the application (made on the basis of the most favored-nation treaties now existing with Prussia and the German States) for equal rights with the States of North and Central America and the West Indies. This rejection is based on the ground that that exemption which is granted to all vessels of all powers sailing between the countries in question and the United States is purely geographical in its character, and can not, therefore, be claimed by other States in view of the most favored-nation clause.

I am instructed, and I have the honor most respectfully to reply to this, that such a line of argument is a most unusual one, and is calculated to render the most favored-nation clause wholly illusory. On the same ground, it would be quite possible to justify, for instance, a privilege granted exclusively to the South American States, then one granted also to certain of the nearer European nations, so that finally, under certain circumstances, always on the pretext that the measure was one of a purely geographical character, Germany alone, among all the nations that maintain commercial relations with America, notwithstanding the most favored-nation right granted to that country by treaty, might be excluded from the benefits of the act.

It can not be doubted, it is true, that on grounds of a purely local character certain treaty stipulations between two powers, or certain advantages autonomically granted, may be claimed of third States not upon the ground of a most favored-nation clause. Among these are included facilities in reciprocal trade on the border, between States whose territories adjoin each other. It is, however, not to be doubted that the international practice is that such facilities, not coming within the scope of a most favored-nation clause, are not admissible save within very restricted zones. In several international treaties these zones are limited to a distance of ten kilometers from the frontier. From this point of view, therefore, the explanation given by the United States Government of section 14 of the shipping act can not be justified.

This law grants definite advantages to entire countries, among others to those situated at a great distance from the United States; these advantages are, beyond a doubt, equivalent to facilities granted to the trade and navigation of those countries, even if they do, under certain circumstances, inure to the benefit of individual vessels of foreign nations. It scarcely need be insisted upon that these advantages favor the entire commerce of the countries specially designated in the act, since they are now able to ship their goods to the United States on terms that have been artificially rendered more favorable than those on which other countries not thus favored are able to ship theirs.

The treaty existing between Prussia and the United States expressly stipulates that

If either party shall hereafter grant to any other nation any particular favor in navigation or commerce it shall immediately become common to the other party, freely where it is freely granted to such other nation, or on yielding the same compensation when the grant is conditional.

Such a compensation, so far as the reduction of the tonnage tax to 3 cents is concerned, has not been stipulated for by the United States in the aforesaid shipping act. Germany is, therefore, ipso facto, entitled to the reduction of the tax in favor of vessels sailing from Germany to the United States, especially since, according to the constitution of the Empire, no tonnage tax is collected in Germany from foreign vessels; that is to say, no tonnage tax of the character of American ton

*Treaty of 1828, Art. IX.

nage taxes in the sense of section 8, paragraph 1, article 1, of the American Constitution, viz, those designed to pay the debts of the Government and to pay the expenses of the common defense and the general welfare.

As you remark in your esteemed note, Mr. Secretary of State, you have based your decision on an opinion of the Attorney-General. In opposition to this view, it will be seen by the printed decisions of the Secretary of Treasury, that the latter, in an opinion on this subject addressed to the Department of State under date of May 11,1885, expressed the opinion that vessels sailing from Portugal to the United States are, indeed, entitled to the privileges granted by section 14 of the shipping act, on the ground of the most favored nation treaty existing between the two nations. This opinion harmonizes in the main with the view entertained by the Imperial Government.

The Imperial Government entertains the hope, in view of the foregoing considerations, that the United States Government on reconsidering this matter will not maintain the position taken in the note of November 7, 1885, and that it will grant to German vessels sailing between the two countries the same privileges that have long been granted without compensation by the German Empire to American vessels.

In having the honor, therefore, hereby to reiterate the application made in my note of August 3, 1885, for the reduction of the tonnage tax to 3 cents in favor of vessels engaged in trade between Germany and the United States, I hope that the decision of the United States Government in this matter will be kindly communicated to me.

Accept, etc.,

No. 14.

H. v. ALVENSLEBEN.

Mr. Bayard to Mr. Alvensleben.

DEPARTMENT OF STATE,
Washington, March 4, 1886.

