fruit crops and the proportion exported, 1922 to 1931
Apples i

Oranges 2

Pears 1

Grapefruit1

Commer
cial crop

Percent
exported

Boxed
crop

Percent
exported

Barreled
crop

Percent
exported

Crop

Percent
exported

Commer
cial crop

Percent
exported

P ercent
5.5
11.4
11.4
11.0
18.1

M illion
bushels
38.1
49.8
33.2
43.0
44.5

Percent
9.2
12.4
15.4
12.6
17.5

M illion
bushels
57. 7
58.0
50.8
56.7
72.9

Percent
3.1
10.5
8.9
9.9
18.5

M illion
bushels
20. 7
17. 8
18.9
20.7
25. 2

Percent
3. 6
5.6
4.4
6.9
5.8

M illion
boxes
31.2
34.6
28.1
31.3
35.9

Percent
6.9
7. 6
7.0
8.4
10.1

M illion
boxes
7.6
8.4
8.7
7.0
7.7

Percent
3.4
3.6
5.0
5.8
8.1

11.8

41.7

13.4

59.2

10.6

20.7

5.3

32.2

8.1

7.9

5.1

78.1
106.4
86.5
101.0
104.2

12.0
19.7
11.9
20.0
17.2

38.6
51.0
39.7
51.9
38.4

14.0
23.5
15.1
23.1
24.2

39.5
55.4
46.8
49.1
65.8

10.1
16. 2
9.2
16.9
13.0

18.4
24.2
21.2
25.6
23.3

5.6
6.8
5.9
10.5
7.9

28.4
47.3
29.0
48.2
*41.4

9. 0
11.9
7.5
10. 2
7.7

7.5
10. 7
8.7
13.3
* 11.6

9.8
9.1
9.3
10.2
9.6

Average_____ ______ ___________

95.2

16.6

43.9

20.5

51.3

13.3

22.5

7.5

38.9

9.5

10.4

9.6

Lemons 2

Prunes 1

Raisins 3

Canned pears 1

Canned peaches 1

Canned pineapple 1

RELATION

100.9

Average_______________________
1927-28________________________
1928-29________________________
1929-30______________________
1930-31________________________
1931-32______________________

BARRIERS

M illion
bushels
95.8
107.8
84.0
99.7
117.4

TRADE

1922-23_____________
1923-24______________
1924-25_________ _______________
1925-26______________
1926-27________________________

Percent
exported

Commer
cial crop

WORLD

Marketing year

M illion
boxes
3.4
5.2
4.5
5.2
5.1

P ercent
4.9
4.7
3.4
5.4
6.7

Crop

Thousand
short tons
166.0
135.1
164.8
158.0
191.0

Percent
exported

Percent
24.3
54.5
52.1
47.3
45.9

Crop

Thousand
short tons
237. 0
290.0
170.0
200.0
285.0

Percent
exported

Percent
21.5
14.6
28. 6
33. 3
26.9

Pack s

Thousand
cases
2,541
1,829
2,195
3, 592
3, 419

Percent
exported

Percent
38.8
42.0
49.1
43.9
38.7

Pack *

Thousand
cases
9,160
7,464
6, 330
10, 457
14, 472

Percent
exported

Percent
11.9
13.5
18.1
15.9
11.3

Pack «

Thousand
cases
4,770
5,896
6, 826
8’ 729
8, 940

Percent
9.2
8.6
7.7
8.6
8.4
8.4

____________________

4.7

5.0

163.0

44.4

236.4

24.1

2, 715

42.2

9, 577

13.7

7, 032

1927-28.............................. ..............
1928-29_________ ________ ______
1929-30-...........- ................. ............

4.7
5.6
5.0

4.7
5.4
3.5

244.7
226.3
161.4

54.5
59. 5
44.2

300.0
268.0
215.0

33.0
41.1
28.6

2, 749
4,315
4, 388

38.3
38 3
24.9

11,150
14, 975
8, 365

15.5
13. 5
17.8

8,879
8,663
9, 210

Average.

Percent
exported

1L5
11.0
10.1

AG RICU LTU RE

Percent
exported

1922-23
...................................
1923-24 .........................................
1924-25
................ ..................
1925-26
__________ L926-27
___________ ________

Commer
cial crop

1930-31________________________
1931-32_____________ ___________
Average___ ___________________

6.1
* 5.2

4.4
4.5

6 282. 5 1
238.8

54.1
50.4

192. 0
169.0

32.2
33.4

5.3

4.5

230.7

53.1

228.8

34.0

Compiled by the Foreign Agricultural Service.

Canned fruit packs from Western Canner and Packer.

1 Market year July to June.
2 Year November to October.
3 Year September to August.
4 Preliminary estimates.
5 Canned fruit exports converted to cases on the basis of 50 pounds to the case of 24 no. 2^2 cans.
6 N et figure; 21,000 tons not harvested owning to poor demand conditions.

4, 266
3,690

34.9
38.8

13, 294
8, 421

11.4
15.7

12, 672
12,807

5.6
3.3

3,882

34.6

11, 241

14.4

10, 446

7.7

WORLD
TRADE
BARRIERS
IN

RELATION
TO
AGRICULTURE

217

218

WORLD TRADE BARRIERS IN' RELATION TO AGRICULTURE

34.— Pears: Import duties as of Apr. 1, 1933, compared loith those in
effect Nov. 1, 1928, and the import restrictions and regulations in the chief
importing countries of the world

T able

C o u n try and currency

U nit

U n it e d
K in g d o m
(p o u n d —par value,
$4.867; current, $3.422)

[Hundred-

G erm a n y (re ic h s
m ark - p a r v a l u e ,
23.82 cents).

F ra n ce
(franc— par
value, 3.92 cents)

D u t y N o v . 1, 1928

F ree .
w eight (112
p o u n d s ).
Box, n e t _____ ____ d o __________
^Barrel, n e t —
____ d o __________
[100 kilos, net__ 7 m ark s-----------Box, n e t___
$0.33___________
$1.21......... ........
Barrel, n e t .

100 kilos, gross. 10 or 20 francs i ___
B ox , g ro s s ..
$0.13___________
Barrel, gross
$0. 32___________

D u t y A p r. 1, 1933

4s. 6d_
$0.30____

$1.10___
7 m arks .
$0.33____

$1.21___

10 or 20 francs
$0.13____________

$0. 32___________

A d v a lo r e m ..

8 p e r c e n t ............

100 kilos_____

18 or 150 fra n cs 1-

D en m a rk (krone—par
value
26.80 cents;
current, 15.27 cents).

B ox, n e t --------Barrel, g r o s s ..
100 kilos, n e t_ .
Box, n e t--------Barrel, n e t—

$0.83____
$0.36____
1 crow n .
$0.05____
$ 0 .1 9 ....

10 percent plus 3
p ercen t.2
20.70
or
172.50
francs.1
$0.96______________
$0.42______________
5 cro w n s__________
$0.15______________
$0.55_____ _____ _

Sw eden
value,
current,
N o rw a y
value,
current,

100 kilos, n e t_ .
Box, n e t --------Barrel, net —
100 kilos, n e t_ .
B ox, n e t ______
Barrel, n e t-----

10 cro w n s----------$0.54____________
$1.95____________
30 or 60 c r o w n s 3_
$1.61 or $3.223. . . .
$5.84 or $11.67 3 ...

20 cro w n s_________
$0.72______________
$2.63______________
36 to 72 c r o w n s 3. - .
$1.26 or $2.523_____
$4.58 or $9.153_____

N eth erlan d s
(florin—
par va lu e ,40.20 cents)
B elgiu m
(franc— par
value, 2.78 c e n ts ).

(krona— par
26.80 cents;
18.12 cents).
(krone—par
26.80 cents;
17.52 cents).

A rgen tina (gold peso—
par valu e,96.48 cents;
current, 58.22 ce n ts).

100 kilos, gross. F re e ____
B ox, gross____ ------ d o ....
Barrel, g r o s s -. ____ d o ....

100 kilos, gross.
C u b a (peso— par value,
Box, gross____
$ 1).
Barrel, g r o s s ._
C anada
(dollar—par 1100 p o u n d s ____
value, $1; current, i B o x ___________
83.13 cents).
[Barrel________

0.80 go ld p e s o s .
$0.18___________
$0.65___________
$0.50 *_________
$0.25 *_________

6.3 gold pesos_____
$0.83______________
$2.99______________

Im port; restrictions and
regulations

Sanitary
in spection ;
certificate required;
gold p aym en ts sus
pen d ed
Sept.
21,
1931.
Sanitary inspection for
disease and pests;
exchange purchases
lim ited to a b o u t 50
percent sam e m o n th
1931.
San itary
in spection ,
particu larly San Jose
scale; certificate re
quired; im p orts reg
ulated b y q u o ta and
licenses.
Sanitary inspection.
C ertificate
required
affirm ing
freedom
from diseases.
E x ch a n g e restrictions.
G o ld p ay m en ts sus
pen d ed
Sept.
29,
1931.
G o ld p a y m e n ts sus
pe n d e d
Sept.
29
1931.
G o ld paym en ts sus
pen d ed
Sept.
29,
1931; unofficial ex
change restrictions.
Sanitary inspection.
Suspended gold p a y
m ents D e c. 16, 1929;
partial exchange re
striction.
Sanitary regulations.

1.20 gold pesos------$0.27______________
$0.98______________
A b o u t $0.75 56____ Sanitary
inspection
A b o u t $0.33-0.40 5 7.
and m arking and
A b o u t $1.20-1.50 « 7.
packing regulations;
pro h ib ite d gold ex
ports O ct. 19, 1931.

C om p iled b y the Foreign A gricultural Service of the D epartm en t of A g ricultu re. C o n v e rte d to dollars
at the prevailing rates of exchange as of A p r. 1,1933. A b o x or a basket is considered as w eighing 44 pou n d s,
n et, or 50 poun ds, gross, and a barrel as 160 pou n ds net and 180 pou n ds gross.
1 T h e sm aller rate applies to containers larger than 20 k ilos (44 p ou n ds) and the other rate to containers o f
20 kilos or less. Boxes and baskets take the largest rate.
2 P rovision al surtax of 3 percent im p osed in 1932.
3 T h e low er rate applies betw een F eb. 1 and Ju ly 31. T h e larger during the other m onths.
4 Sales tax was 2 percent.
6 Plus a 3 percent ad valorem excise tax. T h e sales tax is 6 percent. Gross w eight is used.
6 D u t y is 20 percent ad valorem on fixed valuation, p ro vid in g that the d u ty shall not be less than % cent
a pou n d.
* G old dollars.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

219

T a b l e 3 5 . — Prunes: Import duties as of Apr. 1, 1933, compared with those in

effect Nov. 1, 1928, and the import restrictions and regulations in the chief
importing countries of the world

D u t y A p r. 1, 1933

H u n d re d
w eight (112
poun ds net.)
100 poun ds net

7s-

10s. 6d_

G o ld pay m en ts
p en d ed
Sept.
1931.

100 kilos, gross.

6 m arks -

3 m arks .

E x change restrictions.

100 kilos, n e t . .. 8 m arks .
$0.65____
100
poun ds,
gross.
0.86.
100
poun ds,
net.

8 m arks$0.65____

U n it

U n ited
K in g d o m
(p ou n d sterling—par
value. $4.867: current,
$3.422).
G erm an y (reichsm ark—
par value, 23.82 ce n ts):
Containers o f 80
kilos and u p.
Sm aller containers Containers o f 80
kilos and u p.
Smaller containers.

Others -

D en m ark (krone—par
value, 26.82 cents;
current, 15.27 cents).
Sw eden
value,
current,
N o rw a y
value,
current,

$2.14.

? percen t..

10 percent plus 3
percent .2

100 kilos, gross.

120 francs -

138 fra n cs.

100 kilos, net__ 40 to 100 fra n cs3..
100
poun ds, $1.51_______ _____
gross.
0.50 to $1.26..
100
poun ds,
net.
100 kilos, n e t . - 4 crow ns _
$0.49_____
100
pounds,
net.

$1.

$0.50 to $1.264 cro w n s -------

F re e _ _ .
-------do..

22.50 crow n s..
$2.74................

45 crowns .
$3.58______

2.40 gold pesos _
$1.09............... ..
0.67

Q uota restrictions.

40 to 100 fra n cs 3___
$1.74_______________

50 c ro w n s -

[100 kilos, gross. 7.93 g old pesos..
100
pounds,
$3.47........... ........

(100 kilos, gross.
<100
poun ds,
L gross.
C anada
(dollar—par
100
poun ds,
value, $1; current,
net.
83.13 cents).
C u b a (peso—par value,

160 francs _
120 francs _
$2.84..........

$1.07.

(krona—par (100 kilos, n e t ._
poun ds,
26.80 cents; <100
18.12 cents). I net.
(krone— par (100 kilos, n e t .
26.08 cents; <100
pounds,
17.52 cents). I net.

Argentina (gold peso—
par value, 96.48 cents;
current, 58.22 cen ts).

$0 .8 6 .

A d v a lo r e m ...

. do.

sus
21,

$1.52.

F ran ce (franc — par
value, 3.92 cents):
Boxes and cases1_ _ - 100 kilos, gross. 80 fra n csO thers_____________ ____ d o ________ 60 francs _
$1.42_____
Boxes and cases L _ . 100
poun ds,

N eth erlands (florin—
par value, 40.20 cents)
B elgium
(franc— par
value, 2.78cents):
Containers o f 10
kilos or less.
Larger containers—
Containers o f 10
kilos or less.
Larger con tain ers...

Im p o rt restrictions and
regulations

D u t y N o v . 1, 1928

C o u n try and currency

14.08 g o ld p e s o s .
$3.74____________

E xch ange restrictions;
gold paym en ts sus
pen d ed
Sept.
29,
1931.
G o ld paym en ts sus
p en d ed
Sept.
29,
1931.
U nofficial exchange re
strictions; gold p a y
m ents s u s p e n d e d
Sept. 29,1931.
P artial exchange re
strictions; suspended
gold p aym en ts D e c.
16, 1929.

3.20 gold pesos..
$1.45___________
$1 5______
$ 0 .8 3 5 6 .

G o ld exports p r o h i
b ite d O ct. 19, 1931.

C om p iled b y the Foreign A gricultu ral Service o f the D epartm en t o f A g ricu ltu re and the D iv is io n of
Foreign Tariffs D epartm en t o f C om m erce. C o n v e rte d to dollars at the prevailin g rates of exchange as of
A p r. 1, 1933.
1 A lso all fruit cou n tin g 80 and less per 500 gram s (1.1 pou n ds).
2 P rovision al surtax o f 3 percent im p osed in 1932.
3 Varies w ith the cou n t o f the fruit. T h e larger the fruit the higher the rate, i.e., 90 fruit per 500 gram s
(1.1 poun ds) is charged 90 to 100 francs accordin g to the size of the container.
* Sales tax was 2 percent.
5 P lus a 3 percent ad valorem excise tax. T h e sales tax is 6 percent.
6 G old dollars.

220

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

T a b l e 3 6 . — Raisins: Import duties as of Apr. 1, 1933, compared with those in

effect Nov. 1, 1928, and the import restrictions and regulations in the chief
importing countries of the world
C o u n try and cu rrency

United
K ingdom
(p ou n d sterling— par
value, $4.867; current,
$3.422).
G erm an y (reichsm ark—
par value, 23.82 ce n ts).

U n it

H u n d re d
w eight (112
poun ds) net.
100 pou n ds net.
flOO kilos, n e t ..
\ 100 poun ds net.
100 kilos, gross.
France
(fr a n c —p ar
lOOpou n d s ,
value, 3.92 cents).
gross.
N eth erland s (florin—
A d v a lo r e m ...
value, 40.20 cents).
f 100 kilos, n e t ...
B e l g i u m (franc— par
U00 pou nds,
value, 2.78 cents).
{ net.
D en m ark (krone— par (100 kilos, n e t ...
value, 26.80 cents; U O O p o u n d s ,
current, 15.27 cents), 1 net.
S w e d e n (k r o n a —par (100 k ilo s ,n e t ..
value, 26.80 cents; <100 p o u n d s ,
current, 18.12 cents), [ net.
N o rw a y
100 kilos, n e t ..
(krone— par
value, 26.80 cents;
100 p o u n d s ,
current, 17.52 cents).
net.
A rg en tin a : 2
C ontainers 2 kilos
or less.
Containers larger
than 2 kilos.
Containers
of 2
kilos or less.
C ontainers larger
than 2 kilos.
C u b a (peso—par value,

$1).
C a nada
(dollar— par
value, $1; current,
83.13 cents).

{
Í

D u t y N o v . 1,1928

D u t y A p r. 1, 1933

7 s . - . . ...........-

10s. 6d ........... ..........

$1.52....... .........
8 reichsm arks

$1.60......... ................
5 reichsm arks____
$0.54_____________
75 fr a n c s ................
$1.33_____________

$0.86________
75 francs_____
$1.33_________

Q uota restrictions.

4 cro w n s_____
$0.49_________

4 cro w n s _________
$0.27_____________

15 cro w n s____
$1.82_________

15 cro w n s________
$1.23______________

8 cro w n s_____
$0.97_________

9.60 crow n s______
$0.76______________

U nofficial exchange re
strictions; gold p a y
m e n ts su s p e n d e d
Sept. 29, 1931.
Partial exchange re
strictions; suspended
gold p a y m e n ts D e c .
16, 1929.

31.80 gold p e s o s ...

14.74 gold pesos.

24.19 gold p e s o s ...

100 p o u n d s ,
gross.
____ d o ________

$9.43.....................

$8.40....... ................. .

$6.45................... ..

$6.39________ _____

2.40 gold
$1.09____

3.20 gold pesos____
$1.45_______ ______ _

$3 3_____

$4_________________
$3.33 *_____________

{

E x ch ange restrictions.

10 percent plus 3
p ercen t.1
115 francs________
$1.45_____________

21.55 gold pesos.

100 kilos, gross.
100 p o u n d s ,
gross.
100 p o u n d s ___

G old paym en ts sus
p en d ed Sept. 21,1931.

100 fra n cs____
$1.26............. .

8 percen t____

____ d o ________

100 kilos, gross.

Im p o rt restrictions and
regulations

E xch ange restrictions;
gold pa ym en ts sus
p en d ed Sept. 29, 1931
G o ld paym en ts sus
p en d ed Sept. 29,1931.

G o ld exports p r o h ib
ited O ct. 19, 1931.

C om p iled b y the F oreign A gricultu ral Service of the D epartm en t of A g ricultu re and the D iv is io n o f
Foreign T ariffs, D epartm en t o f C om m erce. C on verted to dollars at the prevailing rates o f exchange as
Of A p r. 1, 1933.
P r o v is io n a l surtax o f 3 percent im p osed in 1932.
2G old peso; par value, 96.50 cents; current value, A p r. 1, 1933, 58.22 cents.
*Sales tax was 2 percent.
4G ald dollars; plus a 3 percent ad valorem excise tax. T h e sales tax is 6 percent.

T a b l e 3 7 . — Canned fruit: Import duties on canned pears, peaches, pineapples,

apricots, salad fruits, etc., as of Apr. 1, 1933, compared with those in effect
Nov. 1, 1928, and the import restrictions and regulations in the chief import
ing countries of the world

C o u n try and cu rren cy

U n ited K in g d o m : 1
T h in siru p _____
T h ic k sirup .
T h in siru p ...
T h ic k siru p .

D u t y N o v . 1, 1928

D u t y A p r. 1, 1933

H u n d red
w eight (112
poun ds) net.
-------d o . . ...........

Is. 6y 2d J __________

G old p aym en ts sus
pen d ed Sept. 21,1931.

6s. 10H d .2_________

100 p o u n d s ,
net.
____ d o ........ ..

$1.49......... ............. -

Is. 6K d . plus 15
percent ad v a lo
re m .2
6s. 10Md. plus 15
percent ad v a lo
re m .2
$0.24 plus 15 per
cent ad valorem .
$1.05 plus 15 per
cent ad v alorem .

80 reichsm arks____
50 reichsm arks____
$8.64......... ............. ..

80 reichsm arks____
50 reichsm arks____
$8.64______________

E x ch ange restrictions.

$5.40................... ..

$5.40.

G e rm a n y : 1
I n sugar siru p___
In natural siru p..
Injsugar siru p___

100 kilos, n e t..
____ d o ________
100 p o u n d s ,
net.
I n natural siru p___ ____ d o ________

See fo o tn o te s

Im p o rt restrictions and
regulations

U n it

n e x t page.

$0.34................... ..

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

221

T a b l e 37.— Canned fruit: Import duties on canned peas, peaches, pineapples,

apricots, salad fruits, etc., as of Apr. 1, 1933, compared with those in effect
Nov. 1, 1928, and the import restrictions and regulations in the chief import
ing countries of the world— Continued
Country and currency

Unit

D u ty N ov. 1, 1928

France:1
In sugar sirup_____ 100 kilos, gross. 50 francs 3- 4---------In natural sirup___ ____ do________ ____ d o ., s . 4_______
In sugar sirup_____ 100 p o u n d s , $0.89______________
gross.
In natural sim p___ ........ d o - ............ $0.89______________
Netherlands, in con
tainers o f :1
1.200 grams or less A d valorem6.. 20 percent________
(2.6 pounds).
12 percent________
1.200 grams to 5 ____ do. e______
kilos (2.6 pounds
to 11 pounds).
.do.
Over 5 kilos.. ..........
8 percent_________
Belgium, in containers
o f :2
100 kilos, n e t 8.
3 kilos (6.6 pounds)
or more.
3 kilos (6.6 pounds _____do. «_______
or less.
100 p o u n d s ,
3 kilos (6.6 pounds
net.8
or more.
3 kilos (6.6 pounds _____do. «............
or less.
Denmark (krone—par 100 kilos, n e t..
value, 26.80 cents; 100 p o u n d s ,
current, 15.27 cents). „ net.
Sweden
(krona— par (100 kilos, n e t8.
value, 26.80 cents; •{100 p o u n ds,
current, 18.12 cents). [ net.8
Norway
(krone—par Í100 kilos, n e t8_
100 p o u n d s ,
value, 26.80 cents;
current, 17.52 cents). I net.8

D ntv A nr 1
D uty Apr. l,

235 francs 3_
90 francs 4« 5.
$4.18 3______

25 percent plus 3
percent.7
15 percent plus 3
percent.7
10 percent plus 3
percent.7

30 or 120 francs 9__

34.50 or 138 francs9.

240 francs________

276 francs_________

$0.38 or $1.519____

$0.43 or $1.74 »____

$3.03....... .................

$3.48......................... .

100 crowns_______
$12.16.___________

100 crowns........... ..
$6.93......................... .

50 crowns________
$6.08______________

75 crowns_________
$6.16______________

90 crowns________
$10.94_____________

108 crowns________
$8.58______________

’100 kilos, gross.
100 p o u n d s ,
. gross.

48.79 gold pesos..
$21.36_____________

55.99 gold pesos...
$14.79_____________

Cuba (peso— par value,

100 kilos, gross.
100 p o u n d s ,

1.20 gold pesos 10._
$ 0 .5 4 ............. ..........

7.20 gold pesos i°„.
$3.30______________

100 pound s...

$2.50 n ..................... .

$5 1 2 ______________
$4.16 i y 3................. .

Canada
(dollar— par
value, $1; current,
83.13 cents).

Quota restrictions.

$1.60 3_.........

Argentina (gold peso—
par value, 96.48 cents;
current, 58.22 cents).

$1).

Import restrictions and
regulations

Exchange restrictions;
gold payments sus
pended Sept. 29,1931.
Gold payments sus
pended Sept, 29,1931.
Unofficial exchange re
strictions; gold pay
ments suspended
Sept. 29, 1931.
Partial exchange re
strictions; suspended
gold payments Dec.
16, 1929.

Gold exports prohib
ited Oct. 19,1931.

^ Compiled by the Foreign Agricultural Service of the Department of Agriculture and the Division of
Foreign Tariffs, Department of Commerce. Converted to dollars at the prevailing rates of exchange as
of April 1, 1933.
1 The pound sterling is used in the United Kingdom, par value is $4.867, current value, $3,422; Germany
(reichsmark—par value, 23.82 cents); France (franc— par value, 3.92 cents); Netherlands (florin—par 40.20
cents); Belgium (franc—par value, 2.78 cents).
2 These rates are listed as alternates to paying duty on the actual sugar content of the sirup.
3 Canned pineapple is also subject to a special tax as follows: 30 francs per 100 net kilos if in sugared liquid
and 15 francs if without sugar, sirup or alcohol.
4 Pineapple rate is 3 times the rate listed here.
5 Rate on pineapple is 150 francs per 100 kilos.
6 Canned fruits and vegetables containing over 5 percent added sugar are required to pay a sugar excise
tax. On cans of 1,200 grams or less the rate for 1928 was 8 percent plus a tax of 27 florins per 100 kilos and
in 1932 the rate was 10 percent plus a sugar excise tax of 27.15 florins per 100 kilos. On the containers of
1,200 grams to 5 kilos the rate is the same as that given plus sugar tax. Only the sugar tax is charged on
containers larger than 5 kilos.
7 Provisional surtax of 3 percent imposed in 1932.
8 D uty based on weight of container.
• Lower rate is without added sugar and higher rate with sugar.
i° Plus a surtax of 10 percent of the duty.
n Sales tax of 2 percent.
12 Plus a 3 percent ad valorem excise tax. The sales tax is 6 percent.
13 Gold dollars.

APPLES

The United States is the world’s greatest apple-exporting country.
Approximately one half of the apples moving in international trade
originate in this country. Apples are grown in every State in the
Union, and they are commercially important in over one half of the

222

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

States. Almost all of the export apples, however, are grown in the
Atlantic Coast States from Virginia to Maine and in the western
boxed-apple States.
On the average, one sixth of the total commercial apple crop of
the country is exported, but the export proportion of certain districts
and of certain varieties is very much larger. For instance, foreign
markets provide the chief outlet for such varieties as the York Im
perial, Albemarle Pippin, and Ben Davis grown in the ShenandoahCumberland Valley of Virginia, West Virginia, and Pennsylvania.
It has been estimated that 50 percent of the apple crop of this region
has normally been exported. Similarly, a large proportion of the
Yellow Newtown and the Ortley, grown in Oregon, particularly in
the Hood River Valley, are shipped abroad. The State of Washing
ton exports large quantities of small-sized Winesap, Jonathan, and
other varieties. In some years considerable quantities of certain
New York and New England varieties, such as the Baldwin, Rhode
Island Greening, and Ben Davis, are exported. The increasing
restrictions on apple imports in the principal foreign markets during
recent years have affected primarily the apple industries in these
export regions.
Apples have been exported from the United States since Colonial
days, but the greatest period of expansion was during the decade
1920 to 1930, as a result largely of the increasing apple production
in the Pacific Northwest. Table 38 shows the exports of apples from
the United States since 1922-23.
T a b l e 38.— Apples: Exports from the United States and the proportion of the

commercial crop exported, 1922-23 to 1931-32
Boxed exports 1

Total exports
Year
Amount

1922-23_________ ______ _________
1923-24...................................... ........
1924-25...............................................
1925-26..............................................
1926-27.........................................

Percent of
crop

1,000 bushels
5,300
12,300
9,600
11,000
21,300

Am ount

5.5
11.4
11.4
11.0
18.1

1,000 boxes
3, 500
6,200
5,100
5,400
7,800

Percent of
crop
9.2
12.4
15.4
12.6
17.5

Barreled exports 2
Am ount
1,000 barrels
1,800
6,100
4,500
5,600
13,500

Percent of
crop
3.1
10.5
8.9
9.9
18.5

11,900

11.8

5, 600

13.4

6,300

10.6

1927-28-.............................................
1928-29..............................................
1929-30..............................................
1930-31_____________ ____________
1931-32_________________________

9,400
21,000
10,300
20, 300
18,000

12.0
19.7
11.9
20.0
17.3

5,400
12,000
6,000
12,000
9, 500

14.0
23.5
15.1
23.1
24.7

4, 000
9,000
4,300
8,300
8,500

10.1
16.2
9.2
16.9
12.9

Average__________________

15,800

16.6

9,000

20. 5k

6, 800

13.3

Average............................ ..

Compiled by the Foreign Agricultural Service from official sources.
1 Grown in Pacific Coast States.

2 Grown in Atlantic Coast States.

The volume of American apple exports has held up remarkably
well during the period of declining world trade since 1929 and con
sequently the total value has not shrunk so much as that of most ex
port commodities. The unit value of the exports, however, has shown
a drastic decline, reflecting in part the general fall in prices and re
duced purchasing power in foreign countries, but also to an important
extent, and especially for boxed apples, the increased tariffs and
other restrictions on apple imports into the leading world markets.
The unit export value for boxed apples has fallen much more than
that for barreled apples.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

223

T a b l e 3 9 . — A pples: Value per unit of exports from the United States compared

ivit'h the index of commodity prices, 1925-26 to 1932-33
Index of unit value

Value per unit
Season July-June
Boxes
$2. 52
2.14
2. 43
2.13
2.18
1.88
1.50
1.14

1925-26................. ..........................— .............
1926-27___________ _____ _____ _________ ______
1927-28___________________ _______ _____ ______
1928-29_______________________________________
1929-30___________________ ___________________
1930-31___________________________ _____ - ..........
1931-32_____ _____ ______ ______ _______________
1932-33 1______ _______________________________

Barrels

Boxes
Percent
100.0
84.9
96.4
84.9
86.5
74.6
59.5
45.2

$4.87
4. 94
A, 99
5.03
5.07
4. 75
4.32
3. 98

Barrels

Index of
commodity
prices

P ercent
100.0
101.4
102.5
103.3
104.1
97.5
88.7
81.7

P ercent
100.0
94.9
v 93.3
93.7
90.8
78.1
66.9
61.7

Compiled by the Foreign Agricultural Service from official sources.
1 July-February, inclusive.

American apple exports are widely distributed but a relatively few
countries take the bulk of the shipments. The United Kingdom is
the most important market, taking on the average almost one half
of the total apple exports from the United States. Continental
European countries, Canada, and certain Latin American countries
take most of the remainder. Table 40 shows the average exports
of United States apples to the principal countries in the last five
seasons.
T able

4 0 . — Apples:

Exports from the United States to principal countries,
average exports in the 5-year period 1927-28 to 1931-32
Average 1927-28 to 1931-32 (July to June)

Country

United Kingdom______________
Germany______________________
Netherlands___________________
France - - ____________________
Belgium_______________________
Sweden__ ______ _______________
Norway - - __________________
Denmark______________________
Other Europe__________________

Total ex
ports

Percent of
total

Boxed ex
ports 1

Percent of
total

47.1
15.5
9.6
4.3
3.7
3.1
2.3
.9
.8

1,000 boxes
3,504
1,927
1,116
319
42
241
177
89
92

39.0
21.4
12.4
3.6
.5
2.7
2.0
1.0
1.0

1,000 barrels
1,317
173
132
123
182
83
60
20
14

57.8
7.6
5.8
5.4
8.0
3. 6
2.6
.9
.6

1,000 bushels
7,455
2,446
1,512
688
588
490
357
149
134

Barreled
exports 2

Percent of
total

Total Europe___________

13, 819

87.3

7, 507

83.6

2,104

92.3

Canada________________________
Argentina______________________
B ra zil_________________________
C uba___________________________
Mexico_________________________
Other countries________________

619
571
166
77
72
500

3.9
3.6
1.0
.5
.5
3.2

478
256
163
53
66
461

5.3
2.9
1.8
.6
.7
5.1

47
105
1
8
2
13

2.1
4.6

Total____________________

15,824

100.0

8,984

100.0

2,280

100.0

Compiled by Foreign Agricultural Sarvice from official sources.
included.
1 Grown in the Pacific Coast States.

.3
1
.6
.

Exports in bushel baskets are

2 Grown in the Atlantic Coast States.

During the last 4 years trade barriers of some description have
been raised in every important foreign market for American apples.
New or increased import duties have restricted American apple
imports into the United Kingdom, Sweden, Norway, and Canada.
Restrictions on the use of exchange have reduced imports of Ameri
can apples into Germany and Denmark. Import quotas in France
and strict sanitary regulations in France and Argentina have held
down exports to those countries. In the United Kingdom the Scan

224

WORLD TRADE BARRIERS IE RELATION TO AGRICULTURE

dinavian countries, and Argentina depreciated currency has been an
additional obstacle to trade. Table 41 provides an outline of the
import duties and other restrictions on American apple imports into
the principal markets. The following discussion describes the most
significant restrictive measures in effect in the principal markets.
An attempt is made whenever feasible to indicate their effects on the
export trade in American apples with the individual countries.
41.— Apples: Import duties as of Apr. 1, 1933, compared with those in
effect Nov. 1, 1928, and the import restrictions and regulations in the chief
importing countries of the world

T a b le

Country and currency

Unit

U n it e d K in g d o m
(pound sterling— par
value, $4,867; current,
$3,422).

H und red
weight (112
pounds).
Box, net______
Barrel, net___

G e r m a n y ( r e i c h s (100 kilos, net.
mark— par
value, {Box, net_____
23.82 cents).
[Barrel, net__.

France
(franc— par
value, 3.92 cents).

kilos, gross.
Í100
Box, gross____

D u ty N ov. 1, 1928

D u ty Apr. 1,1933

Free.

4s. 6d

-_d o .
-d o _

7 marks
$0.33. __
$1.09-_-

7.5 or 15 francs !_
$0.13_______ _____

$0.30.

7marks
$0.33___
$1.09—

7.5 or 15 francs 1.
$0.13_____________

$0.22. .............

$0.22____________

A d valorem

8 percent..............

100 kilos_____

5 or 150 francs l_.

10 percent plus 3
percent.2
5.75
or
172.50
francs.1
$0.96______________

Barrel, gross
Netherlands (florin—
par value, 40.20 cents)
Belgium
(franc— par
value, 2.78 cents).

Box, net......... .
Barrel, gross-.
Denmark (krone— par (100 kilos, net_.
value, 26.8 cents; cur •IBox, net______
rent, 15.27 cents).
[Barrel, net___
Sweden
(krona— par (100 kilos, net..
value, 26.80 cents; cur •IBox, net_____
[Barrel, net___
rent, 18.12 cents).
Norw ay
(krone— par (100 kilos, net..
value, 26.80 cents; <Box, net______
current, 17.52 cents). [Barrel, net___

$0.83.....................

$0.10___________

$0.12_____________

1 c r o w n .............
$0.05____________
$0.175___________
10 crowns______
$0.54____________
$1.75____________
30 or 60 crowns 3
$1.61 or $3.22 3__.
$5.25 or $10.50 3..

5 crowns__________
$0.15______________
$0.50______________
20 crowns. ........... ..
$0.72______________
$2.37______________
36 or 72 crowns 3__.
$1.26 or $2.52 3____
$4.12 or $8.24 3____

Argentina (gold peso— (100 kilos gross. Free___...................
par value, 96.48 cents; { Box, gross____ ____ do........ ..............
current, 58.22 cents). [Barrel, gross-. ____ do.................... ..

