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revision which they mean to have of all of the commercial treaties.

Senator JONES of Washington. But, as I understand, this treaty is not specially revised upon the particular point in which I am interested.

The CHAIRMAN. It has that feature, as I understand, about the merchant marine.

Senator JONES of Washington. I understand it contains the provisions under which we are prevented from adopting a system of discriminating duties, if we should deem it wise to do so; so that even though they may be in favor of the general revision of our treaties, they do not go so far as that.

The CHAIRMAN. I only meant that the Secretary regards it as important to get this one satisfactory to the Senate and to the country, because he hopes to make it a model for further treaties that need revision.

Senator JONES of Washington. I am glad to know that. That puts the proposition squarely up to the committee and to the Senate as to whether we shall revise them in that respect.

As I said, I have been looking at the matter more particularly from the standpoint of the merchant marine than anything else. If this will be of no benefit in building up a merchant marine, or if we can adopt measures that will insure the building up of a merchant marine without anything of this kind, I should not be specially concerned; in fact I think I should be glad to see the United States put upon the basis upon which these treaties put us.

I do not think there will be any controversy over the proposition that this country needs a merchant marine. We need it not only as a means of national defense, but for the expansion of our commerce; so I am not going to argue that proposition at all.

The question arises, how can we get an American merchant marine? Of course, under the impetus of the war and needs of the war, we built a large number of ships, but that does not make a merchant marine. It does not make a permanent one, and does not give us a permanent American merchant marine. Many of the ships are tied up now. They are deteriorating fast and we are taking no steps toward their replacement. Ships, it is estimated, will last about 20 years. They will last longer when they are used than if they are tied up; that is, they deteriorate faster when tied up than when they are being used. It is now 4 or 5 years since the close of the war. In 5 or 10 years from now we will be confronted with the proposition of no merchant marine unless something is done that will lead to a replacement of the ships as they are worn


Furthermore, many of the ships will really become obsolete with the development of new methods in connection with the operation of ships. As a matter of fact, the shipping nations now seem to be going very largely to the Diesel engine type. It seems to be much more economical and much more efficient in every way. So, the first thing we know, we will wake up some morning with our ships, if not worn out, at least practically obsolete. We could not compete with other nations in a commercial way. If we are going to have a merchant marine, we shall have to be in a position in some way to meet them in that line. Our worn-out or obsolete ships will have to

be replaced by private or governmental capital or our merchant marine will be gone.

Of course there is much controversy as to the method of building up or the steps necessary to take to build up an American merchant marine. It is contended that our operation, building costs, and so on, are higher than those of our competitors. Without discussing that phase of it, it is a fact that we have not built up an American merchant marine. We did not build it up under private ownership before the war, and there is every indication now that we are not going to maintain it under the present condition of things and present policies. We have sought to pass legislation under which direct aid would be given. The reason for it and the basis for it was to cover the difference in cost of construction of ships and their operation. That failed, and I think it is clear that the country will not stand for direct aid to the merchant marine. Then how are we going to aid it? What policy shall we follow? There seems to be only one other course to pursue, and that is by indirect methods of some kind; and about the only promising indirect method that has been proposed or that suggests itself is the application of tariff discrimination, in other words, discriminatory duties. We are confronted with these treaties when we attempt to do that. We can not put that policy into effect under the present or the proposed treaties.

There may be much difference of opinion as to whether or not that would be a proper policy or whether or not that would accomplish the purpose; but my position is that we ought to be so that if we think it is wise to adopt the policy of discriminating duties, we can do it. We may not deem it wise to do it; but if we seek to do it now we shall be confronted with the proposition that we can not do it without violating these treaties.

Senator JOHNSON of California. Senator, without interrupting you, will you state historically what has been attempted in that regard with the shipping law, and what the obstacles have been in regard to it?

