ABSTRACT

Introduction The role of tariff policy in industrial development in Finland during the interwar period is a matter of some controversy. Contemporary studies emphasised the impact of protective tariffs in relieving the tight economic situation of farmers. Jutila and Konttinen argued that because Finnish agriculture was a natural part of the economy for the most part, the impact of world prices was relatively mild. According to Jutila and Konttinen, tariff policy was generally successful in reducing the impact of the world depression, especially by halting the fall of agricultural prices in 1934. The positive development in agricultural profitability was, however, somewhat lessened by the high prices of raw materials. This was considered a result of tariff protection in manufacturing, and also of the cartel agreements in the domestic manufacturing industries.1 This allegedly successful policy was challenged by other contemporaries, as well as in later studies. Kalela argued that the protection of agricultural products through import tariffs only prevented the depression from becoming even worse. The protective tariffs were not sufficient to raise the domestic prices of agricultural products. They could not stop foreign dumping, and the tariff levels were therefore raised regularly. The depression in agriculture was eased by devaluation once Finland had abandoned the gold standard. The expansion of the export industries was the key to recovery.2 According to the chairman of the Union of Manufacturing Industries (Teollisuusliitto), the tariff policy was formulated in the best interests of consumers, not industries, and did nothing to ease the dumping of foreign products in Finnish markets. Despite industrialists’ active involvement in the tariff reforms, they did not consider them a success.3 According to Ahvenainen and Vartiainen, protectionism dominated the Finnish tariff policy even during the 1920s. New industries, such as the manufacture of rubber tyres and radios, were given relatively high protection, as were domestic finished goods competing with foreign imports. Food production was fully protected, while tariffs on inputs used in manufacturing production were imposed on a fiscal basis.4