improvement trade slides over to the system of compensatory trade, if the method of equivalence is allowed, and apart from the judgment which must be passed on the latter kind of trade the improvement trade, as we have seen, raises problems of principle and practice. Yet the events of the present time seem destined to give the trade an importance it has hardly had since the consolidation of the national states of Europe provided areas of considerable extent in which trade could freely take place. Owing to the fall in the value of the monies of the Central European Powers, they are unable to purchase goods on the world market, and are dependent on working up the products of other owners if their factories. are to be kept going. Hence, the improvement trade may have a brilliant future before it: though it must be recognised that from the standpoint of the revenue system of these impoverished countries, there are disadvantages, since obviously the vitality of the trade depends upon the freedom from the imposition of duty.

CHAPTER X.-Continued.

"FRONTIER TRADE."

§ 17. WHEN we turn to the Frontier Improvement Trade we meet with no new principle, but only the application of the ideas we have already discussed to a particular set of circumstances. An illustration or two may suffice to make the matter clear.

In Switzerland Article 138 of the Executory Decree, basing itself on Articles 5 and 7 of the Customs Law, defines the matter as follows:

"In the ordinary course of the small frontier trade, objects which are brought by the inhabitants of the frontier zone of 10 kilometres to the inhabitants of the same zone in the neighbouring State for repair, improvement, or working up, or vice-versa, and which, having been repaired, improved, or worked up, are re-imported into the frontier zone of the country of origin within the defined period of time, shall be free of duty, in so far as reciprocity is maintained by the State in question.

“This refers in particular to repairs to clothing and shoes, which private persons in one frontier zone have performed for them by artisans in the other zone for their own direct benefit to rough wood to be sawn: wheat to be milled, etc., given to foreign workmen in the normal course of trade, even if the raw material is itself of Swiss origin.

"For the rest, as regards the extension of the zone, as well as the various processes, there is reserved the right of separate arrangements with individual countries."

This passage, it will be noted, deals only with one aspect of the subject: small commission trade. The regulatory decree of 8th March, 1907, deals with the frontier trade in general. § III includes, under the "Frontier Trade," all the articles and processes included under the active improvement trade," under reservation of reciprocity and the possible stipulations of commercial treaties, special conventions, etc.," and then goes on to add a large number of other pro

cesses, such as grinding of bones, wood gall, apples, etc., sawing, cutting, planing of wood, pressing of fresh fruit, curing of fish, milling, threshing of cereals, etc., salting of cheese, cutting, counting, printing, blackedging of paper, and various processes in connection with textile products.

In addition, the Swiss law separately regulated the "small" frontier traffic. Article 3, sub-section O, of the Customs Law allows the free import of "milk, eggs, fresh fish, snails, fresh field and garden produce, in so far as these products are intended for the market or hawking, and are carried by the supplier into Switzerland, or are only conveyed by small hand-carts. In any case, the observance of the legal frontier route (Zollstrasse) and declaration at the frontier office is obligatory in these cases." 1

Very much the same sort of arrangement exists in Sweden as regards the small frontier trade as in Switzerland. Under Article 8 of the preliminary dispositions of the tariff, articles. brought by the frontier population from Norway or Finland to undergo some process of improvement in Sweden, such as bleaching, dyeing, tanning, spinning, weaving, etc., or for repair, are admitted free of duty, provided there is compliance with the detailed regulations of the customs authorities, or, in special cases, of the customs authorities at the frontier. The passive improvement trade is also allowed in this connection. In Germany, under § 116 of the Customs Act, "in respect of the small frontier trade, special concessions may be made according to the local circumstances." The detailed regulations under this head are very similar to those in force in Switzerland.

§ 18. We are now left with the third of the alleviations which come under the second of our headings-viz., the case of the "propriétés limitrophes." The reason for this alleviation is quite simple. The frontier may cut a particular estate into two halves; shall the cultivator be forced to pay duty if he imports the produce of his fields into the customs area of the country in which the smaller portion of his estate lies? Or a rectification of the frontier takes place, by which an estate is separated from the village or hamlet in which the proprietor lives how are the products of the estate to be treated by the country of residence?

