102 CIRCULAR 249, U. S. DEPARTMENT OF AGRICULTURE 
Another method of subsidizing production is provided by preferential 
duty rates, as in Great Britain. No tobacco is produced in England, 
but large quantities are produced in parts of the British Empire. This 
tobacco on entering England is given a lower rate of duty than tobacco 
from other countries, and large quantities of American leaf have been 
displaced thereby. 
Import Quotas.—Quota and licensing systems have become widely 
applied to agricultural products in European countries. They are 
used to restrict or limit imports for protection of domestic production, 
control of trade balances, as retaliatory measures, or to encourage the 
conclusion or enforcement of trade agreements. 
Exchange Control and Clearung Agreements.—Exchange control is a 
device used in some foreign countries whereby the central banking 
system is able to exercise rigid control over the uses for which foreign 
exchange may be obtained. ‘This control extends to the classes and 
quantities of commodities which may be imported and the sources 
from which they may be obtained, and even as to those who may be 
permitted to import. 
Clearing and Compensation Agreements.—These are more often re- 
ferred to as barter agreements, and mean arrangements by which the 
trade between two countries can be conducted on the basis of exchange 
of goods and without the use of foreign exchange as a means of settle- 
ment. Barter agreements entered into by Germany during the decade 
of the 1930’s were greatly detrimental to the domestic export trade in 
American tobacco. 
War.—In times of war, a factor of far-reaching importance is pro- 
vided by blockades interposed between the American producers and 
the countries to which they normally export their tobacco. Among 
the effects of such interruptions to the normal flow of exports are the 
following: 
Prices to growers are immediately affected, sometimes requiring 
governmental action to sustain the market and prevent its collapse. 
The tobacco may accumulate in American warehouses in such quanti- 
ties as to swell stocks and create serious problems in the readjustment 
of production programs. 
The countries affected may be forced to adopt substitute types of 
tobacco not affected by the blockade. 
Here the greatest significance to American producers is in the 
long-time effects. Experience has shown that preferences in tobacco 
are largely a matter of established taste, and that the long-continued 
use of a given type tends to fix the consumer preference in that type. 
A blockade by which a country at war is denied access to American 
tobacco and by which it is forced into acceptance of a substitute type 
may in time bring about a preference for the substitute tobacco. The 
extent to which such a change in taste occurs will largely depend upon ~ 
the duration of the enforced use of the substitute. Its importance 
lies in the fact that there is implied a permanent impairment of the 
foreign market previously enjoyed by the American producers. 
