Chapter CXXXIV: Section VI: International Commercial Treaties

All international commercial treaties have this object in common: to moderate the impediments to trade which arise from the differences and even from the enmities of states. According to time and character, they fall into three groups:

A. _Medieval_, where a barbarous state for the first time promises foreign merchants in general legal security, without which regular trade is unthinkable. Such treaties, where their provisions are not a matter of course, must be certainly considered as a salutary advance; and they may, under certain circumstances, be necessary even to-day.[A2-6-1]

B. _Mercantilistic_ treaties, which close, perhaps, even a bloody commercial war carried on against a rival,[A2-6-2] or which by a closer connection with a state, whose rivalry is not so much feared, are intended to moderate the worst consequences of a general seclusion.[A2-6-3] Consistently carried out, and without any regard for consequences, the mercantile system really means a war of each state against all others, and it is no mere accident that after the cessation of the wars of religion (1648) and before the beginning of the war of the French revolution (1792), commercial wars occupy the foreground. Such economic alliances as are entered into in these treaties generally unite states which, by reason of the very different nature of their land and their different national culture, are adapted to production of very different kinds, and which, at the same time, have a common political interest.[A2-6-4] Each party here agrees with the other to give a preference to its subjects in trade, to not exceed certain maxima of duties, etc.[A2-6-5]

The art of the negotiator was employed to overreach the other contractant in relation to the balance of trade.[A2-6-6] It was considered a special matter of congratulation to induce a less highly developed nation to abandon the traditional means employed to artificially elevate its industries. Hence it is, that such friendly treaties frequently contained the germs of the bitterest enmity.[A2-6-7] A popular remnant of this second group has been noticeable even in recent times, when in diplomatic negotiations concerning the reciprocal modification of duties, it was considered an overreaching and even as an outrage, in case one state made more "concessions" than it received:[A2-6-8] evidently, a confusion of the producers of the industry in question with the whole nation.

C. _Free-trade_ treaties, intended to pave the way to the general freedom of trade.[A2-6-9] Two provisions especially are characteristic here: putting the subjects of the other party on an equal footing with those of the home country in what relates to the ship-duties, etc.;[A2-6-10] and the promise that the products of the other party, as regards import duties, shall be treated like those of the most favored nation.[A2-6-11] [A2-6-12] Whether this preparation for the universal freedom of trade is better made through the medium of an international treaty or of national legislation cannot be answered generally.[A2-6-13] Besides, in our day, the preference of one foreign nation would be easily evaded through the perfection of the modern means of communication.

[Footnote A2-6-1: The treaty of commerce between England and
Morocco, of the 9th of December, 1856, specially covenants
that the countrymen of a debtor shall not be held
responsible for debts in the creation of which they had no
part; that between England and Mexico, in 1826, guaranties,
among other things, that prices shall be freely determined
between buyers and sellers (art. 8), freedom from compulsory
loans, and from forced conscription for military duty (10),
the exercise of one's religion, and the inviolability of
graves (13); things which were not yet matters of course in
Mexico! Similar agreements between Spain and England in
1667; between Spain and Holland in 1648 and 1713; and even
in 1786, between England and France. Commercial treaties of
this kind are found very early and very frequently among the
ancients. Compare the Arcadian-Ægean in _Pausan_, VIII, 5,
5, which strongly recalls the Russo-English trade over
Archangel; further, Corp. Inscr. Gr., II, No. 1793, 2053 b
and c, 2056, 2447 b, 2675-78, 3523. That in the suburbs of
Jerusalem, from Solomon to Josias, places where Astarte etc.
was worshipped, were maintained unhindered, depends, it is
said, on commercial treaties with the Phoenicians,
Moabites, Ammonites. (_Movers_, Phönikier, III, 1, 121 ff.,
206 seq.)]

[Footnote A2-6-2: The two commercial treaties between Rome
and Carthage, 348 and 306 before Christ (_Polyb._, III, 22
ff.), are a clear proof that, in the interval, the
mercantile superiority of Carthage had increased. While the
Romans in 348 had still the right, under certain
limitations, to carry on trade in Sardinia and Africa, it
was in 306 entirely denied them.]

[Footnote A2-6-3: As guild-privileges make annual fairs
(_Jahrmärkte_) and governmental fixed prices necessary.]

