indeed, necessarily the case, tariff policies have been inseparable from and have largely determined the treaty policies of the various states. These tariff policies have varied greatly from that of Great Britain and from each other. The single-schedule tariffs in force in and after 1860 became, through the operation of the most-favored-nation clause in commercial treaties, double-schedule tariffs with the second, or conventional, schedule applicable to the mostfavored nations. When any reduction was made on a particular article in a treaty with a particular country, it was automatically generalized to all countries having mostfavored-nation agreements with the country making it. On the other hand, in those countries which adopted a statutory double schedule of rates, most-favored-nation treatment usually meant the more or less general application of the lower of the two schedules fixed by legislative enactment.1 A large majority of the European states which developed differential tariffs clung to the general-conventional type. France was the leading exponent of the maximum-minimum type and Germany of the general-conventional.

In the present connection the fact should be mentioned that a fine art of refined classification developed, during the years following 1890, for devising tariff rates in the treaty schedules. In order that the theoretical generalization of concessions might be made in reality of no advantage to any but the two bargaining states, minute definitions of articles were constructed, so that similar articles from other countries would not fall within them. From the point of view of the commercial ideals of the years 1860 to 1880 such a practice was not only dishonest but, as far as it went, nullifying. Another inharmonious development appeared as a

1 Sometimes reductions below minimum rates are granted by treaty. Under most-favored-nation pledges these must be generalized; hence they tend to form an added conventional schedule.

[468 result of the fact that any one of a number of states bound together by treaty ties could, when renewing treaties, insist upon charging higher duties, thus reducing the practical favor of the most-favored-nation treatment offered. It was a natural thing for other nations to raise their rates and so reduce their favors proportionately lest they should give more by the treaty system than they received. On the other hand, a state wishing to lower its tariffs, naturally feeling reluctant to do so without the assurance of a quid pro quo from other treaty countries, would have to bargain with all the others and obtain through toilsome negotiations the desired cooperation.

Thus the most-favored-nation treaty system, as practiced in Europe in connection with double-schedule tariffs, although originally an instrument of commercial liberalization, may result in the general adoption of higher tariffs. The fact should be remembered, however, that without any treaty system, high tariff walls erected by any one nation form a standing challenge to others to retaliate by similar means; and it is always easier for a nation to head toward commercial illiberalism, dragging others with it, than to lead-and obtain a following-in the opposite direction.

60. THE WORLD WAR AND THE MOST-FAVORED-NATION PRINCIPLE

From the point of view of economic policy the most important event of the war period was the conference attended by representatives of the allied governments which assembled at Paris on June 14, 1916.1 Its stated object was "to put into practice their [the Allies'] solidarity of views and interests and to propose to their respective Governments suitable measures for realizing this solidarity." " During

1The present subdivision, including quotations, is based largely upon Senate Document, no. 491, 64th Congress, 1st Session (1916), entitled, Trade Agreements Abroad.

'Ibid., p. 63.

preceding months various threatning, though grandiose, schemes had been put forth in Germany aiming at economic dominance after the war. Various influences in the allied countries, moreover, were at work both before and after the conference with the aim of securing the commercial advantages over Germany which were expected to accrue as a result of an allied victory. The London Spectator, in an article written shortly before the Paris resolutions were announced, said:

. . . There is . . . one very important point which ought at once to be dealt with. If the allied powers are to take in the future common action against German commercial methods, they must have their hands free to impose tariffs upon German goods which they do not impose upon the goods of one another. That means that Germany must not be entitled to claim most-favored-nation treatment.

This is of all points perhaps the most immediately important for the Paris conference to settle. In the treaty of Frankfort, which ended the Franco-Prussian War of 1870, there was inserted a permanent most-favored-nation clause regulating the commercial arrangements of France and Germany.' This

'Article XI of the Treaty of Frankfurt, signed May 10, 1871; text as follows:

Les Traités de Commerce avec les différents Etats de l'Allemagne ayant été annulés par la guerre, le Gouvernement Allemand et le Gouvernement Français prendront pour base de leurs relations commerciales le régime du traitement réciproque sur le pied de la nation la plus favorisée.

Sont compris dans cette règle les droits d'entrée et de sortie, le transit, les formalités douanières, l'admission et le traitement des sujets des deux nations ainsi que de leurs agents.

Toutefois, seront exceptées de la règle susdite les faveurs qu'une des Parties Contractantes, par des Traités de Commerce, a accordées ou accordera à des Etats autres que ceux qui suivent:-L'Angleterre, la Belgique, les Pays-Bas, la Suisse, l'Autriche, la Russie.-British and Foreign State Papers, vol. 62, p. 81. See also Article XVIII of Additional Convention signed Dec. 11, 1871 (Ibid., p. 98), and Procès-Verbal, signed January 11, 1872 (Ibid., p. 103).

[470 clause was inserted at the request of France, but most French people seem to be agreed that it was Germany who drew the greatest advantage from it. At any rate, there is not likely to be any French opposition to a refusal to insert a similar clause in any treaty of peace that may follow the present war. Nor need there be any opposition from Great Britain.1

Some months before, a commercial conference at London had gone on record in favor of making provision

(a) For preferential reciprocal trading relations between all parts of the British Empire; (b) for reciprocal trading relations between the British Empire and the allied countries; (c) for the favorable treatment of neutral countries; and (d) for restricting, by tariffs and otherwise, trade relations with all enemy countries, so as to render dumping or a return to prewar conditions impossible, and for stimulating the development of home manufacture and the consequent increased employment of native labor.2

The recommendations of the Paris Economic Conference were divided into three categories: for the war period, for the reconstruction and for permanent allied collaboration. They aimed generally to insure economic advantage for the allies and corresponding disadvantage for the Central Powers. One of the recommendations intended to operate during the period of reconstruction was as follows:

Whereas the war has put an end to all treaties of commerce between the allies and enemy powers, and it is of essential importance that during the period of economic reconstruction the liberty of none of the allies should be hampered by any claim put forward by enemy powers to most-favored-nation treatment, the allies agree that the benefit of this treatment will not be granted to those powers during a number of years to be fixed by mutual agreement among themselves.

1 Senate Document, op. cit., p. 44. Quoted from issue of June 17, 1916. Ibid., p. 38.

During this number of years the allies undertake to assure each other, so far as possible, compensatory outlets for trade in case consequences detrimental to their commerce should result from the application of the undertaking referred to in the preceding clause.1

According to the London Times,

The recommendation which was accepted as the most vital of all was that denying to the enemy powers, for a period to be fixed by agreement, of "most-favored-nation" treatment... Members who laid emphasis on the value of the "mostfavored-nation" recommendation expressed the view that it struck at the heart of the German fiscal system.2

Liberal opinion, however, saw no good in a scheme to follow up military with economic warfare, and doubtless the President of the United States had the Paris recommendations in mind when, in his address to the Congress on January 8, 1918, he announced as one of the objects to be attained through victory,—

The removal, so far as possible, of all economic barriers and the establishment of an equality of trade conditions among all the nations consenting to the peace and associating themselves for its maintenance.3

Commenting on the Paris recommendations as a whole the Economic World said:

On the face of the matter, no international economic project 1Ibid., p. 65.

"Ibid., p. 52. Issue of June 22, 1916.

3 Point III of the Fourteen Points; quoted by Baker, Ray Stannard, Woodrow Wilson and World Settlement (Garden City, N. Y., 1922), vol. iii, p. 43.

This attitude on the part of the United States might have been appropriately cited in the preceding chapter as a precedent for the policy of Section 317.