102 SECTIONAL ADDRESSES 
by the tariffs and restrictions of those nations which had first experienced 
difficulties. There were, therefore, further instalments of tariffs in ever- 
widening circles ; and by the latter part of 1931 the export trade of all 
countries had as a consequence shrunk to a very marked extent. 
Meantime, France had revived the quota method of control under which 
limitations are imposed upon the quantities of particular goods that may 
be imported over an allotted period of time. Other countries followed, 
the assumption (or justification) being that quotas are temporary measures 
of defence designed to limit imports to the quantities which can be absorbed 
in a period of restricted demand. It is probable, however, that their 
real attraction was their certainty in result (which is usually greater than 
can be assured by tariffs) combined with the fact that treaty obligations 
frequently rendered tariff changes immediately impossible. 
At first quotas were fixed permitting supplying countries shares in 
proportion to their exports during a period preceding restriction. Soon, 
however, they were turned into weapons with which to bargain for 
increases in exports. ‘They are now regularly employed by way of threat 
to extract concessions or counter-advantages from other countries in the 
shape of reduced duties, release of blocked funds, guaranteed purchases 
or other commercial privileges. Their use has been extended far beyond 
the purpose for which they were originally devised. Fortunately they 
are not popular with traders; for their administration involves much 
interference with the ordinary routine of business. 
In the confusion following the financial difficulties which came to a head 
in September 1931 when Great Britain abandoned the gold standard 
and depreciation overtook the currencies of many other important 
countries, centralised control over the transfer of funds abroad was adopted 
by nearly all the governments whose monetary systems were then altered 
in basis and even by some whose currencies still continued to be linked 
to gold. The original purpose of this control was to prevent speculation 
and to protect the values of the currency units from the consequences of 
the withdrawal of funds for deposit or investment abroad. In actual 
working no difficulties at first were placed in the way of importers ob- 
taining exchange for payment for food, raw materials or other commodities 
deemed to be essential. But, very soon, governments began to use 
exchange control as a supplement to other means of restricting imports ; 
and by direct refusal of facilities they were able, more effectively than by 
tariffs and quotas, to discourage foreign transactions whenever they 
desired. This power to discriminate led easily to the next step—the 
granting of preference or priority in exchange on the basis of the country 
from which the imports were to come. It was argued that favour ought 
to be shown to those who were good customers and that it was desirable 
to obtain as near a correspondence as possible in imports and exports 
with every trading country. Further development soon followed and 
control over foreign exchange became a bargaining weapon, just like 
quotas, whereby the threat to withhold or delay payment for imports from, 
or of debts due to, a given country was used to exact commercial privileges 
or special trading facilities. 
At this stage it became evident that the bargaining power arising from 