1 Blumenstein and Gassman, op. cit., p. 12.

We may regard the actual concessions made in these cases as among the survivals of the system in which the basis of levying customs duty was the individual and not the goods which accompanied the individual directly. Thus, the following cases are recognised in the case of Switzerland

Customs Law, Article 3, sub-sections m and n

"(m) Goods, animals, and machines which are exported by inhabitants for use (Bewirtschaftung) in foreign territory, on estates which are yet not situated more than 10 kilometres from the frontier and are re-imported within a defined period of time into Switzerland; in the same way the same articles, which are imported by foreigners into Switzerland for use on estates which are not more than 10 kilometres from the frontier, and remain only a short time in Switzerland; but in the latter case only if and to the extent that reciprocity is practised by the respective foreign country.

(n) The crude products of the soil of such estates, situated on foreign soil within 10 kilometres from the frontiers, as are cultivated by inhabitants of the Commonwealth (owners, possessors of the usufruct, or tenants), whether in person or by third persons on their behalf."

By treaties with Germany and Austria the limits in respect to these frontier arrangements have been increased to 15 kilometres.

In the case of France, the arrangements are much more. complicated. The basis of the French position is the ordinance of 13th October, 1814, which provides for freedom of export by foreigners of the products of their lands situated within a defined distance from the frontier, on condition that French owners of lands situated on their side of the frontier be given reciprocal rights. But free import into France, which, though not at that time the most important aspect of the situation, has now, with the cessation of export duties or prohibitions, usurped the predominant place in interest, is only permissible on two conditions

(a) The right is restricted to estates which were French at the moment of the delimitation of the frontier.

(b) These estates must have remained in the hands of the French owners who were in possession at that time, or have been transferred to Frenchmen, the actual owners by bequest, and these legatees must be heirs in the direct line.

In the case of exports the condition of possession at the time of the delimitation of the frontier is not required; all that is asked for in this case is that the products are the harvests of territory actually cultivated by foreign owners or by foreign cultivators. Every change of proprietorship requires a reaffirmation of the right at the customs office. Each year the owners of the lands have to file at harvest time a declaration indicating the type of culture applied to each part of their lands, and the approximate quantities of products they propose to import or export, as the case may be. The cereals and other products of the earth have to be imported or exported in the form in which they are habitually raised from the soil, and, with the exception of wines, the period of free movement is limited to the period 1st June to 15th November, so far as imports are concerned, though, in the case of exports, the period is extended to the 1st April next following.

In addition to the autonomous law on the subject there are conventional regulations affecting the various frontiers, but these arrangements are by no means uniform, nor are they subject to the most-favoured-nation rule.1

§ 19.2 We must now pass to the last of our divisions, treating of drawbacks and of compensatory trade. And, as the latter is historically connected with the improvement trade, we will begin with this subject.

The actual French law, by insisting on the obligation of transport to the place of manufacture, both in the case of metals and of wheat, has now placed strict limits to the degree to which substitution can be practised. But the German system of import certificates supplies us with an excellent illustration of the working of compensatory trade. In Germany, as in France, the system of compensatory trade grew up in connection with the improvement trade, and, in the controversies in connection with the system, writers generally discuss it under the title "Abschaffung des Identitätsnachweises " (abolition of proof of identity).

1 On the whole subject, Pallain, I., pp. 137-152.

On this section, see generally, Grunzel," Economic Protectionism," pp. 206, 216, et seq; Lexis, art. Identitätsnachweises," in H.S.W., 3rd edn., vol. iii.; Pallain, op. cit., pp. 556-65; Beckmann. "Einfuhrscheinsysteme," in Abhandlungen der Badischen Hochschulen, 1911; same author in J.N.S., 1914, art. "Getreide ausfuhrverguetung und nationale Futterbeschaffung "; G. Michel, art. Acquità-Caution" in Say and Chailler Nouveau Dictionàire d'Economie Politique, vol i. ; Hausser," Les Méthodes Allemandes d'Expansion Economique."

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