SIR: With reference to previous correspondence on the subject, I have the honor to acknowledge the receipt of your note of the 15th ultimo, relative to the question as to the applicability of the most favorednation clauses of the treaties of Prussia and other German states and the United States to the provisions of section 14 of the act of Congress of June 26, 1884.

In reply I beg to inform you that your note will have consideration, it being sufficient for the present to observe that Germany admits that neighborhood and propinquity justify a special treatment of intercourse which may not be extended to other countries under the favored-nation clause in treaties with them, and only appears to question the distance within which the rule of neighborhood is to operate.

Accept, sir, etc.,

T. F. BAYARD.

No. 15.

Mr. von Alvensleven to Mr. Bayard.

[Translation.]

IMPERIAL GERMAN LEGATION,

Washington, August 1, 1886. (Received August 2.)

Mr. SECRETARY OF STATE:

I had the honor duly to receive your note of the 4th of March last, whereby you informed me that my observations concerning the applicability of the most favored nation clause to section 14 of the act of Congress of June 26, 1884, would be taken into consideration, and in which, for the time being, you confined yourself, by way of reply, to one remark.

In the mean time an act of Congress entitled "An act to abolish certain fees for official services to American vessels, and to amend the laws relating to shipping commissioners, seamen, and owners of vessels, and for other purposes," has been approved by the President of the United States under date of June 19, 1886 (Public-No. 85), and has thereby become a law. I have brought this act to the notice of the Imperial Government and have been instructed to state the view taken by that Government of this latest law and to ask your attention to its incompatibility with the stipulations of the treaty existing between Germany and the United States.

This act extends, in a measure, the power conferred upon the Presi dent by section 14 of the act of June 26, 1884, to diminish tonnage dues in certain cases.

According to the act of 1884 the President was authorized, only in the case of vessels coming from the ports of North and Central America, the West Indies, the Bahama, Bermuda, and Sandwich Islands, or Newfoundland, and entering ports of the United States, to reduce the duty of 3 cents per ton, which was imposed on such vessels, provided that the said duty exceeded the dues which American vessels were obliged to pay in the aforesaid ports.

A reduction of the duty of 6 cents, to which all vessels coming from other ports were subjected, was not allowable, even on the supposition in question.

Vessels from the aforesaid favored ports thus enjoyed a special preference in two ways: In the first place, they paid in all cases a duty of but 3 cents per ton, while vessels from other ports were obliged to pay 6 cents per ton; even these 3 cents could be remitted, either in whole or in part, provided that it could be shown that the duty paid by American vessels in the ports concerned amounted to less than 3 cents per ton, or that no such duty was levied in said ports. This latter privilege is, according to the new law, no longer to be exclusively enjoyed by vessels from the favored ports.

Likewise, vessels from other than the most favored ports may obtain a reduction or return of the duty of 6 cents to be paid by them per ton, provided that in the ports from which they have come American vessels pay less than 6 cents or no tonnage duty at all. The amount of the duty to be remitted is computed according to the amount of the duties levied in the ports of departure.

The new law is evidently based upon the idea of reciprocity. If this idea had been consistently carried out no objection could be made to it and the Imperial Government would have no further ground of com

plaint. This, however, is not the case, inasmuch as the new law grants special privileges, as did the old, to vessels from the above-mentioned ports, declaring that they, without any compensation on their part, shall pay but 3 cents per ton, even though a duty in excess of that amount is paid by American vessels in the ports concerned. The number of favored ports is even extended to those of South America bordering on the Caribbean Sea.

The Imperial Government has from the outset protested against this one sided privilege, which is in violation of the treaty stipulations of Germany with the United States. Since this privilege is not only not abolished by the new law, but is confirmed and even still further extended, the original attitude assumed by the Imperial Government towards the old law has been in no wise changed by the new act, and the Imperial Government must continue to protest against the violations of its treaty rights while maintaining the arguments contained in my note of February 15, 1886. As long as vessels from the ports of North and Central America pay but one-half the tonnage duty that is levied upon vessels from German ports, without being required to furnish proof that less than 6 cents is exacted from American vessels in their ports, the Imperial Government will be obliged to maintain its claim for similar usage, viz, the exemption from furnishing such proof.

