merce and trade, or it might be a separate commission. But it should have full powers of investigation and publicity, and aggrieved parties should be able to appeal to it for a consideration of their complaints. CHAPTER XIV INTERNATIONAL TARIFF POLICIES Heights of tariffs primarily for domestic determination - How far they may be the subject for diplomatic discussion - Trade wars-Factors determining height of tariffs of dependent colonies and of China and Siam- Discriminations and preferences more obviously and always matters of international concern Trade war between Germany and Canada - American reciprocity experiences - Preferences within the British Empire. Nations have retained, and for the immediate future at least will continue to retain, the right to levy a reasonable tariff1 on goods they import from abroad. How high or how low the tariff duties of a nation should be is a question primarily for domestic determination. The need of a government for revenue or of the people for food and raw materials and the stage of industrial development in which a nation may find itself constitute the determining factors. Even in the case of bargaining tariffs these factors determine the effective minimum rates. But this does not mean that the height of a tariff may never be a proper subject for international negotiations. Some of the most bitter tariff controversies in the nineteenth century were due, not to discriminations, but to unnecessarily high, and in some cases prohibitive, tariff rates. The European attitude toward the rates of the American Dingley tariff of 1897 is a case in point. Retaliation was seriously considered, but was not put into effect because of America's strong position with refer 1 See Chapter VII. 2 See Chapter X. ence to food and raw materials. In other cases trade wars of the most serious character resulted. In 1888 a tariff dispute arose between France and Italy. Negotiations failed and a trade war followed. For two years each country applied retaliatory duties against the other, and then for eight years further each country applied its maximum duties to imports from the other. Both suffered seriously. By the end of the decade Italian exports to France had declined 57 per cent., and French exports to Italy showed a decrease of fully 50 per cent. More serious was the trade war between France and Switzerland in the early '90's. This was of two and a half years' duration. France applied to Swiss goods her maximum rates, which were approximately 40 per cent. higher than her minimum rates. Switzerland in turn applied to French goods punitive duties ranging upward to 150 per cent. The Swiss also, by changes in railway rates, assisted in diverting their Marseilles business to Genoa, their Havre and Dunkirk trade to Antwerp and Rotterdam, and the whole of their transAtlantic silk trade to England via Belgium and Holland. In addition they cancelled their literary convention with France, which meant not only a serious financial loss to that country, but the diminishing of French cultural influence to the advantage of German thought and literature. The France's losses in this trade war were heavy. diversion of Swiss commerce to other countries lost to her millions of francs in railway receipts, ocean freights, and commissions. Austria, Italy, and the United States gained at her expense in the sugar trade, Spain in the wine trade, Italy in the silk trade, Germany and Belgium in metal goods, and the United States in leather. Ger many received half of the trade lost by France in readymade clothing and one-third of that lost in woolen goods. Not until seven years after the close of the trade war did French exports to Switzerland again equal the exports of the normal years before the trade war. In 1893-4 Russia and Germany engaged in a brief but costly tariff war. Russia's attitude had been hostile to German commercial interests. In 1893 she framed a double tariff, the minimum rates to be granted in return Germany retaliated. Russia raised her tariff rates still higher and increased twenty-fold her harbor dues on German shipping. Germany was quick to see the danger of the situation. Her industrial interests feared the result of the most-favored-nation treatment accorded to French goods in Russia. Russia, furthermore, was able to avoid much of the force of the German rates by shipping her grain to Austria-Hungary. After a few months of this warfare an agreement was reached, but not until both countries had suffered serious losses. Although it is still true that the height of a tariff is a subject ultimately not for international but for national decision, high or prohibitive tariffs (tariffs which more than equalize competitive conditions with a fair margin) do not pay. A country in a strong economic position might maintain a very high tariff and, if it had a series of most-favored-nation treaties, might rely on the bargaining of other countries to secure for it modifications of other tariffs. But such a policy cannot be pursued with impunity. It leads to irritation and retaliation. Under such circumstances even the height of a tariff may be a subject of negotiation and diplomatic discussion. The principle that tariffs should be primarily for domestic determination has a corollary which is not so readily accepted. Tariffs of dependent colonies and of such countries as China and Siam should also be made in the interests of the peoples directly affected. The revenue and the industrial needs of peoples under the tutelage of more advanced peoples should govern primarily, as in the case of independent nations, in the determination of their customs-tariff policy. This course, however, has not usually been followed. Tariffs of de pendent colonies have been made by the mother country. China and Siam have had practically no voice in the making of their tariffs. The customs duties levied in their ports were fixed for them in treaties concluded more than a half-century ago between the leading commercial nations that were interested in Chinese and Siamese trade. It is obvious at a glance that the tariffs of most of the dependent colonies of the world and of China and Siam are made, not with local interests primarily in view, but in behalf of nations that have goods to export. In the case of China and Siam there are those who believe that simple justice requires that they be granted tariff autonomy. If this does not seem practicable at the present time, the treaties should at least be revised. in such manner that the revenue and economic needs of these countries shall have first consideration. An international commission is now revising the Chinese tariff. In the framing of tariffs for dependent colonies the essential needs of the people, perhaps backward economically, should be considered before the commercial interests of the home country that has goods to sell abroad. Low tariffs that are desired by the exporting interests of commercial countries are very likely to be most desirable from the standpoint of the peoples of dependent |