THE was CHAPTER IV COMMERCIAL RELATIONS commerce of the United States and the German Empire never regulated by a comprehensive commercial treaty. Temporary agreements were concluded from time to time determining the status of certain products of one country under the tarif provisions of the other, but the principles governing such decisions were not embodied in any formal treaty made since the ation of the empire. In the absence of such formal agree the two nations used as a working basis the old treaty of between the United States and Prussia,' which placed the unific ment 1828 contacting parties on the basis of the "most-favored-nation" in al I which trea in a tio wh na or tic th ར་ ད matters of commerce and navigation. The controversies developed from time to time over the application of this y to the commercial legislation of the two countries, centered contrasting and, in the case of Germany varying interpretaof the "most-favored-nation" principle. The question was cher that principle required the extension to all most-favoredons, automatically, of any privilege granted to a single country hether it required that extension only in return for compensa The policy of Germany3 was a changing one in this respect, Imperial Government holding at certain pericds the uncononal, and at others offering only the conditional concept. The ited States held consistently to the narrower concept of recip For the question as to the validity of this treaty, see Chap. II, Treaty Relations. See Sen. Doc. No. 29, 62nd Cong., 1st Session. Also Fisk: "Most-favored-nation Relations: German-American."-Journal of Political Economy, March, 1903. Also F. R., 1911, p. 5. 'Calwer: "Die Meistbeguenstigung der Vereinigten Staaten," p. 19 ff. ECONOMIC BASIS OF RELATIONS 65 rocity, i. e., no favors granted without compensating favors received. This, as has been shown (Chapter II), was expressly provided for by Article IX of the treaty of 1828 with Prussia. The determining factor throughout the negotiations over questions of trade has been the tariff. In the case of both Germany and the United States the individual subjects of diplomatic protest are directly or indirectly related to the changing legislation of the tariff or to the changing application of existing tariff provisions. The tariff legislation, though affected by manifold domestic forces, political, industrial and even psychological, has been in general the product of the economic character of the countries enacting it. The industrial development of Germany combined with the growth of American agriculture, revolutionized the economic position of Germany. It was changed from a food-exporting to a foodimporting country. Before the first decade of the empire the agricultural sections of Germany had exported considerable quantities of grain. Later, however, the development of the American northwest and the improvement of ocean transportation brought American cereals into the European markets in great quantities, so that the German farmers lost not only their export markets, but were in danger of losing their home market as well. The natural result was the development of an agrarian protective policy. This was embodied in the tariff law of 1879.5 Protection for manufactured products was also increased especially by the system of premiums and subsidies. Two conflicting interests had to be served-German farmers must be protected against the overwhelming imports of American grain and livestock, and yet German industrials must receive raw materials, including foodstuffs, at a price low enough to enable them to compete with foreign manufacturers in the final selling price of their products. Count Caprivi recognized that Germany's future must be that of an industrial State and initiated a new tariff policy which took into account not only the agrarian interests but also the interests of the manufacturers, by reducing the rates of duty on raw materials and foodstuffs. 'Fisk, U. S.-Ger. Com., Polit. Rel., p. 139. COMMERCIAL RELATIONS The economic self-sufficiency of the United States, of the British Empire, and to a certain degree even of Russia, was beginning to create an economic danger for Germany and other MiddleEuropean states. There developed therefore the movement toward of the nations of central Europe for mutual protection the economic advantages of the other powers, particularly the United States. This expressed itself in a series of commercial treaties concluded since 1892 by Germany with Middle-European countries-agreements which sought to abolish commercial barriers between them and create a greater economic independence a union against for the duties years. commaprocee count by th were at contracting powers. The treaties included reductions of on agricultural products, slight reductions of duties on manufactured products, and were concluded for a period of twelve As a matter of fact, it is difficult to see the immediate =rcial advantage to Germany of these agreements since she ded to extend the advantages expressed in them to the many es, including the United States, with whom she was bound principle of the "most-favored-nation." The treaties however, the embodiment of an idea which has threatened ious recent times to express itself much more effectively, in the form of a Middle-European Tariff Union. high protective policy developed by the United States at me