already entitled to this treatment, it happens that in case or any future treaties the agreement, made on the basis of the most favored nation clause, automatically proceeds upon the lines laid down in the first commercial treaty as already described, since that treaty is evidently one which extends the most favorable treatment to foreign countries. In case it is found desirable in the later treaties to add articles to the list on which concessions are made, as previously established, in the first treaty, it is easy to see that by the most favored nation principle once more, the country having entered into the original treaty also gets the advantage of the gains later made by other countries. In consequence of these conditions it naturally results. from the adoption of a considerable number of treaties that a lengthy, if not all-inclusive schedule of duties, is made up, applicable to all nations which enjoy this particular kind of treatment. The main feature of the system is that the schedule of duties has been produced as a result of negotiations, made first with one country and then with another. The duties are adjusted to the particular needs of the several countries entering into these treaties, but are finally amalgamated together into a lengthy schedule which can be taken advantage of by practically all of them.

Under these circumstances, it is clear that the original tariff charged by the general schedule becomes nothing more than a ground for argument. In order to obtain a vantage-point from which to make concessions it customarily happens that the rates of the general tariff are fixed abnormally high in order to afford a basis of concession. At the present time, the tariff system thus set forth is in vogue in Germany, Austria, Switzerland and Italy. Germany has now entered into commercial treaties with foreign countries, carrying out the system just described and numbering no less than twenty-eight in the most favored nation class. She has also eight special tariff treaties in which tariff agreements are particularly made. Thus the most favored nation clause is the key to her commercial policy,

since through its agency in the twenty-eight treaties aready referred to, the conventional tariff duties have been applied to imports from this long list of countries.

According to a recent summary, the commercial treaties now in existence between Germany and other states may be divided into four classes as follows:

22

1. Treaties with tariff agreements and with clauses providing for the most favored nation treatment. These treat in a detailed manner of the important features of the commercial relations of the two States, insure to the merchants and their goods the treatment accorded the most favored nation; they also contain clauses fixing (or "binding," as the European writers term it) the rates of the tariff in their own general schedules, diminishing those rates or guaranteeing that they shall not be changed. These treaties are usually termed "tariff treaties," as the tariff agreements are the principal feature of the treaty, and the most favored nation clause is regarded as a matter of course. These treaties are usually made between countries which have a highly developed commerce with each other, and which desire to stimulate this intercourse. To this class of treaties belong those which Germany has made with Austria, Russia, Belgium, Switzerland, Italy, etc.

2. Treaties with tariff agreements, but without a clause providing for the most favored nation treatment. This variety of treaty is usually preferred by countries which do not admit the principle of unconditional most favored nation treatment. Tariff conventions, however, are considered as a higher mark of international comity than the simple guaranty of most favored nation treatment, and hence the former usually includes the latter. For this reason the treaties which the United States has made with France and Italy contain certain tariff agreements, but do not contain the European (unconditional) most favored nation clause.

3. Treaties without tariff agreements, but with a most favored nation clause. These treaties are usually composed of a few general provisions in which the contracting parties assure to each other the treatment accorded to the most favored nation. They are usually called "most favored nation treaties," because this clause represents the entire value of the treaty. Since 1860 this class of commercial treaties has been by far the most numerous of the treaties made in Europe. They are made in cases where the commercial intercourse

22 "Modern Tariff Systems," Treasury Bureau of Statistics, ante cit., p. 3107.

between two countries is not extensive enough to make tariff agreements profitable or where such agreements cannot be reached for other reasons. On January 1, 1901, Germany had only eight tariff treaties, while she had twenty-eight most favored nation treaties.

4. Treaties with neither tariff agreements nor the most favored nation clause. Such treaties contain general regulations concerning the commerce between the two States, and are made only with such countries as are partially open to European commerce. Germany, for instance, has made such treaties with China, Korea, Siam, and the Kongo Free State.