Cuba (peso—par value,

$1).
Canada
(dollar—par
value, $1; current,
83.13 cents).

kilos, gross.
)100
Box, gross____
Barrel, gross..
I b o x ......... .................

(Barrel—............

6.3 gold pesos_____
$0.83________ _____ _
$2.75_______ ______ _

0.80 gold pesos. __
$0.18______________
$0.60................... —

1.20 gold pesos___
$0.27______________
$0.90______________

$0.30 4___________ $0.90 4____________

About $0.30-$0.355.
About $0.90-$1.155.

Import restrictions and
regulations

Embargo July 7 to
N ov.
15
against
United States ap
ples except 2 highest
recognized
grades;
sanitary inspection;
certificate required;
gold payments sus
pended
Sept.
21,
1931.
Exchange
purchases
limited to about 50
percent same month
1931; sanitary inspec
tion for San Jose
scale and other insect
pests.
Sanitary inspection for
pests,
particularly
San Jose scale; cer
tificate required; im
ports regulated b y
quota and licenses.
Sanitary inspection.
Certificate required af
firming freedom from
disease.
Exchange restrictions.
Gold payments sus
pended Sept. 29,1931.
Gold payments sus
pended Sept. 29,1931.
Gold payments sus
pended Sept. 29,1931;
unofficial
exchange
restrictions.
Sanitary
inspection;
certificate required;
suspended gold pay
ments Dec. 16, 1929;
partial exchange re
strictions.
Sanitary regulations.
Sanitary
inspection
and marking and
packing regulations;
prohibited gold ex
ports Oct. 19, 1931.

Compiled by the Foreign Agricultural Service of the Department of Agriculture and the Division of
Foreign Tariffs, Department of Commerce. Converted to dollars at the prevailing rates of exchange as of
Apr. 1,1933. A box or a basket is considered as weighing 44 pounds net or 50 pounds gross and a barrel 144
pounds net or 165 pounds gross.
1 The smaller rate of duty applies to containers larger than 20 kilos (44 pounds); the larger rate to the
containers of less than 44 pounds. Boxes are classified as small containers.
* Provisional surtax of 3 percent imposed in 1932.
3 The lower rate applies between Feb. 1 and July 31. The larger rate during the other months.
4 Sales tax was 2 percent in 1928.
« Approximate; 20 percent ad valorem on a fixed valuation; providing that the duty shall not be less than
a minimum of %-cent a pound. In both cases the 3 percent excise tax on the duty-paid value has been added;
gross weight is used; converted to gold dollars; there is also a sales tax of 6 percent.

WORLD TRADE BARRIERS IN RELATIO N TO AG RICU LTU RE

225

UNITED KINGDOM

The United Kingdom is the leading foreign market for American
apples. On the average, about 50 percent of the exports of barreled
apples and 40 percent of the exports of boxed apples from the
United States go to that country. Canada is the principal competitor
of the United States in the British market, while Australia and New
Zealand offer some competition for American export apples during
the spring months.
Until recent years there were practically no restrictions on the
importation of apples into Great Britain. There was no import
duty, and sanitary regulations imposed no great obstacle to the im
portation of foreign fruit. This situation has been radically changed.
A substantial duty is now assessed against foreign apples, and sani
tary regulations present greater obstacles to the exports of American
apples to Great Britain. The depreciation in British currency is an
additional handicap.
1.
Import duty.—Apples were included among the items subject
to a 10 percent ad valorem tax under the general tariff effective
March 1, 1932. Apples from Empire countries were admitted free.
It does not appear that this duty affected materially either the vol
ume or the price of United States apples exported to Great Britain.
On November 17, 1932, as a result of agreements growing out of the
Imperial Conference at Ottawa in July of that year, the 10 percent
ad valorem rate was changed to a specific rate of 4s. 6d. per hun
dredweight of 112 pounds, equivalent at par of exchange to 45 cents
a box and $1.45 a barrel and, at the average exchange rate prevailing
during the 1932-33 season, to about 30 cents a box and $1 a barrel.
This rate was about double the ad valorem rate. Empire apples
continued to be admitted free of duty. The duty now assessed on
American apples is obviously sufficiently high to have a retarding
effect on our exports to the British market, but it has been enforced
too short a time to permit of any precise appraisal of this effect.
Some general observations are, however, possible.
It is necessary in the first place to an'alyze the factors that have
affected the prices of apples, both American and home grown, in the
British market. Such an analysis, covering the nine seasons 1923-24
to 1931-32, shows that American apple prices in British markets were
determined largely by two factors, the volume of exports of apples
from the United States to the United Kingdom and the general com
modity price level in the United Kingdom (fig. 22). In other words,
when exports of American apples to the United Kingdom were large
prices were relatively low and when exports were small prices were
relatively high. Since the amount of exports is closely related to
the size of the crops in the export sections of the United States, this
simply means that the prices received for American apples in Great
Britain during the period studied were determined chiefly by the
supply situation in the United States. It is, of course, to be expected
that American' supplies would be a leading price-determining factor.
The significant fact is that supplies of other apples on the British
market, upon the whole, apparently have had little effect on the prices
received for American apples. This is particularly true of home
grown British apples, even though they constitute on the average
around one half of the total cooking and dessert apples consumed

226

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

in the United Kingdom. Large supplies of British apples do not
appear to have depressed significantly the prices paid for American
apples. On the other hand, prices paid for British apples seem to
have been little influenced by the quantity of American apples on
British markets (fig. 22).

During the period under survey (1923-24 to 1931-32) the apple
crops of the United States and Great Britain alternated regularly
between large and small crops, with large supplies of American
apples occurring in years when British crops were small and small

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

227

supplies of American apples occurring in years when British apple
crops were large. This was a fortuitous circumstance growing out of
the alternate bearing characteristics of the varieties produced in the
two countries; nevertheless, when United States apple crops were
large and exports were correspondingly heavy the fact that British
apple supplies were small did not seem to have any measurably favor
able influence on the prices received for American apples in Great
Britain. Conversely, in the years of small American crops and
exports the relatively large British apple supplies did not measurably
depress average seasonal prices of American apples on British
markets.
It must be recognized that the period covered by this analysis
is short and that the relationships refer to average prices for the
season and to average prices for a number of varieties. The results
might well be different with respect to particular periods during the
season or with respect to particular varieties. Nevertheless, the indi
cations are that because of differences in varieties and quality Ameri
can apples and British apples, for the most part, have not been inter
changeable in British consumer preferences. This being the case, it
is not to be expected that the British import duty on apples will,
in the near future at least, cause any significant increase in the com
petition of British home-grown apples with American apples sold
in that country. As to the more distant future, much will depend
upon the success of present efforts energetically encouraged by the
Government to improve the market quality and increase the quantity
of British home-grown apples. It seems that there has been some
improvement in the quality of British apples in recent years, partly
as a result of the establishment of Government grades and standards,
and that in the last year or two there has been some stimulation of
apple-tree planting in Great Britain.
But the British duty on apples from foreign sources was intended
primarily as a benefit to Empire apple growers, especially Canada.
The prices of some varieties of American apples are unquestionably
affected by Canadian competition. The extent to which Canada may
be in a position to profit by preferential free entry in the British
market will be an important factor in determining the extent of the
injury that may be done to the American apple export trade by the
British import duty. Canadian apple production averages less than
10,000,000 bushels annually and its exports amount to about 4,500,000
bushels, of which almost four fifths—or around 3,500,000 bushels—
go to the United Kingdom. This compares with American exports
to Great Britain of over 8,000,000 bushels a year. It is clear that
Canada does not now produce enough apples to supply British import
requirements. Furthermore, some of the varieties of leading impor
tance in the United States export trade with Great Britain are not
grown on a commercial scale in Canada. Among these are the York
Imperial and the Yellow Newtown, which are in particular favor with
British consumers. On the other hand, certain of the more directly
competitive Canadian varieties will undoubtedly be benefited im
mediately by preferential free entry in British markets and some
quantity of comparable American varieties will be displaced. That
such a displacement has already started is shown by the fact that
Canadian apple exports to the United Kingdom during the 1932-33

228

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

season have been close to the largest on record and have been almost
equal to the total exports of American apples to that country.
The effect of the British duty on stimulating Canadian apple pro
duction must also be considered. Canadian producers have appar
ently already been benefited. For instance, in November 1932 British
Columbian apples sold at from $1.10 to $1.30 gold per box, f.o.b.
shipping points, whereas apples grown in the State of Washington
returned only 75 cents to 90 cents gold a box. In former years Wash
ington apples have usually sold at higher prices than fruit produced
in British Columbia. In addition to the free entry into the British
market, while American apples were assessed a duty of 30 cents a
box, Canada has also had some advantage in the depreciation of
about 15 percent in the value of its currency. In view of the rela
tively higher prices received by Canadian apple growers as compared
with returns to apple growers in the export sections of the United
States and in view also of the high hopes entertained by the Canadian
apple industry with respect to a preferential market in the United
Kingdom, it is reasonable to expect that Canadian apple production
will be stimulated and that in future years the share that the United
States will obtain of the British apple market will be reduced. There
is no basis upon which to estimate the possible extent of this
reduction.
Australia and New Zealand are also important Empire apple-grow
ing and exporting countries. Their seasons are the reverse of those
of the United States, but the early shipments of apples from these
countries coincide with late shipments from the United States (from
April to June) and the late shipments from these countries arrive in
Great Britain during the early months of the United States export
season (July to September). The principal effect of this competition
is, however, to shorten the marketing season in Great Britain for
American cold-storage stock, primarily boxed apples. With the ad
vantage of free entry into the British market and also of a marked
depreciation (around 50 percent) in their currency, the competition
of Australian and New Zealand apples has been intensified, but the
effect on exports of American apples will doubtless be less than in the
case of Canada.
2.
Currency depreciation.—The export trade in American apples to
Great Britain has also been affected adversely by the depreciation of
the pound sterling since the abandonment of the gold standard by
Great Britain in September 1931. With the British currency depre
ciated by around 30 percent from par, American apple exporters had
been faced with the alternative either of maintaining prices in terms
of gold with a consequent loss of volume, or of maintaining the
quantity of exports and accepting lower prices in terms of gold.
That the latter course has been followed is indicated by a rather
marked increase during the last 2 years in shipments of apples to
Great Britain on consignment or—which amounts to much the same
thing—on the basis of a small advance before shipping. In other
words, British importers had been unwilling, partly because of the
currency situation, to make outright purchases of American apples
to the same extent as formerly. The result has been a marked
shrinkage in returns to American apple growers in the export regions
during the 1931-32 and 1932-33 seasons. In terms of sterling the

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

229

prices paid for American apples during these seasons were on about
the same level as those for the seasons of corresponding supplies prior
to the abanbondment of the gold standard. In terms of dollars,
prices have shown a considerable decline. This is shown by Table
42, which gives the prices of York Imperial apples sold at Liverpool
in terms of sterling and in terms of American dollars at the pre
vailing rate of exchange.
T a b le

42 — York Imperial apples: Prices at Liverpool, 1928-29 to 1932-33

Season

1928-9_____________________
____________________
1930-31____________________

In British
currency

s. d.
29
0
28
5
28 10

In Am er
ican cur
rency

$7.06
6.91
1929-30
7.02

Season

1931-32........... ............... ..........
1932-33____________________

In British
currency

s. d.
28 5
30 0

In Amer
ican cur
rency

$4. 74
5.07

A comparison of wholesale New York prices with those of Liver
pool provides another indication of the shrinkage in apple prices
in terms of gold on the British market. In the 4-year period 1927-28
to 1930-31 the dollar spread between the two markets for the Virginia
York Imperial averaged about $2 in favor of Liverpool, while in
1931-32 and 1932-33 the spread was $1.50. When the duty is con
sidered the spread for the first half of the 1932-33 season was only
84 cents.
It is recognized, of course, that there would have been a decline in
sterling prices and in returns to American apple growers and shippers
even though English currency had remained at par. It seems un
likely, however, in the particular case of apples, at least, that the
decline in total returns for American apples sold on British markets
would have been as great as it has been, in fact, under conditions of
widely fluctuating and depreciated currency.
3. Sanitary restrictions.—The flow of American apples into British
markets has been somewhat restricted in recent years by sanitary
regulations. Of these the most significant, is the “ Raw Apple
Order ” promulgated in June 1930, which prohibits the importation
of all United States apples during the period July 7 to November
15 of each year except those of the two highest recognized grades.
This order was made effective as a result of the discovery of apple
maggots (fruit flies) in shipments of American barreled apples re
ceived in Great Britain during the 1929-30 season. The order was
not extended to cover apples from Canada, where the apple maggot
also occurs.
This order has definitely curtailed the quantity of barreled apples
shipped to the United Kingdom during the period of restriction. It
has had little effect on exports of western boxed apples, which have
always consisted principally of fancy and extra fancy apples, which
are not affected by the order. Upon the whole, however, it does not
appear that this regulation, in the long run, will work a serious
injury to the United States apple export trade since it has been
increasingly clear in recent years that there is little place in British
or in other European markets for low-quality apples.

230

WORLD TRADE BARRIERS IN RELATIO N TO AG RICU LTU RE
C O N T IN E N T A L

EUROPEAN

M ARKETS

Continental European countries as a whole take about 40 percent
of the total United States exports of apples. Germany is the most
important market, followed by the Netherlands, France, Belgium,
and the Scandinavian countries. Except for the Netherlands and
Belgium all these countries have recently imposed some restrictions
on imports which have affected significantly the importation of
American apples.
1. Germany.—Germany is the second largest apple importer in
the world and the United States has in recent years supplied about
one-third of Germany’s total apple imports. Drastic restrictions
on the use of foreign exchange have constituted the most important
obstacle to the importation of American apples into Germany. All
foreign exchange transactions are rigidly controlled and importers in
Germany are limited in their exchange to a specified percentage of
previous requirements; in recent months this has been 50 percent
of the amount used in the corresponding months of the preceding
year. This limitation on exchange has unquestionably restricted
imports of American apples into Germany. In this particular case,
however, the restrictions grew out of the necessity of limiting im
ports in general in order to improve the national balance of pay
ments. There is no evidence to indicate that apples have been
affected more seriously than other products. The alternative to ex
change control wTas currency depreciation which might have led to
smaller imports of American apples than actually occurred.
German import duties on apples have not been changed during the
last 4 years (table 41). Apples in bulk or in sacks are assessed
a lower rate of duty than packaged fruit, such as the United States
exports, and in addition such apples are granted a lower rate during
the period September 25 to December 1 when most of the bulk or
sacked apples are imported into Germany from neighboring coun
tries. It is impossible to determine the extent to which the prefer
ential low rate on these European apples may have affected the im
ports of American fruit. It is a fact, however, that when continen
tal European crops have been large it has not been possible to sell
substantial quantities of American apples in Germany until this fruit
has moved into consumption, usually around the first of January.
2. France.—France is the leading apple producer in Europe but
most of the French production is of cider fruit. The competition
of the French product with imported American apples is not great.
There has been a phenomenal increase in United States apple exports
to France in recent years. In the 1929-30 season direct shipments o f
American apples to France amounted to only 74,000 bushels. In
1930^31 they exceeded 1,000,000 bushels and in 1931-32 they rose to
2,000,000 bushels. It is difficult to explain this rapid rise of French
imports of United States apples in this period when trade in general
was showing a marked decline. It appears to have been due largely
to the fall in prices of American apples which permitted them to be
sold in France to a much larger segment of consumers than was
formerly the case and to the fact that French purchasing power has
been maintained at a relatively higher level than in other European
countries.
The French import duty on apples has not been changed in recent
years although an attempt was made to increase it substantially in

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

231

1932. But more stringent sanitary regulations and an import quota
system were adopted in that year and these have contributed to the
decided reduction of French imports of American apples during the
present (1932-33) season as compared with the preceding 3^ear.
The sanitary regulations were aimed in particular at preventing
the entry of San Jose scale. An official decree effective in March
1932, provided that fruits other than citrus from countries where
San Jose scale was known to exist had to be accompanied by sani
tary certificates certifying that the fruit was free from disease and
pests. In addition all shipments except citrus were made subject to
inspection on being landed at one of the four designated ports of
entry. The results of these strict sanitary regulations was an imme
diate decline in the French takings of American apples and pears,
particularly the apples grown in the Atlantic States. Boxed fruit
from the Pacific States was not greatly affected by the regulations
although a number of shipments from this region also failed to pass
inspection in France. During the present (1932-33) season some
shipments of American apples have been refused entry into France
because of San Jose scale. The injury to the United States appleexport business with France caused by these regulations cannot be
determined since a system of import quotas was adopted shortly after
the tightening of sanitary regulations.
The import quota system was applied to fruit in July 1932. The
fruit quota allotted to foreign countries for the first quarter (July
to September) of the 1932-33 season was extremely small. The
quotas were specified by countries in the second quarter (October to
December) and were fixed at the average, without reduction, of direct
imports of such fruits from the United States during the corre
sponding months of 1929, 1930, and 1931. In establishing the quotas
no allowance was made for United States apples and pears which
in the past had been reexported to France from nearby European
countries (table 43).
T a b le

43.— France: Apple and pear quotas alloived the United States in the
1,932-33 season compared with the imports in 1931-32

M onth

United
States
quota for
apples and
pears

United States, exports to France,
United
1931-32
States
quota for
apples and
Apples and
pears
Apples
Pears
pears

M etric tons
s 150
July--------------------------------------------------------------3 30
A u g u s t . - _____
__________________________
195
September----------------------------------------------------1,200
October. __ ______________ ________________
N ovem ber.. _________ ______________________
3,900
4, 680
December_________________________________ 1,885
January. _________ ________________________
2,140
February____________________________________
M a rc h ..____ _______ ______ __________________
2,125
April__________________________ ___________ - )
2,710
M a y ..______ ___________ ____________________ }
J u n e.......................... ............................... ............... 1

Bushels 1
3 7,500
3 1,500
9, 750
60,000
195,000
234,000
94, 250
107,000
106, 250

Bushels
3,000
47,000
30,000
404,000
429, 000
245, 000
309, 000
392,000
138,000
f
164,000
135, 500 <
47,000
[
3,000

Bushels 1
2,000
10,000
17, 500
343,000
369, 000
231,000
298, 000
390, 000
137, 000
164, 000
47, 000
3, 000

Bushels 2
1,000
37,000
13,000
61,000
60,000
14,000
11,000
2,000
1, 000
(4)

19, 015

950, 750

2 ,014,000

200,000

Total_____________ __________ _________

2, 214, 000

Compiled by the Foreign Agricultural Service from official sources.
1 Bushels of 44 pounds.
2 All countries.

179563— 33------ 16

3 Bushels of 50 pounds.
4 Less than 500 bushels.

232

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

The total quota allowed the United States for apples and pears
in the 1932-33 season, July to June, was set at 950,750 bushels, which
may be compared with direct exports from the United States to
France in 1931-32 of about 2,200,000 bushels. While exports to
France might well have been less in 1932-33 than in the preceding
year, even though no quotas had been established, it is not reason
able to suppose that the decline in exports would have been as great
as it actually was. Furthermore, the restrictions in France reacted
unfavorably on other European markets in that numerous shipments
that were rejected in France had to be sold at low prices in nearby
countries.
3. Scandinavian countries.—In the 5-year period 1927-28 to
1931-32 Sweden, Norway, and Denmark together imported about
1,000,000 bushels of American apples annually directly from the
United States and a substantial additional quantity indirectly
through other European countries. In the last 2 years new restric
tions on imports have greatly curtailed the Scandinavian market for
American fruit.
In February 1932 the Swedish duty on apples was increased 100
percent, or from 10 crowns to 20 crowns per 100 kilos. The present
import duty is equivalent at current (April 1933) exchange rates to
about 70 cents per box and $2.35 per barrel. While these duties are
relatively high they do not seem to have reduced materially the vol
ume of American exports to Sweden. Norway, on the other hand,
maintains a practically prohibitive duty on apples during the period
August 1 to January 31, the principal shipping season for American
apples. The present import duty during these months is equivalent
to about $2.50 a box and $8.25 per barrel. During the remainder of
the year the duty is $1.25 per box and $4 per barrel, or considerably
higher than the year-around Swedish duty on apples.
Although Norway is off the gold standard, there is unofficial con
trol of foreign exchange. Purchase of exchange is limited to a speci
fied proportion of the amount required by individual importers in
the corresponding months of the preceding year. The percentage
varies with different products; in the case of apples it has been
around 85 percent. The combination of the high duty, exchange
restrictions, and depreciated currency has severely reduced the outlet
in Norway for apples from the United States.
In Denmark the import duty on apples was increased in October
1931, but it is still low compared with the duties prevailing in most
European countries (table 41). But drastic exchange restrictions
have greatly curtailed the Danish market for American apples. In
January 1932 a law was passed in Denmark which prohibits the im
portation of goods and securities unless they are certified by the Na
tional Bank as unobjectionable from a foreign-exchange standpoint.
During the present (1932-33) season apples can be imported only
upon special permit or “ exchange certificate 55 which must be ob
tained in advance by the importer from the exchange office of the
National Bank of Denmark. It has apparently been very difficult
to secure permits covering the importation of American apples.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

233

A R G E N T IN A

Exports of American apples to Argentina amounted to almost
750,000 bushels in each of the two seasons 1929i-30 and 1930-31.
Shipments dropped precipitously in 1931-32 to less than 200,000
bushels. This decline was to a large extent due to the import duties,
strict sanitary regulations, and exchange restrictions adopted in
1931. Prior to that year there were no restrictions on the importa
tion of apples in Argentina. On February 6, 1931, Argentina im
posed an import duty on apples and pears of 25 percent ad valorem
on a fixed valuation of 15 gold pesos per 100 kilos. The rate was
increased to 35 percent in October 1931. In addition, a surtax of 7
percent of the value is applied making the total duty 42 percent ad
valorem on the fixed valuation. The duty, therefore, amounts at
current (April 1933) exchange to about 84 cents per box and $2.76
per barrel or one of the highest existing in any country.
Effective July 1, 1931, new sanitary and packing regulations
were adopted which seriously affected the importation of fresh fruit
into Argentina. Among other things this order specified the season
during which various fresh fruits could be imported into the country.
Apples and pears, the chief fresh fruit exports from the United
States to Argentina, were permitted entry only during the period
from May 1 to December 15 of each year. All fruit except bananas
was required to be packed before shipment in containers of standard
type used by the exporting country. Apples, pears, oranges, man
darins, and lemons were required to be individually wrapped in
specially prepared (oiled) paper stamped with the name of grower
or packer and the country of origin. Each shipment had to be ac
companied by a sanitary certificate issued by the official technical
authorities in the country of origin stating that the fruit was free
from parasites and disease. All shipments were required to stand
a rigid sanitary inspection, and if any harmful disease or parasites
were found the fruit was destroyed. These and other less important
requirements were strictly enforced during the 1931-32 season and
resulted in a very considerable decline in the exports of apples, par
ticularly from the Eastern States, to Argentina.
The compulsory wrapping requirement was probably the most
important single cause of the decline in exports. Apples packed in
barrels are not customarily wrapped individually and such wrap
ping significantly increases the cost of packing. As a result largely
of this requirement barreled exports to Argentina declined from
over 150,000 barrels in 1930-31 to 8,000 barrels in 1931-32. Boxedapple exports decreased from 257,000 in 1930-31 to 167,000 in 1931-32.
Both boxed and barreled apple exports were reduced by the closing
of the import season on December 15. This meant that the last ship
ments of apples destined for Argentina had to leave the United States
almost a month prior to December 15 and resulted in cutting short
the shipping season by at least 2 or 3 months. Both the compulsory
wrapping requirements and the seasonal import periods were removed
in 1932 and have not been in force during the 1932-33 season, but the
high import duty still remains in effect.
Imports of apples are also restricted by the control of foreign ex
change. Since October 3, 1931, an exchange control commission has

234

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

fixed the maximum and minimum rates for the purchase and sale o f
foreign exchange in Argentina. The foreign-exchange restrictions
apply to fresh fruit among other products. To secure any exchange
to cover imports of American apples a draft, with the bill of lading
attached, must be presented to the commission for approval.
The removal of the wrapping requirements and the abandonment
of specified periods of import have been of benefit to the apple export
trade with Argentina as is shown by the fact that barreled apple
exports during the first 8 months of the 1932-33 season were larger
than in the preceding season despite a smaller crop in the barreled
apple producing regions. Nevertheless, the total exports of barreled
and boxed apples together in 1932-33 will probably not exceed
175,000 bushels as compared with 729,000 bushels in 1930-31, the
last season when United States apples were allowed free entry into
Argentina.
E F F E C T O F T R A D E R E ST R IC T IO N S O N U N IT E D S T A T E S A P P L E E X P O R T S

It is apparent from the preceding discussion that there has been a
widespread tendency toward new and higher tariffs and other restric
tions on apple imports in many of the most important markets for
American apples. In some countries such restrictions have clearly
resulted in curtailment of the importation of American apples, but,,
upon the whole, the volume of apple exports has been well maintained
in the face of the rising barriers. The explanation for this appar
ently paradoxical situation is to be found in part in the expansion in
the French market for American apples since 1929-30. Perhaps o f
more importance, however, is the fact that large parts of the export
apples are of special varieties or of small sizes which are favored
in foreign markets and which can be disposed of in domestic markets
only with great difficulty, if at all. Under these conditions large
quantities of apples have continued to be exported.
That many of them have been shipped for whatever they would
bring on the foreign market is indicated by the growth in the con
signment business and in the practice of shipping on the basis of ¿t
small advance which has often proved to be the only return realized.
The immediate effect, then, of the trade restrictions combined with
reduced purchasing power in foreign markets has been to reduce
materially the income of apple growers in the export regions of the
United States. Since about the usual quantity of apples has moved
into export channels, it does not appear that growers outside of the
export areas have been significantly affected by the restrictions in
foreign markets.
The effect of the import restrictions on production of apples in
the importing countries of Europe as well as in competing surplus
countries is an important consideration in estimating the possible
longer-time effect on the United States export trade in apples. In,
many, but by no means all, of the countries recently imposing restric
tions on apple imports a leading objective has been the stimulation
of home production. In the case of the United Kingdom this objec
tive was apparently subordinate to the desire to benefit the apple
growers in Empire countries by preferential free entry into the
British market.
So far as the continental European importing countries are con
cerned, it does not now seem likely that the increased import duties

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

235

•and other restrictions would in themselves lead to any considerable
increase in domestic production and, consequently, in greater com
petition for American apples in these countries. But in addition to
protecting domestic producers from the competition of imported
supplies there is a general tendency toward governmental encour
agement of the domestic apple industry in practically all European
countries. Such efforts are being directed especially toward im
provement in quality. Thus far it does not seem that marked prog
ress has been made in this direction. But if these efforts toward
quality improvement meet with some degree of success and the
continental European countries continue their present high barriers
against imported apples, it appears likely that there will be a per
manent strengthening of the competitive position of their domestic
apple industries. These countries will probably continue to take
considerable quantities of American apples, but it will probably be
come increasingly difficult to dispose of our lower quality fruit.
Some expansion in Canadian, Australian, and New Zealand apple
production may be expected to result from the advantages of prefer
ential free entry into the British market for apples from these
countries. The possible influence of this factor on Canadian apple
production is of the most importance from the point of view of the
apple export trade of the United States. The British market pref
erence has not been in effect sufficiently long to permit a well-con
sidered judgment as to its influence on Canadian apple production.
But in view of the fact that the preference was granted chiefly
because of the insistence of Canada it seems reasonable to expect
that Canadian apple production will be stimulated. In any case it
will be 8 or 10 years before new plantings made at this time can be
expected to influence market supplies in Great Britain. In the
meantime, however, it is possible for Canada to increase the pro
portion of commercial apples by paying more attention to cultural
methods. Therefore it is reasonable to expect some displacement of
American apples by Canadian in the British market. On the other
hand, it is not at all likely that Canada will be in a position for
many years to supply all of the British import requirements. The
United States has an outstanding advantage in a large production
of small-sized apples of varieties in strong demand by British con
sumers. These advantages w^ill not be entirely nullified by preferen
tial free entry for Canadian apples.
CITRUS FRUIT

Exports of citrus fruit from the United States are confined largely
to oranges and grapefruit. Exports of lemons are relatively unim
portant. The rapid growth of orange and grapefruit production in
recent years makes the question of export outlets a matter of real
concern to the citrus-fruit industry of the United States. Canada
and the United Kingdom, the only important foreign markets for
American citrus fruit, have established import duties on foreign
fruit but continue to admit British Empire products free of duty.
This preferential policy has an important bearing on the long-time
outlook for American exports of oranges and grapefruit. Tables
44 and 45 show the restrictions on oranges and grapefruit in the
principal importing countries.

236

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE
ORANGES

Although the United States is the world’s largest producer of
oranges, it is second in importance to Spain as an exporter. Spain
supplies a little more than one half of the world’s exports of oranges
as compared with about one twelfth from the United States. Most
of the United States orange exports go to Canada. American ex
ports to Europe, chiefly the United Kingdom, are confined largely
to shipments in the summer months because of the strong com
petition of heavy supplies of Spanish and Palestine fruit during the
winter season. During the late spring, summer, and early fall
competition encountered by American oranges in European
markets comes largely from the Union of South Africa and Brazil.
44.— Oranges: Import duties as of Apr. 1, 1983, compared with those in
effect Nov. 1, 1928, and the import restrictions and regulations in the chief
importing countries of the world

T a b le

Country and currency

United K in gd om :1
Apr. 1 to N ov. 30—
Dec. 1 to M ar. 31—

Unit

H u n d red
weight (112
pounds) net.
— do.................

D uty N ov. 1,1928

D u ty Apr. 1, 1933

Free.

3s. òd

.d o ..........

Apr. 1 to N ov. 3 0 - Box, net______ _____d o .
Dec. 1 to M ar. 31— ------ d o _ _......... . ____d o .

G erm an y (r e ic h s
mark— par
value,
23.82 cents).

100 kilos, net.
Box, net_____

io percent ad va
lorem.
$0.37_______ ______
10 percent ad valo
rem.

Import restrictions andl
regulations

Sanitary inspection.
•Gold payments sus
pended Sept. 21,1931.

Sanitary inspection.
Exchange
purchases
limited to about 50
percent same month
1931.
Sanitary
inspection;
certificate required.
Regulated by quota
and license.
Sanitary inspection.

2.50 marks.
$0.19.............

2.50 m arks.
$0.19.............

France (franc— par val Ì 100 kilos, gross.
ue, 3.92 cents).
/B ox , gross____

35 francs.
$0.49.........

Netherlands (florin— Ad valorem.
par value, 40.20 cents).

Free.

10 percent plus 3
percent.2
required
31.05 francs_______ (Certificate
freedom
$0.31......... ........... .... < affirming
[ from disease.
Exchange
restriction.
6.50 crowns..
Gold payments sus
$0.32________
pended Sept. 29,1931.

Belgium
(franc— par 1100 kilos, gross. 27 francs _
/B ox , gross____ $0.27_____
value, 2.78 cents).
Denmark (krone— par
value, 26.80 cents;
current, 15.27 cents).
Sweden
(krona— par
value, 26.80 cents);
current, 18.12 cents).
Norway
(krone—par
value, 26.80 cents;
current, 17.52 cents).

100 kilos, net.
Box, net_____

6.50 crowns..
$0.55...............

100 kilos, net.
Box, net_____

10.00 crowns..
$0.85_________

.100 kilos, net..
Box, net______

2 kronen .
$0.17.........

Argentina (gold p e s o 1100 kilos, gross. F r e e ...
par value, 96.48 cents;
[Box, gross____ ____ do_
current, 58.22 cents).

(

_do_
2.40 kronen.
$0.13.......... -

4.20 gold pesos..

Cuba (peso— par value, Ì 100 kilos, gross. 1.60 gold pesos..
$0.57................... .
jBox, gross..
$1).

1.60 gold pesos,.
$0.57___________

Canada
(dollar— par
1Cubic feet..
value, $1;
current,
(Box, net__.
83.13 cents.)

$0.35
$0.58 4 5-

Free 3_.
____ do.3

(

Gold payments sus
pended Sept. 29,1931.
Gold payments sus
pended Sept. 29,1931.
Unofficial exchange re
strictions.
Sanitary
inspection;
certificate required.
Suspended gold pay
ments Dec. 16, 1929.
Partial exchange re
strictions.
Sanitary regulations;,
certificate of origin
required; citrus from
Texas barred.
Sanitary regulation.
Prohibited gold ex
ports, Oct. 19,1931.

Compiled by the Foreign Agricultural Service of the Department of Agriculture and the Division of
Foreign Tariffs Department of Commerce. Converted to dollars at the prevailing rates of exchange as of
Apr. 1, 1933. A box is considered as weighing 70 pounds net and 78 pounds gross.
1 Currency: Pound sterling which has a par of $4.867 and was worth $3.422 on Apr. 1,1933.
2 Provisional surtax of 3 percent imposed in 1932.
s Sales tax of 2 percent in force in 1928.
4 In addition a 3 percent ad valorem excise tax is charged on all imports. The sales tax is 6 percent.
# Gold dollars.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

237

T a b l e 4 5 .—

Grapefruit: Import duties as of Apr. 1, 1933, compared tvith those
in effect Nov. 1, 1928, and the import restridt'ions and regulations in the chief
importing countries of the world

Country and currency

United K in g d o m :1
Apr. 1 to N ov. 30.

Unit

Dec. 1 to M ar. 31.

H u n d red
weight (112
pounds) net.
____ do-------------

Apr. 1 to N ov. 30Dec. 1 to M ar. 31.

Box, net_____
____ do________

Germany (reichsmark- flOO kilos, net..
par value, 23.82 cents), \Box, net......... .

D u ty N ov. 1, 1928

D uty Apr. 1, 1933

Free.

5 shillings.

_do..

10 percent ad valo'
rem.
$0.53_____________
10 percent ad valo
rem.

. ..d o ..
___do -

2.50 marks.
$0.19_______

2.50 marks_______
$0.19....... ......... ..

France (franc— par val Í100 kilos, gross. 35 francs.
\Box, gross..
$0.50_____
ue, 3.92 cents).
A d v alore m ...

35 francs_________
$0.50......... ...............

Import restrictions and
regulations

Sanitary inspection.
Gold payments sus) pended.
Sept. 21, 1931.
Sanitary inspection.
Exchange purchases
limited to about 50
percent same month
1931.
Sanitary inspection;
certificate required.
Regulated by quota
and license.
Sanitary inspection.

Free.

Free---------------------

(100 kilos, net.
\Box, net_____

45 francs .
$0.40_____

51.75 francs______
$0.46_____________

Ì 100 kilos, net.
IBox, net.........

6.50 crowns..
$ 0 .5 5 ...........

