COMMITTEE ON FOREIGN RELATIONS.

HENRY CABOT LODGE, Massachusetts, Chairman.

HENRIK SHIPSTEAD, Minnesota.

C. F. REDMOND, Clerk.

TREATY OF COMMERCE AND CONSULAR RIGHTS WITH

GERMANY.

FRIDAY, MARCH 7, 1924.

UNITED STATES SENATE,

COMMITTEE ON FOREIGN RELATIONS,

Washington, D. C.

The Committee met pursuant to call at 10.30 o'clock a. m. in the committee room, Capitol, Hon. Henry Cabot Lodge presiding.

Present: Senators Lodge (chairman), Pepper, Swanson, Robinson, and Shipstead.

STATEMENT OF HON. EWIN L. DAVIS, A REPRESENTATIVE FROM THE STATE OF TENNESSEE.

Representative DAVIS. Mr. Chairman and gentlemen of the committee, I wish to state that I appreciate the compliment implied in the invitation to discuss this matter before you; and if what researches I have made and what study I have given this question may be of any assistance to you, I am most certainly glad to give you the benefit of them.

Of course this is a question which has been very greatly discussed pro and con, and I do not know to what extent you gentlemen care to have me discuss it. Personally, I am willing to discuss it as briefly or as lengthily, within reasonable limits, as you may desire.

As I understand both from your chairman, Senator Lodge, and from Senator Robinson, the question involved in this treaty and now under discussion is important not merely because of this particular treaty, but because of the fact that it would be a precedent for similar provisions in treaties with other nations. For that reason it is naturally very important, and should be given every consideration, as I know the committee will give it.

I understand that the discussion perhaps primarily arose out of section 34, embraced in the merchant marine act of 1920, generally known as the Jones Act, which directed the President of the United States to give notice of the revocation of such features of existing treaties as would prevent the United States from imposing such discriminating duties and tonnage dues as it might see proper to impose. That has resulted in very considerable discussion since that time.

The CHAIRMAN. The point we are chiefly concerned with— the position taken by Senator Jones, Senator Fletcher, Senator Ransdell, and others-is that we ought to leave this Government free to put discriminating duties on cargoes coming in American bottoms-the old law.

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Representative DAVIS. Yes, sir. Still, if this paragraph in Article VII of the proposed treaty should be eliminated, it occurs to me that it would also permit this Government if it should see proper, or the German Government if it should see proper, to impose a differential on tonnage dues as well as discriminating duties.

The CHAIRMAN. Yes.

Senator SWANSON. No; unless Article IX went out, that could not be done in the case of tonnage dues; could it?

The CHAIRMAN. That is another clause. That relates to what is called a tonnage due as a harbor due, which is a different thing.

Senator PEPPER. But Mr. Davis's question to you, which you answered in the affirmative, was to the effect that if Article VII were eliminated that would permit differentials or discriminations in tonnage dues.

The CHAIRMAN. Oh, certainly-that paragraph of Article VII; not the whole article.

Senator PEPPER. But if Article IX remains in

The CHAIRMAN. About that there is some difference of opinion, whether or not that does interfere. The point is that they do not want anything put in here that shall tie our hands in regard to differentials in favor of American vessels.

Senator PEPPER. Yes; that is what I understood.

Senator SWANSON. Does the Jones act permit discrimination on tonnage dues, too?

Representative DAVIS. It recognizes the fact that under most of our commercial treaties we could not impose them without violation of those treaties; and in order to reach that end Section 34 of the Jones act directed the President to give notice of the revocation of those features of the treaties which would prevent them from doing so.

Senator SWANSON. No one has appeared before the committee and argued against Article IX except to clarify it so far as it might affect our coastwise trade. I notice in your statement that you referred to differences in customs duties and also in tonnage dues. The CHAIRMAN. There is a distinction there.

Representative DAVIS. Yes; I see. My attention had not been called to Article IX.

The CHAIRMAN. There is a distinction there, the question being whether the words "tonnage dues" used in the article referring to harbor dues affect the question of our making a differential on cargoes. Personally, I do not think they do. A harbor due is something different.

Senator SWANSON. But what I understood you to say was that the Jones Act contemplated the denouncement of these treaties, or provisions of the treaties, giving notice of the revocation.

The CHAIRMAN. It covered them both.

Senator SWANSON. It covered both harbor duties and tonnage dues? Representative DAVIS. Yes, sir.

Senator SWANSON. And also the differential in favor of customs duties on imported goods?

The CHAIRMAN. That is the main question.

Representative DAVIS. Yes, sir. I agree with Senator Lodge that the differential on tariff duties is decidedly the most important feature of the question.

The CHAIRMAN. That is the real point. Representative DAVIS. I merely mentioned the other incidentally. The CHAIRMAN. The only question about Article IX is whether that affects differentials on cargoes.