of the Civil War and maintained in principle ever since, its counterpart in the protective policy of Germany, which oped a little later, beginning with the tariff of 1879. There Owever (up to within very recent years) the important differthat the German protective system has been dictated by the rian Party, whereas the protectionists of the United States been the manufacturing interests. Owing to the character he exports of the two countries this worked to the American Th that the find dev is, enc Ag ha of t benefit. Throughout the diplomatic protests and counter-protests that follow the tariff changes, the economic advantage is constantly with the United States. Germany could hedge in her manufactures with protective measures, but she must keep low or admit free 'Fisk, Mid. Eur. Tar. Union, p. 595. 7 Fisk, U. S.-Ger. Com., Polit. Rel., p. 144. RESTRICTIONS AGAINST AMERICAN PORK 67 the raw products required by those industries. These raw products she obtained in large measure from the United States. Even in the case of United States' food products against which she could and did enact restrictive measures, she must face the opposition of a large and growing portion of her own people, the industrials who were demanding the cheap and abundant articles of food. furnished by America. The United States on the other hand, in its strong policy of industrial protection, enacted tariff measures which opposed almost the complete range of German exports, since these consisted almost exclusively of manufactured goods. Such was in general the economic background for the trade relations between the two countries. Commercial conflicts brought before the diplomatic departments for solution related themselves in complicated and often very indirect fashion to the changing tariff enactments. One of the earliest and most enduring subjects of controversy was that over American pork and the prohibition of its importation into Germany. This commercial conflict began with the imperial decree of June 25, 1850,8 prohibiting the admission into Germany of all kinds of pork except hams and sides of bacon. The reason given for the decree was an epidemic of trichinosis due to the eating of diseased pork. The exemption was made in the case of hams and sides of bacon because, through proper inspection, the trichinæ might be detected in these and the infected meats condemned. In 1882o a request on the part of the United States to have this decree modified for the benefit of certain prepared meat products of two important meat packing companies was refused. In 188310 a measure was brought before the Bundesrath prohibiting the importation of all American pork, including hams and live animals. In protesting" the passage of this measure the United States stated that the assumption of the diseased condition of American pork was unfounded and unjust, that German trade interests in the admission of the pork were very great, that its cheapness made it an important food product for the poorer That COMMERCIAL RELATIONS classes in Germany, and that the planned reduction of United States import charges would so aid German manufactured goods that G Germany should favor the products of the United States. the innocuous character of American pork might be demonstrated, President Arthur invited Germany-12 to "send a commission of experts to the United States to examine the raising and packing of hogs and hog products for food." This invitation was declined. reason given was that the prohibition was "a measure of internal German legislation found necessary after careful investigation on sanitary grounds and closely connected with the internal institutions of the country. Germany by its strict and rigorously enforced legislation afforded the same protection to its people at home against all danger from German cattle and hogs, it could not therefore treat the foreign producers better than its The Own andi in res by to cas It i us tig re fu in An investigation of the American methods of raising hogs preparing hog products by a commission of German experts e United States could not effect a material change in this ect." It is difficult to follow this reasoning. An investigation German commission might have shown the American methods as careful and the meat as healthful as the German, in which there would be no better treatment of the foreign producers. also difficult to see the applicability of the other arguments namely, that Germany made no request to England to investe German conditions when that country chose to impose rictions on the importation of German cattle. Nor does the ther argument seem conclusive that Austria-Hungary, whose tle were also excluded from Germany, had not suggested an uiry of German officials. The most justifiable of the reasons. igned was that while a commission might find perfect order in establishments it might visit, there was no law guaranteeing iformity of inspection throughout the United States.15 1: F. R., '83, p. 335. 13 Sen. Report No. 345, 48th Cong., 1st Sess., p. 144 ff. 14 Ibid., p. 153 ff. Secretary Frelinghuysen summed up the ground of refusal to be that "in a matter concerning domestic sanitary legislation, the German Government could not enter into any arrangement which might imply an obligation on its part to accept and be bound by a state of facts existing outside of its jurisdiction." Ibid., page 6. |