ABSTRACT
D U R I N G the first post-war years tariff policy in general moved into the background. Foreign exchange control and import quotas were regarded in this period of economic nationalism and of autonomous monetary policy as the proper instruments of economic policy in the foreign sphere. Powerful as are the vested interests which can benefit it, a tariff has no such disruptive effect on world trade as have foreign exchange control and import quotas. To be effective a tariff presupposes the existence of some sort of nexus between the different market economies in the different States-economies based upon a common currency system. And a tariff is proved inadequate only when a country adopts the monetary autonomy which goes with economic nationalism. Admittedly tariff policy was used after the First World War to provide a protection for unrealistic price levels: this was the comprehensive tariff system (Heinrich Rittershausen). Such a function-that of protecting the price level as a whole-was undoubtedly that ofthe American tariff legislation of 1922 and 1930; the object was to raise rates all round and thus to weaken the internal symptoms of deflation. And even the super-protectionist American tariff did not destroy the economic unity of the world and permitted the existence of a large volume of trade; the foreign suppliers could after all make an allowance for even the highest tariff walls and, if necessary, leap over them. Import quotas and foreign exchange control, on the other hand, create more or less insuperable barriers and destroy world trade. The fact that many countries attached no particular importance to tariffs after the war provided they could use the other two instruments shows how great has been the change since the period after the First World War.