In England, of course, a different idea has been in control. The events of the past few years have had no inconsiderable effect in weakening the adherence to free trade principles which has been so characteristic of that country throughout the latter half of the nineteenth century. The utter isolation of England in consequence of the rising tide of protectionism on the Continent as well as in the Western Hemisphere, the increasing competition in foreign markets, and the decreasing superiority of English-made goods have together led to a certain revival of the belief that tariff duties may be used as a threat wherewith to force other countries into acting in a way that would throw their markets more widely open to English goods. The agitation for "fair trade" as against "free trade" has attained some strength. It has been demanded by some that tariff duties should be imposed upon goods coming from all those countries which decline to make equal concessions to the goods of Great Britain, and that free trade privileges should be offered only to those countries which accord the same treatment to British goods. In other words, what we call reciprocity has in England taken shape in the notion of "fair trade," by which is meant the policy of doing to other nations what they are actually doing to the home country-taxing their products as highly as they tax English goods and no more. No special basis of application to certain particular commodities is in this conception given to reciprocity. The high or low rates of duty, as the case may be, are to be charged and paid upon all

goods which are subject to such high and low rates abroad. Reciprocity here becomes largely a notion of retaliation. The tariff system to be adopted by England, as outlined by the "fair-trade" advocates, is made to depend upon the conglomerate tariff system adopted by the great variety of countries with which it may happen to be trading.

As is well known, the United States did not pass through the extended free trade period which was enjoyed by the countries of Europe. The Civil War blighted the free trade movement here by the necessity for higher duties, just as the Franco-Prussian War later blighted it in Germany and France by exigencies of a similar kind. We continued our high tariff policy, failing to reduce the duties of the war as had been promised at the time of their passage, and we only aggravated the older schedules by the tariff of 1883. With the passage of the McKinley act in 1890, we continued the later protective régime which has lasted, with but a short interval, until the present time.

Yet, even the United States felt the pressure of the protective principle in the same way, although not to the same extent, as the European countries. The absence of subsidies and bounties from our commercial legislation prevented the protective system from developing to the full extent which characterized it in Europe, while our economic position was not such as to force us to depend upon others to the same extent as many of the European countries. As the protective system attained greater and greater strength abroad, American producers felt themselves subject to restrictions of increasing severity. The heavy duties imposed on our goods when entering European countries seemed to make it increasingly difficult for us to extend our markets. In South America we keenly felt the competition of Europeans, partly on account of their cheaper processes of production and partly because of the assistance granted European merchants by commercial legislation which enabled them to sell some of their goods more cheaply

abroad than they did at home. We had already tried reciprocity with Canada, and later what passed for reciprocity with Hawaii, but we had never given any extended scope to the doctrine. Not until we began to feel the pressure of competition and to recognize that our merchants, too, might be able to enter successfully into international competition, should circumstances be made favorable, did reciprocity as a self-conscious system gain a considerable support. From 1884 onward it definitely increased as a popular movement, paralleling the growth of the system of commercial treaties, whose development among the European countries has already been outlined. Like them, it was an effort to get away from protection, so far as that policy necessitated loss of markets, and discrimination in duties.

It is now possible to see what is the true place to be assigned to a reciprocity policy in the general scheme of tariff relations between the countries of the world. As compared with France, which has its maximum and minimum tariff system; with Germany, which has its general and conventional schedules; with Great Britain, which has practically no tariff at all, the United States appears as a country possessing a general tariff, nominally offering to modify this tariff by special commercial agreements made according to the current demands of expediency, and holding out various sorts of advantage, first to one country and then to another. It is true that the provisions of the two tariff acts framed by Messrs. McKinley and Dingley laid down a basis for reciprocity in certain instances which should be uniform in its application to foreign countries. The tropical reciprocity of the Dingley act, like that provided for in its predecessor, was established upon uniform and recognized bases. But the Dingley act also, as will be seen, provided for the making of agreements with foreign countries which were to be shaped in accordance with the wishes of those who negotiated the treaties. It was scarcely to be expected that any uniformity could result from treaties subject to the necessities and to the demands of expediency which would apply