Of the numerous commercial treaties negotiated by the German government since the foundation of the empire, not one has ever failed of ratification in the Reichstag. This is not surprising if we consider that in Germany there is only one legislative chamber, that a simple majority of the votes cast is sufficient for the ratification of a treaty, and that such a thing as putting a treaty concluded by the government to sleep in the pigeon holes of a committee room is a thing unknown there.

Turning to the United States, we find a great contrast. If we adopted the conventional tariff system, the reciprocity treaties would have to be approved not only by the Senate but by the House, since they would contain new tariff rates which only the lower House has the power to initiate under the constitution. As the negotiation of a series of important treaties would be likely to consume considerable time, it could easily happen that by the time they reached Congress a new House might be elected to succeed the one which had enacted the general tariff. The latter being out of the way, the tariff issue would in all probability no longer figure as a political question, and the newly elected House would not, therefore, necessarily be bound by the tariff pledges which the constituents exacted from its predecessor. The reduced rates agreed upon in the treaties would virtually amount to a revision downward of a tariff but recently enacted, and its fate would be by no means certain. It would be a comparatively easy matter for a few congressmen representing different constituencies, standing together, to secure amendments to a number of rates; yet this would be tantamount to a rejection of the treaty, since it would require the reopening of negotiations with the foreign nations and a resubmittal of the newly concluded treaties to the parliaments of the respective countries.

Assuming that the treaty has successfully withstood the scrutiny and attacks of those who were hostile to it in the House, it would still be far from the goal, since under the constitution a treaty must receive two-thirds of the votes cast in the Senate in order to be ratified. It would therefore be easy for a determined minority of the Senate to defeat the treaty.

Under the general and minimum tariff system these difficulties would be greatly reduced, if not entirely eliminated. Congress having adopted a dual tariff in the first instance, the treaties negotiated would contain no new rates, and, therefore, would not require action.

by the House. In the Senate, too, it would be easier to secure favorable action, since our own rates having been passed upon by Congress before, the only question to consider would be the concessions secured from the foreign countries. In view, however, of the precedent already established by Congress in connection with the McKinley tariff and followed in the Dingley tariff, it is conceivable that Congress might dispense with the submission of the treaties. to the Senate. Under the Dingley tariff at present in force the President is authorized to conclude agreements with foreign countries by granting reduced rates on a small number of articles (brandies, wines, wine-lees, paintings and statuary), and to put them in effect without ratification by the Senate. Under this authority a number of commercial agreements have been concluded in the past ten years, and are still in effect without having been submitted for approval to the Senate. In conferring this authority upon the President, Congress has not parted with its rate-making power, since the reduced rates, to be subsequently granted to foreign nations on a reciprocal basis, are definitely fixed in the act. The same measure of authority could be conferred upon the executive under the proposed dual tariff system by authorizing the President to negotiate reciprocity treaties on the basis of reductions of duty not to exceed the limit set by the minimum tariff. This would insure the prompt application of the minimum tariff upon the conclusion of the negotiations of the reciprocal treaties.

Another serious difficulty would be encountered under the conventional tariff system in the United States through the application of the most-favored-nation principle to our relations with foreign countries. The most-favored-nation clause as interpreted and applied by European nations forms part and parcel of the conventional tariff system. It frequently happens that in negotiating a series of treaties with foreign nations, different rates will be agreed upon on the same products. In all those cases the countries which had accepted the higher rates get the benefit of the further concessions granted to some other nation without being required to offer additional concessions in return. In this manner all nations which have negotiated tariff treaties are treated on the same "most-favorednation" footing, no matter what the original terms of the respective treaties were. This makes the operation of the conventional tariff system simple and fair.

