XIX France was to have a free hand in Morocco in return for giving CHAP. Great Britain a free hand in Egypt. The insistence of Germany upon a share in the disposal of Morocco's resources led to the calling of the Algeciras Conference of 1906, at which an attempt was made by a group of thirteen interested powers to settle the question upon the constructive basis of a guarantee of the formal independence and integrity of Morocco, accompanied by the principle of equal commercial facilities in Morocco for all nations.1 Provision was made that none of the public services of the empire should be turned over to the profit of private interests. In the absence of an adequate sanction, however, this collective agreement broke down, and war was narrowly averted in 1911 when the rival powers were again aligned against each other. Throughout the entire diplomatic conflict the issues were strictly "political, each nation being free to press such claims as it was able to justify to itself. Had arbitration been resorted to in 1911, it would have been impossible for any court, however desirable its mediation, to give a legal decision in the case. At best a compromise could have been effected, differing in no way in point of law from the diplomatic settlement actually reached. China The development of the resources of China led to a rivalry Foreign between the Great Powers which, after passing through various toward forms of divided control, has now been in part adjusted on the basis of a general agreement of the parties concerned. Having once been brought into commercial relations with the Western world, China offered not only a valuable market for manufactured goods, but a profitable field for the investment of capital in the development of railways and mines, and more recently, in respect to its neighbor Japan, a source of supply of raw materials. Individual powers sought and obtained leases of specified areas and larger spheres of influence in the outlying districts. Treaties with individual powers fixed the maximum rates that might be imposed upon Chinese imports and provided that certain revenues should be pledged in payment of public debts incurred to foreign banking institutions.* Other treaties subjected state undertakings, railways, banks, and mines, to varying degrees of foreign control, and For the text of the General Act adopted by the Conference, see Br. and For. State Papers, XCIX, 141. 2 Art. 105. 3 p. 243. Willoughby, Foreign Rights and Interests in China, passim. See above, CHAP. XIX Provisions limited the freedom of China in making further loans or granting industrial or commercial concessions.1 As the result of these treaties China succeeded Morocco as a center of diplomatic conflict between the powers interested in the exploitation of its resources. The transfer of Germany's rights in Shantung to Japan in 1915 brought the problem of foreign control in China before the Peace Conference at Paris; 2 but no constructive rules representing the collective policy of the powers assembled at the conference were adopted. Finally the nine powers represented at the Washington Conference of 1921-22 succeeded in reaching a general agreement "relating to the principles and policies to be followed in matters concerning China." In this treaty the signatory powers agree to respect the sovereignty, independence, and territorial and administrative integrity of China, and to use their influence to establish and maintain the principle of equal opportunity for the commerce and industry of all nations throughout Chinese territory. With the object of making effective the principle of the "open door" in China, the contracting powers agree not to seek themselves, or to support their respective nationals in seeking, any arrangement which might establish in their favor superior rights with respect to commercial or economic development in any designated region of China, or any such monopoly or preference as would deprive the nationals of any other power of the right of undertaking any legitimate trade or industry in China. The treaty is accompanied by a second treaty relating to the Chinese customs tariff, and by a series. of resolutions touching subordinate questions of foreign administrative rights in China. Considering the political influence of the contracting powers, it may fairly be said that their collective action in regard to the future status of China has become the basis of a potential rule of international law upon the subject, which will limit and restrict the freedom of action of each of the parties to the treaty in the determination of its policies toward China in the future. The authority of this agreement will doubtless be enhanced to the point of a definite rule of law should the powers not signatory to the treaty accept the invitation to be extended to them to 1 Ibid., appendix, tables. See also, G. A. Finch, "American Diplomacy and the Financing of China," Am. Journal, XVI (1922), 25. 2 See above, p. 243. For the text of the treaty, see Am. Journal, XVI (1922), Supp., 64. Art. II-V. For the texts of the treaty and the resolutions, see ibid., 69, 76-83. adhere to the treaty.1 General adherence by the non-signatory CHAP. states would convert the original treaty into a definite body of statutory legislation within the particular field. XIX in Mexico The exploitation of the resources of Mexico by foreign capital Concessions has been accompanied by indirect rather than direct intervention of the governments whose subjects have invested in that country. During the long presidency of Porfirio Diaz concessions were freely granted to foreign capitalists for the development of mines and oil-wells and the building of railways. The terms upon which these concessions were obtained were, however, more favorable than the succeeding revolutionary Carranza Government believed to be compatible with the national interests of the country. In consequence the new constitution of 1917 was made to include provisions asserting an ultimate ownership of the nation in all lands and waters, including minerals, salt, mineral fuels, and petroleum in its different forms.2 Foreign governments thereupon became concerned, in the interest of their citizens, to know whether the provisions of the constitution in this respect were to be retroactive.3 Moreover, the imposition by the Mexican Government of new taxes upon the products of mines and oil-wells operated by foreign citizens under earlier concessions raised a question of diplomatic intervention by their governments in their behalf. Direct negotiations with the Mexican Government later became complicated with the recognition of a new de facto Government, of which Obregon became president on January 1, 1921. It was not until August 31, 1923, that the United States, having received satisfactory assurances that the property rights of its citizens would not be adversely affected by legislation under the new constitution, gave formal recognition to the government. Throughout the diplomatic controversy, in which Great Britain became somewhat involved owing to the concessions held by its nationals in the oil regions, there was no rule of international law applicable to the case. Such diplomatic pressure as was put upon Mexico by withholding recognition of the 1See Art. VIII of the principal treaty. For the text of the Mexican Constitution of 1917, see Annals, American Academy of Political and Social Science, Supp., May, 1917. 