Senator JONES of Washington. I do not know just what I can say in that respect, except this: The Republican platform of 1896 declared specifically for a discriminating-duty policy with reference to the merchant marine. My recollection is that that is the only time in the history of the country-at least, in the last 50 yearswhen any great political party has declared for a specific policy. After that declaration, however, we had a committee of the Senate, or, rather. a joint committee of the House and Senate-and I think Senator Lodge was a member of that committee-investigating the proposition of what might be necessary and what we could do to build up an American merchant marine; and that committee came to the conclusion that we could not adopt that policy without violating the treaties, and that if we did adopt such a policy it would lead to retaliation. My impression is that this committee was of the opinion that such a policy would be effective, but the objection of retaliation was allowed to control. So nothing has been done until in the merchant marine act of 1920 we inserted a provision directing the President, within 90 days, to give notice of the abrogation of these treaties, as required in the treaties.

Senator WALSH of Montana. Was there not a provision on the subject in the Underwood Tariff Act?

Senator JONES of Washington. There was a provision in the Underwood Tariff Act for a 5 per cent discriminating tariff to apply where it would not contravene any treaties, and I think the Supreme Court held that that really did not amount to anything because there were no countries having trade of any importance with which we had such treaties; so that from the practical standpoint it was inoperative.

Senator ROBINSON. Was not the suggestion also made that the Executive be authorized to denounce those treaties, or the particular provisions of them?

Senator JONES of Washington. There was no provision of that kind in the law. Such an amendment was offered to the bill. I offered such an amendment myself, but it was voted down. I think the bill as it came from the House did make some such provision, but it was stricken out in the Senate and the provision finally adopted came out of conference.

Senator SHIPSTEAD. Senator, I was under the impression that both President Wilson and President Harding had attempted to take some action along this line, but found that they could not do it because of the fact that these treaties blocked action.

Senator ROBINSON. I was under a similar impression; that is to say, that former President Wilson and President Harding had both declined to take the action, and had done so on the theory that it would make necessary the abrogation of all these treaties.

Senator WALSH of Montana. Before we come to that, let me inquire of Senator Jones if the Supreme Court did point out the conflict between that provision and the treaty?

Senator JONES of Washington. I have not read that decision for a long time, Senator. My impression is that the Supreme Court held that in practical application it did not affect our commerce or trade.

Senator ROBINSON. Will you tell us, then, how the favored-nation clause is offended in any way by legislation of that character? We do not make any discrimination at all as between the different nations. We discriminate between them and our own. I have not followed it recently, but I do not know why legislation of that character should offend against the most-favored-nation clause, because the most-favored-nation clause declares that we will treat, for instance, the nationals of Germany exactly the same as we treat the nationals of another country; not the same as we treat our own people.

Senator JONES of Washington. I do not know so much about these things as you gentlemen do; but I do not think it is really the favored-nation clause that prevents us from levying these discriminating duties, but it is another provision in our treaties that provides that we can not levy different duties on goods coming in our ships from the duties on goods coming in foreign ships.

Senator PITTMAN. Let me call your attention to this treaty itself, to Article VII:

Between the territories of the high contracting parties there shall be freedom of commerce and navigation. The nationals of each of the high contracting parties, equally with those of the most favored nation, shall have liberty freely to come with their vessels and cargoes to all places, ports, and waters of every kind within the territorial limits of the other which are or may be


open to foreign commerce and navigation. Nothing in this treaty shall be construed to restrict the right of either high contracting party to impose, on such terms as it may see fit, prohibitions or restrictions of a sanitary character designed to protect human, animal, or plant life, or regulations for the enforcement of police or revenue laws.

Each of the high contracting parties binds itself unconditionally to impose no higher or other duties or conditions and no prohibition on the importation of any article, the growth, produce, or manufacture, of the territories of the other than are or shall be imposed on the importation of any like article, the growth, produce, or manufacture of any other foreign country. Senator WALSH of Montana. That does not reach it.

Senator JONES of Washington. There is another provision on the subject in these other treaties.

Senator PITTMAN. There is a provision here, I see, to the effect that we shall not impose taxes upon the nationals of Germany different from those we impose upon our own.

The CHAIRMAN. It goes on to say:

All the articles which are or may be legally imported from foreign countries into ports of the United States, in United States vessels, may likewise be imported into those ports in German vessels, without being liable to any other or higher duties or charges whatsoever than if such articles were imported in United States vessels.