6.50 crowns______
$0.32......... ........... ..

(Exchange restrictions.
<Gold payments susl pended Sept. 29,1931.

100 kilos, net.
Box, net_____

10 crowns.
$0.85______

20 crowns________
$1.15_____________

Gold payments sus
pended Sept. 29,1931.

N o rw a y (krone— par
value, 26.80 cents;
current, 17.52 cents).

100 kilos, net.
Box, net_____

22.50 crowns..
$1.91
.........

27 crowns________
$1.50....................... ..

Argentina (gold p e s o par value, 96.48 cents;
current, 58.22 cents.)

100 kilos, gross F r e e ...
Box, gross____ ____ do_.

Netherlands
(florin—
par value, 40.20 cents).
B elg iu m (franc— par
value, 2.78 cents).
Denmark (krone— par
value, 26.80 cents;
current, 15.27 cents).
Sweden (krona— par val
ue, 26.80 cents; cur
rent, 18.12 cents).

Cuba (peso—par value,

$1).
Canada (dollar — p a r
value, $1; c u r r e n t ,
83.13 cents).

4.20 gold pesos___
$0.89.........................

f 100 kilos, gross. 1.60 gold pesos..
\Box, gross____ $0.58_____ ______

1.60 gold pesos___
$0.58_______ ______

)100net.p o u n d s $12..

$1 3____.....................
$0.58 3 1___________

Gold payments sus
pended Sept. 29,1931.
Unofficial exchange re
strictions.
Sanitary inspection;
certificate required.
Suspended gold pay
ments Dec. 16, 1929.
Partial exchange re
strictions.
'Sanitary regulations;
certificate of origin
required; citrus from
Texas barred.
Sanitary regulations.
Prohibited gold ex
ports Oct. 19, 1931.

Box, net______
Compiled by the Foreign Agricultural Service of the Department of Agriculture and the Division of
Foreign Tariffs Department of Commerce. Converted to dollars at the prevailing rates of exchange as
of Apr. 1, 1933. A box is considered as weighing 70 pounds net and 80 pounds gross.
1 Currency: Pound sterling which has a par of $4.867 and was worth $3.422 on Apr. 1, 1933.
2 Sales tax was 2 percent in 1928.
3 Plus a 3 percent ad valorem excise tax. The sales tax is 6 percent.
4 Gold dollars.

T a b l e 4 6 . — Oranges: Exports from the United States to principal countries, by

seasons, 1926-21 to 1931-32

Season 1

1926-27_____________________________________ _______________
1927-28______________ _______ ____________ ________________
1928-29____________________________________________________
1929-30 ............... ............................ ............... ............... ...........
1930-31____________________________________________________
1931-32 _____________ ____________________ ________________

Canada

United
Kingdom

Continental
Europe

Total

1,000 boxes
2,684
2,183
3, 720
1,953
3,137
2,404

1,000 boxes
619
144
1,388
48
1,136
414

1,000 boxes
49
19
216
1
462
217

1,000 boxes
3,612
2,542
5,582
2,189
Ü " 4,936
3,203

Compiled by the Foreign Agricultural Service from official sources.
^November to October inclusive.

238

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

Over 70 percent of the orange exports of the United States are
ordinarily shipped to Canada. Until 1931 there were no restrictions
on orange imports into that country. Canada was, in fact, looked
upon simply as an extension of the domestic market. On June 2,
1931, Canada placed a tariff of 35 cents per cubic foot, approximately
70 cents per standard box, on oranges imported from the United
States. Oranges from Empire countries were left on the free list.
Prices of American oranges in Canada have risen in relation to
prices in American markets since the imposition of the Canadian

F ig u r e

2 3 .— M o n t h l y

O r a n g e P r ic e s a t M o n t r e a l ,
w it h T h o s e a t n e w Y o r k .

Canada,

Com pared

tariff. Figure 23 shows the course of prices of California oranges
on the Montreal and New York markets over a period of years. It
will be noted that in September and October 1931, orange prices in
Montreal rose sharply in relation to the New York price. This
advance continued into November when it reached a point slightly
higher than the New York price plus the Canadian tariff and fluc
tuated in that neighborhood for the succeeding 12 months. It con
sequently appears that Canadian dealers and consumers have ab
sorbed the amount of the tariff. How much this increase in the price
of oranges in Canada has affected consumption of American oranges
is difficult to measure. Exports of American oranges to Canada
have declined in the two seasons since the tariff was established, both
in actual volume and in relation to production in the United States.
Exports of oranges to Canada during the 1931-32 season amounted
to 2,404,000 boxes or 5.7 percent of the United States commercial
production as compared with 3,137,000 boxes or 6.5 percent of pro
duction in 1930-31. Not all of this decline can be attributed to the
Canadian tariff. Depressed business conditions and reduced pur
chasing power in Canada have also been important factors. It is
reasonable to assume, however, that the higher prices for American
oranges in Canada resulting from the tariff have contributed sub
stantially to the reduced consumption of American oranges in that
country.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

239

In addition to the effect of the duty on consumption there has been
some displacement of American oranges by Empire products. Cana
dian imports of oranges from Jamaica, Australia, and South Africa
have tended to increase. Of these countries Jamaica probably offers
the greatest threat of competition. In the early years of the twen
tieth century Jamaica shipped around one half million boxes of
oranges annually to the United States. These exports fell off and
gradually disappeared, and production in Jamaica declined. The
preferential free entry into the Canadian market for Jamaican
oranges has stimulated a revival of Jamaican orange production.
Trade with Canada has been further encouraged by the establish
ment of direct steamship lines. South Africa and Australia also
produce considerable quantities of oranges, and some increase in
exports to Canada may reasonably be expected. The increased com
petition from these sources would fall chiefly on California Valencias
which are shipped from May to November. The British Mandated
Territory of Palestine, one of the world’s great orange exporters,
w^as recently granted free entry into the Canadian market for the
period from January to April, inclusive. Exports of oranges from
Palestine have been increasing rapidly in recent years. It seems
probable, however, because of the proximity of Canada and because
of the preference that has been developed in that country for highquality American oranges, that the United States will be able to
retain a substantial proportion of the Canadian orange market.
The United Kingdom is the only other important foreign market
for American oranges. Most of the United States exports to that
country are “ summer ” oranges shipped during the period April to
November. Exports of “ winter ” oranges, which make up the
greater part of the American orange supplies, have been small,
largely because of the strong competition in the British market dur
ing this season from Spanish and Palestine oranges. About 18 per
cent of the total exports of oranges from the United States and
about 26 percent of the “ summer ” exports went to Great Britain
during the five seasons 1926-27 to 1930-31.
On November 1, 1932, Great Britain imposed a duty of 10 percent
ad valorem on oranges imported from foreign countries for the pe
riod December 1 to March 31 of each year and a duty of 3s. 6d. per
hundredweight of 112 pounds (about 35 cents per box) on oranges
imported during the period April 1 to November 30. British Empire
oranges continued to be admitted free of duty. The 10 percent ad
valorem duty during December to March is of little significance to
the American orange industry since the United States exports to
Great Britain during the winter are confined to small shipments of
the highest quality fruit. Moreover, the same duty is applied to
Spain, the leading source of imports during this season. The specific
duty imposed during April to November promises to work some in
jury to United States exports to Great Britain. In addition to the
adverse effect on consumption of higher prices resulting from the
duty it will intensify the competition from Union of South Africa
oranges. Since the Union of South Africa was the leading com
petitor of the United States for the British “ summer ” orange market
under conditions of free entry from all sources, the preference now
existing may well lead to substantial displacement of American
oranges by the South African product.

240

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE
G R A P E F R U IT

The export situation for grapefruit is in many ways similar to that
for oranges. There is, however, the significant difference that the
United States, including Puerto Rico, is in a much more dominant
position with respect to world production of grapefruit than it is for
oranges. Furthermore, there are no important British Empire coun
tries in a position at present to benefit substantially from the exist
ing preferential tariff in Canada and Great Britain.
American exports of grapefruit have been rising rapidly in recent
years in line with increasing production. Florida supplies most of
the exports, with the remainder furnished by California, Arizona,
and Texas. The United Kingdom and Canada take almost 95 percent
of the grapefruit exported from the United States. (Table 47.)
T a b l e 47.— Grapefruit: Exports from the United States to principal countries,

~by seasons, 1926-27 to 1931-32

Season 1

Canada

United
Kingdom

Continen- |
tal Europe

1926-27_______________ ___________________ ______ __________
1927-28 _________________ ________________ ______ _______
1928-29 .............................. ......................... ................... .................
1929-30__________ _______________________________ __________
1930-31.--.......................... ......................................... .....................
1931-32 __________________________________________ ________

1,000 boxes
276
279
341
299
433
441

1,000 boxes
310
415
583
461
845
630

1,000 boxes
18
14
19
19
52
25

Total

1,000 boxes
625
732
969
809
1,361
1,119

Compiled by the Foreign Agricultural Service from official sources,
i September to August, inclusive.

Since November 1, 1932, Great Britain has had a duty of 10 per
cent ad valorem on foreign grapefruit imported during the months
of December to March and of 5 shillings per hundredweight (about
50 cents per box at exchange rates prevailing during March 1933)
for the period April to November, inclusive. Most of the United
States grapefruit has been shipped when the higher specific rate was
in effect.
The British West Indies and the Union of South Africa are the
principal Empire grapefruit producers, but production in these coun
tries is small compared with that of the United States. Nevertheless,
production has been increasing in recent years, and British imports
of grapefruit from these Empire sources have been rising. The prin
cipal shipping season for British West Indies grapefruit occurs dur
ing the season when the lower ad valorem rate is in effedt. South
African fruit is shipped largely during the summer months when
the specific rate is applied. In view of the start that has already
been made in grapefruit production and exports from the West In
dies and South Africa, it may be expected that continued preferences
by Great Britain would lead to further expansion and a consequent
reduction in the share of grapefruit supplied by the United States in
the British market.
Canada has had a tariff on grapefruit equivalent at par of exchange
to about 70 cents per box since May 10, 1921. During this period
American exports of grapefruit to Canada have steadily increased.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

241

Since April 1927 grapefruit from Empire sources has been free of
duty in Canada if shipped direct from the country of production.
The production of grapefruit in Jamaica has been stimulated by
reason of this preferential rate and the establishment of direct
steamship lines from Jamaica to Canada.
The volume of grapefruit exports from the United States has not
as yet been seriously affected by the Canadian and British import
duties. But the British West Indies and some other British Empire
countries appear to have considerable potentialities as grapefruit
producers and, under the stimulus of free entry into the important
British and Canadian markets, these potentialities will doubtless be
more fully exploited. This would lead to a reduction in the share of
the Canadian and British imports supplied by the United States but
not necessarily in the quantity of exports, since grapefruit consump
tion in these countries has been increasing and will probably con
tinue to increase with the return of more prosperous times.

CHAPTER XII
COTTON
The measures adopted by foreign governments directly affecting
cotton may be classified as follows : measures aiming to promote pro
duction; measures to stabilize prices and restrict production; and
tariffs, other taxes, and foreign-exchange regulations affecting cot
ton, or cotton manufactures. In addition, economic policies generally
have been so shaped in some countries as to have pronounced effects
on the cotton-textile industries and indirectly on the American
producer.
On the whole, measures and policies of foreign governments on
unmanufactured cotton have had comparatively little effect upon
American producers. Significant increases have been made in for
eign production during the post-war period, but for the most part
they have been responses to the high prices resulting from short
United States crops in the early post-war period and recoveries to
normal production in foreign countries. Tariffs are characteristi
cally low on raw or unmanufactured cotton, and regulations of for
eign exchange for the purchase of cotton in those countries having
such regulations tend to be liberal. Although trade restrictions on
raw cotton have had little effect in bringing about the present situa
tion, the measures and policies that affect cotton indirectly have been
important. Tariffs and boycotts on cotton textiles have disrupted
trade channels, thus reducing market outlets and depressing indus
tries in exporting countries, while expanding the textile production
capacity of other countries. The industrial policies of nations have
tended to emphasize the development of textile industries, and this
resulted in major shifts in the centers of cotton-mill consumption.
Recent monetary changes have accentuated these changes. The
shifts in manufacturing centers have been so pronounced and rapid
that they have apparently accentuated the effects of the general
depression.
MEASURES AFFECTING PRODUCTION

Measures of governments affecting production are of three typesy
those of a fostering type in Avhich the government or subsidized
agency conducts research and gives advice on production or mar
keting, those of an active promotional type in which the agency
becomes a party in a program to promote production, and those of a
restrictive nature, the net effect of which is to reduce production.
In practically all of the 56 countries that regularly report production
of cotton, some official, semiofficial, or private agency has been organ
ized to encourage and give expert advice on various phases of cotton
production and marketing, usually with a direct or tacit support and
cooperation of the government. In some of the principal consuming

242

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

243

countries the mills or government have set up agencies to promote
cotton production, particularly in the colonies of these countries.
These activities reflect the desire of mills to add to the sources of
supplies of cotton, and in part they reflect the general developments
of producing regions throughout the world. (Following the virtual
cotton famine that occurred in the years of short American crops
after the war, these efforts were increased.) Over a period of years
such measures have undoubtedly increased cotton production. Prior
to the World War, however, they were accompanied by an increase
in consumptive requirements, and American producers gained larger
foreign markets while the developments were occurring. As can be
seen from the figures in table 48, foreign production outside of China
increased 76 percent, or 3,153,000 bales, from the average for the
years 1893 to 1897 up to the period 1910 to 1914. But exports from
the United States also rose 3,100,000 bales, or 50 percent between
these periods, and cotton prices, after allowing for the rise in the
general commodity price level, rose 17 percent.
T

able

4 8 . — United States production, exports, and prices of cotton and foreign

production in representative periods

Period by years, beginning Aug. 1

1893-97_ .............................. ................... ...........
1910-14____________________________________
1921-23___________________ _________________
1927-31_________ _____ __________________ _

Price 1

Cents
7. 27
12.02
25. 42
14.69

Deflated
price 2

Cents
10. 36
12.09
17.83
11.64

Domestic
exports

United
States pro
duction

Foreign
production
excluding
China

B ales 478
pounds
6.192.000
9, 300, 000
5, 723, 000
7.927.000

Bales 478
pounds
8,821,000
14, 259, 000
9, 283,000
14, 658,000

Bales 478
pounds
4.148.000
7.301.000
6, 908, 000
9.400.000

1 New York spot prices.
2 Deflated by Index of A ll Commodity Prices at Wholesale, 1910-14=100.

The expansion in foreign cotton production that proved embar
rassing to American farmers came in the years following short
American crops. In this expansion, governmental aid and other
direct and indirect subsidies to cotton production were significant,
but in reality they were themselves more a response to the short
American crops and high prices than independent causes.
In 1921 the United States cotton crop fell to 7,954,000 bales, the
lowest since 1895. Production remained low for the next 2 years, and
prices, after allowing for changes in the general price level, aver
aged 47 percent above the 1910 to 1914 level. Exports averaged
nearly 40 percent below those of 1910 to 1914.
Foreign production had reached a low point in 1920, but it rose
nearly 4,000,000 bales in the following 5 years. Moreover, although
the principal cause of the small crops in the United States, the boll
weevil, remained, a huge increase in acreage and a partial recovery
in yields caused production in this country to rise sharply. The
United States crop of 18,000,000 bales in i926 was the largest on
record and was 10,000,000 bales above the crop of 1921. The in
crease in United States production and the correlation between prices
and production both in the United States and abroad make it clear
that aids to foreign producers were secondary in importance to the
high prices, in the stimulation of foreign production.

244

WORLD TRADE BARRIERS IN RELATIO N TO AG RICU LTU RE
B R IT IS H O R G A N IZ A T IO N S TO P R O M O T E C O T TO N P R O D U C T IO N

For many years the British Government and British cotton manu
facturers have been endeavoring to stimulate cotton growing in new
areas, particularly within the British Empire. Some of these activi
ties have had financial support from the Government, others have
been private. Most of the activity has been carried on through two
promotional organizations, the British Cotton Growing Associa
tion, a private company formed in 1904, and The Empire Cotton
Growing Corporation, a government-assisted body chartered in 1921
but not definitely placed in operation until 1923. The functions of
The Empire Cotton Growing Corporation are to encourage cotton
growing, make surveys of potential cotton-growing regions, and es
tablish and maintain research facilities. The functions of the Brit
ish Cotton Growing Association are more specific, as the establish
ment and maintenance of ginneries, the distribution of cottonseed
to growers, and the establishment of model farms and the purchase
of cotton from the natives.
The British Cotton Growing Association has an authorized capital
of £500,000, and although a private organization, it has always
worked in close harmony with the home Government and the colonial
and Dominion Governments in the areas in which its activities have
been conducted. Its revenues have been the income from its opera
tions as a private enterprise, but its promotional activities have
required the development of technical and scientific work. Although
the British Cotton Growing Corporation is still operating, the Brit
ish Government apparently felt, after the World War, that further
encouragement should be given to Empire cotton growing. Accord
ingly, The Empire Cotton Growing Corporation was chartered in
1921, and got definitely under way in 1923 after the enactment of
the cotton industries act. The Government placed £979,000 at the
disposal of this corporation. Under the act, British cotton spinners
were assessed 6 pence per bale of cotton purchased by them for
5 years. In 1928 the assessment was reduced to 3 pence per bale,
and in 1930 to 1 penny per bale.
FRENCH

A G E N C IE S

Cotton growing in the French colonies has been entrusted to the
Colonial Cotton Association, organized in 1903. The association has
for its purpose the development of cotton growing in the French
colonies, and encouragement of the use of colonial cotton by French
spinners. The association was given a subsidy of 1 franc per bale
of cotton consumed by French spinners on 80 percent of their active
spindles. This income was considered inadequate, and in 1927 an
import duty of 1 franc per hundred kilograms (equivalent to about
0.02 cent per pound) was imposed on raw cotton imported into
France.
I T A L I A N , P O R T U G U E S E , A N D B E L G IA N A G E N C IE S

The Italian and Portuguese Governments have encouraged the
development of cotton growing in their respective African colonies,
but so far little progress has accompanied these efforts. The Belgian
Government and private companies have promoted cotton growing

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

245

in Belgian Congo. These efforts met with some success prior to the
recent decline in cotton prices, but production in the Belgian Congo
has not become sufficient to make it an important factor in the
world markets.
J A P A N E S E A G E N C IE S

Japan is making efforts to promote cotton growing, mainly in
Chosen, but also in southern Manchuria, and an association has been
formed for promoting cotton growing in the latter area. Also the
South American Colonization Co. has been established by a large
Japanese spinning concern in cooperation with other Japanese con
cerns. This company has received a concession from one of the
Brazilian States placing about 2,500,000 acres under its control to be
assigned to Japanese colonists. A few thousand acres are reported
to have been leased in Peru by Japanese interests also. It is stated
that the Japanese Government contributes a portion of the traveling
expenses to the emigrating colonists.
I N D IA

India is the principal foreign cotton-producing country, and ac
counted for over half the total increase in foreign production from
1920 to 1925. In addition to the British organizations, there are
local cotton-promoting agencies throughout the Empire. The Indian
Central Cotton Committee was established in March 1921 for the
purpose of encouraging improvement in production and marketing
methods, and improvement in the quality of Indian cotton. This
organization is supported mainly by a levy on cotton consumed in
India, as well as on that which is exported. This levy amounted to
8 cents per Indian bale (0.02 cent per pound) from 1923 to 1926, and
about half this amount since 1926. The Empire Cotton Growing
Corporation has a representative on the central committee.
The Indian Government also contributes indirectly to the promo
tion of cotton growing by financing the construction of irrigation
works, and by laws for the purpose of improving production and
marketing of cotton. Two acts in effect at present were designed
particularly to improve the grade of Indian cotton. They are the
cotton ginning and pressing factories act, passed in 1925, and the
cotton transport act of 1923. The purpose of the former act is to
regulate cotton ginning and pressing factories, and the purpose of
the latter act is to regulate the transportation of cotton so as to
prevent the mixing of inferior cotton with cotton of better quality.
Import restrictions are maintained for quarantine purposes, and
cotton may be imported only through the port of Bombay. The
tariff on raw cotton amounts to 6 pies per pound (equivalent to about
1.15 cents per pound at par, or about 0.8 cent per pound at the ex
change rate prevailing in February 1933). Since India exports so
large a portion of its cotton, it is obvious that this tariff does not
affect the prices of the bulk of Indian cotton.
The increase in India’s production from the low point of 1920 to
the high point of 1925 amounted to 2,188,000 bales of 478 pounds, or
73 percent. Prior to 1925 it appears that the quality of the Indian
crop improved. Since then, the volume of production has declined
materially, however, and it appears that the quality of the crop has

246

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

not continued to improve. From this it would seem that the previous
increase in quantity and improvement in quality was primarily a
response to high prices (table 49).

Total foreign

Other
coun
tries

Uganda

A n g lo -E g y p tian Sudan

Peru

Brazil

1,000
1,000
1,000
1,000
1,000
1,000
bales1 bales1 bales 1 bales 1 bales1 bales 1
21, 327
415
107
22
14
590
58
476
177
82
694
26
43
504
186
40
485
20
55
553
197
74
24
688
196
576
212
38
108
764
453
605
212
41
164
917
782
602
204
151
998
106
512
830
246
131
110 1, 061
994
487
112
246
116
964
1,174
525
225
142
171 1,209
1,279
584
303
108 1, 086
139
1,589
470
158
106
911
1,851
570
163 1, 010
206
1,950
348
120
230 1,000

Foreign,
exeluding
China

1,000
1,000
bales 1 bales1
1, 513
1,883 1, 251
1, 514
902
2,318 1, 391
1,993 1,353
2,178 1,507
2,102 1, 650
1,742 1, 586
1,875 1, 261
2, 466 1, 672
2,116 1,768
2, 250 1,715
1,700 1, 288
2,300
950

Russia

1,000
bales1
3, 657
3,013
' 3, 752
4,245
4, 320
5, 095
5, 201
4, 205
4,990
4,838
4, 289
4,372
3, 368
3,779

Egypt

1,000
bales1
14, 259
13,440
7, 954
9, 755
10,140
13, 628
16,104
17, 977
12,955
14, 478
14,828
13,932
17,096
12,994

China

India

1910-14_________
1920____________
1921____________
1922.................. ..
1923____________
1924____________
1925____________
1926____________
1927____________
1928____________
1929________
1930____________
1931____________
1932 3___________

United

Year begin
ning Aug. 1—

49.— Cotton production in selected countries

States

T a b le

1,000
bales1
7, 301
5, 777
5, 932
7, 227
7, 567
8, 994
9, 694
8, 681
9,170
9, 956
9, 556
9,614
8, 704
8,706

1,000
bales 1
" 7 ,6 6 5
7, 446
9, 545
9, 560
11,172
11, 796
10, 423
11,045
12, 422
11, 672
11, 864
10, 404
11,006

Division of Statistical and Historical Research, Bureau of Agricultural Economics, U .S . Department
of Agriculture.
1 Figures given for bales of 478 pounds net.
2 Average for 1914, 1915, 1916.
3 Preliminary.

CHINA

In China efforts to promote cotton production have been directed
chiefly toward the introduction of improved native varieties and
of American varieties. In order to do away with certain malprac
tices, a cotton-testing department was established, with branches in
Shanghai, Tientsin, and Hankow, where all cotton destined for export
is inspected for excessive moisture and other forms of adulteration.
The cotton-testing department also conducts educational and research
work.
There is a a tariff on raw cotton amounting to 2.1 gold units of
40 cents each per picul, equivalent to 0.63 cent per pound. Sur
taxes on imported goods are collected at several ports. At Shang
hai and Foochow these taxes are 0.25 percent ad valorem, at Tienstin,
0.7 percent ad valorem, at Nanking, 0.1 percent ad valorem, and at
Hankow, 1 percent ad valorem. There is a surtax of one twentieth
of the duty on all imports. There are no excise taxes nor import
restrictions on cotton. China imports large amounts of Indian and
American cottons, and the import duties have a price influence on
these types of cotton in China. Some types of Chinese cotton are
exported, however, so that the effects of the tariff are not general.
China is the second largest foreign producer of cotton, but the
size of the total crop is unknown and little is known of the trends
of total production. The increase in the so-called “ commercial
crop ” is clearly the result of a larger proportion of the crop being
manufactured commercially, and does not reflect a trend in total
production. The figures shown in table 2 are for production in cer
tain Provinces. No definite trend is apparent in these figures. The
promotional activities and tariffs have, therefore, had no pronounced
effect on Chinese cotton production in recent years.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

247

EGYPT

Cotton growing and marketing constitute the most important
enterprise in Egypt, and until recently that country was the third
largest foreign cotton producer. The Egyptian Government has
undertaken programs that affect cotton growing, marketing, and
prices more positively and in more ways than the government of any
other established cotton-growing country. Although all measures
adopted by the Government are presumed to be beneficial to the
industry in the long run, if not immediately, many of them directly
restrict production or trade.
Governmental agencies conduct research studies on cotton vari
eties, production technic, costs of production and marketing effi
ciency, and they sell seed and fertilizers to farmers. The Govern
ment also provides irrigation facilities and determines the amount
of water that may be used on each of the various crops. On the
financial side, the Government makes loans to farmers, has estab
lished agricultural credit banks, extended time for payment of land
taxes, and, as it could not reduce rents directly, decreed in 1930
that native courts dismiss all rent cases where as much as 80 percent
of the agreed rent had been paid. Export taxes on cotton were
reduced from 35 piasters per kantar (or 1% cents per pound) to
25 piasters in 1922, 20 piasters in 1926, and 10 piasters per kantar
(or one half cent per pound) in 1931.
The Government has entered the market many times, usually to
improve prices. In 1914 the intervention consisted of closing the
market and fixing prices in order to avoid the disrupting effects of
the war. At subsequent times they have purchased cotton in order
to force prices up, and have named prices at which they would buy
all cotton offered. Some of these efforts were aimed to raise prices
of Egyptian cotton irrespective of the prices of other growths;
others were aimed to increase the price margin of Egyptian cotton
over American cotton.
Purchases were made during the minor depression slump in 1918
and thereafter prices rose materially. In 1921 purchases were made
and prices advanced, but the advance was somewhat temporary.
Purchases made in 1922 with the objective of increasing the price
spread of Egyptian over American cotton were effective during the
period in which purchases were made, but the gains were not held.
A similar attempt in 1923 was successful, and purchases made in
1924 were fairly effective, but those in 1925 were not. Large pur
chases in 1926 resulted in the Government holding large stocks, as
did the purchases in 1929 and 1930. The programs of governmental
purchases of cotton met with considerable success in periods of tem
porary depression and may have aided Egyptian farmers in meeting
world competition during such periods, but the programs were not
adequate for coping with major declines in the general price level,
such as that of 1929 to 1932.
Cotton planting has been restricted as a further measure to support
prices. A cotton-acreage restriction law had been passed in 1914 as
a war measure toi insure food supplies, but the laws passed to restrict
plantings in the years 1921, 1922, 1923, 1926, 1927, 1928, 1929, 1931,
1932, and 1933 were intended to reduce stocks and benefit prices. The
Egyptian Government clearly has more power to affect plantings
179563— 33-------17

248

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

than have most other governments, but it is extremely difficult to
determine the effectiveness of these cotton-acreage laws. It is gen
erally recognized that little attempt was made to( enforce the laws in
years of price recovery, and it is not certain that the laws were in
effect soon enough to have been effective or that serious attempts
were made to enforce them in most years when prices were low. In
any event, it is clear that much of the acreage reduction in such years
was due to low prices rather than to the laws. It is probable, how
ever, that the laws had some influence, especially in 1931 and 1932.
Regardless of the influence, production in 1932 was reduced almost
to the low level of 1921, and was little more than half that of 1929.
Although supplies decreased, prices of Egyptian cotton fell with
prices of other cottons, and the price margins for Egyptian cotton
were not maintained.
The unsatisfactory price effects can be attributed partly to the
increase in supplies of long-staple cotton from other countries, but
mostly to the low consumer buying power, wTith the resulting extreme
depression in the fine-goods textile industries. The unfavorable
situation is emphasized, no doubt, by the United States tariff on
long-staple cotton.
Although the decreased production has relieved the market of
some of its burdensome supplies, prices remain low. Moreover, the
increased production of other crops in Egypt has reduced the prices
of those products and the restrictions on cotton planting have been
relaxed so as to permit more cotton to be grown in 1933.
The Egyptian Government has followed the practice generally of
maketing its stabilization stocks gradually so as to affect the market
as little as possible. This, of course, has constituted a further lestriction program. More recently the policy has been changed in a
way that may be very important in the future. The Government
has sold cotton on favorable terms to mills that formerly have not
used Egyptian cotton, provided the mills agreed to use Egyptian
cotton over a period of years. This policy, if maintained, may
broaden the demand for Egyptian cotton, and is a sharp contrast to
the policy of restriction generally followed by the Egyptian
Government.
On the whole, it appears that the program of the Egyptian Gov
ernment has lessened rather than increased the competition offered
by Egyptian growers in world markets. It is doubtful, however,
that this situation will prevail in the future. The relaxation in the
acreage law applicable to 1933, despite the continued low prices of
cotton, demonstrates that Egypt can not long continue a program
of restricting its major economic activity.
R U S S IA

Cotton production has been greatly increased by the Soviet Gov
ernment since 1921, and it has been contended that a continuation
of this policy would result in a vast expansion in the future. But
an examination of the trends of cotton production in Russia shows
that Russian production rose to a high point of 1,500,000 bales in
1915 and thereafter declined sharply until 1921, when it amounted
to less than 50,000 bales. Practically the entire expansion since 1921
has been in the nature of a recovery. Acreage is reported to have

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

249

risen far above previous levels, but production has exceeded the
1915 level only in the years 1930, 1931, and 1932. Some reports indi
cate that even these figures may overstate the increase. It is now
apparent that some of the areas into which cotton production was
introduced are not well suited to the crop, and it is doubtful that they
will become important producers. On the other hand, cotton con
sumption is increasing in Russia and can be expected to make fur
ther increases. Over a period of years it is probable that the in
crease in consumption of cotton in Russia will at least equal, if not
exceed, the increase in cotton production.
B R A Z IL

Brazil is the most important cotton producer in South America
and is said to have vast areas of land that are suitable to cotton*
production. Over a period of years production has been increasing
gradually, and during the period of short world supplies special1
efforts were put forth by British and other mill interests to encour
age cotton production and export trade in Brazil. Brazilian produc
tion reached a peak of around 600,000 bales in 1924 and 1925, but
the high prices prevailing at that period were probably the primary
cause of the expansion. Nevertheless, the increase in Brazil’s pro
duction was moderate, and for the most part it was offset by an
increase in Brazilian mill consumption. Cotton production hasshown no definite trend in Brazil since 1925, but in years of unfavor
able growing conditions, such as 1930 and 1932, the crop has been*
greatly reduced. It is not apparent that the efforts put forth to*
stimulate production in Brazil had any marked effect on world com
petition, although in 1929-30, when stabilization efforts held the
price of American cotton high relative to other growths, exports fronr
Brazil were greatly increased.
PERU

Cotton production in Peru is increasing gradually, and from 1925
to 1929 the crop averaged about 250,000 bales compared with about
100,000 bales for the period 1910 to 1914. Agricultural agencies
conduct research work and the Government’s export tax on cotton
was reduced to help the growers in meeting world competition.
A N G L O -E G Y P T IA N

SU D AN

The outstanding developmental project in cotton growing is that o f
Anglo-Egyptian Sudan. This project has been fostered by the
British cotton-mill interests and the Sudan Government is a party to
the project. A part of the cotton is rain-grown and a part of it is
grown on flood lands, but the most important development is in ther
Gezira section which has been irrigated at a large investment.
Cotton production in the country has increased from 14,000 bales*
on the average for the years 1910-14 to 206,000 bales in 1931. Esti
mates of the potential development in Sudan vary widely, but those
made prior to recent years were characteristically high, These high
estimates undoubtedly attracted undue attention to the increases that
actually took place in supplies from the Sudan. It has been ob

250

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

served, however, that yields tend to decrease on the sections that have
been under cultivation for several years and plant diseases were very
bad in 1929 and 1930. In 1930 the crop amounted to only 106,000
bales, a decrease of 36,000 bales from that of 1928, and this, together
with the low prices of cotton, led to discouragement as to the finan
cial success of the venture. The improved growing conditions in
1931 gave more hope, but the continued low prices make it evident
that areas requiring large capital outlays will have difficulty in
competing in the world cotton markets unless the price of cotton
rises materially.
UGANDA

The program for developing cotton production in Uganda ranks
second only to that of Anglo-Egyptian Sudan as an example of pro
motional effort in cotton growing.
Production rose from 22,000 bales annually in the pre-war period
to 171,000 bales in 1928, and in 1931 production amounted to 163,000
bales. The promotional activities have consisted of organizing the
labor supply and encouraging natives to adopt modern methods and
standards of living that will make them want to increase their earn
ing capacity, and of supplying modern equipment and improving the
transportation facilities. It is clear that the efforts brought forth
increased supplies of cotton in the years prior to 1925. Since then
production has been about stationary, varying from 171,000 bales at
the high point in 1928 to 108,000 bales in 1929. It has become evi
dent in Uganda, as in Anglo-Egyptian Sudan, that it is difficult to
get native labor to work efficiently in periods of low prices.
OTHER

C O U N T R IE S

Developmental programs similar in nature to those already dis
cussed have been undertaken in many countries. It is not clear, how
ever, that these programs have caused cotton production to expand
more than it would have been expanded under the stimulus of the
general development of the countries and the reaction of producers
to cotton prices. In fact the programs may be interpreted as essen
tial aspects of a response on a large scale to high cotton prices. Pro
duction in these countries rose from about 600,000 bales in the
pre-war period to about 700,000 bales in 1920, but fell with low prices
to about 500,000 bales in 1921. Then, under the stimulus of high
prices, production in these countries rose to exceed 1,000,000 bales in
1926, and reached a peak of 1,200,000 bales in 1928. Thereafter pro
duction declined as prices fell, and amounted to about 1,000,000 bales
in m .
To summarize : A material increase has taken place in foreign cot
ton production during the post-war period. Coupled with the
increase have been attempts to foster cotton production by govern
mental and private agencies in most of these countries. Most of the
increases, however, occurred in years of high cotton prices, and it is
clear that the high prices were the primary cause of the increases in
production. It was the short supplies of American cotton that gave
rise to the high prices.

