mentioned the United States, where the states are contguous geographically and bound together by an indisscluble political union; the Zollverein established among the German States in 1834;5 and the customs union of the states of Australia. A customs union or preferential tariffs would also be justified among the states of Centra America. If eastern and southeastern Europe is in the future broken up into small nations in order to satisfy the many national aspirations of those peoples, their vital interests may require the adoption of a common commercial policy among them. Cuba and Hawaii are economically a part of the United States and are bound to this country by peculiar political ties. To refuse in their case a close economic union with the United States would be unjust to them. Even Algeria may perhaps reasonably claim inclusion in a customs union with France. Just where the limit to the establishment of customs unions and preferential arrangements shall be placed depends upon what is desirable from the standpoint of international goodwill. The interests of weak political units dependent upon others and the fundamental political and geographic relationships should be carefully weighed. It is reasonable to suggest, however, that mere political ties between political units widely separated is not alone sufficient to justify preferences. From the standpoint of world harmony, then, no justification can be found for preferences, for example, between the United States and the Philippines, between Great Britain and Australia, Italy and Eritrea, or France and Indo-China. It is one thing, however, to admit that exceptions are 5 It was gradually extended to include more German states and was completed in 1871. Hamburg and Bremen were added in October, 1888. necessary and quite another to determine what the exceptions are to be. If each nation is left to determine independently what exceptions to the general rule should exist, the general treaty will put us little. further ahead than we are today. Plausible grounds, geographic or political, can always be alleged for preference, and the exceptions will destroy the rule. Here, as in the case of concealed discriminations, we have a problem for international investigation and possible decision. The need for investigation and control with reference to concealed discriminations and possible exceptions to the equality-of-treatment principle makes highly desirable the establishment of an International Tariff Commission under the League of Nations. In the past, when bargaining between nations failed to remove discriminations, or when negotiations resulted in no agreement as to the scope and interpretation of the most-favorednation clause and as to exceptions to the rule of equality of treatment, there was a deadlock. The only recourse available was trade war, and this course, if pursued, usually failed. No organization existed that could act as an arbiter and that was interested in the international aspect of the problem. We have come to see that not only the nations directly involved, but every other nation, is interested in the amicable adjustment of trade difficulties. An International Tariff Commission, if it were merely a clearing house of, information, would justify its existence. Certainly the world needs an organization that will take up differences when ordinary negotiations fail and that will be in a position to propose a solution before these differences lead to hatred and hostility. An International Tariff Commission to do effective service need not at first have more than investigatory and advisory powers. It should publish authoritative texts of all the tariffs of the world in the important languages of commerce, as is already done by the International Union for the Publication of Customs Tariffs at Brussels. It should investigate concealed discriminating tariffs and regulations, and in case its mediation failed to remove any discriminations found, it should be authorized to give them full publicity in order that they might be corrected either by penalty duties imposed by the countries discriminated against, or by joint international action. It should investigate the operation of the most-favored-nation clause and assist in its interpretation and in carrying out its spirit as well as its letter. 6 The International Union for the Publication of Customs Tariffs was formed by a general international convention signed at Brussels on July 5, 1890. This convention, to which the United States and practically all other countries are partners, is binding for successive periods of seven years, but is subject to revision at any time. Any nation may withdraw by notice given 12 months before expiration of any seven-year period. The object of the Union is to publish at the common expense and as promptly and accurately as possible all customs tariffs of the various countries of the world, and any modifications thereto from time to time. To this end an International Bureau has been organized at Brussels, which is charged with the publication of the International Customs Bulletin in the following five languages: English, French, German, Italian, and Spanish. In order to facilitate prompt and accurate publication of the tariffs at the various countries, each contracting state agrees to send to the Bureau at Brussels two copies of its customs laws, tariffs, and any regulations, orders, or instructions concerning application of its tariff schedules, classification of goods, or other matters affecting the interpretation or execution of its tariff laws; also copies of commercial treaties, international conventions or agreements, and domestic laws having a direct bearing on existing tariffs. The annual budget of expenditures by the International Bureau is fixed by the convention at the maximum of 125,000 francs (about $25,000), actual expenses being shared by the various countries in stated proportions according to the amount of their commerce. It should study the economic effect of proposed exceptions to the principle of equality of treatment and report whether or not they are warranted from an international standpoint. These and similar questions open an ample field for the activities of an International Tariff Commission. Without such machinery the opendoor principle and the unconditional most-favorednation clause, even if written into the final treaties of peace, are in danger of being evaded and their spirit destroyed. An International Tariff Commission may be given another field of investigation which would contribute to fair tariff making throughout the world. It would not have, as has been said, any power over the minimum level of tariffs adopted by individual nations. But it may be given power to collect data on competitive conditions in each country and to publish comparative reports. A nation today seeking to levy a fair tariff' finds it difficult to obtain foreign information. If comparable data on prices, costs, and other conditions were collected by an International Commission, they might be used by individual nations in formulating such tariffs and such anti-dumping legislation as their domestic needs may require. In order to make such investigation effective, each nation would have to agree to permit the Commission to use the national authority to collect information from which figures for purposes of publication might be deduced. 7 See Chapter VII. CHAPTER XVII FOREIGN INVESTMENT AND CONCESSIONS Foreign investments Of Great Britain Of France - Of Germany of the United States Use of foreign investments in highly developed countries - Alien Property Custodian in the United States German world-wide control of nonferrous metals - German finance in Italy-Policy to be pursued The alliance between export trade and foreign investments Methods making it effective - Need for international regulation Political significance of the exploitation of undeveloped regions - Exclusive concessions and the open door - The Congo The British in the Caribbean -Conflicts between financial interests and weak Governments British in Egypt - French in Morocco- Haiti and Dominican Republic-Italy in Tripoli - The Boer War - Political aims and finance-Russia in Persia - The Bagdad Railway - Concessions in China- - Manchuria - The Twenty-One Demands - China in the world politics of the future- Necessity for international supervision-Failure of imperialism Of the laissez-faire policy - Nature of international control. In all communities that have attained a fair degree of civilization some of the people are able to save something from their income. for permanent investment. If the community in which they live is growing and developing, if it is diversifying its industries, it is likely that opportunity for profitable investment can easily be found at home. If, on the contrary, the community is already highly industrialized and public improvements well developed, investments there will yield a relatively lower rate of interest than in less advanced parts of the world. Many investors, therefore, in Great Britain, France, Germany, Belgium, Switzerland, and The Netherlands, frequently, through large financial houses, have placed their savings in enterprises in foreign countries. The great majority of these investments are merely commer |