[Footnote A2-6-4: Commercial treaty of the Venetians with
the Latin empire in Constantinople, of the Genoese with the
Greek after its restoration; in which, for instance, it was
promised to the former, that no citizen of a state at war
with Venice, should be permitted to sojourn in the Byzantine
empire; to the latter, that they alone of all foreigners
should enjoy freedom from taxation, and, with the Pisans,
navigate the Black Sea. As long as the Dutch were the
hereditary foes of Spain, they were much favored in France.
Commercial treaty of 1596, putting them on an equal footing
with the French; and which, considering their superiority at
the time, was necessarily of greater advantage to them than
to the French. _Colbert's_ step to destroy this
preponderance is coincident with the changed foreign policy.
(Richesse de Hollande, I, 127.) In the peace of Nijmegen,
again (art. 6 seq.), France tried to separate the Dutch from
their allies by the restoration of their former rights. In
the Spanish war of succession, France entered into a treaty
with the arch-duke, Charles, that a common commission should
fix the duties on English commodities, transfer the trade
with America to an English-Spanish company, but that the
French should be excluded therefrom. (_Ranke_, Franz.
Gesch., IV, 257.)]

[Footnote A2-6-5: The king of Bosporos had the rights of
citizenship in Athens, and enjoyed that of freedom from
taxation of his property there. In consideration of this,
the Athenians were released from his corn export duties of
1/30. (_Isocr._, Trapez., § 71. _Demosth._, Lept., p. 476
ff.) Commercial treaty of Justinian with Ethiopia: the
latter was to afford aid against the Persians, in return for
which Byzantium promised to supply its requirement of silk
no longer from Persia, but from Ethiopia. Commercial treaty
between Florence and England, 1490: England promised to
permit all the wool destined for Italy, except a small
quantity intended for Venice only, to go over Pisa, and as a
rule, not through foreigners. Florence, on the other hand,
was to receive English wool only through English ships.
(_Rymer_, Foedera, XII, 390 seq. Decima dei Fiorentini, II,
288 ff.)]

[Footnote A2-6-6: The difficulties of such negotiations
described by an experienced politician (probably _Eden_):
Historical and Political Remarks on the Tariff of the French
Treaty, 1787.]

[Footnote A2-6-7: The Methuen treaty (1703) was considered
an English master-piece, because Portugal had actually
exported a great deal of Brazilian gold to England. _Pombal_
said, in 1759: "Through unexampled stupidity, we permit
ourselves to be clothed, etc. England robs us every year, by
its industry, of the products of our mines.... A severe
prohibition of the exportation of gold from Portugal might
overthrow England." (_Schäfer_, Portug. Gesch., V, 494 ff.)
And yet the treaty only says that Portugal withdraws its
prohibition of English woolen wares, and restores the former
duties (15 per cent.), while England continues to permit
Portuguese wine to pay a duty 1/3 less than French wines!
Singular doctrine of _Adam Smith_ (W. of N., IV, ch. 6), and
still more of _McCulloch_ (Comm. Dict., v. Commercial
Treaties), that this commercial treaty was unfavorable to
England and very favorable to Portugal, although, in fact,
later a duty of only about 3 per cent. was imposed here on
English commodities. (_Büsch_, Werke, II, 62.) The
English-French commercial treaty of 1786 introduces in the
place of the former prohibition, duties of 10, 12 and 15 per
cent. for a number of industrial products. The French soon
came to believe that they had been taken advantage of here.
_A. Young_ found the desire very general in the north of
France, to get rid of the Eden treaty even through a war.
(Travels in France, I, 73.) Many of the _cahiers_ of the
third estate demand that no treaty of commerce should be
entered into without previous consultation with the
industries interested. (Acad. des Sc. morales et polit.,
1865, III, 214.) But in England, also, bitter complaints of
the opposition, to which Pitt replied, that commercial
treaties between agricultural and industrial countries
result to the advantage of the latter, independent of the
fact that England obtained a new market of 24,000,000, and
France of only 8,000,000 persons. Compare the extracts in
_Lauderdale_, Inquiry, App., 14. Forcade: Revue des deux
Mondes, 1843.]