W ORLD TRADE BARRIERS IN RELATIO N TO AG RICU LTU RE

251

TRADE RESTRICTIONS ON UNMANUFACTURED COTTON

Trade restrictions on unmanufactured cotton are relatively few
and small and have had little effect on cotton exports from the
United States. But several types of restriction exist, such as tariffs
on cotton, general import taxes, and general sales taxes applying to
cotton as well as to other goods, and exchange restrictions.
In addition to the tariffs already discussed, those of Italy, Spain,
and Poland may be cited. Italy has a tariff of 18.4 paper lire per
hundred kilos plus 15 percent ad valorem. At the rate of exchange
prevailing in February 1933, 18.4 lire per hundred kilos was equiva
lent to 42.7 cents per hundred pounds. In addition, on sales amount
ing to 100 lire and over in value, there is a sales tax of 0.5 lira per
100 lire or fraction thereof. Spain has a- tariff of 1.3 gold pesetas
per hundred kilos, applicable to American cotton (equivalent to 11.38
cents per hundred pounds) plus a special tax of 1 paper peseta per
hundred kilos (equal to about 3.7 cents per hundred pounds in Feb
ruary 1933). Special taxes of 1 percent of the duty are levied on
imports through the port of Barcelona and 0.85 gold peseta per
metric ton on all goods except automobiles imported through the
port of Santander. Poland has a general cotton tariff of 45 zlotys
per hundred kilos gross weight on raw cotton. This is equivalent to
$2.29 per hundred pounds. Cotton brought in through ports of the
Polish customs territories and with the permission of the Polish
minister of finance, however, is not subject to the general cotton
tariff, but is subject to a special cotton tariff of 1 zloty per hundred
kilos, or 5.1 cents per hundred pounds. Cotton brought in with the
permission of the ministry of finance, but through other than ports
of the Polish customs territory, was also subject to the tariff of 1
zloty per hundred kilos up to December 31, 1932, but is subject to a
duty of 6 zlotys per hundred kilos during 1933, and will be subjected
to a duty of 12 zlotys per hundred kilos beginning January 1, 1934.
Although all duties are in terms of gross weight, there is a deduction
of 2 percent of the duty if the cotton is in bales, and a deduction of
5 percent of the duty if it is in bales with iron ties. There are
clearance charges equal to 20 percent of the duty. The effect of the
Polish tariffs is to force all cotton to enter the country with the per
mission of the Polish ministry of finance and through ports of the
Polish customs territory. Clearly, the tariffs of Italy, Spain, nor
Poland are high enough to restrict imports.
In several countries general taxes are applicable to cotton. For
example, in the Netherlands there is a statistical tax on all imports of
one half of 1 percent ad valorem. Franee has a sales tax of 2 percent
ad valorem on imports. Germany has a sales tax of 2 percent ad
valorem levied on import transactions and on domestic sales. Canada
has an excise tax on all imports of 3 percent ad valorem and a sales
tax of 6 percent ad valorem which applies to imports unless brought
in by licensed manufacturers of taxable goods as well as to subse
quent* sales. In Belgium there is a transmission tax of 2.2 percent
ad valorem.
Czechoslovakia requires the securing of a foreign exchange permit
to import raw cotton. As a result, cotton is distributed among the
mills according to schedule. Cotton spinners were assured that im

252

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

port permits would be granted liberally, but when cotton prices rose
in August of 1932 to levels well above those of the preceding year,
it became difficult to get sufficient currency allotments for importing
adequate supplies of cotton. Whether or not the currency restric
tions would have been relaxed if cotton prices had remained at the
higher levels was not determined.
Except for the United States tariff of 7 cents per pound on cotton
liaving a staple length of 1y8 inches and longer, restrictions on inter
national trade in raw cotton are of minor importance. Moreover, it
is doubtful that they will become serious in the future. The impor
tant foreign cotton-manufacturing countries are not in cotton-grow
ing regions. The primary interest of these countries is to get ade
quate and dependable supplies of cotton cheaply.
The import duties, surtaxes, and other fiscal charges on raw cotton,
in effect December 1, 1931, in 54 countries, are shown in table 50,
prepared by the United States Tariff Commission. Though it is not
fully up to date, the tabulation suffices to indicate, for a long list of
countries, the gist of the recent and existing situation with respect
to import charges on raw cotton.
'T a b l e

50.— Cotton, raw : Import duties, surtaxes, and other fiscal charges, as
of Bec. 1, 1931
Country

.Argentina..
Australia __
.Austria.
Belgium ..
B o livia...
Brazil________
British India .
Bulgaria_____
Canada______
C h i l e ...........
C hina______
Colum bia. .
Costa Rica.
C uba_______
Czechoslovakia_______
Denmark_____________
Dominican Republic.
Ecuador...........................
E g yp t------------------------Estonia...... .....................
Finland......... .................
France......................... ..
Germany____ _____ _
Greece..............................
Guatemala.
H aiti_______

United States equivalents of foreign rates

Dollars per 100 pounds
1.92 (legal net weight), ginned; 0.64 (legal net weight), not ginned.
3.55 (net weight). Plus 16 percent ad valorem on c.i.f. basis (10 percent
primage duty and 6 percent sales tax).
D uty free.
D u ty free but subject to sales tax of 1 percent ad valorem on c.i.f. basis.
2.55 1 (gross weight). Plus 6 percent ad valorem on f.o.b. basis, consular
charge.
13.59 2 (gross weight), ginned. Effective Dec. 11, 1931; 3.40 2 (gross weight),
not ginned. Effective Dec. 11, 1931.
0.77 (net weight).
8 percent ad valorem on basis of wholesale selling price in domestic markets.
D uty free, but subject to excise tax of 1 percent and sales tax of 4 percent ad
valorem on duty-paid value.
0.12 3 (gross weight). Plus statistical tax of 3K percent ad valorem on c.i.f.
basis.
0.63 (net weight). Plus flood relief surtax of 10 percent and port surtax of
approximately 5 percent of the duty.
4.41 (gross weight). Plus canalization tax of $0.66 per 1,000 pounds if imported
through north coast customhouses.
1.35 (gross weight), ginned, for Province of Limon. Includes customs surtaxes
of 5 percent and 10 percent, and consular charge of 4 percent of basic duty.
0.16 (gross weight). Preferential rate to United States. Includes 3 percent of
basic duty, public works surtax. Plus 2 percent ad valorem on f.o.b. basis,
consular charge, and sales tax of 1M percent ad valorem on duty-paid valu e.
D uty free.
Do.
4.54 (gross weight).
1.81 (gross weight). Plus 4 percent ad valorem on f.o.b. basis, consular charge.
Imports prohibited.
D uty free.
Do.
D uty free, but subject to sales tax of 2 percent ad valorem, on duty-paid v alu e.
D uty free.
2.09 (net weight), ginned. Includes surtax of 75 percent of the duty. Imports
of unginned prohibited.
2.72 (gross weight), ginned; 0.91 (gross weight), not ginned. Plus 2 percent
ad valorem, on f.o.b. basis, consular charge, in each case.
0.91 (gross weight), ginned; 0.54 (gross weight), not ginned.

1 Includes municipal surtax of 20 percent of basic duty and $0.166 per 100 pounds (gross weight), railway
construction tax.
2 Includes 2 percent, in gold, of official valuation, port tax.
3 Includes $0.0552 per 1,000 pounds (gross weight) customs surtax.

WORLD TRADE BARRIERS IK RELATION TO AGRICULTURE

253

Table 50.— Cotton, raw : Import duties, surtaxes, and other fiscal charges, as
of Dec. i , 1931— Continued
Country

Honduras______
Hungary_______
Irish Free State.
Italy........... .........
Japan__________
Mexico_________
Netherlands___
New Zealand.
Nicaragua______
Norway________
Panama________
Paraguay---------Persia................ .
Peru....................
Portugal............ ..

Rumania. ..........
Soviet R ussia.,.

Salvador, E l___
Spain___________

Sweden_______________
Switzerland__________
Turkey_______________
Union of South Africa
United K ingdom _____
United States........... . .
Uruguay______________
V e n ezu ela ............... . .
Yugoslavia___________
4 Includes
s Includes
s Includes
? Includes

United States equivalents of foreign rates

Dollars per 100 pounds
7.37 i (gross weight), ginned; 4.88 4 (gross weight), not ginned. Plus, in each
case, 5 percent ad valorem, consular charge, and 1 percent ad valorem surtax
on imports into San Pedro Sula through Puerto Cortez, both on f.o.b. basis.
D uty free, but subject to import turnover tax of 3 percent on c.i.f. value.
D uty free.
0.44 (gross weight). Plus 15 percent ad valorem import surtax, on invoice
value, and sales tax: For sales up to $5.26, $0.005 for each $1.05 or part thereof;
for sales over $5.26, $0.026 for each $5.26 or part thereof.
D uty free.
7.31 (gross weight). Includes 3 percent of basic duty, customs surtax.
D uty free.
Do.
0.62 s (legal net weight). Plus 3 percent ad valorem, on f.o.b. basis, consular
charge.
D uty free.
15 percent ad valorem, on f.o.b. basis. Plus 2 percent ad valorem, on f.o.b.
basis, consular charge.
2.14 (gross weight). Plus 1 ^ percent ad valorem, on f.o.b. basis, customs
surtax.
15 percent ad valorem on c.i.f. basis. Under control State trade monopoly.
Import permits granted only on presentation of export certificates for equiv
alent amounts.
6.59 6 (gross weight). Plus 8 percent ad valorem, on f.o.b. basis. (3 percent
customs surtaxes and 5 percent consular charges.)
0.63 (gross weight, in bales). Less 8 percent of duty if loaded on Portuguese
vessels at port of origin or at certain recognized European ports of trans
shipment. Plus minor customs house, port, and unloading fees; impost of
one tenth of 1 percent, and sales tax of 2 percent, both on duty-paid value;
also, consular invoice and visa fees.
0.09 (gross weight).
20 percent ad valorem (on c.i.f. basis, Russian port or frontier) and subject
to State trade monopoly. If imported via the port of Murmansk, the rate
(except on Egyptian cotton) is 16 percent or 15 percent, respectively, during
the summer and winter navigation period (Apr. 15 to N ov. 14, and N ov. 15
to Apr. 14).
1.13 (gross weight). Plus 6 percent ad valorem, on f.o.b. basis, consular
charges.
1 (gross weight), inclusive of special cotton surtax, plus small surtax on all
imports, varying with the commodity; and a special surtax on imports
through the port of Santander. Bagging is dutiable separately at rates
applicable to component textile material. If imported via European ports,
there is an additional duty of $0.22 per 100 pounds. Raw cotton with the
seed, from the United States and certain other countries, is subject to an
import prohibition, under a plant quarantine measure in effect since Apr.
25, 1929.
D uty free.
0.02 (gross weight).
3.22 (net weight). Plus a transaction tax of 6 percent ad valorem, on c.i.f.
basis. Under import quota system inaugurated N ov. 16, 1931, importation
of cotton is prohibited during month of December 1931.
D uty free, but subject to primage duty of 5 percent ad valorem, on f.o.b. basis.
D u ty free.
7 (net weight), having a staple of 1% inches or more in length, 7 cents per
pound. Cotton not specially provided for is duty free.
0.36 (gross weight).
2 .6 6 7 (gross weight).
Plus 13^ percent ad valorem, on f.o.b. basis, consular
charge.
D uty free.

5 percent in gold, of basic duty, and $2.38 per 100 pounds, gross weight, customs surtaxes,
3 7 ^ percent of basic duty, customs surtaxes,
21 percent of basic duty, customs surtaxes.
56.55 percent of basic duty, customs surtaxes.

TRADE RESTRICTIONS ON COTTON MANUFACTURES

The most significant trade barriers relating to cotton are those on
cotton manufactures. These are numerous and complicated and have
disrupted international trade in cotton goods. The extent to which
they may have injured the American farmers is not clear, but the
disruptions caused by trade barriers generally constitute one of the

254

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

outstanding features of the present depression. Tariffs on cotton
manufactures should be considered from the standpoint of the influ
ence they may have had in bringing about or emphasizing the pres
ent depression in cotton-textile industries that has reacted so unfa
vorably upon the American farmer.
In imputing causal significance to trade barriers on cotton manu
factures in the present depression, it is necessary to recognize the
developments that were occurring independently of trade restrictions.
Prior to the World War textile industries were expanding in most of
the European countries and many of the non-European countries,
but this was part of a general industrial development. Tariffs were
used to assist the developing textile industries, and in some cases, as
in Italy, the development was accompanied by a decrease in imports.
To other countries, such as Germany and the United States, British
exports of cotton piece goods were being maintained or were increas
ing despite the development of cotton-textile industries within the
countries. Total British exports of cotton-piece goods reached a peak
in 1913, reflecting the increase in international trade in these goods,
along with the development of cotton-textile industries in many
parts of the world.
The war produced radical changes in the world cotton-textile trade.
With supplies cut off from Great Britain and other manufacturing
countries, textile industries developed more rapidly in other coun
tries. After the war many countries turned to the development of
cotton-textile industries. The change was greatest in Japan where
it was recognized that manufacturing industries would have to be
expanded greatly if a large population was to be supported in a coun
try of very limited natural resources. Japan ceased being an impor
tant importer and became a leading exporter of cotton manufactures.
In a few years it came to supply a large part of the import require
ments of Oriental countries for cotton textiles. The industry also in
creased in China. In India the development of the industry was
accompanied by a spirit of nationalism that resulted in increased tar
iffs and the inauguration of boycotts on imported goods. This was
one of the most serious obstacles to British export trade in 1930 and
1931. On the continent of Europe textile industries revived after the
war, and several countries aimed to expand export trade in these
products, while importing countries erected tariffs to foster their own
industries. Added to this, the new national boundaries disarranged
the old channels of trade. After the depression began, tariffs were
erected or increased in attempts to lessen the effects of the depression
and to reduce unfavorable trade balances.
The new and increased trade barriers on cotton manufactures prob
ably helped to bring about the present depression, first through their
disrupting effect on trade, and, second, through their encouragement,
of textile industries to a point that probably represented an over
expansion of the industry from the standpoint of world total require
ments. Moreover, this situation aggravated the general depression
when it developed. It is clear, however, that these barriers were not
primarily responsible for the present depression. So long as the
depression of the textile industry in one country was offset by a
favorable situation in another market, the American farmer was not

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

255

injured; in fact he may have been helped by the situation. But
when the depression became widespread he felt the effects seriously.
The depression, as it has developed from its many causes, has been
felt, in regard to cotton, mostly in a very great reduction in prices,
but partly in significant but less drastic reductions in the foreign con
sumption of American cotton and, for a while, in exports. In view
of the low tariffs and relative freedom from other trade barriers
applicable to raw cotton, low prices proved effective in expanding
exports of American cotton, and foreign consumption increased in
1931-32. Most of the increase in foreign consumption of American
cotton that year was due to the displacement of foreign growths by
American cotton as a result of the short foreign crops in 1931. Ex
ports in 1931-32 were 7 percent above the average for the 5 years
1925-26 to 1929-30. They were the second largest since the World
War and the fourth largest on record. In contrast, the consumption
of cotton in the United States in 1931-32 was 28 percent below the
1925-26 to 1929-30 average.

CHAPTER XIII
DAIRY PRODUCTS
The domestic production and consumption of dairy products are
fairly closely balanced, but conditions in foreign markets and inter
national trade restrictions have an influence upon the prices of these
products in the United States. Two dairy products of prime im
portance enter international trade, namely, butter and cheese, and
because these dairy products are imported or exported by a large
number of countries the welfare of the dairy farmers in the United
States is affected to some degree by the production, consumption, and
prices of dairy products in many other countries of the world. Out
of this situation arises the importance of trade restrictions in other
countries to the dairy producers of the United States.
The situation is complicated by the fact that our dairy industry,
while on an import basis taken as a whole, is not uniformly so. We
are on an import basis for milk and cream, for cheese, and most of
the time for butter. But we export large quantities of concentrated
milk, our exports of butter sometimes exceed our imports, and we
export some cheese. Hence, import restrictions in foreign countries
are of some direct significance in relation to our exports of dairy
products. In the main, however, they are significant through their
effects upon world prices and their consequent tendency to divert
supplies to the United States. This is best illustrated by butter.
THE BRITISH BUTTER M ARKET AS INDICATIVE OF THE WORLD
SITUATION

The nearest approach to a world butter price is that prevailing
in London. Great Britain is the world’s largest importer of butter,
and from that standpoint the British market is the most important
in the world. Furthermore, the British market is probably more
sensitive to world supply and demand conditions than is any other.
As only about 10 percent of the butter consumed in Great Britain
is produced domestically, Great Britain is primarily dependent
upon world supplies. Germany, second in importance to Great
Britain as a butter importer, is much less dependent upon foreign
supplies, since about three fourths of the supply of Germany is
produced within the country.
Furthermore, British imports of butter freely reflect changes in
the world-supply situation. Until recently Great Britain has been
the great free butter market of the world with no tariff or quota
restrictions to affect the volume of imports, or to affect the price
at which imported butter could be sold within the country. But
now only butter from the British Dominions has free access to
the British market. A tax is imposed on butter from other coun
tries, such as Denmark and Argentina, but as the tax is relatively
small it is still true that Great Britain offers the least restriction
256

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

257

of any major butter-importing country of the world. Since it is
the country to which foreign butter has the most ready access, the
sensitiveness of the British market to the world butter situation
has not been significantly decreased. Changes in London prices
may still be taken as indicative of changes in the world supply and
demand situation for butter.
CENTS
PER
POUND

” ........... n
BUTTER PRICES
I
1

.. .................1

‘
j

__ LA. ______

è V /
1/

ß e s t D a n is h in L o ndo n

À
» V V

___ 1

H r®

V-

■

n d fin e s t in L o n d o n «* ''

*
5

.... ""

rrKicDAi lijn^DTC 1 r e e
1 M L i i v i r u n i o t_c- j j

n rrs/ nn n-rr*
n t-c . A r u n i o

-h i
I

bJu
1

r
"*
IL.O11^•uArun 1
u\J IV
1*w

I
1
JU LY

! . .
JULY

JULY

1922-23 ’23-24
F ig u r e

JULY

’24-25

JULY

’25-26

JULY

’26-27

JULY

*27-28

JULY

’28-29

JULY

’29-30

2 4 . — b u t t e r -, p r i c e s , P r i c e M a r g i n s , T a r i f f
Ex p o r t s .

JULY

*30-31
lev e l

JULY

’31-32

’32*33

, IMPORTS, AND

In a very gen eral w ay, the prices o f bu tter a t N ew Y o rk and L ondon h ave follo w e d
sim ilar courses over the la s t 10 yea rs.
B u t there have been significant changes in th e
m argin betw een these p r ic e s ; these m argins are show n in relation to the tariff level in
the second section o f the ch art.
A com parison o f this section w ith th e th ird and fou rth
section s show s th a t im ports in to and exports fro m the U nited S ta tes are closely related
to the butter-price m argins.
D om estic prices have never exceeded w orld prices by m ore
th an the tariff rate except fo r short periods, and w hen th is has occurred, im ports h a v e
tended to reduce dom estic prices.

258

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

Since the revival of-normal importation of butter into Germany,
beginning in 1924, Great Britain had until recent years absorbed
quite uniformly about two thirds of the total volume of butter mov
ing in international trade, making it the most important butterimporting country in the world and readily influenced by world
wide conditions. In 1931 this proportion was increased to nearly
three fourths, and in 1932, for which preliminary figures are now
available, this proportion was further increased to about 80 percent.
The total volume of international trade and the proportion accounted
for by the principal importing countries is shown in table 51.
51.—Butter: Total volume of international trade and proportion accounted
for by principal importing countries, average 1909-13, annual 1925-32

T a b le

Proportion of total imported
byCalendar year

Total imports 1

P ounds
654,989,000
916,216,000
934,423,000
974,302,000
1,022, 588,000
1,097, 719,000
1,152,149,000
1,181, 354,000
1, 200,000,000

Average, 1909-13.
1925.____ _______
1926_____________
1927.____________
192 8
192 9
193 0
________
193 1
193 2

Great
Britain

Ger
m any

Percent
69.5
67.3
67.0
64.2
65.2
64.0
64. 6
73.2
78.9

Percent
17.0
23.2
23.1
24.5
27.3
27.2
25.5
18.7
12. 8

France,
Belgium,
and
Switzer
land

Percent
5.9
3.8

2.6
3.4
2.6
3.2
4.7
9.0

6.8

1 Represents 33 to 36 countries.

Of the total imports of butter into Great Britain in 1932 (946,300,000 pounds including quantities reexported), somewhat more than
48 percent (450,194,000 pounds) came from the Dominions, princi
pally New Zealand and Australia. Twenty years ago these Do
minions supplied 23 percent of the total, and as recently as 5 years
ago they supplied only 30 percent.
EFFECT OF IMPORT RESTRICTIONS ON WORLD TRADE

Great Britain and Germany are the only large butter-importing
countries, although France, Belgium, Switzerland, the Netherlands,
and Italy have, until recently, been gradually expanding import
markets.
GREAT

B R IT A IN

Import restrictions in Great Britain thus far have taken the form
of tariff protection and apply only to supplies from non-Empire
sources. The tariff on such “ foreign 55 butter, as fixed on March 1,
1932, is 10 percent ad valorem. On butter from the Irish Free State
a duty has been fixed, effective November 9, 1932, of 30 percent in
addition to the 10 percent applying to all non-Empire butter.
Under the terms of the treaty formulated at the Ottawa Confer
ence and now in effect, the duty on non-Empire butter was the

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

259

equivalent of 2.3 cents per pound at the value of the pound sterling
as quoted at New York as of March 1, 1933. The 10 percent ad
valorem rate on Danish butter, f.o.b. Copenhagen as of November
3, 1932, amounted to 1.7 cents per pound.
Quota restrictions against foreign supplies of butter entering
Great Britain were considered at Ottawa on the principle that when
prices were brought below cost of production to British farmers,
the import restriction scheme could be evoked, but this was aban
doned as establishing a precedent upon which restriction of imports,
on the same principle, might be turned against the Dominions.
In the interest of British farmers, on the one hand, and of British
consumers, on the other, the rate of duty was fixed with a view to
checking foreign imports only to such an extent as would not result
in a violent rise in price, but which, nevertheless, might serve to check
foreign supplies to approximately the same extent as Empire supplies
were increased. Danish exports of butter totaled considerably less in
1932 than in 1931 (347,881,000 pounds against 378,530,000 pounds),
but owing to relatively more effective restrictions in Germany and
other continental markets, exports of Danish butter to Great Britain
actually increased. Despite this abnormal diversion of European
supplies to British markets the Dominions supplied 48 percent of the
total British imports of butter in 1932 as compared with 43 percent
in 1931.
Consumption of butter in Great Britain has been greatly stimu
lated by the low wholesale and retail prices. Consumption per capita
has increased from 14.8 to 20.7 pounds in the period 1924-31. This
increase has been partly due to a shift from margarine to butter as
butter prices declined, for the consumption of margarine dropped
from 12.4 to 9.3 pounds per capita. The combined consumption of
butter and margarine increased 2.8 pounds for the same period owing
largely to the price declines. Any material rise in butter prices
probably would cause some reduction in per capita consumption of
butter and margarine, and a shift back toward margarine.8
Prices of butter have moved rather closely in line with the general
wholesale price level in Great Britain during recent years. Index
numbers based on 1926 as 100, stood in 1930 at 82 on Danish butter in
London against 81 as the general level of 150 commodities; in 1931
at 71 on butter and 70 on all commodities; and in 1932 at 66 and 69,
respectively. Actual prices of butter in 1932 were the lowest on
record in any year in which modern conditions of world trade have
prevailed.
Differences in favor of best Danish butter over New Zealand and
Australian butter, since March 1932, when the tariff of approximately
2 cents a pound became effective on Danish, have been at least as
narrow as in previous years. No enhancement in the British price is
apparent, such as would result from the addition of the import duty
recently in effect on the Danish and not applicable to butter from
New Zealand. (Table 52.)
8 E stim a te s published by the N ew Z eala n d D a iry E x p o rter o f Sept. 1, 1 9 3 2 .

260

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

T a b l e 5 2 . — B u tter: Comparative prices per pound of Danish, New Zealand, and

Australian in London, before and after the tariff on “ foreign ” , i.e., non-Em
pire supplies
1930

M onth

January. _
__ __
February__ ________
M arch______________
A pril__________ _____
M a y _____
.J u n e ____
__ . . .
J u l y _____________ .
August
September October
November__________
December__________

M onth

January.
. _ __
February. ________
March
April
__
______
_ _ ..
M a y _____
June_____ _________
July__ ____ _______
A u g u s t __________ .
September__________
October. __
November__________
D ecem ber.. _______

1931

1932

Danish

New
Zealand

Danish
over
New
Zealand

Danish

New
Zealand

Danish
over
New
Zealand

Danish

New
Zealand

Cents
37.4
38.0
34.9
30. 2
28.9
30.1
32.5
32. 2
32. 6
32. 5
30. 6
29.9

Cents
33.8
32.7
30.0
27.4
28.0
28.8
29.6
29.0
27. 6
25.3
22.4
24.5

Cents
3. 6
5.3
4.9
2.8
.9
1. 3
2.9
3. 2
5.0
7.2
8.2
5.4

Cents
29.0
32.0
29.6
26.8
25.9
25. 7
25.9
26.0
26. 3
23.1
21.8
20.6

Cents
25.1
26.1
25. 6
23.8
23.8
24. 0
24. 7
24.4
22. 8
20. 6
18. 4
15.4

Cents
3.9
5.9
4.0
3. 0
2.1
1.7
1. 2
1. 6
3.5
2.5
3. 4
5.2

Cents
19.1
22.0
20.4
19.5
17.0
16.4
17.8
17.4
19.1
18.0
17. 9
17.8

Cents
14.8
16.3
17.7
17.7
15.8
15.9
16.5
16. 8
17.’ 4
16. 2
13.5
12.3

Danish

Aus
tralian

Danish
over
Aus
tralian

Danish

Aus
tralian

Danish
over
Aus
tralian

Danish

Aus
tralian

Cents
37.4
38.0
34.9
30. 2
28.9
30.1
32. 5
32.2
32.6
32.5
30.6
29.9

Cents
33.0
32. 0
29.0
26. 6
27.6
28.0
29.0
28.7
27.1
24.9
22.8
24.0

Cents
4.4
6.0
5.9
3. 6
1.3
2.1
3. 5
3.5
5.5
7. 6
7.8
5.9

Cents
29.0
32.0
29. 6
26.8
25.9
25.7
25.9
26.0
26.3
23.1
21.8
20.6

Cents
24. 6
25.8
25.3
22.9
23.2
23.1
23.5
23.5
21.8
19. 7
17.2
15. 2

Cents
4.4
6.2
4.3
3.9
2.7
2.6
2.4
2. 5
4.5
3.4
4.6
5.4

Cents
19.1
22.0
20.4
19.5
17.0
16.4
17.7
17.4
19.1
18.0
17.9
17.8

Cents
14.9
15.8
16.8
17.4
15.7
15. 5
16.0
15.6
16.3
15. 2
12. 9
12.6

Damsh
over
N ew
Zealand

Cents
4.3
5.7
2.7
1.8
1.2
.5
l! 3
.6
1.7
1.8
4.4
5.5

Danish
over
Aus
tralian

Cents
4.2
6.2
3.6
2.1
1.3
.9
1.7
1.8
2.8
2.8
5.0
5.2

GERMANY

In contrast with Great Britain, Germany produces the greater
part, approximately three fourths, of the butter consumed within
that country. According to various estimates, there is probably
produced in Germany around 85 percent of the total milk equivalent
of dairy products consumed in all forms.
But in the world’s butter markets Germany is second to Great
Britain in volume of butter imported. The proportion of the world's
trade in butter represented by imports into Germany amounted, just
before the war and for some years following the post-war recovery
in its trade (in 1924 and 1925), to roughly one fifth of the total.
By 1928 the record importation of 298,821,000 pounds was 28 per
cent of the total imports accounted for in international trade in
that year. Since 1928 the volume of Germany’s import trade and
its relative importance in world trade has declined markedly as
shown in table 51.
Following the post-war renewal of a high protective tariff policy
in 1925, the German Government has built up successively more
effectual restrictions upon imports of butter until now, under the
contingent made effective November 15, 1932, total importation

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

261

cannot exceed 121,000,000 pounds yearly. This is about equal to
the average importation in the years just preceding the war, is less
than one half the average yearly importation since 1925, and only
40 percent of the maximum importation of 299,000,000 pounds
reached in 1929.
Imports going to make up the total contingent of 121,253,000
pounds as the maximum that may be imported in any year are to
be prorated among the various countries on the basis of their average
percentage share in imports during 1929-31.
According to latest information, therefore, the only construction
to be placed upon the most recent tariff provisions as affecting
imports of butter into Germany is that, although the equivalent of
8 cents per pound will not prohibit imports, importation will be
lessened if not by the import duty then certainly by the limitation
fixed by the contingent feature upon the quantity that may be
imported over the tariff.
Consumption of imported butter in Germany, total and per capita,
has been declining rapidly since 1930, and a further decline will
follow the limitation of imports by the contingent provision now
being put into effect. On a per capita basis, consumption of im
ported butter may be estimated roughly to have declined from 4.4
pounds in 1930 to 3.4 pounds in 1931 and to 2.2 pounds in 1932.
I f the contingent provision remains unchanged the maximum pos
sible consumption in 1933 is 1.8 pounds per capita. Thus even the
artificial limitation of imports in 1933 will result in less of a decrease
than has been taking place in other recent years as the result of
weakening demand for foreign butter.
Butter has been low in price within Germany during these same
years relative both to the general price level and to the price of
margarine.
Thus the takings of Germany, which have been falling off in
recent years, must be expected to be still further lessened under the
artificial limitations that have recently been added. This can result
only in further diversion of butter supplies to British or other
alternative markets.
O TH ER

C O U N T R IE S

In addition to the influence of the lessening market in Germany
upon the situation in Great Britain recent developments have affected
the possibilities of diversion of supplies to countries of minor im
portance as alternative world butter markets. The increasing im
portance in recent years of the takings of butter by these minor
markets, in which various import restrictions have now been adopted,
is shown for some of the more important countries in table 51. It is
apparent that with Germany limited to a smaller importation in the
coming year than in 1931 or 1932, any artificial curtailment of imports
into these countries must result in correspondingly heavier pressure
of supplies on the British market. Should this pressure be suffi
ciently heavy and long continued, the margin between prices in Great
Britain and in the United States might become wide enough, particu
larly in our winter season, to give rise to direct competition in United
States markets.