Under what is known as the American interpretation of the most-favored-nation clause, however, such a procedure would be impossible. It has been the policy of the United States not to extend gratis to other nations concessions which are made to a foreign country in return for reciprocal advantages. Under this construction of the most-favored-nation clause, which narrows down its application only to gratuitous concessions granted to some foreign country, the conventional tariff system would become very unwieldly and complex. To illustrate: If in negotiating a treaty with France we granted a 20 per cent reduction of duty on gloves, and in a treaty subsequently concluded with Germany the reductions were made 30 per cent, we would have three different rates on the same article (the general rate, the rate to France, and the rate to Germany), and it might easily happen that on some articles we would have as many rates of duty as there were treaties concluded. In the case cited here as an illustration, France would find herself discriminated against unless we extended to her gloves the reduction granted to Germany. Under our interpretation of the most-favored-nation clause, however, we could not agree to that without reopening negotiations with France for additional concessions to compensate the United States for the reduced duty on gloves. This would be manifestly impracticable, as no nation would care to negotiate reciprocity treaties with the United States if it could not be assured in advance against unexpected discriminations as a result of subsequent reductions of duty by the United States in favor of other countries. To give them that assurance (which constitutes the underlying basis of all the tariff treaties in force among European nations) we would have to depart from the interpretation of the most-favored-nation clause hitherto adhered to by the United States. The only alternative would lie in the adoption of the general and minimum tariff system in which the minimum rates can be made uniform to all reciprocating nations by an act of Congress.

Conclusion

Summing the conclusions reached by the analysis of the two dual tariff systems, it can be said that the conventional system offers the facilities of superior strategic advantages in negotiating

This policy has been more fully discussed by the writer in the North American Review for March, 1906.

reciprocity treaties, flexibility in mutual rate adjustment, and stability of rates during the life of the treaty. It requires, however, for its successful application the existence of an organization which combines in itself the representative character of a legislative body with the most intimate knowledge of things that comes to a board of experts, which can carry on its deliberations in executive session while enjoying the confidence of the people and speaking with an authoritative voice in the councils of the government.

It is most successful in countries in which the executive and the legislature are under one control, either because the majority of the legislative branch controls the executive, as in countries having a constitution like that of England or France, or because the executive controls the legislature more or less, as in Russia and Germany. It can be made to yield brilliant results where the forms of government and the administrative apparatus allow of a careful planning of a commercial policy, applied with deliberate precision and continuity of purpose, which comes of a stable administrative system undisturbed by political changes.

Finally, the conventional tariff system, to be practical and acceptable to the foreign nations as well as to the one which adopts. it, must have as its underlying basis the unlimited application of the most-favored-nation principle, as understood and enforced among all the great commercial nations of the world, except the United States.

THE AMERICAN INTERPRETATION OF THE "MOST

FAVORED NATION" CLAUSE

BY CHESTER LLOYD JONES, PH.D.,

Instructor in Political Science, University of Pennsylvania, Philadelphia.

The navigation legislation of the United States has been of varied and apparently contradictory character. Often, however, the laws passed have been inconsistent only in effect while prompted by the same general motives. A large portion of our early legislation as to tonnage dues, for example, was passed not to further the development of the American marine alone, nor to furnish revenue for the government, but with the object of forcing other countries to grant fair conditions of commerce. Our earliest agreements with foreign nations show a desire to give and accord the most liberal terms for international trade. Shortly after the ratification of the constitution, however, a severe policy of discrimination against foreign shipping was adopted resulting in the series of "countervailing" tonnage laws by which England and the United States piled restriction after restriction on colonial commerce, one aiming to force the other to open its West Indian markets, the other striving to keep all the trade under its antiquated system of navigation laws. All this was an attempt to force what we considered fair conditions of trade-an attempt wholly opposed in its effect to the general result which the United States sought to secure, the establishment of a free field for competition in the colonial markets. With the second third of the nineteenth century a more liberal policy saw the abolition of many of the navigation restrictions, and until the Civil War brought the re-enactment of tonnage dues there was a period in which comparatively little discriminatory tonnage legislation was passed. The necessity of an increased income during the Civil War brought the renewed levy of tonnage duties which, through a combination of reasons, continue even to-day, as will be shown.

Our commercial legislation, except as discriminations have been