Representative DAVIS. I mentioned it in connection with section 34 of the Jones Act, which has probably given rise to the controversy over this section in the proposed treaty. In view of the fact that three different Presidents President Wilson, President Harding, and President Coolidge-have declined to carry into effect the direction of Congress embraced in section 34 of the Jones Act, it may perhaps be of interest to you gentlemen to hear some reference to that and the reasons for it.

The CHAIRMAN. Yes; President Wilson first declined, and Presi dent Harding and President Coolidge have taken the same ground. Representative DAVIS. After the passage of that act, and when President Wilson had failed to take any steps toward carrying out the direction of section 34, as you gentlemen will recall, there was considerable criticism of him from certain quarters for failure to do so. Being at that time a member of the Merchant Marine and Fisheries Committee of the House, and being interested in the problem, I went to the State Department and conferred with the officials therein with regard to the reasons which had prompted President Wilson to pursue the course which he had. I do not suppose I am now revealing any confidence when I state that I was advised that while President Wilson at first took the position that such a provision was not obligatory, but was merely advisory on the part of the Congress, yet he was disposed to carry out the expressed will of Congress in that particular; and, without entering into a consideration of the wisdom of the course, he gave instructions that the State Department take proper steps to act in accordance with that direction in section 34 of the Jones Act.

When the Secretary of State and the Solicitor of the State Department went to look into the problem with that end in view, they found that there were so many difficulties and objections that they submitted a memorandum to the President stating the objections to such a course; and by reason of those facts, thus represented, President Wilson reached the conclusion that it was wholly unwise to act in accordance with the direction of section 34 of the Jones Act.

Senator SWANSON. Have you ever read those reasons assigned at that time?

Representative DAVIS. I have a portion of them here now, Senator, which were furnished to me at the time by the State Department. I am not going to take the time to read all of these, but, if you gentlemen desire, I shall be glad to insert them in the record.

The CHAIRMAN. We will have them all printed.

Senator SWANSON. We shall be very glad to insert them all in the the hearings.

(The statement of reasons above referred to will be found printed in full at the end of Representative Davis's statement.)

Representative DAVIS. I just want to read two or three paragraphs of the statement assigning President Wilson's reasons for the course adopted by him.

After quoting section 34 of the merchant marine act of 1920, the statement says:

The provision in question presents very serious international aspects from the standpoint of relations with other governments, as well as from the standpoint of important commercial and political rights and interests of this Government.

After skipping some, I wish to read this:

Nearly all the so-called commercial treaties between this Government and other nations contain provisions securing for the citizens or subjects of each of the contracting parties reciprocal equality in the matter of duties imposed on the cargoes of the vessels of each country in the ports of the other. These treaties generally also contain other provisions securing for the citizens or subjects of each country reciprocal equality with regard to duties on goods shipped from one country into the other. Such provisions relate to the importation of goods by land and by sea, and are not limited merely, as are those referred to in the act, to goods imported in American vessels or in foreign vessels.

It occurs to me that that is an important matter for this committee to take into consideration.

The treaties further contain provisions obligating each of the contracting governments not to impose on vessels of the other higher tonnage charges than those payable on its own vessels.

Without taking time to discuss the various features of this opinion, I do wish to state that they explain that while the direction in section 34 was to give notice of the revocation of those particular features of the treaties, yet that it could not be done because, with one exception, none of the treaties had any provision which would permit one nation to give notice to the other of the revocation of any particular part of the treaty, so that the only course to pursue would be to give notice of the revocation of the entire treaty, or to undertake to enter into negotiations by which the treaty could be modified in the particular in question.

Senator SWANSON. Let me see if I get clearly the distinction that you make there that these treaties give equality of treatment both for imports and exports?

Representative DAVIS. Yes.

Senator SWANSON. And that they are so interwoven that they can not be separated, and that we could not retaliate on exports, as our Constitution prohibits us from imposing an export duty. Consequently they would have two methods of retaliation, both on imports and exports that are necessary for our industries. Is that the point?

Representative DAVIS. That is true in so far as it goes, but the point is that these commercial treaties with other nations embody other provisions wholly separate from navigation, and they are not separable. They were made as a whole, and there is no provision in them permitting either nation to rescind or revoke any provision of the treaty, with perhaps one exception.

Senator PEPPER. In other words, your point is that just as in some cases if any part of an act is unconstitutional the whole act must go; so in this case you can not eliminate some of the features without denouncing the whole treaty? Is that it, sir?

Representative DAVIS. That is it exactly; furthermore, a treaty is an agreement and can only be amended or revoked in accordance with its terms or by agreement; and, Senator Pepper, I want to state that this identical question was presented to President Hayes in