262

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

France, Belgium, Switzerland, the Netherlands, and Italy are out
standing examples of nations that have adopted schemes to place
effectual restrictions upon imports of butter.
1. France.—In France the policy was first adopted of establish
ing periodically certain quotas; this had reduced imports of butter
from 28,951,000 pounds in the first 6 months of 1931 to 15,016,000
pounds in the first 6 months of 1932. Effective September 28, 1932,
and to apply for 1 year, the general tariff on butter was further in
creased to the equivalent (at the rate of exchange as of that date) of
24.9 cents per pound, with the minimum tariff at 12.5 cents per pound.
The additional charge of 15 percent ad valorem on butter from coun
tries that have left the gold basis is unofficially reported as having
been retained under the new tariff rates. With this latest increase
in import duty the import quota was abolished for a time. Imports
amounting to 40,837,000 pounds in 1931 declined to 26,099,000 pounds
in 1932.
2. Belgium.—Imports into Belgium have been checked by tariff
increases and import license requirements set up late in 1931. The
control of butter imports provided, for in April 1932 has resulted
in lessened importation, imports in June having been 43 percent
less than in June of last year. The decrease was particularly marked
in supplies from Denmark, the Netherlands, and the Baltic States.
Total imports of butter into Belgium were actually greater in 1932
than in 1931, but this is attributable to the heavy imports received in
the early months of the year. It has been said by critics of the policy
of restrictions within Belgium that as a result of these measures the
domestic price of butter had been increased, by September 1932, to
30 percent more than prices previously ruling on imported Danish
butter.
3. Switzerland.—In Switzerland since 1927, to encourage butter
making and thereby increase the utilization of milk and displace
imports of butter, a fixed price has been guaranteed for a certain
quality of table butter. But as the Swiss have not excelled as butter
makers, only a part of the domestic product qualified for the fixed
price under the terms of the subvention, and butter continued to be
imported in considerable volume.
In accordance with the Swiss protective policy, which is par
ticularly in the interest of agriculture, tariff rates on butter have
been successively increased in recent years, and on February 26,
1932, a decree provided that from April 1, 1932, butter could be
imported onty under license.
Despite the fact that imports have been affected by the higher
tariff rates and import license requirements during only a part of
the period, imports during 1932 fell to 8,150,000 pounds from a total
for 1931 of 23,359,000 pounds.
4. The Netherlands.—The Netherlands is, of course, predomi
nantly an exporting country in its butter trade; the considerable im
ports and the marked decline in exports are recent developments.
In 1930 exports of butter amounted to 92,409,000 pounds, in 1931 they
fell to 72,672,000 pounds, and in 1932 they fell to 44,923,000 pounds.
Simultaneously, imports increased from 4,396,000 pounds in 1930
to 8,887,000 pounds in 1931 and 9,318,000 pounds in 1932. Imports
were chiefly of Australian and Siberian butter which retailed at
prices that competed effectually with margarine.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

263

Imports of butter into the Netherlands were limited by a recently
established quota of about 1,295,000 pounds for the 4 months,
March-June 1932. Most of this quota was imported during March
and the first half of April, leaving a practical embargo in effect
during the latter part of April and May. The decree provides for
a quota from each country equal to the average importation from
that country during the corresponding period of 1928-30. Total
imports averaged about 4,400,000 pounds during those 3 years. This
quantity was doubled in 1931, and during the first quarter alone of
this year imports had amounted to about 7,000,000 pounds. Accord
ingly, the quota as established for the second quarter of this year
means a decided check upon the exportation of butter to the Nether
lands, which was becoming a secondary market, and important par
ticularly to Australia, New Zealand, Argentina, and Denmark.
5.
Italy.—Some material lessening of imports of butter into Italy
is noted as having already resulted from the greatly increased tariff
effective March 4, 1932. Imports of butter into Italy during 1932
amounted to 4,398,000 pounds, a decline of 30 percent from the im
ports of 6,203,000 pounds in 1931.
C O N C L U S IO N S C O N C E R N IN G E F F E C T S O F IM P O R T R E S T R IC T IO N S

Great Britain, therefore, remains a relatively free butter market
with all other deficit countries protecting their butter markets by
high tariffs or quota restrictions or by a combination of both. With
the application of a small import duty even by Great Britain on
non-Empire butter, Denmark and other “ foreign 55 countries are able
to export to the British market only through the payment of the
duty. Consequently, such quantities of butter as are not permitted
to enter other countries because of quotas or tariffs are shipped to
Great Britain to obtain whatever prices that market will afford.
Indications are that under such conditions producers in these foreign
countries must pay or absorb the British duty. This, in turn, tends
to intensify the pressure of foreign competition upon the markets of
the United States.
EFFECT OF EXPORT BOUNTIES AND OTHER AIDS IN WORLD TRADE

There is evidence that the principal national measures outlined
above, designed to restrict import trade and protect domestic mar
kets for domestic dairy interests, are effectually limiting the market
for dairy products from surplus-producing countries. The volume
of export trade in butter from most of the European surplus-produc
ing areas appears to have been checked during 1932, and various
measures providing for export bounties and other aids have been
adopted in an effort directly to stimulate exports or primarily as a
means of raising domestic prices.
1.
Australia.—Under the Paterson plan, in operation since 1926,
Australian butter producers voluntarily assess themselves on all
butter produced in order that, through compensation to exporters
of butter, the domestic prices will automatically rise by the amount
of such compensation or “ bounty 55 with a net gain resulting to the
dairy industry as a whole.
179563— 33------ 18

264

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

The payment to exporters is referred to as an export bounty. But
since the cost is met by the producers, who expect to be more than
compensated by the higher prices obtained in the home market, the
benefits are self-limiting in the absence of production control. For
as production increases in response to the benefits conferred by the
scheme, more butter is available for export, the total cost of the
“ bounty ” payments increases, and the net gain to the producers
diminishes. This has actually tended to be the case, and from time
to time it has been necessary to reduce the amount of the bounty to
meet this situation.9
2. Irish Free State.—A plan almost identical with that operating in
Australia has been operative in the Irish Free State since April 21,
1932. As the quantity of butter exported is about equal to the quan
tity retained for home consumption, the levy on the total production,
fixed at about 4 cents per pound at par, is expected to provide a
bounty equivalent to 8 cents per pound on creamery butter exported.
With a view to encouraging winter production, the bounty is to be
paid throughout the year, whereas the levy is collected only on the
production from March 1 to November 30. As in Australia, an
import duty equal to the bounty is in effect. A tariff equivalent to
8 cents per pound is to be continued, and the Minister of Agriculture
is to prohibit imports of butter except under license when such action
may be deemed necessary in the interests of the home market. With
a tariff of 40 percent ad valorem in effect on Irish butter entering
Great Britain, the rate on Irish creamery butter based on the latest
available London quotation (Irish butter having ceased recently to
be quoted) would just about have equalled the export bounty of 8
cents per pound. As Great Britain has been practically the only
established market for Irish butter, the advantage resulting from the
export bounty plan in the Irish Free State to date does not appear
to have been material.
3. Union of South Africa.—Following closely the Australian plan,
South African butter and cheese producers have paid an export
bounty since 1930. Rates of bounty and levy have been modified
from time to time, and assessments are made against producers, al
though administered by the Government. Under the Export Sub
sidies Act of 1931 the Government itself derives an additional fund
from a special 5 percent ad valorem tax on* imports of which
subsidies are paid on exports of butter and cheese. The Union is
as yet of comparatively little importance as an exporter of butter or
cheese, but these products are now favored not only by the export
bounty but by the free entry into Great Britain.
4. The Netherlands.—Notwithstanding the recent development of
an import trade in lower-quality butter, the Dutch dairy industry is
largely dependent upon its export trade. From a gross export of
104,323,000 pounds of butter in 1929, exports declined to 92,393,000
pounds in 1930, and 72,659,000 pounds in 1931, with a still more
marked falling off in 1932 to 44,923,000 pounds.
Prices of milk in the Netherlands had fallen to such low levels by
the end of 1931 that a “ Crisis Dairy A c t 55 was invoked to bring
prices to a point at which they would cover the cost of production.
The law, involving many rather complicated provisions, charges a
9 F o r fu lle r exposition and h istory of the m easure see the appendix.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

265

central organization, “ The Crisis Dairy Central ” , with the execu
tion of the act. The basis of the plan is to supplement the world
price by consumption taxes, thus establishing a wholesale price for
butter which will guarantee to producers a total return for their milk
equalling cost of production. Margarine for domestic consumption
must be mixed with butter in a proportion to be established by the
Board of the Crisis Dairy Central and a consumption tax is placed
on margarine to raise its price to about two thirds that of butter.
5.
Finland.—In Finland a plan has been adopted whereby the price
of butter is to be enhanced in part through a tax on margarine and,
within certain limits, is to be guaranteed. In case the Copenhagen
official quotation goes below the equivalent of 33.5 cents per pound,
the Government is to make good the difference, not to exceed the
equivalent of 4.4 cents. This guaranty can tend only to stimulate
production for export. No information is at hand as to the date it
is to become effective.
Although most of the restrictive measures adopted as applying to
butter have tended to affect the price of milk and other products
indirectly, butter is here chosen to illustrate the effects of world
conditions on our dairy industry.
Important butter-importing countries in Europe have limited the
importation of butter by the use of quotas and tariffs. These restric
tions have forced a larger proportion of the world exports of butter
upon the English market, which, until the recent adoption by the
United Kingdom of a duty on butter, was the only large free
butter market in the world. At present the British market is free
only to the Dominions, and thus far the British tariff on nonEmpire butter appears to have been absorbed by the foreign pro
ducers. The large supplies of butter converging on the English
market have tended to depress the British price and thus to increase
the pressure of foreign competition upon the markets of the United
States.

CHAPTER XIV
SUGAR
In common with the producers of other agricultural products in
the United States, the producer of sugar finds himself faced today
with disastrously low prices. The monthly average price of sugar
in New York, duty paid, has been 4 cents per pound or less since
October 1928, and was less than 3 cents for a period of 13 months
from February 1932 to March 1933. Although different from most
of the other commodities considered in this report in that it is on an
import basis, sugar is very much like them in that its price in the
United States is largely dependent upon world conditions. Among
these conditions, unprecedented surpluses appear as a major factor
contributing to the decline of the price of sugar in the United States.
Following the World War, world production increased at a rapid
rate. There were several causes, among them restoration of agricul
ture in Europe, improvements in technology and in beet and cane
varieties, opening of new lands well suited to the growing of sugar
cane, the support that the governments of a large number of coun
tries gave to the price of sugar in definite areas. Partly because of
this increase in production, world prices of sugar fell to a low level
after the war, and this helped to stimulate consumption of the in
creased output. But in an effort to protect their growers against the
fall in prices, several countries—Europe, Japan, the United States,
and others—raised their sugar tariffs. This governmental interven
tion in turn stimulated production in these sugar-deficit countries,
and is partly responsible for the present world surplus of sugar.
Of the total increase of 10,292,000 short tons in world sugar pro
duction during the last 12 years, some 7,783,000 short tons were pro
duced within the tariff walls of the countries referred to above.™
Even though a considerable part of the 7,783,000 tons would pre
sumably have been produced in any event, a considerable quantity,
large enough to constitute an important part of the existing world
surplus, may be ascribed to intervention.
Another portion of the present world surplus may be ascribed to
the restrictive effect upon consumption of the enhanced price o f
sugar within the protected markets. As these protected areas include
more than half a billion people, even a slight reduction in per capita
consumption must have had a large aggregate effect on the world
sugar surplus.
The precise amount of the surplus attributable to intervention can
not be determined. But upon grounds to be indicated below, it is
estimated that between 4,000,000 and 5,000,000 short tons of the
present (1932-33) surplus of over 8,000,000 short tons has appeared
as the result of the stimulative measures of the last 10 or 12 years.
It is further estimated that this additional surplus has affected the
world price of sugar to the extent of about 1 cent a pound.
10
Th ese 7 ,7 8 3 ,0 0 0 tons do n o t include the increases in production in such low -cost area s
as Cuba an d J av a.

266

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE
T a b l e 5 3 . —Sugar

267

(raw) : World production and carry-over, 1920-21 to 1931-82
Production

Year (SeptemberAugust)

Visible
Europe,
British
Total supply
exclu
on
Empire Japan
supply
World sive of
exclud
and
Sept. I 1
total
United
ing
Taiwan
King
India 2
dom

Conti
nental
United
States
and
insular
posses
sions
and
terri
tories 3

Cuba

Java

Other

1,000
short
tons
.1920-21........................ . 21,681
1921-22______________ 24,676
1922-23________ ______ 23,885
1923-24______________ 25, 680
1924-25______________ 29, 375
1925-26______________ 31,979
1926-27______________ 31,074
1927-28______________ 33,054
1928-29______________ 35, 893
1929-30______________ 36,449
1930-31_________ _____ 38, 790
1931-32______________ 37, 805
Average:
1920-21 to 1922-23.. 23, 414
1929-30 to 1931-32.. 37, 681

1,000
short
tons
2,135
4,098
3,025
2,870
2, 705
3, 990
4,450
4, 539
5,191
5,842
6,972
8, 369

1,000
short
tons
19,546
20, 578
20,860
22,810
26, 670
27,989
26, 624
28, 515
30,702
30, 607
31, 820
29,436

1,000
short
tons
4,096
4,340
4,972
5, 501
7, 693
8, 075
7, 288
8, 378
8,891
8, 619
10, 799
7, 890

1,000
short
tons
1,097
1,125
1,116
1,106
1,370
1,655
1,601
1,827
1,970
2,064
2,326
2,130

1,000
short
tons
384
472
470
595
625
654
563
746
971
974
965
1,192

1,000
short
tons
2,953
2,965
2,415
2, 782
3,480
3,125
3, 225
3, 711
3, 696
4,063
4,214
4, 518

1,000
short
tons
4,406
4,517
4,083
4, 606
5,812
5, 524
5, 050
4, 527
5, 775
5,231
3, 495
2,915

1,000
short
tons
1,853
1,994
1,981
2,201
2, 535
2,175
2, 639
3,238
3,198
3,245
3, 095
2, 821

1,000
short
tons
4,757
5,165
5,823
6,019
5,155
6,781
6, 258
6,088
6, 201
6,411
6,922
7,970

3,086
7, 061

20,328
30, 621

4,469
9,103

1,113
2,173

442
1,044

2, 778
4, 265

4, 335
3,880

1,943
3,054

5,248
7,101

Increase............ 14, 267
P e rc e n t in cre ase
over the 12 years. _
60.9

3, 975

10, 293

4, 634

1,060

602

1,487

-4 5 5

1,111

1,853

128.8

50.6

103.7

95.2

136.2

53.5

-1 0 .5

57.2

35.3

Bureau of Agricultural Economics, Foreign Agricultural Service Division.
national Yearbook of Agricultural Statistics.

Data largely from Inter

1 Sept. 1 of the end year. Includes the following: Carry-over in 11 European countries; stocks at United
States refining ports; stocks at Cuban shipping ports and in the interior of the island; stocks at shipping
ports in the Philippine Islands; available supply in Java.
2 Including Hawaii, Puerto Rico, Philippine Islands, and Virgin Islands.
3 Includes the United Kingdom, Canada, British W est Indies, Mauritius, Union of South Africa,
Australia, and the Fiji Islands.

T a b l e 5 4 .—

Sugar ( r a w) : Average monthly price per pound, cost and freight
New York, duty not paid
Ave rage

Year

1919 2__________
1920___________
1921___________
1 922 .............
1923..................
1924__________ _
1925..............
1926___________
1927___________
1928.............
1929___________
1 9 3 0 .................
1931____________
1932___________
1933___________

Jan.

Feb.

Mar.

Apr.

M ay

June

July

Aug. Sept.

Oct.

N ov.

Dec.

Cal
Crop
endar
year1
year

C en ts C en ts C en ts C en ts C en ts C en ts C en ts C en ts C en ts C en ts C en ts C en ts C en ts C en ts
5. 885
11.91 10.47 11.12 16.11 20.42 18.39 16. 43 13. 54 9.20 7. 39 5.60 4.15 12.06 3 14.0
4.11 4.47 5.14 4.51 3.87 2. 96 2. 85 3.08 2. 60 2.51 2.26 2.01 3. 36
4.8
2. 03 2.11 2.31 2.40 2.46 3.00 3. 51 3. 58 3.24 3.69 3.83 3.90 3.01
2.6
3. 52 4. 52 5.75 6.02 6. 21 5.80 5. 36 4. 25 5.17 5.79 5.43 5.52 5.28
4.7
4. 85 5.48 5.15 4. 57 3.83 3.43 3. 33 3. 57 4.18 4. 24 4. 07 3.41 4.18
4.7
2. 83 2. 86 2. 98 2. 71 2. 56 2. 63 2.49 2. 59 2.44 2.07 2.30 2. 34 2. 57
3.1
2. 39 2.45 2. 26 2.35 2. 41 2. 36 2. 38 2.47 2. 68 2. 80 2.93 3. 31 2. 57
2.4
3. 25 3.14 3. 01 2.99 3. 05 2.85 2. 75 2. 75 3.02 2.89 2.86 2. 92 2. 96
3.0
2. 72 2.48 2. 74 2. 66 2. 68 2. 52 2.41 2. 38 2. 22 2.14 2. 09 2.16 2. 43
2.7
2. 03 1.96 1.94 1.87 1.82 1.75 2.10 2. 05 2. 22 2. 23 1.95 1.99 1.99
2.0
1.95 1.81
1.82 1.68 1.44 1.39 1.26 1.18 1.13
1.41
1.29
1.29 1.47
1.7
1.37 1.31
1.28 1.29 1.18 1.32 1.50 1.46 1.41
1.41
1.35
1.13 1.33
1.3
1.13
.94
.59
. 75 1. 05 1.15 1.14 1.13 1.06
.77
. 63
.84 .93
1.0
.72
.75
.93
1.12 1.31
1. 39

Compiled from The Sugar Index, B . W . Dyer & Co.
1 Ending August.
2 Prices under Government control.
3 In computing the 1919-20 average, 12.4 was substituted for 5.885 in the months September to December
1919. The quantity 12.4 is the average for the 4 months January-April 1920.

268

WORLD TRADE BARRIERS 11ST RELATION TO AGRICULTURE

In 1931 the international sugar agreement (Chadbourne plan)
was entered into by the principal sugar-exporting countries to restrict
exports, for the purpose of reducing world stocks of sugar. This
appears to be achieving significance at the present time (May 1933),
but the unsatisfactory world conditions affecting sugar continue to
have an adverse effect upon the American sugar market.
DEPENDENCE OF PRICE IN THE UNITED STATES ON WORLD
CONDITIONS

Changes in the price of sugar in New York, to which prices
throughout the United States largely conform, are determined by
world conditions, for sugar is an international commodity. It is
produced in many parts of the world and enters extensively into
international trade. In the case of continental United States, about
two fifths of the domestic sugar requirements is supplied by ship
ments from Cuba; two fifths by shipments from Hawaii, Puerto
Rico, and the Philippine Islands; and the remaining one fifth is
supplied by sugar of domestic growth (table 55). The 2,000,000
or 3,000,000 short tons of sugar imported from Cuba act as a con
necting link between the United States and the world sugar market.
I f the price obtainable by Cuba in overseas markets falls below
the price obtainable in the United States, Cuban exports tend to
be diverted to the American market where they exert a downward
pressure on sugar prices. In the reverse situation, with overseas
prices rising above the United States price, the tendency is for
exports to be diverted from the United States market and for our
price to rise. Thus world conditions, working through the export
price in Cuba, react upon the price in New York and so affect sugar
prices all over the United States.
T a b l e 5 5 . — Sugar

Year

Total
United
States
supply

(r a w ): Relative contributions to United States market by
sources of supply, 1920-21 to 1931-32

Dutiable sugar
Shipments to
Production in conti
United States from
nental United
insular possessions
Imports from other
Imports from C u b a3
States 1
and territories 2
countries

Total

1920-21______
1921-22______
1922-23...........
1923-24______
1924-25______
1925-26______
1926-27______
1927-28______
1928-29______
1929-30______
1930-31______
1931-32______

1,000
short
tons
5 ,651
6,707
6,365
5,824
6, 836
6,998
6, 669
6, 714
7,364
6,495
6, 502
6,615

1,000
short
tons
1,347
1,425
1,022
1,112
1, 260
1,121
1, 011
1,246
1, 273
1,294
1, 482
1,412

Percentage
of total
United
States
supply

Percent
23.8
21.2
16.0
19.1
18.4
16.0
15.2
18.6
17.3
19.9
22.8
21.4

Total

1,000
short
tons
1,076
1,341
1,235
1,275
1,645
1,981
1,689
2, 052
1,975
2,378
2, 604
2,813

Percentage
of total
United
States
supply

Percent
19.1
20.0
19.4
21.9
24.1
28.3
25.3
30.6
26.8
36.6
40.1
42.6

Total

1,000
short
tons
2,463
3,860
4, 021
3, 258
3, 858
3,861
3,953
3, 399
4,109
2, 769
2,405
2, 352

Percentage
of total
United
States
supply

Percent
43.6
57. 6
63.2
55.9
56.4
55.2
59.3
50.6
55.8
42.7
37.0
35.6

Total

1,000
short
tons
765
81
87
179
73
35
16
17
7
54
11
38

Percentage
of total
United
States
supply

Percent
13.5
1.2
1.4
3.1
1.1
.5
.2
.2
.1
.8
.1
.6

Bureau of Agricultural Economics.
1 Includes beet and cane sugar.
2 Shipments from Hawaii, Puerto Rico, Philippine Islands, and Virgin Islands.
3 Cuban sugar enjoys a preferential duty of 20 percent over other foreign sugars. On 96° sugar, the type
usually imported into the United States, tariff rates have been as follows during this period: U p to M a y
28, 1921, the duty on Cuban sugar was 1 cent per pound, and on other foreign sugar was 1.26 cents; begin
ning M ay 28, 1921, on Cuban sugar it was 1.60 cents, and on other it was 2 cents; beginning Sept. 22, 1922,
on Cuban sugar it was 1.76 cents, and on other it was 2.21 cents; since June 17,1930, on Cuban sugar it has
been 2 cents, and on other foreign sugar it has been 2.50 cents.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

269

This general conclusion can be substantiated by quantitative evi
dence. The annual average price at New York is closely correlated
with the world visible supply of sugar and is correlated to a signifi
cant degree both with total supply (the sum of annual production
and visible supplies) and with year-end supplies (visible supplies).
In figure 25 are charted the movement of the price of sugar (New
York, duty not paid), the world visible supply, and the United States
wholesale commodity price level; and in figure 26 are charted the
total world supply, the price of sugar, and the wholesale price level.

* DUTr NOT MID

F i g u r e 2 5 .— W o r l d c a r r y - o v e r o f s u g a r , a n d N e w Y o r k
D u t y N o t P a i d , 1920 t o d a t e

P r ic e o f S u g a r .

T h e price o f sugar, du ty not paid, a t N ew Y o rk is influenced by ch anges in the w orld
visible supply, or carryover, and in the w holesale com m odity price level.
W h en the w orld
visible supply increases, the price o f sugar tend s to decrease, and vice versa .
W h en the
gen eral price level declines the price o f sugar tends to decrease, and vice versa.

F i g u r e 2 6 .—W o r l d S u p p l y o f s u g a r a n d n e w Y o r k
N o t Pa i d , 1920 t o d a t e .

P r ic e o f S u g a r , d u t y

# T h e price o f sugar a t N ew York is influenced by changes in the to ta l w orld supply, con
sistin g o f an n u al production plus carry-over from the previous year, and in the general
w holesale com m odity price level.
T h e price o f sugar is n o t so sen sitive to changes in
to ta l w orld supply a s to changes in the visible supply.

270

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

In general, an increase in the world supply is accompanied by a
decrease in price and vice versa. The movement of supplies for the
most part has been upwards, but there was a brief downward move
ment during the period 1922-23 to 1923-24, with a consequent im
provement in the United States price. The general price level is also
a contributing factor in making the price of sugar, for the latter in
general moves in harmony with the former. Of the two factors,
supply and price level, it is probable that supply is the more
important.
The general downward movement of sugar prices in the United
States during the last 10 years has been associated with an almost
continuous upward movement of world production and world sur
pluses. (Figs. 25 and 26.) As has been mentioned, most of the
increased production of the last decade has come in tariff-protected
areas. An analysis of the total world production by regions, on the
basis of tariff regimes, reveals that some 75 percent of the 10,300,000
short tons of increase has occurred in tariff-protected regions.
About 4,600,000 tons, or 45 percent of this increase, has appeared
in the tariff orbit of continental Europe and may be attributed, in
part to agricultural restoration. About 1,000,000 tons, or 10 percent,
has occurred in the British Empire; 600,000 tons, or 6 percent, in
Japan and Taiwan; and 1,500,000 short tons, or 14 percent, within
the tariff wall of the United States. (Table 53.) The rates of in
crease in the foregoing areas on the basis of their production in the
three years 1920-21 to 1922-23 were as follows: Continental Europe,
104 percent; British Empire (excluding India), 95 percent; Japan
and Taiwan, 136 percent ; and the United States and dependencies,
54 percent. The average rate of increase for these areas was almost
90 percent in contrast to the average rate of increase of 21 percent
for the rest of the world, and is higher even than the 57 percent of
increase of Java, where the output of sugar was greatly stimulated
by improvements in the rate of yield of the sugar cane. These fa,cts
are suggestive of the influence of government intervention in bringing
about the present world surplus of sugar.
NATURE OF INTERVENTION IN FOREIGN COUNTRIES

Government intervention with respect to sugar has taken many
forms. It usually includes control, largely through the restriction
of imports, over the quantity available for consumption within an
area around which a tariff wall can be erected. In a situation of
diminished domestic supplies, domestic price tends upward. The
higher price tends to maintain or to stimulate production, which may
be part of the purpose of the import restrictions. On the other
hand, the higher price also tends to reduce consumption, and thus
militates in part against the sugar industry for which the assistance
is intended.
Nearly every country that is under the protection of a sugar tariff
is, on the whole, a deficit-producing area. But some, like Czecho
slovakia and Germany, are exporting countries whose surplus sugar
must compete in the open market. In these countries the tariff
is made effective by the domestic sugar interests themselves, who
accomplish this end by organizing into “ cartels ” with or without

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

271

government participation, for the control of distribution and prices
within the tariff-protected area. These interests benefit from the high
price maintained for part of their output with the assistance of the
tariff, while disposing of their surplus abroad for whatever it will
bring.
Table 56 shows the duties in effect on sugar in 37 countries, as of
1932. These rates of duty constitute a fairly good indication of the
degree to which the governments concerned have entered into sugar
defense programs. The weighted average of the duty for the whole
table is almost 2.8 cents a pound.11 For Europe the weighted average
is about 6.8 cents a pound, most of the duties there being well above
2 cents a pound.
T a b l e 5 6 . —Import

duties and other taxes on raw sugar in foreign countriesT
1982
[96° polarization or nearest equivalent]

Total tax on imported sugar
Country

In cents per
pound (percents
are ad valorem)1

Import duty
In foreign units (percents
are ad valorem)

Consumption
taxes, sales taxesr
etc. (percents are
ad valorem)

BRITISH EMPIRE

United Kingdom:
General.............

1.19.

Dom inion-

0.65-

Colonial-

8s. 1.6d.
weight.
4s. 4.8d.
weight.
3 2s. 4.8d
weight.
3s. 4.8d.
weight.
10s. 2d.
weight.

0.35.
0.50-

Irish Free State..

1.50-

Canada:
General.

1.15 plus 3 per
cent,
do.
Intermediate—.
Preferential___ 0.26 plus 3 per
cent.
India_____
2.01 ___________

New Zealand-

1.10 plus 6 per
cent plus 10
percent.
0.65_____________

Ceylon________

0.33.

Federated
States.

1.91-

Australia..

M alay

China..

1.54.

JapanSiam___
Turkey.

1.50.
0 .68 .

3.86,

per

hundred

8s. 1.6d_.

per

hundred

4s. 4.8d_.

00-

per

hundred

2s. 4.8 d -

(2).

per

hundred

3s. 4.8d_.

(2).

per hundred

10s. 2d_.

(2).

1.32255 cents _

3 percent.

1.32255 cents per pound
plus 3 percent,
do.
0.29688 cent per pound
plus 3 percent.
9 rupees 1 anna per hun
dredweight.
4 £9. 6s. 8d. per ton plus 6
percent plus 10 percent.

(2).

Do.

do.
0.29688 cent..

Do.
9 rupees 1 anna—.
£9. 6s. 8d__...........

0.5d. per pound plus 5 per
cent of duty.
1.50 rupees per hundred
weight.
5 cents per pound................

0.5d. plus 5 per
cent of duty.
1.50 rupees........... ..

5.145 gold customs units
per picul.
9.88 yen per 100 k in_..........
5 bahts per 100 k i l o s ........
18 Turkish pounds per
100 kilos plus 10 percent
ad valorem.

4.90 gold customs
units.
5.33 y e n ................
5 bahts____________
18 Turkish
pounds.

i 6 percent plus
10 percent.

5 cents.

(5).
4.55 yen.
10 percent.

Compiled in the Division of Foreign Agricultural Service, Bureau of Agricultural Economics, U .S. De
partment of Agriculture; rates checked and revised as of Nov. 19, 1932, by the Division of Foreign Tariffs,
U .S. Department of Commerce, and the U.S. Tariff Commission.
1 Conversion to United States currency based on rate of exchange prevailing on N ov. 19, 1932.
2 Excise does not apply to imports.
3 Lower rate limited to specified quota.
* The 6 percent is based on the duty-paid value plus one fifth of that value.
* Customs surtax of 5 percent of the duty imposed from Aug. 1,1932, until the liquidation of the American
wheat loan. There are also smaller surtaxes, varying by ports.
11 D u ty, converted to cents a pound, w eighted by the population of the country.

272

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

T a b l e 5 6 . —Import

duties and other taxes on raw sugar in foreign countries,
1932— Continued
[96° polarization or nearest equivalent]

Total tax on imported sugar
Country

In cents per
pound (percents
are ad valorem)

Import duty
In foreign units (percents
are ad valorem)

Consumption
taxes, sales taxes,
etc. (percents are
ad valorem)

P er 100 kilos
26.38 gold crowns__________
100 francs plus 2.2 percent.

6 21.12 gold crowns.
100 francs......... ........ 2.2 percent.

81 gold leva________________
537 crowns____ _____________
5.90 crowns_ _ ........... - _____
450 marks__________________

40 leva ._ ________
338 crow ns_______
5.90 crowns_______
450 marks. ______

41 leva.
7 199 crowns.

7.40 plus 6 per 416.50 francs plus 6 percent cent.
M inim um 8____ 4.45 plus 6 per 250.75 francs plus 6 percent.
cent.
Germany__________ 5.17 plus 2 per 48 reichsmarks plus 2 per
cent.
cent.
Greece_____________ 2.76_____________ 9 1,050 paper drachmas____
Hungary___________ 7.51 plus 9 per 95.008 pengo plus 9 percent .
cent.
_______________ 13.12 plus 15 per
Italy565 paper lire plus 15 per
cent.
cent.
24.75_florins________________
Netherlands _____ 4.51
2.45
_________ 32.20 crowns_______________
Norway.
_
Poland
11.55____________ 227.50 zlotys_______________
Portugal___________ 3.10 plus 2 per 225.67 paper escudos plus
2 percent.
cent.
Spain______________ i2 9.18___________ 12105 pesetas_______________
Sweden____________ 0 .55....................... 7 crow ns_____ ______ ______
Switzerland________ 0.02_____________ 0.25 franc__________________
Yugoslavia_________ 5.95 plus 11 per 970 paper dinars plus 11
percent.
cent.

331.50 francs_____

85 francs plus 6
percent.
D o.

EUROPE

Austria ............ .....
Belgium. ................ Bulgaria. .......... .......
Finland
France:
General.

4 .3 3 ..___________
1.26 plus 2.2 per
cent.
0.26....... ............... ..
7.21............. ...........
0.46............ ...........
2.96................. .......

____

165.75 fr a n c s ..___

27 reichsmarks___ 21
reichsmarks
plus 2 percent.
9 1,050 drachm as...
45.008 pengo........ .. 50 pengo plus 9
percent.
10165 lire plus 15 400 lire.
percent.
Free ____________
24.75 florins.
32.20 crow ns... . _
90 zlotys. _
__ 137.50 zlotys.
11 225.67 escudos.. . 2 percent.
12 60 pesetas_______
7 crowns__________
13 .20 franc______
220 dinars_________

45 pesetas.

331.50 francs . __
165.75 francs______
12}^ percent...........

57.25 francs.
D o.
95 francs.

14 11.476 pesos .
20 pesos_____ ___
1530 soles plus 3 per
cent.
1,100 milliemes___

1 sole.

0.05 franc.
750 dinars plus 11
percent.

OTHER

Algeria:
General

6.91
_________
3.97. ___________
1.69 plus 12V6
percent.
Argentina
___ 3.05 ___________
Chile___ ____________ 0.55......... ........... ..
Peru_______ ________ 3.94_____________
___

M i n i m u m 8____

Morocco___________

Egypt___ __________

388.75 French francs............
223 French francs___ ______
95 French francs plus
12H percent.
11.476 gold pesos________ 20 gold pesos_______________
15 31 soles plus 3 percent___

1.68______ ______ _ 161,100 milliemes_________

O6).

6 This rate applies only to imports for refineries, subject to permit.
7 Lump sum turnover tax.
8 Applies to imports from Cuba and Dominican Republic. Colonial sugar duty free.
9 Includes surtaxes amounting to 75 percent of the duty.
10 Raw sugar of first class.
11 This rate includes customs surtaxes and applies to imports of “ foreign” sugar (that is, not of Portuguese
colonial origin) into continental Portugal. The duty is reduced by 8 percent if loaded on Portuguese vessels
at port of origin or at certain recognized European ports of transshipment. In addition to the duty there
are various minor customhouse charges. Portuguese colonial sugar is admitted with 50 percent reduction
in duty, subject to special regulations.
12 The total tax and the import duty are only nominal, since Spain, by her commercial treaty with Cuba,
has agreed to admit Cuban cane sugar (unrefined or centrifugal up to 96° polarization) at a charge not higher
than the manufacturing tax on Spanish sugar (equivalent to 3.94 cents per pound), when the Spanish pro
duction of sugar does not suffice to meet the needs of national consumption and importation becomes
necessary. Centrifugal cane sugar, if imported via European ports, is subject to an additional duty of 3.94
cents per pound.
13 This rate applies only to imports for refineries, subject to customs control.
14 As of October 1932; rate varies slightly with price from month to month.
15 Also surtaxes of 20 percent, 21 percent, or 22 percent of the duty, varying with port of entry.
16 Excise tax of 60 milliemes collected on refined sugar at refinery.

For the British Empire exclusive of India the weighted average of
duties is about 1.2 cents a pound and in the Orient (India, China, and
Japan) the average is 1.7 cents a pound. Compared with the average
New York price, as of 1932, of about 1 cent a pound, duty not paid,
these rates appear very high. But they present a fair picture of the
high level of the world-wide economic nationalism in regard to sugar.

WORLD TRADE BARRIERS IK RELATION TO AGRICULTURE

273

It would be difficult indeed to name a single country in which there
has not been some form of intervention in the sugar industry. In the
United Kingdom, which next to the United States is the greatest
importer of sugar, a combination of tariff and bounty has been in
force since 1925, the protection of the tariff being extended by means
of preferential rates to include the sugar-producing colonies of the
British Empire as well. In the Netherlands a direct subsidy is ac
corded to the beet growers. In almost every country of Europe high
tariffs on sugar prevail. In Germany and Italy the price is fixed, if
not by the Government itself, at least with its tacit consent. A brief
description of some of the more significant cases of state interven
tion follows ; more complete discussion, with details as to legislation,
mode of operation, etc., will be found in the Appendix.
IN T E R V E N T IO N IN

IM P O R T IN G C O U N T R IE S

The British Empire, including two of the world’s great sugarimporting areas (England and Canada) and some of the most im
portant producing areas (Australia, Mauritius, British Africa, Brit
ish Guiana, etc.), has been in the forefront of the advancing sugar
production of the last decade, the output of the British Empire
having practically doubled since the immediate post-war period (table
53). The most important measures of intervention in the Empire
have been the payment of a production bounty in the domestic
beet-sugar industry in England and the extension by England and
by Canada of tariff preferences to the colonies and dominions of the
British Empire. The preferential duty in each country at the end of
1932 was, roughly speaking, about one half of the general duty (table
56). The percentage of imports from British sources into the United
Kingdom rose from 4 percent in 1913 to 24 percent in 1924 and to
33 percent in 1931. In the case of Canadian imports, the percent
age of Empire sugar rose from 31 percent in 1924 to 94 percent
in 1931. As a consequence, the colonies have been able to main
tain the volume of their output despite declining prices in the world
market and in the dominions.
In the United Kingdom the bounty is paid to the manufacturers
of sugar upon the condition that the benefit of the bounty shall ac
crue to the growers of the beets. The subsidy was enacted in 1925,
to continue over a period of 10 years, starting at 19s. 6d. per hundred
weight ($4.24 per 100 pounds at par) for 98° or better sugar and
declining to 6s. 6d. per hundredweight ($1.41 per 100 pounds) at
the end of the 10-year period. So effective was the subsidy that,
from 1923 to 1930, the production of sugar in the United Kingdom
rose from 14,000 to 470,000 short tons.12
In the Netherlands, like the United Kingdom traditionally a
free-trade country, intervention in aid of the sugar industry has
similarly taken the forms of tariff protection and a subsidy to beet
growers. In this case the subsidy, begun in 1931, was placed on a
sliding-scale basis to keep the price of sugar within certain limits.
12
The special assistan ce
on pp. 2 7 5 and 3 9 2 .

extended

th e

sugar

in du stry

A u s tra lia

discussed

274

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

Other countries use similar methods. Austria extends a consid
erable measure of protection through the tariff. In 1921, 1926, and
1928 the sugar duty was increased. Meanwhile the domestic output
of sugar rose from 6,000 short tons in 1920-21 to 180,000 short tons
in 1931-82, a quantity three times as large as the pre-war output of
52.000 short tons. In 1926 Turkey established a state monopoly
for the importation of sugar and sugar products, in addition to a
protective tariff. For the period 1928-31 an average production of
33.000 short tons was reported in Turkey, whereas in 1925-26 no pro
duction had been reported. In Lithuania a high duty was supple
mented in 1931 by a guaranteed price for sugar beets and the estab
lishment of a government-controlled sugar-beet factory. Latvia and
Spain, in 1932, embarked on new or greatly enlarged programs of
aid to their domestic sugar industries in order to stimulate domestic
production. In Latvia a government sugar monopoly was estab
lished, and in Spain the prices of sugarcane and sugar beets were;
fixed by decrees of the Spanish Government.
Whereas the countries so far cited have devoted their efforts largely
to increasing the output of sugar in order to achieve independ
ence from foreign sources of supply, others have endeavored to
retain a degree of independence already achieved. Among the latter
are Sweden, Denmark, and France. In Sweden attempts to main
tain stabilized prices for sugar beets have been in force almost con
tinuously since the war. At first largely a matter of private agree
ment between beet producers and sugar factories, the guaranteed
price to growers has become a direct concern of the Government.
Since 1930, the Government has been paying a subsidy directly to
growers as an addition to their market price in order to bring
the total receipts per ton up to a specified guarantee. In 1932 the
payment of the subsidy was continued in an indirect form, a sugar
import monopoly being established as part of the system.
In Denmark the sugar factories and refineries were given a com
plete monopoly over sugar production and trade in 1932, and the
prices of sugar beets and refined sugar were fixed by Government
decree.
In France the effort to keep up the price of sugar included import
quotas and an agreement on the part of the beet-sugar producers
to withhold a certain proportion of the supplies.
The trend toward national self-sufficiency in sugar has spread
beyond Europe and the Americas. On the other side of the globe,
Japan has established an important sugar industry in Taiwan (For
mosa). Since 1900, substantial subsidies to the sugar industry have
been granted, from time to time, by the Taiwan Government-General.
From 1900 to 1926 some $6,000,000 was spent on fertilizer, supplies,,
machinery, irrigation works, etc. to promote the establishment of the
sugar industry in Taiwan, and the Government has made grants of
seed cane to the industry. The Taiwan industry has also received
considerable benefit from the duty imposed by Japan on imports
of sugar. Production in Taiwan rose from an average of 472,000
tons in the period 1921-22 to 1925-26, to an average of 970,000 short
tons in the 2 years 1930-31 and 1931-32.

