over, any portion of the Chinese Empire under such agreements as had been made, it could not conceal its apprehension that difficulties might arise between the Treaty Powers, imperilling the rights secured to the United States by its Treaties with China. His Government thought that danger of international irritation might be removed by declarations being made by each Power claiming a "sphere of interest" in China, in some form to this effect:

"1. That it will in no wise interfere with any Treaty port or any vested interest within any so-called 'sphere of interest' or leased territory it may have in China.

"2. That the Chinese Treaty Tariff for the time being shall apply to all merchandise landed or shipped to all such ports as are within such 'sphere of interest' (unless they be free ports), no matter to what nationality it may belong, and that duties so leviable shall be collected by the Chinese Govern

ment.

"3. That it will levy no higher harbour dues from another nationality, frequenting any port in such 'sphere,' than shall be levied on vessels of its own nationality-and no higher railroad charges over lines built, controlled, or operated within its 'sphere' on merchandise, belonging to citizens or subjects of other nationalities, transported through such spheres, than shall be levied on similar merchandise belonging to its own nationals transported over equal distances."

There was strong reason, Mr. Choate continued, to believe that the Governments of Russia and Germany would co-operate in such an understanding. Under a recent Ukase the Emperor of Russia had declared the port of Talienwan open to the merchant ships of all nations during the whole term of the lease under which it was to be held by Russia, and Germany had declared Kiao-Chao a "free port."

On September 29, 1899, Lord Salisbury replied that the policy consistently advocated by Great Britain was one of securing equal opportunity for the subjects or citizens of all nations in regard to commercial enterprise in China, and that from this policy H.M. Government had no intention or desire to depart.

On November 30, 1899, Lord Salisbury informed Mr. Choate that H.M. Government were prepared to make a declaration in the sense desired by the United States Government "in regard to the leased territory at Wei-hai-Wei and all territory in

China, which may hereafter be acquired by Great Britain by lease. or otherwise, and all spheres of interest now held or which may hereafter be held by her in China, provided that a similar declaration be made by the other Powers concerned."

Before January 5, 1900, all the Powers concerned had subscribed to the declaration in question, which thus became binding among them.

In further confirmation, and no doubt with a view to giving still greater precision to the above principles, the British and German Governments on October 16, 1900, signed the following agreement :

"Her Britannic Majesty's Government and the Imperial German Government, being desirous to maintain their interests in China and their rights under existing Treaties, have agreed to observe the following principles in regard to their mutual policy in China :

“1. It is a matter of joint and permanent international interest that the ports on the rivers and littoral of China should remain free and open to trade and to every other legitimate form of economic activity for the nationals of all countries without distinction; and the two Governments agree on their part to uphold the same for all Chinese territory as far as they can exercise influence.

"2. Her Britannic Majesty's Government and the Imperial German Government will not, on their part, make use of the present complication to obtain for themselves any territorial advantages in Chinese dominions, and will direct their policy towards maintaining undiminished the territorial condition of the Chinese Empire.

"3. In case of another Power making use of the complications in China in order to obtain under any form whatever such territorial advantages, the two Contracting Parties reserve to themselves to come to a preliminary understanding as to the eventual steps to be taken for the protection of their own interests in China.

"4. The two Governments will communicate this agreement to the other Powers interested, and especially to Austria-Hungary, France, Italy, Japan, Russia, and the United States of America, and will invite them to accept the principles recorded in it."

This agreement was simultaneously communicated by the British and German Governments to the Powers mentioned in Clause 4. The principles "recorded in it" were duly accepted by them all.

The "open-door" question was brought up again in connection with Morocco. Under Article IV. of the joint declaration

XXIII

EFFECT OF " MOST-FAVOURED-NATION" CLAUSE

IN COMMERCIAL TREATIES

THE most-favoured-nation clause is one which it has become customary to insert in treaties of commerce, providing that if any reductions of tariff or other advantages are granted by either co-contracting State to any third State, the other shall have the benefit of them. In Europe this clause has been uniformly treated as applying to all reductions of tariff without distinction. The United States interpretation, on the other hand, distinguishes between reductions of a general character and reductions made specifically in return for reductions by some other State. The latter do not come within the operation of the clause, and a co-contracting State is only entitled to obtain extension of them to itself by granting similar concessions. In other words, special concessions to any co-contracting State are only allowed gratuitously to a third co-contracting State, when nothing is given for them, the clause not covering advantages granted in return for advantages.

In a despatch of July 17, 1886, to the American Minister in China, Mr. Bayard explained the American view in the following

terms:

"In its commercial aspects the expediency of an unqualified favoured. nation clause is questionable. The tendency is towards its formal qualification, by recognising in terms what most nations hold in fact and in practice, whether the condition be expressed in the clause or not, that propinquity and neighbourliness may create special and peculiar terms of intercourse not equally open to all the world; or by providing that the most-favoured treatment, when based on special or reciprocal concessions, is only to be extended to other Powers on like conditions." 1

This is still the United States view, as is set out in a luminous article in the November (1905) number of the North American Review, on "The Alternative of Reciprocity Treaties, or a Double

1 See Wharton's Digest on the International Law of the United States, sec. 134. It is interesting to recall the interpretation by the United States Government of the 8th Article of the Convention for the cession of Louisiana, providing that after the expiration of twelve years from the date of that Treaty, the ships of France should be treated upon the footing of the most favoured nation in the ports of the ceded territory. It was contended by France that this was an absolute agreement, irrespective of the conditions upon which favours were granted to other nations, and that, therefore, when a favour should be granted to another nation for a consideration (reciprocal or otherwise), or upon a condition, France was entitled to enjoy the same favour without consideration or condition. This was denied by the United States. The claim was abandoned by France in the Treaty of 1831 (Bancroft Davis, Treaties of the United States, 1873, p. 127).

Tariff," by Mr. John Osborne, chief of the Bureau of TradeRelations, State Department, and late Secretary of the Reciprocity Commission, a gentleman eminently competent to describe the contemporary American standpoint. Mr. Osborne maintains that "it is evident that the gratuitous extension to third Powers of commercial advantages exchanged in reciprocity between two countries, is absolutely inconsistent with the true principles of reciprocity as understood in the United States; it would not only seriously impair and even tend to destroy the value of the original grant, but it would also involve duty reductions upon the entirety, or, at least, the bulk of importations from the world, of the articles of merchandise affected, thus constituting a serious sacrifice in national revenues."

This is an argument of policy, and not one, properly speaking, of interpretation or construction. No strictly judicial argument can be urged in support of the American view. Whether a reduction "bought," as it were, by a counterreduction is affected by a "most-favoured-nation" clause depends, from a judicial point of view, solely on the wording of the clause.

There seemed to be a possibility that this would become the judicial construction in America under a decision of the United States Supreme Court (Bartram v. Robertson), but the question a few months later came up again in Whitney v. Robertson (Supreme Court of the United States, 1887, 124 United States, 190), when the official view, on the contrary, was strongly endorsed. The plaintiffs in the action were merchants doing business in the city of New York. They imported a large quantity of sugars, produce of the island of San Domingo, similar in kind to sugars produced in the Hawaiian Islands, which were admitted free of duty under a treaty with the government of those islands. The treaty provided for the importation into the United States, free of duty, of various articles, "the produce and manufacture of those islands, in consideration, among other things, of like exemption from duty, on the importation into that country, of sundry specified articles which are the produce and manufacture of the United States." The first two articles of the treaty, which recited the reciprocal engagements of the two countries, declared that they were made in consideration "of the rights and privileges" and "as an equivalent therefor," which the one conceded to the other. The plaintiffs relied for a like exemption of the sugars imported