Notwithstanding that the amendatory shipping act of June 19, 1886, provides in its eleventh section for the enlargement of the privilege of reduced tonnage on the basis of reciprocity where the condition of neighborhood does not exist, the Imperial Government has anticipated the proposal authorized by that and by the twelfth section of the act referred to by claiming the privilege without equivalent. I transmit, for your information, copy of Mr. von Alvensleben's note of August 1, 1886, in which the claim is so presented and defended by arguments which I am unable to accept as sound or sufficient. A reply to the German demand has been delayed, partly because it appeared necessary to first dispose of the Swedish and Norwegian claim, on which the others more or less depend, and partly from a desire to give to the merits of the discussion a material modification by entering into a reciprocal arrangement with one or more countries under the expanded provisions of sections 11 and 12 of the act of June 19, 1886. The inclosed copies of correspondence had with the Swedish and Norwegian minister will show you the present status of the discussion with that Government. It is sent to you for your information merely, not for communication to the German Government. The Government of the Netherlands has asked the formal conclusion of the reciprocal understanding, provided for by the eleventh section of the act of June 19 last, and the only obstacle to the acceptance of the proposal and the issuance of the President's proclamation lies in a recently-discovered ambiguity in the subproviso of that section, which renders it uncertain in its application. Its early amendment is, however, probable, when the proclamation will forthwith be issued. This instruction is sent in order to keep you fully advised of the progress of an important discussion with the country to which you are accredited, but no action on your part appears to be necessary beyond reporting any facts which may come to your knowledge in this relation. I am, etc., T. F. BAYARD. 'CORRESPONDENCE WITH THE LEGATION OF GERMANY IN WASH INGTON. No. 10. Mr. von Alvensleben to Mr. Bayard. [Translation.] IMPERIAL GERMAN LEGATION, Washington, August 3, 1885. (Received August 5.) The undersigned, imperial German ambassador extraordinary and minister plenipotentiary, has, in accordance with the orders he has received, the honor to make the following very respectful communication to Hon. Thomas F. Bayard, Secretary of State of the United States. By a law of June 26, 1884 (an act to remove certain burdens on the American merchant marine and encourage the American foreign carrying trade, and for other purposes), section 14 (tonnage tax), it has been provided that vessels which sail from a port in North or Central America, in the West Indian Islands, the Bahama, Bermuda, and Sandwich Islands, to a port of the United States, shall pay in it, in place of the previous tonnage tax of 30 cents per ton a year, only 3 cents per ton, and not more than 15 cents a year, whilst vessels from other foreign ports have to bear a tax of 6 cents. This lowering of the tax to 3 cents has been granted to the favored countries-Canada, Newfoundland, the Bahamas, Bermuda, and West Indian Islands, Mexico, and Central America, including Panama and Aspinwall-unconditionally and without regard to the taxes, however relatively high, these countries on their side levy on American ships. Article IX of the Prussian-American treaty of the 1st of May, 1828, which has been lately, in the correspondence between the cabinets of Berlin and Washington concerning the petroleum railroad rates as well as because of the Spanish-American treaty concerning the trade of Cuba and Puerto Rico, successively asserted by both Governments to be valid for all Germany, runs as follows: If either party shall hereafter grant to any other nation any particular favor in navigation or commerce, it shall immediately become common to the other party, freely, where it is freely granted to such other nation, or on yielding the same compensation, when the grant is conditional. The treaties which the United States in their time have concluded with the Hanse cities, Oldenburg and Mecklenburg, contain similar provisions. In accordance with the purport of these, Germany has an immediate claim, and without making any concession in return, to participate in the enjoyment of the tonnage tax abatement to 3 cents per ton, which has been unconditionally conceded. The undersigned is, in accordance with the view of the Imperial Government, above set forth, directed to claim from the Government of the United States for German vessels the abatement of the tonnage tax to 3 cents per ton, and to propose, at the same time, the repayment of the tonnage tax which at the rate of 6 cents per ton has been overpaid since the law of the 26th of June, 1884, went into effect. While the undersigned reserves for himself the