W ORLD TRADE BARRIERS IN RELATION TO AG RICU LTU RE
IN T E R V E N T IO N IN

275

E X P O R T IN G C O U N T R IE S

Until recently, intervention in the sugar-exporting countries, like
that in the importing, was mainly of a sort tending to maintain or
increase output. But during the past few years restriction of exports
and production has introduced a new phase.
1. Stimulation or maintenance of output.—While many of the
sugar-importing countries in the world have been seeking independ
ence from foreign sources of sugar, a number of the exporting coun
tries have been engaged in maintaining the volume of their output at
a given level, or in increasing it. Australia, Czechoslovakia, Ger
many, Hungary, Poland, for a number of years past, and Brazil and
Argentina more recently, have intervened with a view either to main
taining or to increasing the volume of sugar production.
In Australia, intervention has taken a very direct form. The Gov
ernment of the State of Queensland, which produces practically all
of Australia’s sugarcane, exercises a monopoly over the production
and distribution of cane sugar throughout the Commonwealth of
Australia. This is done through an arrangement between the Com
monwealth and the State governments as a means of insuring a good
price to the grower.
In Czechoslovakia, Germany, Hungary, and Poland, intervention
has taken the form of measures to maintain the internal price of
sugar above world parity, while exports continue to be made at the
world parity price. These effects were accomplished through the
medium of the tariff imposed by the Government, and through pri
vate control over domestic production and distribution on the part
of the well-organized domestic industry in each of these countries,
largely through cartels. The tariff rates as of 1931 are given in
table 56.
2. Restriction of exports and production as a new phase of inter
vention.—With the inauguration of the International Sugar Agree
ment in May 1931 (see below), another type of intervention became
prevalent in the exporting countries, namely, restriction of exports,
supplemented by production restriction. Under this agreement the
most important sugar-exporting countries, including Java, Cuba,
Czechoslovakia, Poland, Germany, and others, contracted to restrict
their exports, to reduce their surplus stocks, and, by implication, to
reduce their production. At about the same time Argentina and
Brazil, although they did not join in the international agreement,
set up individual programs for the restriction of production.
(a) Cuba.—The movement for restriction was really initiated
earlier, however, by Cuba, whose prosperity is almost wholly depend
ent upon sugar. As early as May 1926, Cuba enacted a law empower
ing the President to restrict the crops of 1927 and 1928, and to forbid
any grinding before a specific date to be announced each season. A
10 percent reduction was provided for the 1926 crop, then being
harvested. In 1927, 4,500,000 long tons was set as the maximum crop,
and January 1 Avas set as the date for the beginning of grinding.
In preparation for the 1928 crop the sugar defense law of Octo
ber 4, 1927, was passed, to remain in force until 1933. It provided
for the appointment of a National Commission for the Defense of
Cuban Sugar, consisting of five members, to act as advisers to the

276

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

President of Cuba. It provided that the Defense Commission pre
pare each year estimates of the quantity of Cuban sugar required by
Cuba itself, by the United States, and by the rest of the world, and
that the President then fix the total quantity of the Cuban crop and
its proportional distribution under these three headings. It further
provided that he should fix the production quota for each mill (sugar
produced in excess being made subject to a fine of $20 per bag) and
the percentage of the quota that might be exported to the United
States. A Cuban Sugar Export Corporation was set up to take
charge of the actual administration of quotas.
Operations under this law have varied from year to year. In
1928 grinding was delayed until January 15, the crop was limited to
a tonnage nearly one half million below that of 1927, quotas were set
up for exports to the United States, and to countries other than the
United States, and 200,000 long tons were designated as the sur
plus to be carried over. During 1929 and 1930, the policy of restric
tion was largely abandoned, the only restriction being the postpone
ment of grinding until January 1. From January to June 1929, the
Sugar Export Corporation was suspended. It was reconstituted in
July 1929 to act as single seller for a privately organized Coopera
tive Export Agency and it continued in existence after that agency
was voted out of existence in April 1930. In January 1931 the policy
of restriction was revived, in anticipation of the international sugar
agreement concluded in May, with a decree limiting the Cuban sugar
crop to 3,100,000 long tons, out of which a maximum of 3,000,000
tons could be exported, 2,600,000 to the United States and 400,000
to other countries.
On May 14, 1931, the Cuban Sugar Stabilization Institute wras
established to represent Cuban participation in the international
sugar agreement and to control Cuban production and exports of
sugar. Administrative details continued to be entrusted to the Na
tional Sugar Export Corporation. Producers and exporters were
each allotted a definite quota, and a heavy fine (10 cents per pound)
was levied for any sugar produced or exported in excess of the
quota.
(&) The international sugar agreement of 1981.—At Brussels, on
May 9, 1931, Cuba, Java, Germany, Czechoslovakia, Poland, Hun
gary, and Belgium, jointly accounting for about 40 percent of the
world’s sugar production and about 90 percent of the world’s sugar
exports, entered into an agreement, effective as of the beginning
of the crop year of 1930-31, to limit their exports to specific annual
quotas, to separate their excess stocks from their normal supplies,
and to eliminate the surplus. Later in 1931 Peru and Yugoslavia
also joined. An International Sugar Council was established to gov
ern the application of the agreement, and export quotas were as
signed to the various countries, except that, for Cuba, only the volume of the exports to countries other than the United States w7as
specified. These quotas as originally drawn are given in table 57.
The figures given in the table for Cuban exports to the United States
are estimates of the Cuban authorities based upon the consuming
capacity of the United States. Although not a part of the interna
tional agreement, they are representative of its intent.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE
T a b le

277

57.—Sugar export quotas of various countries under the terms of the
international sugar agreement, 1931 to 1935
[1,000 short tons]
Country

Cuba (beginning Jan. 1):
To the United States___________________________ .
To other countries________________ ______________

1931

2,886
734

1932

1933

1934

1935

3,136
902

3,136
958

Total Cuban exports________ ___________________

3, 620

4,038

4,094

Java (beginning Apr. 1)_______________________________

2, 535

2,645

2, 756

2,866

2,976

1933-34

1934-35

1930-31
Europe (ending Sept. 1):
Czechoslovakia------- ---------------------------------------------G e r m a n y .___
___ _________________________
Poland_________________________________ _____ ______
Hungary__________ _______________________________
Belgium______________________________________ _____

629
551
340
93
33

1931-32

629
386
340
93
33

1932-33

629
331
340
93
33

Total, Europe________ _____ _______ ____________

1, 646

1,481

1,426

Total of above countries________ ________ _______

7,801

8,164

8, 276

8, 386

8,496

An increase of 5 percent in export quotas was to be permitted when
the price of sugar f.o.b. Cuba reached 2 cents a pound and main
tained that level for 30 days. I f the price reached 2^4 cents, an
additional 2y2 percent was to be permitted at the discretion of the
International Sugar Council, or a total of 7y2 percent in excess of
the original quotas. If it reached 2y2 cents, a further 2y2 percent,
or in all an addition of 10 percent to the original quotas, was to be
permitted. In case Germany in any year was unable to export its
quota, such deficiency up to a given limit was to be allotted to Cuba,
Czechoslovakia, Poland, Hungary, and Belgium, to be exported by
them during the next year in addition to their normal quotas.
As a means of eliminating the excess stocks, the sugar agreement,
besides limiting exports to a specific quota for each country, directed
each one to dispose annually of a specific quantity of sugar; these
quantities were designated as excess supplies. It was further agreed
that each of the participating countries should so adjust the produc
tion of sugar that its output, plus the annually disposable part of its
surplus, would not exceed its domestic consumption plus its assigned
export quota. Surpluses then existing in the various countries were
declared as consisting of the following quantities: Cuba, 1,456,000
short tons; Java, 551,000 short tons; Germany, 93,000 tons; Czecho
slovakia, 10,000 tons; Poland, 88,000 tons; Hungary, 18,000 tons;
and Belgium, 32,000 tons. The segregated stocks in Cuba were to be
reduced at the rate of about 292,000 short tons a year, and annual
installments also were provided for the gradual working off of the
surplus stocks in other countries.
At the end of the first year of the operation of the sugar agreement,
despite lower production in the countries participating, world stocks
had become larger, prices had reached the lowest levels in 38 years,
and international trade had diminished. State intervention in coun
tries not members of the agreement continued unabated in the direc
tion of increasing production. Meanwhile the general world depres

278

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

sion was deepening. Under such conditions the exports of the
agreement countries fell far short even of the restricted quantities
set up in the agreement.
Early in 1932 the terms of the agreement were revised, following
meetings of the International Sugar Council in Brussels and in
Paris. Cuba agreed to fix its 1932 crop at about 2,700,000 long tons;
and the European parties agreed to accept a reduction from their
1932 export quotas equal to the quantity by which Java might exceed
1,680,000 tons during the year April 1932 to March 1933. The
Cuban reduction in terms of exports was about 164,000 short tons;
and the European reduction, equal to the difference between 2,645,000
and 1,680,000 tons, amounted to 965,000 short tons.
In spite of these reductions, sugar prices early in June 1932 de
clined to an all-time low of 0.57 cent a pound New York, exclusive
of the duty. When it became apparent in Cuba that the quota it
had planned to export to the United States would be excessive, a
pool was organized by banking interests for the purpose of holding
for a rise in prices the stocks represented by the 1932 export certifi
cates: and on July 2 the pool was made official and obligatory by
Presidential decree. Out of the amount assigned to the United
States during 1932, 700,000 long tons (784,000 short tons) was to be
withheld until the average price, New York, not including the duty,
should reach 1y2 cents per pound and remain there for 5 days. An
other decree (August) extended the duration of the pool to June
30, 1933.
At a meeting of the International Sugar Council at The Hague
late in 1932 negotiations that had extended over 4 months finally re
sulted in another revision of the agreement. In view of her dimin
ished exports to the United States market, Cuba was accorded an in
crease in exports to other countries for 1933 up to 1,000,000 long
tons plus whatever part of the 1932 German export deficit Cuba did
not utilize in 1932. This increase in the Cuban quota would be de
ducted from the quotas of Java and Europe. For 1934 and 1935
the Cuban ex-United States export quota was set at 930,000 long
tons, the increase to be offset by a reduction in the quotas of other
countries, Germany being the chief contributor. As a compensa
tion to Germany and the other member countries (other than Java
and Cuba), Java agreed that if the world price of sugar reached the
level at which export quotas were automatically to be increased by
5 percent, the other member countries (excepting Cuba) could have
the benefit of the 5 percent to which she (Java) was entitled. At
the same time the pivotal price at which export quotas automatically
increase was diminished by common agreement from 2 cents a pound
to 1% cents a pound f.o.b. Cuba.
Reference has already been made to the production restrictions
adopted by Cuba to implement the International Agreement. In
the other member countries also, notably in Java and Germany,
similar measures for implementing the agreement have likewise been
adopted. (See ch. Y, p. 98, and, for further details, the appendix.)
(c) Restriction in minor sugar-producing countries.—To complete
the discussion of restriction in sugar-exporting countries, a brief
reference may be made to two cases of minor importance. Govern

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

279

ment intervention to restrict production has appeared in direct form
in Brazil and in indirect form in Argentina. In December 1931
the Brazilian Ministry of Labor, Industry, and Commerce was placed
in direct control of the Brazilian sugar market and the price of
sugar at the principal Brazilian sugar market, Rio de Janeiro, was
stabilized between 39 and 45 milreis (paper) per bag (3.5 and 4.1
cents per pound at par).13 In Argentina, beginning early in 1931,
a previously established National Sugar Commission was directed
so to adjust the duty on sugar as to maintain the domestic price
between 11 centavos gold per kilo (4.8 cents a pound at par) and 41
centavos paper (7.9 cents a pound).13 Under the auspices of the
National Sugar Commission an agreement was reached among the
producers whereby they were to limit their production and distri
bution in the domestic market.
EFFECTS OF GOVERNMENT INTERVENTION ON THE WORLD
SUGAR SITUATION
E F F E C T S P R IO R TO

1931-32

Prior to the year 1931-32, government intervention tended dis
tinctly to increase world production and to reduce world consump
tion of sugar. The ever-widening gap between quantity produced
and quantity consumed was apparent in the world surplus of sugar,
which continued to mount at an increasing rate until 1932-33. This
rising surplus was accompanied by an almost continuously declining
price.
1.
Effects on production.—From 1920-31 to 1931-32 world pro
duction increased from a little over 19,000,000 short tons to 29,000,000
short tons. During the same period visible supplies (as of Sept. 1)
increased from 2,000,000 short tons to well over 8,000,000 short
tons (table 53). The chief increases in production during this
period occurred in those areas in which government intervention
was most prominent—in general, the deficit-producing countries. In
Europe, and in the British colonies and dominions exclusive of
India, the volume of output approximately doubled during the
decade. In the insular possessions and Territories included within
the tariff wall of the United States, production has increased by
about 90 percent since the World War.
The increase of production in the foregoing areas becomes the more
significant when it is remembered that production meanwhile in
Cuba—one of the lowest-cost sugar-producing countries of the
world—declined by about 11 percent. The fact that the output of
some of the lower-cost producers was declining while that of some of
the higher-cost was increasing rapidly, clearly indicates that govern
ment intervention was hindering effective development of the world
sugar industry on the basis of natural advantage. The increasing
output of the less efficient areas, it is generally recognized, has been
brought about largely through government intervention.
In table 58 are summarized the statistics of production and im
ports of a group of deficit countries and areas where government
13 In M ay 1933 the Brazilian milreis stood at about 64 percent of par and the Argentine
peso at about 70 percent of par.
179563— 33------ 19

280

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

intervention in sugar has been important. Very marked increases in
production appear in the United Kingdom, in the British Empire as
a whole (exclusive of India), in Austria, France, Italy, Japan (in
cluding Taiwan), in Turkey, and in Yugoslavia. In these countries
imports either have been kept close to their former level or have
actually been reduced in volume.
The sum total of production for all of the countries shown as of
1930-31, minus the production of 1925-26, is 2,022,000 short tons.
This represents an increase of almost 50 percent in 5 years, illustrat
ing in striking fashion what a tremendous stimulus has been given
by government aid to the expansion of sugar output. Since 1925-26
neither post-war rehabilitation nor favorable prices have been factors
in promoting expansion, for reconstruction was by now well on its
way and, beginning early in 1924, a decline in prices had set in.
In table 58 is indicated also the effect on international trade of
the increased production in deficit areas. Drastic increases in the
volume of imports of these countries are evident in most of the cases
given. The United Kingdom offers a possible exception, for the
amelioration of the tariff barrier in the United Kingdom gave
considerable impetus toward the marked increase in consumption
prior to 1931-32. The total decrease in imports in deficit areas was
from 3,746,000 to 3,119,000 short tons, or a decrease of about one
fifth over a period of 5 years.
T a b l e 5 8 . —Production

and imports of sugar in deficit areas where intervention
has been of a stimulative character in the period between the years specified
Country

United Kingdom ---------British Empire (exclu
sive of India.)
Austria_______ _________
France__________________
G r e e c e ..______________
Italy____________________
Japan and Taiw an------Netherlands....................
Spain........... ............... .......
Sw eden............................
Turkey_________________
Yugoslavia------------------T otal................... ..

Produc
tion

Year

N et im
ports

1,000 short 1,000 short
tons
tons
15
1, 720
63
2,292
486
1, 829
1,106
i 2, 009
1,655
i 2,811
2,333
i 2, 383
52
87
86
109
166
89
180
748
144
1,298
67
(*)
70
(2)
174
15
469
6
654
317
965
164
330
55
318
92
278
(3)
337
(3)
204
117
94
206
69
(2)
14
70
67
6
112
37

1923
1925-26
1930-31
1923
1925-26
1930-31
1923
1925-26
1930-31
1925-26
1930-31
1925-26
1930-31
1925-26
1930-31
1925-26
1930-31
1925-26
1930-31
1925-26
1930-31
1925-26
1930-31
1925-26
1930-31
1925-26
1930-31 j
1925-26
1930-31

4,196
6, 218

Intervention

Subsidy paid to factories with the stipulation that
they pay a fixed price to the beet growers.
Tariff.
Tariffs, including preferences to colonies and
dominions.
Tariff.
Tariff and import quota.
Tariff.
Do.
Tariff.

Subsidies to production.

Tariff and production bounty.
Tariff; fixed prices for beet and cane in 1932.
Tariff; production bounties; minimum
guaranties; monopoly in 1932.
State monopoly.
Tariff.

3, 746
3,119

Compiled from International Yearbook of Agricultural Statistics.
1 Includes only United Kingdom, Canada, and Irish Free State.
2 Less than 1,000.
3 Exported instead of imported.

price

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

281

Production was stimulated by government intervention in export
ing countries also, although not to the same extent as in importing
countries. A number of examples are summarized statistically in
table 59.
T a b l e 5 9 . —Production

and exports of sugar in surplus countries where inter
vention was of a stimulative character in the period between the gears
specified
Country

British Empire:
Australia........ ............. ........
1British A f r i c a .................
British Guiana................ .
Total__________________
Total_________ __
Continental Europe:
Czechoslovakia__________
Germany_______ ________
H u n g a r y .______________
Poland_________ ______
Total___________ _____ _
T o ta l................ ...............

Year

1923-24
1925-26
1930-31
1923-24
1925-26
1930-31
1925-26
1930-31

Produc
tion

Net ex
ports

Intervention prior to 1931

1,000 short 1,000 short
tons
tons
320
9 Embargo on imports; government monopoly
583
181
of trade; tariff preference of the British
606
211
Empire.
203
29 Tariff preference of the British Empire.
54
240
393
170
109
120
Do.
141
128

1925-26
1930-31

943
1,140

344
509

1925-26
1930-31
1925-26
1930-31
1925-26
1930-31
1925-26
1930-31

1,661
1,259
1,763
2, 808
183
258
638
855

994
569 Private or semiofficial cartels to regulate com
1
petition in domestic markets; tariffs to
310
restrict imports and make the self-regula93 } tion of the domestic industry effective on
117
domestic supplies and thus to maintain
216
domestic above export prices.
423 i

1925-26
1930-31

4,245
5,180

1,304
1,419

Compiled from International Yearbook of Agricultural Statistics.

Striking increases in production are shown in Austria, British
Africa, British Guiana, Germany, Hungary, and Poland, with cor
responding increases in exports, except in the case of Germany.
Of the countries included in table 59, Czechoslovakia was the only
one in which production and exports declined. For the seven coun
tries included in the table, the increase of production from 1925-26
to 1930-31 was 1,100,000 short tons, an increase equivalent to about
17 percent. I f the first three countries (included as part of the Brit
ish Empire in the previous table) be excluded, the increase in pro
duction amounts to 935,000 short tons, or about 22 percent.
The net increase in production over the 6-year period from
1925-26 to 1930-31 in both deficit and surplus areas where gov
ernment intervention has been a factor in stimulating production
(including the countries in tables 58 and 59, and including the United
States and its dependencies) amounts to about 4,000,000 short tons.
With world prices ranging from 1 to 3 cents, much of this increase,
especially that in the importing countries, would not have been pos
sible without government assistance to the producers.
There is, of course, no means of determining precisely how much of
the increase was due to intervention. Other factors, the effects of
which are not susceptible of definite measurement, also affected the
trend. The rehabilitation of war-torn areas in Europe, including

282

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

the restoration of the agricultural productive plant, accounts for a
considerable part of the increase in the European sugar output be
tween 1918 and 1924. Improvements in technology and in sugarbeet and cane varieties, the high price of sugar prior to 1924, and
the relatively high prosperity prior to 1929, are all to be taken into
account.
Considering how wide-spread and how thorough-going has been
government intervention on the behalf of sugar during the last
decade, it is perhaps reasonable to assume that at least one half of the
increase in production in the European orbit (European countries
and dependencies) may be attributed to it. In other words, of the
5,600,000 short tons by which the production of sugar within the
European tariff orbit during the last 3 years exceeded the production
of 10 years ago, perhaps 2,800,000 short tons can be attributed to the
influence of state intervention. Another quarter of a million tons
of the increased production may be attributed to state aid in Taiwan
and other parts of the Orient. Furthermore, within the orbit of the
United States tariff, probably at least half the increase in the pro
duction of sugar in our insular possessions can be attributed to the
tariff. This would mean something like 750,000 tons.
Roughly speaking, it would appear that sugar production for the
world as a whole may have been increased by some three and one half
or four million short tons, or by about 45 percent, during the last
decade in consequence of government intervention.
2.
Effects on consumption.—The very measures that have been
directed toward improving the market for the domestic sugar indus
tries through increased prices have also had the undesired effect of
reducing consumption in the several domestic markets. Moreover, in
addition to protective tariffs and other measures to raise the price of
sugar in the domestic market, governments have levied various other
charges for fiscal purposes, such as sales taxes, consumption taxes,
and manufacturing taxes. These additional charges, while not bene
fiting the domestic sugar producers in any direct way, have increased
the price of sugar and contributed to the decrease of consumption.
The interconnection of government levies, sugar prices, and sugar
consumption is shown graphically in figure 27. Taking first the rela
tion of price to tax, it is seen1that in general the duty-paid price of
sugar varies from country to country approximately by the amount
of the import duties and other charges levied. Second, the low-price
countries have a large per capita consumption, whereas the highprice countries have a relatively small per capita consumption.
Taken together, the two statements of relationship lead to a third—
the consumption of sugar tends to vary inversely with a change in
the duties and other charges imposed by governments. This is illus
trated in figure 28, in which the average relationship between per
capita consumption, and the tax in 10 foreign countries and the
United States is charted as a sloping line.
The sloping line indicates in a general way that as the charges im
posed on sugar increase, the per capita consumption of sugar declines.
In reasoning from cause to effect, however, certain reservations must
be noted. In the first place, a tariff duty or other tax on an imported
product usually is not fully effective; that is, it does not increase the
price of the product over what it would otherwise have been by the
full amount of duty. Moreover, the rate of sugar consumption

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

283

depends to a large extent upon per capita income, which varies from
country to country, and upon more or less fixed habits of consump
tion, wThich also differ considerably in the various countries. The
presence of these and other variable influences, which cannot be
measured quantitatively in many cases, makes it difficult to determine
to what extent government imposts affect consumption.
A separate analysis of sugar consumption in the most important
single consuming market outside of the United States—the United
Kingdom—on the basis of changes over a period of 10 years provides
CONSUMPTION
POUNDS
PER CAPITA

100

4-0

UNITED
KINGDOM

FRANCE

GERMANY

ITALY

P e r c a p ita consumption

F IG U R E 2 7 ,— C H A R G E S L E V IE D O N S U G A R , P R IC E O F S U G A R , A N D P E R C A P IT A
C O N S U M P T IO N IN V A R IO U S C O U N T R IE S , 1 9 3 0 - 3 1 . ( G R O S S R E L A T IO N S H IP S .)

The per capita consumption of sugar tends to decrease as price increases.
to increase as the import duties, consumption taxes, etc., increase.

Price tends

F i g u r e 2 8 .— p e r C a p i t a C o n s u m p t i o n o f , a n d c h a r g e s L e v i e d o n , S u g a r
in V a r i o u s C o u n t r i e s , 1 9 3 0 -3 1 .
(G r o s s R e l a t io n s h ip , w it h A l l o w a n c e
T O BE M A D E F O R O T H E R I M P O R T A N T F A C T O R S IN F L U E N C IN G C O N S U M P T IO N .)

Consumption of sugar tends to decrease as the charges levied by governments increase.

284

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

a somewhat simpler approach in studying the relations between taxes,
price, and consumption. In figure 29 it is shown that the margin of
the price of sugar in the United Kingdom above world prices has
varied directly with the British duty on foreign sugar. Of course,
other factors have contributed to the change in the London price of
sugar, notably changes in the general price level in the United King
dom and in the world price of sugar. But the effect of the British
tariff upon siigar prices in the United Kingdom is suggested by the
fact that during the years 1921-23 to 1925-27, while the duty on sugar
was being decreased by 2y2 cents a pound, the margin of the price of
sugar (duty-paid refined) at London over the world price (New
York, 96°, duty not paid), declined by even more than that amount.

F i g u r e 2 9 — B r i t i s h D u t y o n F o r e ig n S u g a r
in

u n it e d

K in g d o m

above

and

w orld

m a r g i n o f p r ic e o f s u g a r

P r ic e , 1 9 2 0 - 3 1 .

As the British duty on sugar has decreased, the margin of the price of refined sugar

at London above the price of 96° raw sugar at New York, duty not paid, has also

decreased.

1920 '21
F ig u r e 3 0 . — P e r
and

'22 '23 '2*r ’25 '2 6 '2 7

c a p it a

c o n s u m p t io n

V a r i o u s Fa c t o r s

'2 8 ’29
of

a f f e c t in g

'3 0 '31

Sug a r

’3 2 '3 3 \3AIn

the

u n it e d

k in g d o m

Co n s u m p t io n , 1 9 2 0 - 3 2 .

The consumption of sugar in the United Kingdom has continued to increase despite the
decline in the general price level since 1924 and the decline in consumer purchasing
power since 1927. The continued increase in consumption is attributable in part to the
declining price of sugar and in part to shifts in demand and to other influences.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

285

Figure 30 shows that as the price of sugar in London decreased
during the decade from 1921 to 1931 the per capita consumption of
sugar increased. For every cent a pound change in the price of
sugar the per capita consumption changed by about 2y2 pounds.
Allowance must be made, of course, for other factors that have
changed with price and are independent of price. A number of
these are charted in figure 30 along with the price and per capita
consumption of sugar. One of the forces depicted therein—the
general wholesale price level—moved downward; such a movement
must have tended to reenforce the stimulating influence of declining
sugar prices upon sugar consumption. On the other hand, another of
the forces depicted—purchasing power—expressed quantitatively in
the terms of percentage employment, has had a general downward
trend since 1927. Ordinarily such a movement would have tended
to reduce consumption, but this influence has been offset by other
forces, such as changing habits of consumers in the direction of
increasing use of sugar in the human diet.
Making allowance for these other factors, some of which are tan
gible and many of which are intangible, it may be said with reason
able safety that of the 2y2 pounds per capita change in consumption,
perhaps half of the total, or a little over 1 pound per capita, may be
attributed to the change in price. Since price varies approximately
with the duty, it follows that consumption would change at the
rate of something in the neighborhood of 1 pound per capita for each
change of 1 cent in the duty.
The foregoing result may be used as a basis for estimating the
effect of tariffs the world over on the consumption of sugar. For
the world as a whole, a change of 1 pound per capita in sugar con
sumption means, at the present level, a variation of about 3.28 per
cent. Correspondingly, a change of 1 cent a pound in the price
means a variation of about 25 percent. Hence the coefficient of
elasticity of demand would be in the neighborhood of —0.13. That is
to say, consumption would tend to vary about 13 percent as much as
price.14
This figure for the elasticity of demand would seem to be a conser
vative one to apply to the chief consuming areas of the world, for
there is a strong probability that in many other countries the demand
for sugar is more elastic than in the United Kingdom. It is generally
recognized that consumption is more sensitive to change in price
among groups whose standard of living is relatively low. This
seems to be particularly true of China, with a population of
453,000,000, and India, with a population of 353,000,000.
This estimate may be checked by considering the changes that have
taken place in world consumption and world price during the last
few years. In table 60 are given the annual (crop-year) world
consumption of sugar, as estimated by Dr. Mikusch, internationally
known sugar statistician and economist, and the average price of
sugar, duty paid, at New York (calendar year). Bearing in mind
that the average duty collected for sugar the world over has been
between 1 and 3 cents a pound, that European prices are higher
14
C alculated as f o llo w s : W o r ld per-capita consum ption = 6 1 ,0 0 0 ,0 0 0 ,0 0 0 pounds 4 -2 ,0 0 0 ,0 0 0 ,0 0 0 o f population = 3 0 .5 pounds.
Percent change in consum ption = 1 - f - 3 0 .5 = 3 .2 8 .
P ercent change in price = 1-^-4 = 25.
T h e form er percent divided by the la tte r = 0 .1 3 .

286

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

because they include costs of transportation, and that certain errors
in the computation tend to cancel each other, the New York prices,
duty paid, may be taken as sufficiently representative. The calcula
tion of the elasticity of world demand on this basis is given in table
60. The resulting estimated elasticity of demand of about —0.18 is
somewhat higher than the quantity —0.13 calculated on the basis of
a change of 1 pound per capita for each 1 cent a pound change in the
price.
60.— Bate of change in world sugar consumption with changes in price

Calendar year

1924-25___________________________________
1925 -26 .._______ __________________________
1926-27__________ _______ ________________
1927-28___________________________________
1928-29______________________ _______
.
1929-30____________ _____ ___________
1930-31___________ ______ _______
_

Tons
25.400.000
27.100, 000
27.100, 000
28.400.000
30, 300, 000
29.700.000
30, 500, 000

1924 _________________ ________ __
1925 ____________________ __ .
1926 _____________
________
1927 _____________
„
.
1928_____________________________________
1929 ______ ___
1930 __

Average consumption of last 3 years___
Average consumption of first 3 years___

30,200,000
26, 500, 000

Average price of last 3 vears.................. ..
Average price of first 3 years...............

Difference___ _____________________
___
Average of the 7 vears............... ...................

3, 700,000
28, 400,000

Difference____ ____
_______ _______ __
Average of the 7 years____ _____________

3.7

28t = o-13

Price of
sugar at
New York,
duty paid 2

Cents per
pound
6.0
4.3
4.3
4.7
4.2
3.8
3.4
11.4
14.6
1

m m p tto n; !

Crop year

T a b le

- 3 .2

-r r -o -7 2 7

1 Foreign Crops and Markets, Apr. 14, 1930, p. 547; and M a y 23, 1932, p. 838. (Based on figures given
in Consumption, Imports, and Exports of Sugar in the World, published semiannually by G. Mikusch
in Vienna.)
2 Agriculture Yearbook.

Both estimates are conservative as compared with that arrived at
by Schultz 15 in a detailed study of statistical laws of demand and
supply as they apply to sugar. Schultz found that during the
decade 1903-13, the elasticity of the world demand was approxi
mately of the order of —0.6 during the decade 1903-13. Under the
conditions of price and per capita consumption prevailing during the
period from 1924-25 to 1930-31 an elasticity of demand of —0.6 is
equivalent to a change of from 3 to 6 pounds per capita with each
change of 1 cent per pound in price.16 This indicates an elasticity
nearly five times as great as that employed in the present estimate.
Adhering, then, to our original estimate of —0.13 as safely con
servative, we shall proceed on the hypothesis that consumption would
be higher by 1 pound per capita if the price of sugar were lower by
1 cent a pound. If the duties and consumption taxes levied on
sugar in many countries had not been imposed in 1931-32, the domes
15 Schultz, H . C., S ta tistic a l L a w s o f D em and and Supply ( 1 9 2 8 ) , pp. 1 6 8 and 1 88.
16 C alculated as fo llo w s :

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

287

tic prices of sugar would have been somewhere between world-price
parity and the duty-paid price. If the domestic prices had been
lower by the full amount of the duties, etc., the weighted average
domestic price (weighted by population) for Europe, the British
Empire, China, Japan, and the United States would have been lower
by about 2.8 cents a pound. On the basis of the foregoing hypothe
sis, consumption would accordingly have been greater by 2.8 pounds
per capita. An increase of 2.8 pounds in the consumption of the
1.300.000.000 people involved would have meant a total increase in
consumption of 1,800,000 short tons over and above what it was in
1931-32.
However, it cannot be supposed that the duties were fully effec
tive, since the incidence of a tax on imports, if considerable quanti
ties are being brought in, is always divided between the foreign pro
ducers and the domestic consumers. That is to say, a part of the
effect of the tax is to depress the foreign price. Precisely what
allowance to make for this factor in the present connection, there is
no means of knowing. But some light can be shed on the matter.
Schultz found 17 that under the conditions of demand and supply
prevailing in the period 1904-13 the increase in the United States
price of sugar due to the tariff was approximately 86 percent of the
duty. I f the duties as of 1931-32, above, are taken to be 80 percent
effective on the difference between world price and the average of
duty-paid domestic prices, the removal of the duties would have
meant a consumption larger by 1,400,000 short tons. But this does
not allow for the presumably higher elasticity of production and
lower elasticity of demand in countries other than the United States.
I f these were so great as to warrant cutting the foregoing estimate
in half, it would still amount to 700,000 short tons.
3.
Effects on world stocks and prices.—Up to this point quanti
tative estimates have been derived, within broad limits of error, for
the effect of government intervention on the world production of
sugar and on the world consumption of sugar. It has been estimated
that without the stimulus of government intervention the amount by
which world production would have been smaller in 1931-32 is in
the neighborhood of 3,500,000 or 4,000,000 short tons. It has been
estimated also that without the deterring effect of intervention on
consumption the world takings of sugar in 1931-32 would have been
greater by about 700,000 short tons. The sum of the two quantities
involved gives an estimate of between 4,200,000 and 4,700,000 short
tons as the total surplus of sugar attributable in 1931-32 to govern
ment intervention—roughly, let us say, between 4,000,000 and
5.000.000. The 1931-32 surplus, instead of being in the neighbor
hood of 8,400,000 short tons, would have been between 3,500,000 and
4,500,000 short tons.
I f stocks today were between 3,500,000 and 4,500,000 tons, they
would be even smaller than they were during the period from 1925-26
to 1927-28. The year 1925-26 was almost at the beginning of the
sharp increase in stocks to the present level of about 8,400,000 tons.
If the increase in stocks had not occurred, the world price of sugar
today would be somewhere in the neighborhood of what it then was,
17 Schultz, H . C., S ta tistic a l L a w s o f D em and and Supply

( 1 9 2 8 ) , p. 2 0 4 .