'For a discussion of the normal property rights of aliens, see above, p. 178. The student of American constitutional law may make comparison with the provision of the Constitution, Art. I, Sec. 10, forbidding any State to pass a law "impairing the obligation of contracts, as well as with the provisions of the Fifth and Fourteenth Amendments requiring "due process of law," including just compensation, when persons are deprived of their property by the State. See above, p. 113. CHAP. XIX Cases of d. Tariffs and subsidies de facto government was the result of the individual decision of the particular powers concerned. To these more conspicuous instances of the absence of any rule of international law regulating the foreign policies of states, where the objective has been the development of the commercial life of the nation, may be added the Anglo-Russian Agreement of 1907, by which two rival powers marked out for themselves spheres of influence in Persia which practically reduced that state, not itself a party to the agreement, to the status of a protectorate under dual, but divided, guardianship. Certain third states, not parties to the treaty, looked upon it with misgivings, but no successful effort was made to bring about a collective agreement of all or any large number of the powers, by which the status of Persia would have been put upon a legal basis. In the case of the forcible annexation of Tripoli by Italy in 1913 political as well as economic motives appear to have dictated the declaration of war against Turkey; but no question of collective action on the part of other powers was seriously raised, because possibly of the doubtful position of Italy as a member of the Triple Alliance. The single-handed control of Great Britain over Egypt, having succeeded to the previous dual control of Great Britain and France, remained practically uncontested by other powers down to the outbreak of the World War, when the protectorate was formally annexed to the British Empire.' With respect to legislation adopted by a state with the object of protecting and developing the foreign trade of its citizens, it should be noted that, while international law recognizes the right of every state to frame its domestic laws according to its own judgment of the national welfare, nevertheless such laws may at times directly affect the foreign relations of the state and give rise to protests and retaliatory measures on the part of other states. Preferential tariffs exacted of a colony or dependency in favor of the mother-country, or preferential tariffs conceded voluntarily by a self-governing colony to the mother-country, as in the relations between Canada and Great Britain, raise the issue of a violation of the spirit, if not the letter, of that equality of treatment which, in the form of "most-favored-nation" clauses, has come to be almost a principle of law in the commercial relations of nations. In like manner, tariff legislation which was practically prohibitive of certain foreign imports might be questioned by the state against which the prohibition was directed, although in this For the subsequent status of Egypt, see above, p. 97. 1 XIX case the complete absence of any legal right in the premises would CHAP. leave to the injured state no other redress than the adoption of measures equally injurious to the offender. The same is true of such forms of national legislation as subsidies and rebates, by which states have sometimes sought to obtain for their citizens a position in foreign markets which they could not win by the usual methods of commercial competition. States whose citizens suffer by the handicaps thus imposed upon them are free to adopt similar measures in aid of their own commerce, but beyond that they have no redress. International law at present offers no rule against unfair competition. marine foreign The part played by the national merchant marine as a factor e. Merchant in international relations in time of peace has been conspicuous and only within recent years. Two influences appear to be responsible. policy In the first place governments have for some time clearly perceived the intimate connection between a national merchant marine and an efficient navy. Ships of war, operating at a distance from their home base, must be supported by numerous auxiliary vessels, carrying provisions, ammunition, coal, and other supplies. If the transport of troops should be necessary, vessels other than men-of-war would be needed. In consequence, the larger maritime states have made it their policy to encourage the development of a national merchant marine, large enough to supplement the probable needs of the regular navy in time of war and under contractual obligation to submit to government control immediately upon the outbreak of war. The second influence has been a purely commercial one. The overseas carrying-trade has been a profitable business for the citizens of a number of European states. At the same time it has assisted to a considerable degree in building up the foreign commercial markets of the home country. For both these reasons governments have found it desirable to encourage the growth of a merchant marine, and they have been willing at times to subsidize private ship-owners in order to assist them to overcome competition more effectively. In its turn the development of a large 1 The entrance of the United States, as owner of a large merchant fleet built during the World War, into competition with private owners of foreign vessels has raised questions similar to those presented by government subsidies to private owners. The ability of a government to sustain losses over a long period enables it to underbid competing lines less strongly financed. Compare, also, the provisions of the Jones Merchant Marine Act of 1920, by which preferential tariff treatment was granted to goods carried in American vessels. The fact that the execution of the act would have required the abrogation of some thirty |