right to make in due time proper proposals in reference to the abatement provided over and above this in the law of the 26th June of last year, dependent on certain conditions, and which (abatement) may in the future even exceed that of 3 cents per ton, according to the result of proper inquiries concerning the tonnage dues and other taxes, hereafter to be levied in German harbors, he has the honor to request very respectfully that the Secretary of State will kindly take the proper course, so that German shipping may as soon as possible participate in the unconditional favor, to which it is entitled, of an abatement of the tonnage tax to 3 cents. The undersigned has the honor to await, very respectfully, your kind answer in reference to this matter, and avails himself, etc. H. V. ALVENSLEBEN. No. 11. Mr. Bayard to Mr. von Alvensleben. DEPARTMENT OF STATE, Washington, November 7, 1885. SIR: I had the honor to receive in due season your note of August 3 last, touching the application of the provisions of the fourteenth section of the shipping act, approved June 26, 1884, in respect of the collection of tonnage tax to vessels of Germany coming from ports of that country to ports of the United States, under the most favored nation H. Ex. 1, pt. 1--118 clause of the existing treaty of 1828 between the United States and Germany. The importance of the questions involved in the claim of the German Government and in like claims preferred by other governments has led to the submission of the entire subject to the judgment of the AttorneyGeneral. The conclusions of the Department of Justice, after a careful exami nation of the premises, are that— The discrimination as to tonnage duty in favor of vessels sailing from the regions mentioned in the act, and entered in our ports is, I think, purely geographical in char acter, inuring to the advantage of any vessel of any power that may choose to fetel and carry between this country and any port embraced by the fourteenth section of the act. I see no warrant, therefore, to claim that there is anything in "the most favored nation clause" of the treaty between this country and the powers mentioned that entitles them to have the privileges of the fourteenth section extended to their vessels sailing to this country from ports outside of the limitation of the act. These conclusions are accepted by the President, and I have, accordingly, the honor to communicate them to you, as fully covering the points presented in your note of August 3 last. Accept, etc., No. 12. T. F. BAYARD. Count Leyden to Mr. Bayard. [Translation.] IMPERIAL GERMAN LEGATION, Washington, November 17, 1885. (Received November 19.) Mr. SECRETARY OF STATE: I have the honor most respectfully to acknowledge the receipt of your polite note of the 7th instant, whereby you inform me that the Depart ment of Justice of the United States has decided in the matter of the application of the provisions of section 14 of the act relative to naviga tion of June 26, 1884, to German vessels, that the reduction of tonnage duties which is provided for a specified region is of a purely geograph ical character, and that the most favored nation clause can consequently have no application in this case. I have the honor, at the same time, to inform you that I have brought the contents of your aforesaid note to the notice of the Imperial Gor IMPERIAL GERMAN LEGATION, Washington, February 16, 1886. (Received February 18.) Mr. SECRETARY OF STATE: The Imperial Government has seen by your note of November 7, 1885, relative to the enforcement of the provisions of section 14 of the naviga tion act of June 26, 1884, that the United States Government rejects the application (made on the basis of the most favored-nation treaties now existing with Prussia and the German States) for equal rights with the States of North and Central America and the West Indies. This rejection is based on the ground that that exemption which is granted. to all vessels of all powers sailing between the countries in question and the United States is purely geographical in its character, and can not, therefore, be claimed by other States in view of the most favored-nation clause. I am instructed, and I have the honor most respectfully to reply to this, that such a line of argument is a most unusual one, and is calculated to render the most favored-nation clause wholly illusory. On the same ground, it would be quite possible to justify, for instance, a privilege granted exclusively to the South American States, then one granted also to certain of the nearer European nations, so that finally, under certain circumstances, always on the pretext that the measure was one of a purely geographical character, Germany alone, among all the nations that maintain commercial relations with America, notwithstanding the most favored-nation right granted to that country by treaty, might be excluded from the benefits of the act. It can not