98 EICHENGREEN and FRANKEL included even raw materials and certain manufactures that had previously been imported from Central and Eastern European sources(Basch 1941,pp.31-33).In the second half of the 1930s,the Schacht Plan was adopted to limit German imports to foodstuffs and raw materials.The reliability of supplies was attained by tailoring commercial arrangements to particular transactions.Different exchange rates were used for transactions with different countries and in different commodities.Arrangements were negotiated directly between governments.None of this encouraged private initiative-the development of new trade between importing and exporting firms and trade in new products-or the growth of intra- bloc trade that is normally expected to result from closer regional links. The rise of Germany's economic power and its formation of a Central European trading bloc encouraged France and Britain to respond in like fashion.But both French and British trade policies were heavily shaped by other considerations.France had already extended imperial preferences to its empire.It had integrated Algeria into the metropolitan economy and applied French tariffs to its colonies(see Carsow 1935).But any desire to extend this pattern of discrimination in the 1930s was frustrated by other factors.For one thing,France remained true to the gold standard,which strengthened its ties with the other members of the gold bloc.Working in the other direction was pressure in France,mainly from the agri- cultural sector,for unilateral increases in protection.In the end,the second tendency dom- inated:France increased tariffs and quotas on imports from all foreign countries rather than attempting to form a regional arrangement with the gold bloc.8 The British response must be understood against the backdrop of the long-standing cam- paign for imperial self-sufficiency and the impact of the Great Depression on British trade politics.Since Joseph Chamberlain's turn-of-the-century tariff reform movement,there had been sentiment for selective tariffs to protect British industries and divert the country's overseas trade toward the empire.That Joseph's son Neville was Chancellor of the Exche- quer in the National Government of 1932 illustrates the extent of this continuity.The sever- ity of the Depression,the rise of unemployment,and then the uncertainties of a floating pound sterling strengthened the hands of those seeking the adoption of a tariff(see,for example,Capie 1983). The policy response was the General Tariff of 1932,which imposed duties in the range of 20%to 33%on a wide variety of merchandise imports.In anticipation of a conference to be held in Ottawa later in the year,the Dominions were granted free entry until November 15,1932.It was anticipated that,if discussions at Ottawa failed to yield fruit,many of their goods would pay a duty of 10%(Drummond 1972,p.92). Negotiations at Ottawa led to the admission duty-free of certain exports from the Domin- ions and the application to others of lower tariffs than those levied against"foreign"coun- tries,in return for which the Dominions reduced their tariffs on various British goods. Drummond (1972)notes that these arrangements did not prevent other countries from increasing their sales to both Britain and the Dominions.Only in 1932-1933 was there a fall in foreign sales to Britain and the Empire.While the General Tariff and imperial pref- erence could not have been good for the Commonwealth's trade with the rest of the world, the limited nature of British protection,by international standards,minimized its trade- diverting effects.In addition,Britain made aggressive use of the "enormous bargaining power"conferred by its system of imperial preference;this may have succeeded,as in the Argentine case,in reducing the tariffs that other countries levied on British products(Tasca 1939,Pp.131-132).98 EICHENGREEN and FRANKEL included even raw materials and certain manufactures that had previously been imported from Central and Eastern European sources (Basch 1941, pp. 31-33). In the second half of the 193Os, the Schacht Plan was adopted to limit German imports to foodstuffs and raw materials. The reliability of supplies was attained by tailoring commercial arrangements to particular transactions. Different exchange rates were used for transactions with different countries and in different commodities. Arrangements were negotiated directly between governments. None of this encouraged private initiative-the development of new trade between importing and exporting firms and trade in new products---or the growth of intra￾bloc trade that is normally expected to result from closer regional links. The rise of Germany’s economic power and its formation of a Central European trading bloc encouraged France and Britain to respond in like fashion. But both French and British trade policies were heavily shaped by other considerations. France had already extended imperial preferences to its empire. It had integrated Algeria into the metropolitan economy and applied French tariffs to its colonies (see Carsow 1935). But any desire to extend this pattern of discrimination in the 1930s was frustrated by other factors. For one thing, France remained true to the gold standard, which strengthened its ties with the other members of the gold bloc. Working in the other direction, was pressure in France, mainly from the agri￾cultural sector, for unilateral increases in protection. In the end, the second tendency dom￾inated: France increased tariffs and quotas on imports from all foreign countries rather than attempting to form a regional arrangement with the gold bloc.’ The British response must be understood against the backdrop of the long-standing cam￾paign for imperial self-sufficiency and the impact of the Great Depression on British trade politics. Since Joseph Chamberlain’s turn-of-the-century tariff reform movement, there had been sentiment for selective tariffs to protect British industries and divert the country’s overseas trade toward the empire. That Joseph’s son Neville was Chancellor of the Exche￾quer in the National Government of 1932 illustrates the extent of this continuity. The sever￾ity of the Depression, the rise of unemployment, and then the uncertainties of a floating pound sterling strengthened the hands of those seeking the adoption of a tariff (see, for example, Capie 1983). The policy response was the General Tariff of 1932, which imposed duties in the range of 20% to 33% on a wide variety of merchandise imports. In anticipation of a conference to be held in Ottawa later in the year, the Dominions were granted free entry until November 15, 1932. It was anticipated that, if discussions at Ottawa failed to yield fruit, many of their goods would pay a duty of 10% (Drummond 1972, p. 92). Negotiations at Ottawa led to the admission duty-free of certain exports from the Domin￾ions and the application to others of lower tariffs than those levied against “foreign” coun￾ties, in return for which the Dominions reduced their tariffs on various British goods. Drummond (1972) notes that these arrangements did not prevent other countries from increasing their sales to both Britain and the Dominions. Only in 1932-1933 was there a fall in foreign sales to Britain and the Empire. While the General Tariff and imperial pref￾erence could not have been good for the Commonwealth’s trade with the rest of the world, the limited nature of British protection, by international standards, minimized its trade￾diverting effects. In addition, Britain made aggressive use of the “enormous bargaining power” conferred by its system of imperial preference; this may have succeeded, as in the Argentine case, in reducing the tariffs that other countries levied on British products (Tasca 1939, pp. 131-132)