288

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

minus an allowance for the decline in the general price level. Dur
ing the years 1925-26 to 1927-28, inclusive, the New York price,
exclusive of the duty, averaged 2.8 cents a pound. In 1931-32, Sep
tember to August, it averaged 1.3 cents a pound. This represents a
decline of 1.5 cents. Meanwhile, however, the general price level
fell bv about 31 percent. Allowing for this factor it may be esti
mated that the total effect of intervention upon the New York price
was in the neighborhood of 1 cent a pound.
E F F E C T S OF I N T E R N A T IO N A L S U G A R A G R E E M E N T O F 1931

The period since 1931 presents a more involved situation from the
standpoint of intervention owing to the dual character of the inter
vention that has subsequently prevailed. Since the adoption of the
International Sugar Agreement in May 1931, both restrictive and
stimulative measures have coexisted throughout the world, each
tending to affect the world sugar situation along with other factors
quite outside the realm of government intervention. To measure
wTith precision the effects of these various factors is not possible, but
there is enough evidence to suggest that the international agreement
has had some effect in reducing world stocks.
Since 1931 world production and carry-over in the countries be
longing to the International Sugar Agreement have declined. Pro
duction in these countries fell from an average of over 13,000,000
short tons for 1928-29 and 1929-30 to less than 10,000,000 in 1931-32.
From September 1931 to September 1932 carry-over fell by about
one tenth. The declines of production and carry-over are not, of
course, necessarily the result solely of the agreement. In part they
were probably due also to the low and declining world price of sugar.
This is suggested by the fact that in some of the participating coun
tries, notably Germany, production and exports fell by more than
the amounts stipulated in the agreement. Yet the effect of the agree
ment on production and exports in the member countries has
undoubtedly been marked.
To a very important extent, however, the improved statistical
position of sugar in the agreement countries has been offset by devel
opments outside them. In the nonagreement countries production
increased from an average of about 17,300,000 short tons in 1928-29
and 1929-30 to over 19,500,000 tons in 1931-32. This represents an
increase of some 2,200,000 tons as contrasted with a decline of some
thing over 3,000,000 tons in the agreement countries. Since the
annual average world price did not actually rise in 1931-32 the
increased production in the nonagreement countries can hardly be
attributed directly to the price effects of restriction in the agreement
countries, except insofar as any slackening of the decline in sugar
prices relatively to those of competing crops may have tended to
encourage a shift to sugar production. But the increased produc
tion in nonagreement countries was undoubtedly due in large part
to trade barriers and other aids which greatly increased after 1929,
and this increased production did have the effect of partly offsetting
the results of restriction in the agreement countries.

APPENDIX
AGRICULTURAL PRICE-SUPPORTING MEASURES
IN FOREIGN COUNTRIES

289

AGRICULTURAL PRICE-SUPPORTING MEASURES IN
FOREIGN COUNTRIES1
ARGENTINA
Price-maintenance measures have not been a particularly prominent feature
of government intervention .in behalf of agriculture in Argentina. Insofar as
the Government has been active in the direction of agrarian relief, much of its
activity has been on the side of measures designed to reduce production or
marketing costs rather than of measures intended immediately to affect the
relation of supply and demand in such a way as to raise prices. There has
been some activity, however, of the type more immediately related to price
maintenance, and this has recently tended to increase. Most significant in this
connection have been the tariff and other restrictions imposed on imports and
restriction of the production of sugar. Other measures tending to enhance
farm income include regulation of the grain exchanges, the reduction of freight
rates, the reduction of land rentals, special loans to the producers of cereals,
and participation in the planning and financing of grain-elevator construction.
Some of these latter will be discussed herein as well as the strictly price-main
tenance measures.
1.
Tariffs.— Since Argentina is predominantly an agricultural country and
since the great bulk of her agricultural production is definitely on an export
basis, tariffs and other measures restricting imports manifestly can have but
little effect insofar as the maintenance of internal prices is concerned. For
example, corn, wheat, linseed, beef, hides, and wool, which are commodities of
the first importance, are not in a position to benefit by increases in the tariff
rates. On the other hand, a number of products of minor importance in Argen
tine agriculture are on an import basis and thus are in a position where supplies
may be affected and internal prices enhanced by import restrictions. Agricul
tural products on an import basis include rice, yerba maté, coffee, tobacco, eggs,
olive oil, and certain dried and fresh fruits. Practically all of the coffee and
olive-oil requirements are imported; of the other items listed she produces more
or less within her own borders. Some of the duties on agricultural commodities
imported into Argentina are given in the following table. It should be noted
that practically all articles in the Argentine tariff, whether dutiable at specific
or at ad valorem rates, are subject also to surtaxes. The amount of a surtax
is stated usually as a percentage of the official valuation .2
During the past 2 years Argentina has increased her tariff rates on agri
cultural (and other) products with a view to protection both of domestic in
dustries and of the Argentine currency. On February 23, 1931, duties on oats,
wheat and corn flours, rye, beans, peas, lentils, dried vegetables, onions, nuts,
honey, rice, cheese, edible oils, and certain fresh fruits became effective. On
August 31 a large number of products hitherto on the free list were made duti
able and fixed valuations were established for them. Apples, pears, livestock,
hides and skins, beverages, and certain foodstuffs were affected. On September
21 a general upward revision of rates affecting about 400 articles, including some
agricultural products, went into effect. On October 9, 1931, an additional ad
valorem import duty of 10 percent was levied on all goods imported, to be effec
tive for a year. But before the year came to an end the provisional surtax was
extended, to continue in effect for another 2 years. It was further provided
that during the last 15 months the surtax was to be reduced gradually until
brought to an end in December 1934.
1 38 cou ntries are included in th is appendix.
A m o n g th ose not included are Soviet
R u ssia and the Irish F r ee S ta te.
F o r an account of the m easures and policies o f Soviet
R u ssia, see ch. V I I .
In the Irish Free S tate the recent changes have been so num erous
th a t it has not been feasible to digest them for inclusion herein.
2
In A r g en tin a as in som e other L a tin A m erican cou ntries th e official v a lu a tio n system
is applied.
T h e m ethod con sists in levyin g ad valorem duties and then assign in g official
v alu es to the com m odity affected.

291

292

WORLD TRADE BARRIERS IK RELATION TO AGRICULTURE

Argentina: Import duties on certain imported agricultural products as of March
1933

Rates in foreign
currency

United
States
currency

Product

Rice:
Hulled .............................................. ........................................................... ..
Unhulled___________________________________________________________
Leaf tobacco:
Havana ________________________________________________ _____ _____
Paraguayan------------------- -----------------------------------------------------------------Other _ _ . _
_______ _______________________ ________________
Apples_______________________ ________________________________________
Oranges
__
__________________________________ _____ _______
Eggs
_____________ ________ ________ __
__ _____
Yerba maté:
Processed. ________ _______ ____________________ _____________________
Not processed........... ............................... ..................... ....................... .........
Sugar:
96° and u p ______ _________________________________________________
Less than 96°________________________ ________ _____________________

Import
duty 1

Official
valuation 1

D uty
including
surtaxes 2

Gold peso
per kilo
0.050
.250

Gold peso
per kilo
0.08
.02

Dollars per
100 pounds
1. 68
6.71

1.600
.128
.640
.150

33.68
4. 55
12. 81
1.67
(4)
0)

. 05000
. 01875

.192
5.160

2.19
1.00

6.07000
e. 05000

.128
.096

^ 3. 21
7 2. 54

1.000
.150
.375
(3)
(4)
(4)

Compiled from information furnished by the Division of Foreign Tariffs, Bureau of Foreign and Domes
tic Commerce.
1 In addition to the duty, surtaxes totaling 17 percent of the official valuation are imposed.
2 Conversion to United States currency made on the basis of average exchange for March 1933, peso=
$0.5837.
3 25 percent ad valorem.
4 Free.
5 The surtaxes on official valuation in this case total 12 percent.
6 Plus additional duty or surtax fixed at 0.0296 gold peso per kilo for the month of February 1933. This
duty is established monthly by the National Sugar Commission.
7 Includes additional duty established for February 1933.

On February 27, 1931, a presidential decree (dated Feb. 6 ) providing for a slid
ing scale duty on sugar was published. Each month the duties on sugars are
fixed so that the price for imported refined sugar in the Argentine market after
clearing through customs shall be at least 11 centavos gold per kilo (4.8 cents a
pound at par). Before the 10th day of each month the National Sugar Com
mission determines the minimum price of foreign offerings, c.i.f. Then it com
putes the amount of additional duty so that the sum of the additional duty,
plus the previously ascertained minimum price of foreign sugar, plus the ex
penses of clearing the sugar through customs, amounts to 11 centavos gold per
kilo (4.8 cents a pound). On refined sugar an additional duty of the same
amount is applied. The application of the additional duty will be temporarily
suspended whenever the Sugar Commission finds that the net price received for
sugar by the local refineries in the Buenos Aires market exceeds 41 centavos
paper per kilo (7.9 cents a pound). In case of suspension of the duty under the
above circumstances an additional duty of 4 centavos gold per kilo (1.1 cent a
pound) shall be imposed provisionally.
In addition to the regular restrictions on imports, a special provision against
dumping of foreign products on the Argentine market went into effect in the
latter part of 1931. The decree, dated August 8, 1931, provided that the execu
tive power could apply new or higher duties temporarily under any of the fol
lowing conditions: (a) When a foreign country concedes subsidies, special re
wards, or other advantages to products - destined for exportation; (&) when
subventions, special rewards, exemptions, or other advantages are accorded for
transport of foreign products or to persons engaged in shipping; (c) when com
petition of foreign products, favored by special circumstances, such as legisla
tion, rate of exchange, low wages, forced labor, or any other form of “ dump
ing ” is harmful to Argentine production. The new duties applied in such cases
remain in force as long as maintained by the executive power, until such times
as confirmed, reduced, or suppressed by the National Congress. The changes are
to be proposed by the Minister of Agriculture.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

293

Under article 76 of the Argentine tariff law the executive powTer already had
the authority to increase the Argentine duty rates by one half and to establish
a duty of 15 percent on duty-free goods coining from countries which do not
apply their minimum tariff to Argentine goods, which increase the charges on
imports from Argentina, which place charges on Argentine goods otherwise
duty-free, which exceptionally lower the duties on goods from other countries,
or which by restrictive measures place impediments on the importations of
Argentine fruit or products.
2.
Direct restriction of imports on economic or sanitary grounds.— Argentina
imposes a partial embargo on imports of yerba maté, and for a time had sea
sonal embargoes on imports of fresh fruits. She maintains year-round sanitary
restrictions on imports of apples and some other products.
Yerba maté, which occupies an important place as a beverage in Argentina,
has heretofore been chiefly imported, mainly from Brazil. In order to en
courage the domestic yerba maté industry, the Argentine Government pro
hibited the importation of yerba maté after January 15, 1931. The prohibition
was modified to permit the entry of 60,000 tons a year at the rate of 5,000
tons a month, all but 500 tons of this monthly import allowance being dis
tributed among certain importing houses according to a quota plan.
Seasonal embargoes were used until recently by Argentina to assist the
domestic fruit industry, the idea being to keep out competitive imports
during the time when the home products were being marketed. From March
9, 1931, until April 8, 1932, fresh fruits were permitted entry only during the
time specified in the following schedule: Oranges, from October 1 to June 3 0 ;
mandarins, from October 1 to April 30'; lemons, from November 1 to Febru
ary 15; cherries, February 15 to October 31 ; plums, March 1 to November 15;
apples and pears, May 1 to December 15; quinces, June 1 to December 3 1 ;
peaches and nectarines, April 1 to November 15 ; grapes, July 1 to November
3 0 ; cherimoyers, October 1 to March 31 ; melons, June 1 to September 3 0 ;
and watermelons, April 30 to October 31. A government decree of April 8,
1932, removed these seasonal restrictions.
Various sanitary restrictions are maintained by Argentina on a number of
agricultural products. Like other restrictions on trade, these have an economic
effect.
Of particular economic significance for American producers is the
decree of July 1, 1931, restricting the importation of apples and certain other
fresh fruits. The fresh fruits for which the restrictions were established are
apples, pears, peaches, nectarines, oranges, mandarins, lemons, cherries, plums,
grapes, quinces, and melons,
Since the interest of American growers and
shippers relates mainly to apples, the following summary covers that fruit
only.
Under the decree of July 1931, apples could be imported into Argentina
only from May 1 to December 15 of each year; and, moreover, certain re
quirements had to be met before entry would be permitted. The fruit was
required to be packed for shipment in the containers of standard types adopted
Iby the exporting country and each apple had to be wrapped in specially pre
pared paper stamped with the name of the grower or packer and the country of
origin. Both the seasonal requirement and the wrapping provision have since
been removed.
The container in which the apples are packed must bear
an indication of the contents, variety, number of apples, name and address of
the producer or packer, and the country of origin.
The decree also provided that all shipments of apples to Argentina must
be made under refrigeration and must be accompanied by a sanitary certifi
cate issued by the official technical authorities in the country of origin. The
certificate must show that the fruit is free from parasites and must give the
Tariety, region where grown (locality and state), point of embarkation,
name of ship carrying the fruit, name of consignee or representative of shipper
at port of destination, and the date of issue of the certificate. The certificate
must be visaed by the Argentine consul at the port of shipment or by the one
a t the nearest port.
The decree also provided that the fruit could not be imported through any
ports other than Buenos Aires and Rosario until the government had been
able to establish a quarantine service at other ports. All shipments are sub
ject to inspection upon arrival in Argentina. If there is any reason to sus
pect the presence of parasites, the shipment may be placed in quarantine for
such time as the sanitary officer may consider necessary.
I f no parasites are found, the fruit is released for entry. I f blotch, canker,
brown rot, soft rot. Mediterranean fruit fly, apple curculio, apple fruit miner,

294

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

apple maggot, and apple weevil are found, the whole shipment must be inciner
ated without indemnification and at the expense of the importer. Apples at
tacked by other injurious parasites not mentioned above are refused entry but
will not be incinerated in the event that they are immediately reshipped.
American apple exports to Argentina were greatly reduced by these sanitary
regulations.
The compulsory wrapping requirement practically shut out
barreled apples from the Argentine market during the 1931-32 season. This
was because barreled apples are not usually wrapped, and those that were
shipped had to be especially packed for that market. Both barreled and boxed
apple exports declined because of the short shipping season and the strict
inspection requirements. Closing the season cn December 15 cut about 2 to
3 months off of the normal shipping season, since the last shipments had
to leave the United States about November 15 to reach Argentina before the
closing date. The strict inspection which the fruit had to stand also made
exporting rather risky, since some of the prohibited diseases could develop in
the fruit during transit.
Total exports of apples from the United States to Argentina in 1931-32 were
only 192,000 bushels compared with 728,000 bushels in 1930-31. Only 8,100
barrels were exported as contrasted with 157,000 in the earlier season. Exports
of boxed apples were 167,000 as compared with 257,000 boxes in 1930-31.
Other sanitary regulations provide that fruits and vegetables in general must
be accompanied by a phytosanitary certificate issued by authorized technical
officials of the country of origin and visaed by the Argentine consul. Sugar
must be accompanied by a similar certificate, and, if permitted entry, is first
quarantined for observation. Plants and seeds entering the country are like
wise subjected on importation to routine inspection. Restrictions are placed
on the importation of forage seeds in general and on the seeds of plants which
may be attacked by the European corn borer. The importation of the following
is prohibited: A lfalfa seeds (with some exceptions), bamboo plants, corn (both
grain and plant), bananas, and plantains.
3. Restriction of sugar production.— Late in 1928 the Province of Tucuman,
which produces about 80 percent of Argentina’s sugar, enacted a law limiting
the output of each mill to 70 percent of its 1926 production and imposing a
prohibitive tax on excess output sold in the domestic market, sugar sold for
export being exempt from the tax. Sugar ground from the cane of small inde
pendent growers (those producing less than 250 furrows of 100 meters length
each) was also exempted. On sugar sold in the domestic market a small tax
was imposed for the purpose of defraying the costs of administration.
Concurrent with this enactment the Argentine Government set up a National
Sugar Commission to coordinate the activities of all sugar interests in the
country. About 2 years later (February 1931) this body was given a pricecontrolling function, enhancing its importance. A Federal decree of February
1931 directed the Commission each month to so adjust the import duty (see
tariffs above) on sugar as to keep the price of imported refined sugar, laid down
in the Argentine market, between 11 centavos gold per kilo (4.8 cents a pound
at par) and 41 centavos paper (7.9 cents a pound). In May 1931, under the
auspices of the National Sugar Commission, an agreement was reached whereby
the Province of Tucuman limited the production of sugar in the crop year
1931-32 to 278,000 metric tons, while the Provinces of Salta and Jujuy limited
their output to a total of 90,000 metric tons. The distribution of sugar was
placed in the hands of the Sugar Producers’ Chamber of Commerce; a com
mittee of the producers was to assign grinding quotas to the several mills, the
volume of production being made subject to the issuance of grinding permits.
In December 1931 it was reported that the refiners of Tucuman had agreed to
dispose of 103,000 metric tons of surplus sugar within the 3 years and to reduce
their output by 34,000 tons each year (or 102,000 tons for the 3 years). Salta
and Jujuy agreed to corresponding reductions. The total reduction, according
to reports early in 1932, was to amount to 124,000 tons.
4. Supervision of the grain exchanges.— One of the outstanding recent develop
ments in agrarian relief in Argentina has been the adoption of measures regu
lating the grain exchanges. The measures adopted are not, strictly speaking,
price-maintenance measures in the sense that they immediately affect the rela
tion of supply and demand. They are, however, measures designed to reduce
the spread between prices in the primary markets and farm prices, and in this
sense are price-maintenance measures. Because of this fact, and also because of
the prominence that has recently been given to them in connection with Argen

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

295

tine efforts at agrarian relief, some account of the grain exchanges legislation
seems called for in the present connection.
On January 26, 1932, by special resolution of the Minister of Agriculture, the
grain-futures markets in Argentina were put under the supervision of the
Bureau of Rural Economy and Statistics. A special committee undertook an
investigation of what are known as the “ price-to-be-fixed ” operations and sub
mitted a report in March. On March 17 the Government issued two decrees
for taking over control of the operations of the grain-futures markets on a
permanent basis, the decrees becoming effective in part on April 1 and in re
maining part on April 15. They appear to have been designed primarily to
insure that free competition should reign at the country’s two great graintrading centers in Buenos Aires and Rosario.
The preamble to these decrees points out that “ in both the grain-futures
markets already mentioned only 400 and 200 nominal shares have been issued,
of 15,000 pesos each, each member being allowed to possess two or five, which by
reason of their scarcity in this market and by the high value they have attained
has reduced the group of operators to a limited number of people and does not
allow that genuine producers, either individually or in cooperatives, or persons
or firms which are interested, either by their profession or commercially or
industrially, in the grain or linseed market should form part of it.” The
“ limited number of people ” referred to in this paragraph is a consequence of
the rule observed by the grain exchange, extending the privilege of trading
only to the regular stockholders in the exchange.
One of the decrees removes these limitations and at the same time requires
complete publicity of the details of all transactions. The other decree pro
vides safeguards for the “ price-to-be-fixed ” contracts frequently entered into
by Argentine farmers, and provides that the Government must be represented
on the committees of the exchanges which determine the “ fixation prices”
received by farmers under the “ price-to-be-fixed ” contracts.
The methods of sale with which this legislation deals are peculiar to Argen
tina, where the inadequacy of storage and credit facilities at the farm and
at country points necessitates immediate movement of crops to the central
markets during harvest time. Very frequently sale is not fully consummated
at the time when grain changes hands. Sale by the grower may be either
“ outright” (so called) or under a “ price-to-be-fixed” contract.
Under the
so-called “ outright ” method of sale the farmer at once receives about 95 per
cent of the nominal price at the country shipping point at the time of sale.
Later on, after standards for the season have been set (by a committee of the
grain exchange) and the grade of the individual farmer's grain has been de
termined, the grower receives the remainder subject to adjustment for grade.
Under the price-to-be-fixed method of sale, the farmer receives a large ad
vance, usually amounting to about three fourths of the value of the grain sold.
The contract of sale is generally for a period of 30 days and renewable at the
grower’s option. The price is not fixed at the time of delivery, but it is agreed
that the price shall be in accord with current “ fixation ” prices at the time
when the sale is finally concluded and that the farmer shall set the day of the
final sale. This the farmer must do before 11 o’clock on the morning of the
day that he chooses. A t 4 o’clock each afternoon a committee of each grain
exchange meets and sets the “ fixation ” price for the day.
It is particularly with the method by which these “ fixation ” prices are
determined that the agricultural interests have quarreled. The fixation price
for a given date is an average of the sales made on the floor of the exchange
during the day. Prices paid by the exporters naturally are a dominant in
fluence in determining the prices on the floor of the exchange. Because a
very few exporters handle the great bulk of the Argentine surplus and the
current price of grain is often fixed after the grain itself has passed into their
hands, it is contended that the grain exchanges of Buenos Aires and Rosario
were being influenced to the disadvantage of the grower.
W ith particular reference to wheat it must also be noted that the adjust
ment of the spread between export prices and fixation prices is more or less
an arbitrary matter inasmuch as Argentina has no official grading of grain
and no official weighing or inspection. Although several types of wheat have
been evolved for export grading, there is but one classification for wheat moving
in the internal trade of Argentina, namely, f.a.q., or fair average quality. D is
counts are exacted for inferiority below f.a.q. but no premiums are paid for
superior quality. The standards of quality are made up in Buenos Aires and
179563— 33------ 20

296

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

Rosario in February and March of each year from samples supplied daily by
the exporters from the deliveries received by them. As will be seen below,
supervision over the processes of sampling and standard fixing are provided in
the second of the recent decrees relative to the grain exchanges.
The situation was summarized in the preamble to the decrees, in setting forth
their purpose, as follow s: “ In virtue of the prevailing method with regard
to sale contracts (i.e. sales at prices to be fixed at a further date), buyers are
in a privileged position and sellers lack even the smallest legitimate guaranty,
or, in general, feel prompted to speculate with regard to terms for the fixing
of prices. At present, on liquidating the contract, it is customary to decide
on the price according to that which is paid on that date by two or three
exporting firms, without excluding the buying firm, and it is urgent to create
guaranties which may place both the buyers and the sellers in a position of
equality through the establishment of official prices fixed by organizations
having the status of an association and through the intervention of the
Ministry of Agriculture.”
Article 1 of the first decree issued on March 17 provided for increased com
petition on the grain exchanges by making persons who are not stockholders
in the exchanges eligible for trading on them. This privilege had previously
been limited by the exchanges to their own regular members, who were also
stockholders in them. Now the privileges of the futures markets are open to
all persons who are directly concerned with the production, marketing, and
industrial utilization of grain, including farmers and farm cooperative organ
izations, grain shippers, and millers, subject to the posting of proper security
for the faithful performance of their contracts.
Other important provisions of this decree were directed toward making
public the transactions of the grain exchanges. The Ministry of Agriculture
through the Bureau of Rural Economy and Statistics exercises permanent
supervision over all operations and over all telegrams officially sent or received
by each grain futures market, except as regards the names of the individual
operators, which may be investigated only under express authority of the
Minister of Agriculture. Persons using the exchanges must register with the
Bureau of Rural Economy and Statistics. The futures markets must daily
publish a summary of the day’s transactions, specifying the amounts of grain
offered, the amounts sold, and the respective prices and dates of delivery, such
publication being subject to the censorship of the Ministry of Agriculture.
Every merchant, broker, or society must also keep a record of all operations in
a book of special form so that the records shall be available to the Ministry of
Agriculture for comparison with those of the futures markets.
Another important requirement set forth in this decree besides that of pub
licity is the requirement that “ Within 60 days from date the amount of the
reserve funds at the disposal of the markets shall be destined, up to 80 percent,
except that part that may have been invested in bonds of the public debt, to the
increase of agricultural credits, through warrants on grain stored in barns, ele
vators, deposits, and sheds of any kind which offer the necessary security.”
A minor provision of the first decree states that buyers who receive, in
turn, orders of delivery, shall have either 5 or 10 days but no more, in which
to make delivery, depending on whether the grain is in port or in the interior
of the country. Quite possibly this leeway given to buyers may tend to
encourage buying operations.
The second decree issued on March 17 is concerned with sale contracts, par
ticularly of the “ price-to-be-fixed ” type. Article 3, which is the most important,
sets forth that the grain exchanges of Buenos Aires and Rosario shall include
an official representative and that in the committees which daily fix the so-called
“ official ” prices on the exchanges there shall be a delegate named by the
Ministry of Agriculture, whose powers shall be equal to those of the other
members. The price to be observed in settling price-to-be-fixed contracts must
be the daily price as fixed by one or the other of these two exchanges, as speci
fied in the contract. Another important provision of the decree is that the seller
may, under a price-to-be-fixed contract, request the fixing of price for either the
whole or for just a part of the quantity of grain specified in the contract. In
cases where prices are fixed for a part and the contract is to run for a month,
to determine the price of the balance, the following procedure must be observed:
During the 25 working days before the expiration of the contract, price shall
automatically be fixed, each day, of one twenty-fifth part, although on any of
those days the whole balance may be fixed.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

297

In other parts of the decree various safeguards are set up to prevent fraud.
Buyers of grain must within 5 days of their purchase send a copy of the sale
contract to the office of rural economy and statistics to be placed on file. When
the grain is delivered a sample of the grain sealed and signed by both parties
and a copy of its analysis describing the quality, test weight, etc., must be sent
to the above office.
5. Other relief measures.— During 1931 the government induced the railroads
to lower the freight rates on corn moving from the interior to the seaboard, for
the marketing season only. It likewise endeavored to bring about a reduction
of rentals; it fostered a large program of construction of grain elevators; it
sponsored an aggressive campaign to increase the domestic consumption of
co rn ; and it engaged in other activities to lighten the burden of the crisis, in
cluding the granting of special loans to cereal producers.
In connection with this last item the following measure was adopted by the
Bank of the Nation, which is a government institution, on December 14, 1931.
The managers of the bank’s interior branches were authorized to grant special
loans to farmers on wheat, linseed, barley, oats, and rye of the current harvest.
The loans are to be granted according to a stipulated price basis for the indi
vidual grains stored at the ports, at the railway stations or on the farm, and
will apply to grain either in bags or in bulk. So far as this loan concerns
wheat, the basis established is considerably more than that fixed in previous
years, being equal to approximately 75 percent of the value of wheat on the
basis of current market quotations. Repayment of a loan may be made within
a period up to 150 days from the day it is granted. The rate of interest has
been fixed at 6% percent. The board of directors of the Bank of the Nation
pointed out that they had adopted this means of providing aid for the handling
o f the farmers’ crops in order that the movement to market could proceed in an
orderly manner and in order that producers could count on having the funds
necessary for the settlement of their more pressing debts. The board desired
further that these loans should be widely diffused throughout the country so
as to benefit as large a number of farmers and grain merchants as possible.
Of more permanent significance in the field of orderly marketing was the pro
gram for the construction of a nation-wide system of grain elevators in which
the Government played an important role. The Government participated in
framing the plans for a chain of 130 elevators to be constructed by the Associa
tion of Argentine Cooperatives at strategic points in the grain-raising districts
of Argentina. The formation of a specal corporation, the Rural Development
Corporation of America, to promote the project was approved by the provincial
Government’ on July 18, 1931. Subsequently, on November 7, 1931, a contract
for the construction of elevators was entered into by the Government, the
Association of Argentine Cooperatives, and the Rural Development Corpora
tion. Subject to the approval of the Ministry of Finance and in accordance with
the plans and estimates of the Ministry of Public Works, the corporation was
to be permitted to issue debenture bonds up to the whole cost of the work pro
jected. Ten percent of the debentures was to be retained by the Ministry of
Public Works as a guarantee of satisfactory construction, to be returned to the
corporation after the elevator had functioned for a year without inherent defect.
To insure that the properties would be owned by the farmers’ cooperatives,
the Bank of the Nation was to handle the financial arrangements under a
special plan of amortization. The Bank of the Nation extended increasing
amounts of financial aid to the cooperatives, mainly in connection with con
struction of elevators. Credits extended in 1931, amounting to about $2,000,000,
were about a third greater than in 1930. The government ended its participa
tion in the program of elevator construction early in 1932, when it withdrew
from the contract of November 1931.

AUSTRALIA
In Australia government intervention in support of prices of agricultural
products has been noteworthy, especially on the side of cooperative marketing.
Both the Commonwealth and the state governments have been active. Among
their activities may be mentioned: Restriction of im ports; support of producercontrolled marketing organizations, some of which manage the exportation of
Australian products on a national scale and some of which operate on a
restricted b asis; the support and even conduct of State monopolies in some

298

WORLD TRADE BARRIERS IK RELATION TO AGRICULTURE

farm products; the payment of production bounties; and tlie securing of pref
erential entry for Australian farm products into overseas markets by means
of reciprocal tariff agreements.
In but one instance does there appear to be a straight export bounty, paid
by the Government, 011 any agricultural product or its immediate derivative.
This is in connection with the premium 011 exports of sweet wines. Originally
the premium amounted to Is, 9d. a gallon (43 cents at p ar), but this was
reduced 20 percent after the passage of the financial emergency act. But
in other ways the Commonwealth and state governments are involved in ac
tivities calculated to aid exportation; and in one important instance, namely
butter, a system is in operation, with the tacit support of the Government,
whereby the producers assess themselves in connection with a price-supporting,
scheme which involves payment of what amounts to a private export bounty.
1.
Restriction of imports.— Australia is predominantly an agricultural coun
try, about three fifths of the value of her total production and about three
fifths also of her exports being agricultural. Among her agricultural exports
some of the most important are wool, wheat, meats, butter, and raisins. On
the other hand, she imports greater or less quantities of some agricultural
products, including not only coffee, of which she grows an insignificant quan
tity, but also certain commodities of which she produces important amounts.
Among native-grown products which are also imported, tobacco, hops, onions,,
and bananas are of consequence.
Consider first the export group. On all of the leading items in this group
customs or other import charges are imposed. Wool is permitted entry duty
free, but in common with other imports is assessed a primage duty of 10
percent ad valorem plus a sales tax of 6 percent, the latter being based 011
the duty-paid selling value. Wheat pays 2s. per 100 pounds (29.2 cents a
bushel at par). On cold-processed meats, both beef and mutton, the duty is
3d. (6 cents) per pound; on fresh or smoked meats 2 % d . (5 cents) per pound.
The duty on butter amounts to Td. (14 cents) per pound. Imports of raisins
were prohibited in April 1930 ; nominally, the duty would be 6d. (12 cents) a
pound. Conversions of the Australian rates to United States currency, as given
above, are on the basis of par exchange. At the present time, however (May
1933), Australian exchange is about 36 percent below par.
Even if the foregoing import duties on products of which Australia produces
an exportable surplus were purely nominal, they would be significant to the
extent that they indicate the protectionist intent of the law. A s a matter o f
fact, however, some of the duties in this category are not purely nominal. In.
connection with some of these export products the tariff is a part of a more
comprehensive system of trade control by which domestic prices are main
tained above the export price level. In the case of butter, the tariff plays
a part in the Paterson plan (see below) by which domestic prices are main
tained above export prices. Cotton, which is on an export basis in some years,
is sheltered by a tariff while the Queensland State government purchases the
entire crop at a fixed price. A complete prohibition on imports of sugar
shelters a governmental monopoly in that export product. The duties on wheat
and wheat flour help to maintain local prices in Queensland and Tasmania,,
notwithstanding that Australia as a whole is on an export basis for these
products. The internal trade restrictions and regulations with which these
tariff and other import restrictions are associated, will be discussed below
under other headings.
In the import group the most important item is tobacco, although hops,
onions, and bananas are of some significance. On tobacco the rates are as
follows, per pound: Unmanufactured tobacco, to be locally manufactured into
cigarettes, 5s. 8d. and 5s. 2d. ($1.38 and $1.26), respectively, for stemmed and
unstemmed; into cigars, 3s. and 2s. 6d. (73 and 61 c en ts); and into other
types of tobacco products, 3s. 6d. and 3s. (85 and 73 cents). On hops the rates,
are Is. (24 cents) per pound under the general tariff and 6d. (12 cents) per
pound under the empire preference. On onions the rate is £8 ($38.93) per
ton to all countries; and on bananas Id. (2 cents) per pound. To most o f
these charges must be added a primage duty of 10 percent ad valorem and a
sales tax of 6 percent. The most important remaining item in this g r o u p ,
namely coffee, pays a duty of 4d. (8 cents) per pound (raw) or 7d. (14 cents)
per pound (m asted).
To allow for present (M ay 1933) depreciation o f
Australian exchange, it would be necessary to reduce the foregoing duty
equivalents, in United States currency, by about 36 percent.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

299

The foregoing rates are in line with the general policy of protection in
Australia. Until recently the tariff trend in Australia was upward. W ith a
recent change of Government, however, there has been evidence of some tendency
toward a moderation of tariff rates.
The Australian tariff schedule has been amended three times since April
1 9 3 the first changes coming in May, the second in August-September, and the
third in October 1932. In general these revisions have indicated a relaxing and
final repeal of import prohibitions in force since April 1930, together with some
reductions and some increases in duty rates.
Under the provisions of the May decrees the prohibitive import restrictions
on glucose, corn flour and starch powder, vinegar, and acetic acid were removed
and the import quota system previously applying to unfermented grape wine
was rescinded. The duty was raised on almond kernels from 6 to 9 pence per
pound. Effective August 31 the Australian Government ordered the repeal of
the remaining import prohibitions temporarily imposed as part of an emergency
measure on April 4, 1930. Foodstuffs affected by the lifting of these restrictions
included cheese, lemons, oranges, certain dried and preserved fruits and vege
tables, jams and jellies, pickles, and sauces. The primage duty which usually
amounts to 10 percent ad valorem was also waived, effective September 2, 1932,
on certain agricultural, horticultural, and viticultural machinery and imple
ments, and parts.
On October 14, 1932, changes in 200 out of 434 items in the Australian tariff
which were designed to increase the margin of preference enjoyed by products
of the United Kingdom and in general to Canada and New Zealand in the Aus
tralian market, became provisionally operative. On about 400 of the 435 prod
ucts or classes of goods involved in the 200 tariff items which were changed, the
increased margin of preference to British products was accomplished primarily
by means of increasing the existing general tariff duties (applies to other than
British) by ad valorem rates with a very limited number of specific duties.
The ad valorem rates ranged from 2 % to 10 percent (mostly 5 percent), and in
a few cases from 12y2 to 17% percent. Some of the general agricultural items
which were changed included:
(1) Foodstuffs:
(a) Increased by 5 percent ad valorem: Alcoholic essences, fruit juices,
flavorings, and sirups, and some grocery items.
(b) Increased by 10 percent ad valorem: Confectionery; potted or concen
trated meats, including extracts and meat je llies; preparations in dry form for
making soup.
(c ) Whole coconuts 1 shilling per hundredweight; cocoa butter and substi
tutes one half pence per pound.
(2) Tobacco and tobacco products:
(a) Specific duty increases: Cut tobacco (not elsewhere indicated) and
manufactured tobacco (not elsewhere indicated), 1 shilling per pound; cigar
ettes and fine-cut tobacco for making cigarettes, 2 shillings per pound.
( b) Specific duty decreases: Unmanufactured tobacco for manufacture into
cigars, 6 pence per pound; cigars, 2 shillings per pound.
In addition to tariff rates proper, reference should be made to Australian
antidumping legislation. A law of 1921 provides that, after investigation and
report by the tariff board to the effect that the importation of certain goods
is detrimental to an Australian industry, special duties are to be assessed.
Such cases occur when goods are sold for export to Australia at a price less
than the fair market price for home consumption, or even at a price considered
less than reasonable. Thereupon a special dumping duty is collected equal to
the difference between the price at which the goods were sold and a fair mar
ket price. When goods are exported to Australia at freight rates less than
those prevailing, a dumping duty amounting to 5 percent of the value of the
goods at the time of shipment is assessed. Special duties are also provided
for protection against depreciated foreign currencies.
A further restriction of imports results from the imposition of various
sanitary prohibitions and restrictions. The entry of most of the important
fruit trees, including the stone and deciduous types, from countries where
certain diseases are present is forbidden. The importation of citrus fruits as
well as plants coming from any country where citrus canker is known to
exist is prohibited. Sugarcane, bananas, and potatoes must be inspected and
certified as to freedom from disease before being permitted to enter. Cotton
seed and raw cotton can be landed only at certain ports where they must
undergo rigorous examination before being certified for entry. In addition to