[Footnote A2-6-8: Urged very largely in southern Germany
against the Prussian-French commercial treaty of 1862. But
is it really an "advantage" for France to have in the
interior more toiling (_Plackereien_) for inlanders as well
as for foreigners? Or that its consumers must pay high taxes
to the producers of certain wares?]

[Footnote A2-6-9: Seldom in antiquity. Compare, however,
Inscr. Gr., II, No. 256, and the reciprocal granting of the
rights of citizenship of Athens and Rhodes. (_Livy_, XXXI,
15.) Among the moderns, Flanders followed free-trade
principles similar to those followed later by Holland, at
the beginning of the fourteenth century; for instance, it
refused to gratify France by breaking off its trade with
Scotland. (_Rymer_, Foedera, II, 388.) Florence, in 1490,
promised the English, that in all treaties to be entered
into with others, it would permit it to enter. In the
French-Florentine commercial treaty of 1494, it is
stipulated with the Florentines that their ships _Gallica
esse intelligantur_ and their merchants _tanquam veri et
naturales Galli_ etc. (Decima, II, 308.) Swedish treaty with
Stralsund, 1574, that every privilege granted to a Baltic
city should also be, of itself, to the advantage of
Stralsund. Mutual equal treatment of subjects promised
between Portugal and England, 1642; Portugal and Holland,
1661; mutual treatment on the basis of the most favored
nation: between England and Portugal, 1642; Holland and
Spain, in the peace of Utrecht; Spain and Portugal, 1713;
Spain and Tuscany, 1731; England and Russia, 1734. But how
far such principles were removed from the beginning of the
eighteenth century is shown by the speech from the throne of
the 28th of January, 1727, of George I., in which the
Austro-Spanish treaty of 1725, that placed the subjects of
Austria in the colonial empire of Spain on an equal footing
with the English and Dutch, is described as a violation of
the dearest interests of England, and in which it is said
that England must defend its own unquestionable right
against the covenant entered into to violate public faith
and the most solemn treaties; that it might be that Spain
thought of subjecting England once more to the popish
pretender. Even in 1713, it was one of the principal points
in controversy between the Tories and Whigs, whether, in a
commercial treaty with France, the latter should be accorded
the rights of the most favored nations. Compare _Daniel
Defoe_, A Plan of the English Commerce, and _per contra_,
The British Merchant.]

[Footnote A2-6-10: English treaties with Prussia, 1824; the
Hanse cities, 1825; with Sweden, 1826; France, 1826 (England
removed the limitations still retained without compensation,
in 1839); Naples, 1845; Sardinia, Holland and Belgium, 1851.
Prussian treaties with Russia, 1825; Naples, 1847; Holland,
1851. French with Bolivia, 1834; Holland, 1846 (in which
reciprocity is extended even to the navigation of rivers);
Denmark, 1842; Venezuela, Equador and Sardinia, 1843; Russia
and Chili, 1846; Belgium, 1849; and Portugal, 1853.]

[Footnote A2-6-11: Marking an epoch in this respect are the
treaties of the United States with Holland (Oct. 8, 1782),
Sweden (April 3, 1783), Frederick the Great (Sept. 10,
1785), and England (Oct. 28, 1795); recently that entered
into by Napoleon III. with England in 1860, and with the
Zollverein in 1862.]

[Footnote A2-6-12: The expression "most favored" is not
always strictly construed. Thus, for instance, France
granted the right of coast-sailing proper (_cabotage_) only
to Spain. States frequently promise only: _s'appliquer
réciproquement toute faveur en matière de commerce et de
navigation qu'ils accorderaient à un autre état gratuitement
ou avec compensation_.]

[Footnote A2-6-13: Napoleon III. had a preference for
commercial treaties, because these, as acts of foreign
politics, lay in the plenitude of his imperial power (art. 6
of the constitution of 1852; senatus consultum of Dec. 23,
1852), while in legislation, his free trade tendencies were
limited by popular representation. And so also Prussia, by
its commercial treaty with him (1862), was actually freed
from the hindrances which the free veto of the
Zollverein-conferences would have opposed to its reform.
Opposition to the treaty-form because too binding.
(_Chaptal_, De l'Industrie Française, II, 242 ff.) The
free-trade party lauds it precisely on this account. See the
report of the Leipzig Chamber of Commerce for 1874-75, p.
41.]