As is stated in my note of February 15, 1886, the Imperial Government is unable to regard as conclusive your principal argument, viz, that the privilege in question is of a purely geographical character, because the effect of this privilege is to benefit, in point of fact, the entire trade and navigation of those countries in which the ports in question are situated. No paramount importance can be attached (as is done by the United States Government) to the mere form in which this privilege is granted to particular countries.

I am therefore instructed, on the ground of the treaty right pertain ing to the Imperial Government, to reiterate its previous claim that German ports shall be placed on a footing precisely similar to that of North and Central American ports, etc., and most respectfully to request you, Mr. Secretary of State, to favor me with the further reply which, in your note of March 4, you gave me to understand that I might expect from you.

Accept, etc.,

H. V. ALVENSLEBEN.

CORRESPONDENCE WITH THE LEGATION OF ITALY AT WASHINGTON.

No. 16.

Baron Fava to Mr. Bayard.

LEGATION OF ITALY,

Washington, February 16, 1886. (Received February 17.)

Mr. SECRETARY OF STATE:

In pursuance of the provisions of the fourteenth section of the act of Congress of June 26, 1884, "to remove certain burdens on the American merchant marine," etc., vessels coming from the ports of North and Central America, and from the West Indies, Bahama, Bermuda, and Sandwich Islands, or from Newfoundland, have, since the aforesaid act took effect, been subjected, on their arrival in the United States, to the pay.

ment of a duty of 3 cents per ton, not exceeding, in the aggregate, 15 cents per ton in any one year, while a duty of 6 cents per ton, not exceeding, in the aggregate, 30 cents per ton in any one year, continues to be levied upon vessels coming from Italian ports. Having been duly informed of this fact, the Government of the King instructs me, and I have the honor hereby to request the Federal Government to be pleased to adopt the necessary measures to the end that vessels coming from Italian ports may likewise enjoy, from the date of the aforesaid act of Congress, the same privilege that is accorded by the fourteenth section of the act in question to vessels coming from ports in the countries enumerated in the section aforesaid.

It is scarcely necessary to remind your excellency that the request which I have been instructed to lay before you is based upon article 24 of the treaty of June 25, 1871, which is now in force between Italy and the United States. The English text of said article is as follows:

The United States of America and the Kingdom of Italy mutually engage not to grant any particular favor to other nations, in respect to commerce and navigation, which shall not immediately become common to the other party, who shall enjoy the same freely if the concession was freely made, or on allowing the same compensation if the concession was conditional.

The fourteenth section of the act" to remove certain burdens on the American merchant marine," etc., further provides that—

The President of the United States shall suspend the collection of so much of the duty herein imposed on vessels entered from any port in the Dominion of Canada, Newfoundland, the Bahama Islands, the Bermuda Islands, the West India Islands, Mexico, and Central America, down to and including Aspinwall and Panama, as may be in excess of the tonnage and light-house dues or other equivalent tax or taxes imposed on American vessels by the Government of the foreign country in which such port is situated.

The President, in the exercise of this power, has suspended, by his proclamation of January 31, 1885, the collection of the tax of 3 cents per ton on vessels coming from certain ports in Canada, the United States of Colombia, and other countries.

On the ground, moreover, of the clause contained in article 24 of the treaty concluded in 1871 between Italy and the United States the Royal Government regards the conditional privilege granted by the second paragraph of the fourteenth section of the act of Congress of 1884 and by the proclamation of the President of the United States as already secured in behalf of Italian vessels coming from the ports of the peninsula. Consequently, if it shall be possible to prove that American vessels are subjected in Italian ports to the payment of no tonnage or light-house duty, or to that of no equivalent tax, or that American vessels pay less than 3 cents per ton in Italian ports, the duties which Italian vessels are now obliged to pay in the ports of the United States should be entirely suspended or proportionally reduced.

As the Italian Government is not prepared, just at present, to furnish such proof (although it reserves the privilege of so doing in future communications), it instructs me, in the mean time, to bring the foregoing to the attention of the American Government, and to ask your excellency's good offices to the end that the duty of 6 cents per ton, which is still levied in the ports of the United States upon vessels coming from those of Italy, may be reduced to 3 cents from the date of the promulgation of the act "to remove certain burdens on the American merchant marine," etc.

Be pleased to accept, etc.,