300

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

national restrictions, there are others imposed by the various States tending to
limit imports.
2.
Government support of cooperative marketing.— Much of the government
aid to agriculture in Australia has been concerned with helping the farmer to
help himself through the medium of cooperative organization in marketing.
Marketing pools are formed dealing, as a rule, in but one commodity or in a
closely allied group of commodities. Both compulsory and voluntary pooling
prevail. Under the compulsory system every producer is obliged to dispose
of all or part of his output of a given commodity through the cooperative.
Under the voluntary system, the producer may dispose of his output through
the pool or not, as he sees fit. Most of the compulsory pools of Australia have
been created by legislation which provides that marketing through a central
organization shall be obligatory upon all of the producers when a majority o f
them so decide by ballot. The compulsory pools set up have usually been in
the form of control boards. These differ from the familiar producer-controlled
cooperative in that the Government, either State or Federal, is directly repre
sented and plays an important part in their conduct. Government support has
also been extended to voluntary pools, mostly in the shape of Federal aid but
also in the shape of informal State aid. The aid given by the Commonwealth
and State Governments to compulsory pooling is here discussed under headings
(a ) and (I)), respectively; that given to voluntary pools, under (c) and (d ),
respectively.
(a)
Federal Government support of compulsory pooling Ijoards.— In accord
ance with the wishes of the producers, as expressed by 9. majority vote, twTo
laws, one creating an export control board for dried vine fruits (raisins) and
the other creating one for canned fruits, have gone into effect in Australia.
The avowed purpose of these boards is to coordinate exports without attempting
to control the domestic market, although by promoting exports they may tend
to raise domestic prices. Indeed it is stated unofficially that, under the shelter
of the tariff, dried-fruit prices have been maintained in the domestic market
higher than those received in the British market, whereas under free competi
tion the opposite situation should have obtained. In connection with export
control boards, in general, the Commonwealth Government assists materially
in a financial way, particularly when a State board is newly organized. The
Commonwealth also contributes materially to the advertising campaigns o f
the fruit producers, and the producers’ organizations, on their side, maintain
close touch with the Government in the matter of advertising.
The dried fruit export control board exercises a considerable measure of con
trol over the export trade in dried grapes. It has a membership of 11, 8 of
whom represent the growers. One member is a representative of the Govern
ment and two are commercial experts appointed by it. Growers, dealers, and
packing sheds must register with the board. Contracts made by exporters must
be submitted to the board’s London agency for approval, particularly with re
spect to price, the object being to eliminate unnecessary competition.
Pro
visional export quotas are fixed for each of the States and these serve to regu
late the volume of export trade to some extent. The board also performs the
important function of overseas publicity agent for the Australian dried-fruit
trade. These activities serve to encourage cooperation among the producers.
Such a board is also able to prevent the exportation of produce of inferior
quality. Funds for the board’s operation are derived from a small export tax
amounting to one eighth of a penny a pound on dried fruits (one fourth of a
cent at par), collected by the Commonwealth Government.
The legislation establishing the dried-fruits board is typical of this kind o f
Government support. The dried-fruits export control board was created by the
dried-fruits export control act of 1924, which became effective in February 1925,
after a majority of the growers of Australia had voted in favor of the control
system. The act prohibited exports except by the board itself or under its
license, and gave the board power to set up the London agency for the pur
pose of disposing of Australian dried fruits in London or elsewhere. Another
act of 1924, known as the “ export guarantee act ”, gave power to the Common
wealth treasurer to guarantee to the Commonwealth Bank or any other pre
scribed bank doing business in the Commonwealth the repayment of advances
made to a board in connection with the financing of exports under the various
acts. It stipulated that the amount so guaranteed must not exceed 80 percent
of the produce upon which the advance is based.
In similar fashion the canned-fruits export control act of 1926 cre
ated a board of three “ to control the export and the sale and distribu

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

301

tion after export, of Australian canned fruits.” Canned fruits may be exported
only as the board determines. Contracts for the export of canned fruits are
made only by the board acting as the agent, of the owners, or else in con
formity with conditions approved by the board. The canned-fruits export
control act, which established the board in 1926, was very much like the
dried-fruits control act, and it, too, became effective only after the growers
had expressed their approval at a poll. As w ill-be seen below in connection
with sugar, processed fruits benefit by a considerable rebate on the cost
of the sugar content when they are exported, this rebate being granted in
order to relieve the canners from any disadvantage in export arising from
high domestic sugar prices.
(b)
State government support of compulsory pooling boards.— Two States of
Australia, Queensland and New South W ales, have enacted extensive legislation
for compulsory pooling. Commodity control boards have been set up similar to
those already described but on a smaller scale and covering a wider range
of commodities. Although the Government support described below is mostly in
the form of enabling legislation, support has been extended in other ways, much
of it informally. Furthermore, some of the state-wide compulsory pools re
ceiving State (and Federal) Government support have taken on monopoly
aspects; these are treated below under the heading of “ Monopolistic controls
and price-fixing in the Australian States.” Meanwhile a brief account of the
compulsory pooling legislation in Queensland and New South W ales will be
given.
Since the war Queensland has been the most active of the Australian
states in the matter of pooling legislation. The first act of this nature was
the wheat pool act of 1920, discussed below under section 3 on monopolistic
controls. This wheat pool act was followed, in 1922;. by the primary prod
ucts pools act, which provides that the governor-in-council may, upon the
recommendations of the council of agriculture or if requested so to do by a
representative number of growers or by an organization representative of
the growers, declare any grain, cereal, fruit, vegetable, or other product of
the soil in Queensland or any dairy produce or article of commerce a “ com
modity ” for the purposes of the act. Thereupon all the commodity is to be
delivered to the board established to market i t ; with certain minor exceptions
all sales except to the board are prohibited. Contracts for the sale of the com
modity for delivery in or out of Queensland are void after publication of a notice
to that effect in the G azette; and there is the usual proviso excepting interstate
contracts from the operation of the act. Under this act pools were set up for
various periods of time in corn, eggs, butter, pigs, peanuts, canary seed, arrow
root, and cheese.
In the same year, the fruit marketing organization act was passed, establish
ing a committee of direction to take control of the marketing of fruit. Accord
ing to the provisions of this new act, the primary products pools act could not
be applied to fruit and no other organization for pooling fruit could be created.
In 1927 the State of New South W ales adopted the marketing of primary
products act. By a majority vote of the producers of a particular primary prod
uct, that product may be brought under the act, whereupon a board is consti
tuted to have jurisdiction over the marketing of the whole output of that prod
uct for the State or for specified areas. (Originally it took an affirmative vote
of more than two thirds to constitute a majority, but this was amended in 1931
to read “ more than one half of the producers ” ). Commodities excepted from
the act are wool and dried fruits. Any board established under the act consists
of not less than 5 members, 3 producers and 2 Government nominees, 1 of whom
is the director of marketing and the other a consumers’ representative.
Eggs, rice, and honey have been brought under the act but in August 1932
a plebiscite of the honey producers voted 527 to 147 in favor of abolishing the
honey-marketing board, and that board consequently passed out of existence
on August 24, 1932. The boards handled the following amounts of produce:
Of eggs, about 14.5 million dozen during the year ended June 1931; of rice, some
27,000 tons during 1930; of honey, about 21,000 60-pound tins from the time
of the constitution of the board in October 1930 to June 1931 (9 months).
Ballots were held at various times to bring wheat, butter, millet, and certain
stone fruits under the act, but the requisite majorities were lacking. Since
1928, for example, four plebiscites of wheat growers in New South W ales have
been taken in an effort to obtain the necessary majority favorable to bringing
that product into a compulsory pool under a State marketing board, but all
votes failed. In no cases, it is said, have the New South W ales or Common

302

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

wealth Government ever advanced funds or guaranteed debts of the three New
South Wales marketing boards noted above.
(c)
Federal government support (open or tacit) of voluntary pooling.— Butter
and wheat in Australia are marketed by voluntary cooperative organizations,
the former almost entirely, the latter only in part. Both receive encourage
ment from the Federal Government.
W hat is known as the “ Paterson plan ” has been in effect in Australia
with respect to butter since 1925. The Paterson plan involves the equalisation-fee principle, lacking only the outright compulsion of the equalization
fee. The cooperative and private corporate creameries, which dominate
the dairy industry, have vested their control in a stabilization commit
tee. An all-Australian price above world parity is set, and to this the
creameries are expected to adhere. The creameries pay a small levy of a few
cents a pound to the committee on their entire output. A t first the levy
amounted to Id. (2 cents) a pound, but since 1928 it has amounted to l% d . (3,5
cents) a pound. The proceeds go into a fund out of which a bounty is paid
on the exportation of butter from Australia. The higher domestic butter prices
that are made possible by the removal of the surplus from the domestic market
compensate the creameries for their disbursements. The bounty paid under
the plan has varied considerably, having been given the following values: On
January 1, 1926, 3d. (6 cents) a pound; on September 1, 1928, 4d. (8 cents) ;
on January 1, 1929, 4 1/^>d. (9 cents) ; on January 1, 1931, 3 % d . (7 cents) ; on
April 1, 1931, 3d. (6 cents) ; on April 12, 1931, 2 1/^d. (5 cents) ; and on April 2,
1932, 3d. (6 cents) a pound. The above conversions are made at par of
exchange.
The sudden reduction in the amount of the bounty from 4 1/£d. to 3% d .
(9 cents to 7 cents) a pound in January 1931 is evidence of the difficulties
encountered by the export subsidy. Under the stimulus of the bounty, the pro
duction of butter had increased considerably and concomitantly, exports had
grown to such dimensions that the requirements of the bounty on exports had
threatened to exceed the funds available from the levy on production. Con
tinued heavy exports resulted in further reductions in the value of the bounty
listed above, until very recently. Another difficulty encountered by the bounty
on exports of butter was the imposition, or threatened imposition if shipmentswere received in quantity, of countervailing duties by Canada, France, and the
United States on the Australian bounty-fed product.
Strictly speaking, the Paterson plan is a private, rather than a governmental,
price-control scheme, adopted and administered by the butter industry inde
pendent of legislative enactment.
However, it is to a considerable extent
dependent upon the tacit support of the Government. In the first place, its
very existence as an organization which diminishes competition in trade rests
upon at least a tacit waiving of the antimonopoly legislation of Australia,
for according to the law for the preservation of industries (1906, 1910) no
contract or agreement may be made to restrain commerce and no (legal)
person may monopolize commerce with foreign countries. In the second
place, because of the near-by position of low-cost supplies of butter in New
Zealand, the success of any scheme for keeping up the domestic price of butter
in Australia depends on imports being severely restricted. The Australian
Government provides the necessary restriction in the form of a high tariff.
In April 1932 the duty was 7d. per pound (14 cents at par). This duty is still
in effect. The necessity for restricting imports was demonstrated as early as
1926 when, according to unofficial sources, the scheme threatened to break down
under a duty of only 3d. per pound and was restored to a firm position by the
enactment of a higher duty.
The federal government also extends aid to two of Australia’s three volun
tary wheat pools. The Commonwealth Bank, which is essentially a Govern
ment institution, finances the Victorian WTheat-Growers Corporation and the
South Australian wheat pools. (The finances of the cooperative wheat pool of
western Australia are provided by the cooperative Wholesale Society of Great
Britain.)
In New South W ales the Government itself has built and operated grain
elevators for many years. The system at present consists of 105 countrypoint elevators with a capacity of 16,793,000 bushels and 1 terminal elevator
at W hite Bay, Sydney, with a capacity of 6,750,000 bushels. This svstem of
country and terminal elevators was erected at a cost of £4,040,000. They are
operated in accordance with the wheat act of 1927. These elevators never
buy or sell any wheat, their functions being considered those of storage and

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

303

service. They are said to have never paid their operating costs, let alone
providing for the interest on the investment or a sinking fund.
(d)
State government support of voluntary pooling.— The aid extended by
State governments to voluntary pooling in Australia has been mostly of an
informal sort. However, one example of formal support is to be found in
Queensland. Legislative provision for the proper organization of voluntary
pools was made in the Primary Producers Cooperative Association Act of
1923. Such an association, which must be registered under the act, may be
established for the purpose inter alia of selling and disposing of the primary
products of its members in the most profitable manner. Associations registered
under the act may adopt without alteration certain model rules or they may
amend the model rules subject to the requirement that certain particulars
specified in the act itself must be included. The formation of such associa
tions is encouraged by the imposition of various restrictions upon the activities
of unregistered societies.
There appears to' have been further activity by the Australian States in
support of voluntary pooling, but information on further State aid in this
field is lacking in detail.
3.
Monopolistic trade controls and price fixing in the Australian States.—
Perhaps the most positive method to which a government may resort for
maintaining prices is some form of monopolistic control, with the government
itself or some agency taking the bulk of the farmer’s output and either paying
a fixed price or guaranteeing a price to the producer. Commonwealth and
State governments have cooperated in Australia in establishing controls over
the trade in several agricultural products. These controls, while not actually
monopolies, at least have monopolistic aspects. Sugar, cotton, wheat, and
flour have been made the subjects of monopolistic controls.
(a) Sugar monopoly— Queensland.— The State of Queensland produces all
of Australia’s sugarcane except for a small quantity grown in New South
Wales. According to an agreement with the Commonwealth government, dated
April 25, 1929, the Queensland government is authorized to acquire 99 percent
of the sugarcane produced in Queensland and all of the raw sugar manufac
tured in New South Wales. It sells all grades of sugar and cane products
at prices which are the same in the main distributing centers of the Common
wealth. Prices are fixed at definite rates for different classes of purchasers,
the manufacturers of fruit products destined for home consumption being
given the lowest rate. To the manufacturers of fruit products that are
exported, the Queensland government pays a rebate on the sugar content
equal to the difference between the domestic price that it has charged them
and the world parity price. Queensland further stands responsible for any loss
arising from the exportation of surplus sugar. The Commomvealth govern
ment, on its side, prohibits the importation of sugar except as may be necessary
to meet a shortage .
(&) Cotton— Queensland.— Queensland likewise is the source of practically
all of the Austrialian-grown cotton. The Commonwealth Government pays a
fixed price of 5d. (10 cents at par) a pound to growers for raw- cotton, to con
tinue in effect until 1935. This is apart from the bounty paid to the growers by
the Commonwealth (see “ Production bounties” below). The cotton board of
Queensland is the agency through w7hich the aid is administered. The board
owns six gins and an oil mill, which are capable of handling the whole of the
state’s cotton output.
(c)
Wheat— Queensland.— The amount of wheat produced in Queensland is
just about enough for local consumption. This condition makes it possible for
the State of Queensland to maintain what amounts to a guarantee of the price
of wheat. The sole marketing agency is a compulsory pool organized on the
basis of a state wheat board, consisting of five repersentatives of the growers
with a chairman appointed by the government. The board disposes of about
90 percent of the total crop, all wheat not necessary for consumption on the
farm being required by a wheat pool act of 1920 to be delivered to the board.
The Commonwealth Bank provides the financial assistance, the state govern
ment guaranteeing the wTheat board’s account with the bank. Initial advances
are made available to the growers upon the delivery of their wheat at country
stations; the initial payments in the 1929^-30 season varied from 2s. 3d. (55
cents at par) per bushel for feed wheat to 4s. (97 cents) per bushel for no. 1
milling wheat. Further advances are always provided for and wheat prices
are guaranteed throughout the State.
{d) Wheat flour— New South Wales.— The New South W ales flour acquisi
tion act in force since March 1931, is a legislative effort resulting in a tax on

304

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

flour locally consumed. The Commonwealth law^ forbids a direct tax on flour
so under the provisions of the act the government acquires, all flour for home
consumption and sells it at a substantially higher price to retailers or consumers
in New South Wales. At the inception of the act (March 1931) the govern
ment of Newy South W ales specified that flour for local use and retail should
bear a profit of 55 shillings a ton and it was purchased at £7 5s. per ton ($35.27
at par) and sold at £10 ($48.66) a ton, a price which was 13.4 per cent higher
than the purchase price. Growers are granted loans from the profits of the
state government transaction. The above rate was maintained until Decem
ber 30, 1931, when it was decided that the profit wras more than loans to neces
sitous farmers demanded. Operative January 1, 1932, it was decided that only
30s. per ton profit on New South W ales consumption would be sufficient and
since that date flour has been allowed to fluctuate with the market with millers
required to remit to the state government the specified charge on all flour sold
for local retail and consumption.
4.
Production bounties.— The Commonwealth Government of Australia is pay
ing cash bounties on the production of wheat, cotton, and flax. In the case of
wheat the bounty is only for the 1931-32 crop and is perhaps more properly to
be described as a bonus, since it applies to production already consummated,
and is not offered over a period of years as inducement to produce more wheat.
(a)
W heat.— A bounty of 4% d. a bushel (9 cents at par and about 5 cents at
current rates of exchange) was paid on all wheat marketed by growers
during the 1931-32 season, which began in December 1931. The banks of Aus
tralia agreed to make available a loan of £3,000,000 (about $14,600,000 at par)
to cover the bounty. The Australian Minister of Agriculture estimated that the
total quantity of wheat available for sale out of the 1931-32 crop would be
about 160,000,000 bushels, an amount sufficient to absorb the loan to be advanced
by the banks. The regulations required the grower and the receiver of the
wheat to state on prescribed forms the quantity of wheat sold or delivered for
sale. On the receipt of this information a check was sent to the grower by the
department of markets.
The bounty of 4 % pence per bushel (9 cents at par and about 5 cents at
rates of exchange then current) was paid only for wheat marketed during the
1931-32 season— December 1931 to November 1932. Legislative efforts to con
tinue a similar bounty during 1932-33 were defeated in the Australian Parlia
ment and in its place the so-called “ Commonwealth financial relief act of 1932 ”
was passed on December 5, 1932. In its final form, it carried a total appro
priation for assistance to the farmers in the amount of £2.250,000. Of this
total amount, £2.000.000 was to be distributed directly to the States on the
basis of wheat distribution. The States wrere to redistribute to the farmers
on such basis as they saw fit subject to the approval of certain Federal authori
ties. but the law specifically provided that none of this money should be made
available to wheat farmers indiscriminately as a bounty on the basis of
production.
The distribution of this £2,000,000 by States was announced as follows:
Sterling

New South W ales_________________________________________________________
Victoria_____________________________________________________________________
South Australia___________________________________________________________
Western Australia_________________________________________________________
Queensland________________________________________________________________
Tasmania__________________________________________________________________
Federal Territory__________________________________________________________
Total________________________________________________________________

£570, 902
442, 421
507,138
436,145
40, 744
2, 342
308
2, 000, 000

These moneys, according to the Prime Minister, were to be applied by the
States for the benefit and assistance of wheat growers b y: (a) reducing the
cost of production of wheat (including the cost of transport and marketing) ;
(b) by providing for the needs of individual wheat growers, but not upon the
basis of wTheat produced by individual wheat growers.
The Prime Minister repeatedly stated that this £2.000.000 made available
to the States wTas not by any means to be considered a bounty on wheat produc
tion, but to be used in the assistance of those wheat farmers of Australia who
were in the most necessitous circumstances. He did not outline how the degree
of necessity is to be determined, but left the determination of that necessity
to State officials.

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

305

The additional £250,000 ($1,025,000) appropriated was for the assistance of
primary producers in respect of the production of primary produce other than
wheat. The l*aw provides that this assistance will be a bounty at the rate of
15 shillings per ton ($3.65 at par) for each complete ton of artificial manure
used by primary producers in respect of the production of primary produce,
other than wheat, during the 12 months ended November 30, 1933. Any amount
<Iue to the producers in any territory of the Commonwealth under this portion
o f the act would be paid direct by the Commonwealth, but any amounts due to
residents of a State of the Commonwealth would be paid through the State
governments. The Prime Minister specified that no claim for assistance under
this portion of the act would be paid until satisfactory evidence was advanced
to the Secretary of Commerce for the Commonwealth that the artificial ma
nures so purchased were used during the specified period, and in the produc
tion of primary produce, other than wheat.
The act also provided for a reduction of one third in the land tax levy for
the fiscal year beginning July 1, 1932, and in certain specified cases wliere
its execution would seriously impair or entail serious hardship definite release
from payment could be obtained. Among such cases were those where the
taxpayer had become bankrupt or insolvent; where drought or other adverse
seasonal conditions had greatly reduced his income; or where, due to the low
price of farm products, the income derived during the year was less than
the land tax assessed for that year.
( 6)
Cotton.— The Commonwealth Government has been paying a bounty on
seed cotton and cotton yarn since 1926, and under the present law expects to
continue the bounty at decreasing rates until 1936. Two bounty acts have been
passed, the one known as the cotton bounty act of 1926 and the second, the
cotton industries bc-unty act of 1930 which superseded the former legislation.
Under the first act the bounty rates on seed cotton were fixed at l% d . per
pound (3 cents at par) for higher grades and 3 farthings per pound (iy2 cents)
for lower grades. These rates prevailed during the 5 years of the first act and
the first year of the second act, or until September, 1932. During each suc
ceeding year until 1936, however, the amount of the bounty on the higher grade
seed cotton is reduced one-fourth pence (one half cent at par) per pound and
on lower grade cotton the successive annual reductions amount to one eighth
pence (one fourth cent) per pound. Thus, for the final year of the act now
in force the bounty on the higher grades will be one half pence (1 cent) per
pound and on lower grades one fourth pence (one half cent) per pound, both
rates being but one third of the original rates. The bounty is also paid on lint
cotton during the period of the 1930 bounty act according to a standard ratio
of weight which lint bears to seed and which is to be prescribed seasonably by
the Governor General.
The bounty rate for cotton yarn is dependent upon the count, the higher
counts receiving corresponding higher bounty benefits, As in the case of seed
cotton the payments from 1926 to 1932 were the same but during the four
remaining years of the present act equal annual reductions are made in the
schedule so that for the final year the bounty will also equal only one third
o f the original rates. The total amount of the bounty authorized for 1 year
under the present act is £260,000. Under the first act the amount was
¿ 120,000 for seed cotton and £60,000 for cotton yarn.
(c)
Flax.— The Commonwealth government is paying a bounty amounting
to 15 percent of the cash selling value of fls’ x and linseed to producers as an
addition to the prices received, in accordance with the Flax and Linseed
Bounties Act of 1930. This bounty will continue for 2 years, to bo followed
by one of 10 percent for 2 years, and by one of 7 V.» percent for 1 year. The
grant, according to the act, will expire in 1935. The value of the bounty to be
paid during any year may not exceed £20,000.
5.
Preferential tariff arrangements.— Farmers in Australia have in the past
12 years secured an increasing amount of preference for many of their products
in other markets in the British Commonwealth of Nations under the policy of
imperial preference. Since the Commonwealth wTas established in 1001 Aus
tralia has always been definitely protectionist in her tariff policy. Since the
enactment of the Tariff Act of 1908, however, Australia lias consistently advo
cated the principle of imperial preference. The Tariff Act of 1908 provided
preferential tariff rates in favor of goods produced or manufactured in the
United Kingdom and these preferences have subsequently been greatly extended.

306

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

W ith the sole exception of Great Britain, however, Australia has never extended
her preferences to other parts of the Empire without demanding preferences in
exchange. A t the present time Australia secures substantial preferences for
many of her important agricultural exports in the markets of the mother
country and Canada.
In the case of the mother country (see United Kingdom) Australian farmers
since 1919 have enjoyed preferential tariff treatment on such agricultural ex
ports as currants, raisins, dried and preserved fruits, sugar, and tobacco, and
since 1925 on hops. These preferences have been instrumental, particularly in
the case of dried fruits, in building up important export industries in Australia.
In the case of Canada a trade agreement (see Canada), effective as of August
3, 1931, grants Australian exporters greatly reduced duties on such agricultural
products .as beef and veal, lamb and mutton, canned meats, eggs, cheese, butter,
hops, rice, fresh apricots, pears, quinces, nectarines, grapes, oranges, dried apri
cots, peaches, pears, raisins, currants, canned fruits, peanuts, sugar, and wines.
Australia has also negotiated a trade agreement with New Zealand by which
exports of certain products from Australia are given the British preferential
rates in that market in return fcr reciprocal arrangements for certain New7
Zealand products coming into Australia.
In 1906 Australia entered into a reciprocal agreement with South Africa by
which Australian goods wTere granted the British preferential rates in the South
African tariff on butter, fodder, wheat, flour, and meat, vihile Australia granted
reduced rates of duty on South African timber, fruits, feathers, corn, wTines,
sugar, and tobacco. Australian exports to South Africa were considerably
greater than South African exports to Australia and the agreement was allowed
to lapse on July 1, 1926.
(a)
The Ottawa Conference.— Australia was a party to only one imperial
agreement at the Ottawa Conference. This agreement was with the United
Kingdom and provided for protection and preference in the British market for
the important additional export products of Australia such as wheat, beef, mut
ton, and fresh fruits. Currants, raisins, sugar, tobacco, and hops have enjoyed
preferential treatment for some time. Wool, however, still remains on the free
list in the United Kingdom. For a discussion of the Ottawa Conference agree
ments see chapter V II of the main report.

AUSTRIA
Price-influencing measures for agricultural products in Austria in recent
years have taken the form chiefly of restrictions on imports, though direct
financial aid to her farmers has also sometimes been granted.
The partition of the old Austro-Hungarian Empire in 1918 left Austria in a
position of greatly increased dependence upon foreign sources for her necessary
supplies of many foodstuffs and raw materials. Yet, notwithstanding this dependence, various circumstances have combined to bring about increasing im
port restrictions on agricultural, as well as on other, products. One impor
tant circumstance has been the high tariff and other import restrictions main
tained by neighboring countries and the desire to be in a position to bargain
effectively with them for more favorable treatment of Austrian exports o f
manufactured goods. Another has been monetary depreciation and the finan
cial difficulties through which Austria has gone since the war.
Austria has sought to restrict imports by means both of tariffs and of licenses
and quotas. In order to offset currency depreciation the nominal rates of duty
after the war w7ere supplemented from time to time by a customs surcharge.
As depreciation advanced, this multiple for maintaining the gold parity of the
Austrian crown was changed frequently. In addition, on February 15, 1923,
a system of import licenses was adopted. This required special import licenses
for a large number of products, including many foodstuffs. The licensing re
gime largely ceased after March 1, 1925, though continued for a time thereafter
on tobacco and tobacco products, chocolate and substitutes therefor.
(For cer
tain manufactures, however, it has continued in effect up to the present time.)
Further protection was accorded by a series of ordinances beginning on April
1, 1923, whereby an ad valorem turn-over tax was levied each time goods
changed hands in the course of trade. This tax on imported goods was collected
by the customs authorities as an addition to the import duty.
1.
Tariffs.— On March 18, 1926, the Austrian Government was granted au
thority to amend the “ general ” rates of the tariff by decree whenever Austrian
producers were seriously menaced by imports. Since that time there have been

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

307

several upward revisions of the “ general ” rates, partly for protection and partly
with the object of strengthening the hands of the Austrian negotiators in secur
ing for Austria reductions in the tariffs of neighboring countries. The latest
revision of this character was made on July 28, 1931. Austria has negotiated
special commercial treaties with Czechoslovakia, Hungary, Yugoslavia, Rumania,
and other countries, by the terms of which Austria admits imports of specified
farm products at reduced rates of duty contingent upon similar treatment for
Austrian manufactures in the countries with whom she has concluded treaties.
Such restrictions are, of course, a mitigation of Austria’s “ general ” tariff rates.
Nevertheless, the basic trend of her tariff rates on agricultural as well as on
other products has been upward.
Most of the tariff increases in Austria in the past year and a half have
grown out of the new commercial treaties between Austria on the one hand
and Hungary, Yugoslavia, and Czechoslovakia on the other, which became
provisionally effective on July 28, 1931. These treaties increased the con
ventional rates granted under the expired treaties on a long list of agricultural
and manufactured products. The following illustrations will suffice to suggest
the recent trend in tariffs. The conventional duty on wheat and rye was in
creased on July 28, 1931, from 2 gold crowTns to 10 gold crowns per 100 kilos.
This was equivalent to an increase of from 11 to 55 cents a bushel on wheat
and from 10 to 51 cents a bushel on rye, conversions to American currency
having been made at par. At the same time the conventional duty on wheat
and rye flour was increased from 5 gold crowns to 23.5 gold crowns per 100
kilos ($0.90 to $4.23 per barrel). The conventional rates are applicable to
countries with which Austria has most-favored-nation agreements, including
the United States. On February 12, 1932, the conventional duty on wheat was
increased to 11 gold crowns per 100 kilos ($0.61 per bushel at par), while the
duty on rye was reduced to 8 gold crowns per 100 kilos ($0.41 per bushel).
These changes automatically involved an alteration in the rates of duty on
flour and milling products. The revised duty on wheat flour, therefore, is
25.50 gold crowns per 100 kilos ($4.59 per barrel) and on rye flour 19.50 gold
crowns pel* 100 kilos ($3.51 per barrel).
The treaty with Yugoslavia, however, provided for a preferential Austrian
import duty on an annual contingent of 50,000 tons of Yugoslav wheat at a
rate of duty 3.20 gold crowns per 100 kilos (17.6 cents per bushel) lower than
the duty in force at any tim e; this provision being subject to approval of the
nations that have most-favored-nation agreements with Austria. Since the con
ventional duty on wheat on February 12, 1932, was increased to 11 gold crowns
per 100 kilos ($0.61 per bushel) the duty on wheat coming in from Yugoslavia
under the contingent would amount to 7.80 gold crowns per 100 kilos ($0.43
per bushel). This, however, still leaves the preferential rate on contingent
wheat from Yugoslavia considerably higher than the conventional rate in effect
prior to July 28, 1931.
Another example of recent upward revisions in the tariff is afforded by Ihe in
crease on pork and pork products. Thus, for example, the conventional duty on
salted bacon on July 28, 1931, was increased from 10 gold crowns per 100 kilos
($0.92 per 100 pounds) to 22 gold crowns per 100 kilos ($ 2.02 per 100 pounds).
On the same date the conventional duty on lard was increased from 10 gold
crowns to 30 gold crowns per 100 kilos ($0.92 to $2.76 per 100 pounds) and on
breakfast bacon from 45.5 gold crowns to 80 gold crowns per 100 kilos ($4.18
to $7.35 per 100 pounds). The conventional rates on a considerable number of
fruits and vegetables, livestock, and eggs were also materially increased at the
same time.
A decree of October 20, 1931, increased the import duty on cattle from 30
to 45 gold crowns per 100 kilos ($2.76 to $4.14 per 100 pounds). The Austrian
tariff act provides that the duty on cattle can be reduced when the average price
of cattle for slaughter on the Vienna market rises above 1.50 schillings per
kilo (9.57 cents per pound) live weight, and when this increase in price is not
temporary in character. In this connection it should also be noted that the
Austrian tariff act also contains a provision authorizing the Minister of Finance
to reduce the general rates of duty on lard from 30 to 10 gold crowns per 100
kilos (2.76 cents to 0.92 cent per pound) if, and as long as, the wholesale price for
lard of the best quality, in barrels, c.o.d. Vienna, rises to above 230 schillings per
300 kilos ($14.68 per 100 pounds) on the Vienna market, temporary fluctuations
excepted. A decree of October 24, 1931, reduced the general import duty on
lard (which, in the case of lard, is also the conventional rate) from 30 to 10
gold crowns per 100 kilos (from 2.76 cents to 0.92 cent per pound), while

308

WORLD TRADE BARRIERS IN RELATION TO AGRICULTURE

another decree of January 15, 1932, reinstated the duty to 30 gold crowns per
100 kilos (2.76 cents per pound).
2. Import licenses.— On July 17, 1931, a law was enacted authorizing the'
government to restrict by means of special import licenses imports from coun
tries with which Austria has no commercial treaties. The law provides that
such import permits will not be refused with regard to importation of the
necessities of life if the country from which such products are to be imported
is actually importing products of Austrian origin of the same value.
3. Impoi't certificates.— In order to facilitate exportation of certain Austrian
agricultural products from some parts of the country, Austria employed for a
time the import certificate system known as the “ Einfuhrschein ” (measure
adopted on Sept. 27, 1929). The use of import certificates was authorized in
connection w ill the exportation from Austria of wheat, rye, barley, oats, cattle,
horses, butter, and cheese. Under this system the certificates could be used
for the payment of duty on similar goods imported into Austria. This sjstem,
was discontinued on April 30, 1931.
4. Import quotas.— Effective April 30, 1932, the Austrian Government intro
duced a system of import quotas, applying the limitation of the imports from,
individual countries in accordance with Austria’s needs. It was reported that
this step was generally considered as an admission that the exchange restric
tions, in force since October 9, 1931, had failed to bring the desired reduction in
Austrian imports, and that a continuance of the existing trade deficit would be
disastrous to the country. It was expected that the intended import quotas
would principally affect manufactured and finished products, and to a lesser
degree raw materials and agricultural products. Among the products for which
such quotas have been established are cattle, hogs, poultry, wine, butter, cheese,
edible fats, and canned fruits.
5. Special agricultural relief fu n d ; grain-sowing premiums and other relief
measures, 1930-31.— While not entirely of a directly price-influencing nature, a.
law enacted in 1930 is of special interest as an illus

Full text of World Trade Barriers in Relation to American Agriculture : Letter from the Secretary of Agriculture

FRASER