be doubted, it is true, that on grounds of a purely local character certain treaty stipulations between two powers, or certain advantages autonomically granted, may be claimed of third States not upon the ground of a most favored-nation clause. Among these are included facilities in reciprocal trade on the border, between States whose territories adjoin each other. It is, however, not to be doubted that the international practice is that such facilities, not coming within the scope of a most favored-nation clause, are not admissible save within very restricted zones. In several international treaties these zones are limited to a distance of ten kilometers from the frontier. From this point of view, therefore, the explanation given by the United States Government of section 14 of the shipping act can not be justified. This law grants definite advantages to entire countries, among others to those situated at a great distance from the United States; these advantages are, beyond a doubt, equivalent to facilities granted to the trade and navigation of those countries, even if they do, under certain circumstances, inure to the benefit of individual vessels of foreign nations. It scarcely need be insisted upon that these advantages favor the entire commerce of the countries specially designated in the act, since they are now able to ship their goods to the United States on terms that have been artificially rendered more favorable than those on which other countries not thus favored are able to ship theirs. The treaty existing between Prussia and the United States expressly stipulates that If either party shall hereafter grant to any other nation any particular favor in navigation or commerce it shall immediately become common to the other party, freely where it is freely granted to such other nation, or on yielding the same compensation when the grant is conditional. Such a compensation, so far as the reduction of the tonnage tax to 3 cents is concerned, has not been stipulated for by the United States in the aforesaid shipping act. Germany is, therefore, ipso facto, entitled to the reduction of the tax in favor of vessels sailing from Germany to the United States, especially since, according to the constitution of the Empire, no tonnage tax is collected in Germany from foreign vessels; that is to say, no tonnage tax of the character of American ton *Treaty of 1828, Art. IX. nage taxes in the sense of section 8, paragraph 1, article 1, of the American Constitution, viz, those designed to pay the debts of the Government and to pay the expenses of the common defense and the general welfare. As you remark in your esteemed note, Mr. Secretary of State, you have based your decision on an opinion of the Attorney-General. In opposition to this view, it will be seen by the printed decisions of the Secretary of Treasury, that the latter, in an opinion on this subject ad dressed to the Department of State under date of May 11, 1885, expressed the opinion that vessels sailing from Portugal to the United States are, indeed, entitled to the privileges granted by section 14 of the shipping act, on the ground of the most favored-nation treaty existing between the two nations. This opinion harmonizes in the main with the view entertained by the Imperial Government. The Imperial Government entertains the hope, in view of the foregoing considerations, that the United States Government on reconsid ering this matter will not maintain the position taken in the note of November 7, 1885, and that it will grant to German vessels sailing between the two countries the same privileges that have long been granted without compensation by the German Empire to American vessels. In having the honor, therefore, hereby to reiterate the application made in my note of August 3, 1885, for the reduction of the tonnage tax to 3 cents in favor of vessels engaged in trade between Germany and the United States, I hope that the decision of the United States Government in this matter will be kindly communicated to me. Accept, etc., No. 14. H. v. ALVENSLEBEN. Mr. Bayard to Mr. Alvensleben. DEPARTMENT OF STATE, SIR: With reference to previous correspondence on the subject, I have the honor to acknowledge the receipt of your note of the 15th ultimo, relative to the question as to the applicability of the most favored nation clauses of the treaties of Prussia and other German states and the United States to the provisions of section 14 of the act of Congress of June 26, 1884. In reply I beg to inform you that your note will have consideration, it being sufficient for the present to observe that Germany admits that neighborhood and propinquity justify a special treatment of intercourse which may not be extended to other countries under the favored-nation clause in treaties with them, and only appears to question the dis tance within which the rule of neighborhood is to operate. Accept, sir, etc., T. F. BAYARD. 1 |