Senator JONES of Washington. That is the provision that we have had and I object to. That, I take it, is not what you call the favored-nation clause.

Senator WALSH of Montana. No.

The CHAIRMAN. Not strictly; no. It usually is referred to in that way, however.

Senator JONES of, Washington. But that is the provision in various treaties that prevents us from levying higher duties on goods imported in foreign vessels than on goods imported in American vessels.

Senator WALSH of Montana. That is the specific provision applicable to this question.

Senator JONES of Washington. Yes; that is it.

Senator JOHNSON of California. Was it not a provision similar to that upon which President Wilson and President Harding declined to denounce the various treaties?

Senator JONES of Washington. Those were the provisions in the treaties that we sought to have denounced, and they both refused to denounce them. Here is the provision in the merchant marine act of 1920, section 34:

That in the judgment of Congress, articles or provisions in treaties or conventions to which the United States is a party, which restrict the right of the United States to impose discriminating customs duties on imports entering the United States in foreign vessels and in vessels of the United States, and which also restrict the right of the United States to impose discriminatory tonnage dues on foreign vessels and on vessels of the United States entering the United States should be terminated.

And there is a provision in this treaty, I think, against it. The CHAIRMAN. Yes; Article IX deals with tonnage, harbor, pilotage, lighthouse, quarantine, or other similar or corresponding duties.

Senator JONES of Washington. Section 34 goes on:

and the President is hereby authorized and directed within ninety days after this act becomes law to give notice to the several Governments, respectively,

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parties to such treaties or convenions, that so much thereof as imposes any such restriction on the United States will terminate on the expiration of such periods as may be required for the giving of such notice by the provisions of such treaties or conventions.

The CHAIRMAN. Of course, if the Senator will allow me a moment, that does not touch a case where the other country gives us certain advantages which are not given by the countries generally-for instance, Cuba. We have a treaty of reciprocity with Cuba, and that is held to be entirely right, because Cuba gives us certain advantages which she gives nobody else.

Senator WALSH of Montana. Yes; but if you will refer to the paragraph at the top of page 5-I was going to inquire about thatThe CHAIRMAN. Yes; I was just about to go on and read that as part of what I was reading.

Senator WALSH of Montana. It says:

With respect to the amount and collection of duties on imports and exports of every kind, each of the two high contracting parties binds itself to give to the nationals, vessels and goods of the other the advantage of every favor, privilege or immunity which it shall have accorded to the nationals, vessels and goods of a third State, and regardless of whether such favored State shall have been accorded such treatment gratuitously or in return for reciprocal compensatory treatment.

The CHAIRMAN. That goes further than any that we have, I think. Senator WALSH of Montana. That would mean, of course, that we would have to admit sugar from Germany at the same rate of duty that we admit it from Cuba.

The CHAIRMAN. I think it would. I think that goes much further than what we have now.

Senator LENROOT. That is true.

Senator WALSH of Montana. Then the favored-nation clause would take hold, and we would have to admit sugar from everywhere at the same rate. In other words, we should be obliged to violate our treaty with Cuba if we should ratify this.

Senator LENROOT. How do we get along with that under existing treaties?

Senator WALSH of Montana. The existing treaties do not contain this provision for the case of concessions made in consideration of concessions upon our part.

The CHAIRMAN. This is a new provision.

Senator WALSH of Montana. We justify the Cuban arrangement on the ground that we bought this of Cuba, and gave them considerations in return; but this takes it away, and we put Germany on the same footing as Cuba. Then the favored-nation clause will take hold.

Senator PITTMAN. And every nation will be on the same footing with Germany.

Senator WALSH of Montana. I beg pardon for interrupting you. Senator JONES of Washington. That is all right, Senator. I think you have brought out a very important point in regard to this treaty.

With reference to section 34 of the merchant marine act of 1920, it was not carried out by President Wilson, nor by President Harding. I do not know just exactly the reasons that influenced either of the Presidents not to carry it out. I have understood that one of them took the position that Congress had no authority to direct the

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