Papers relating to the foreign relations of the United States, 1929, Volume I

611.003/1673a

The Secretary of State to Senator Reed Smoot³⁸

Washington, June 26, 1929.

My Dear Senator: Certain provisions of the pending Tariff Bill (H. R. 2667) which require on certain conditions mandatory increases in the standard tariff rates established by the Bill, will, if that Bill becomes law and such increases take place, cause violation by the United States of the Treaty between Germany and the United States proclaimed October 14, 1925,³⁹ and other similar treaties between the United States and other countries which contain unconditional most-favored-nation clauses as to tariff relations.

The result of such violation would be either to permit the offended country (1) in case of serious breach to assert a claim of right to terminate the treaty in question at once (such treaties usually run for a fixed term of years) or (2), without terminating the treaty, to assert a plausible claim for damages against the United States equal to the amount of such excess duties collected.

Either result would be obviously unfortunate. Such most-favored-nation clauses in treaties are deemed a potent defense for the United States against possible tariff retaliation by foreign nations.

I respectfully suggest that the pending Bill be amended in this regard. Any question of treaty violation would be obviated if such provisions for mandatory increases were eliminated or if the mandatory feature were eliminated and the enforcement of such increases were made discretionary with the President (instead of mandatory on him or other officers).

I enclose a memorandum showing

1. A list of sections of the Bill deemed contrary to the treaties;

2. A quotation from the German Treaty showing what the United States has promised to Germany in this regard and a list of similarly situated treaties.

You will understand that this letter does not at all deal with the effect of the proposed tariff revision on our foreign relations in general, but is confined to the legal question of the effect on existing treaties.

It is desirable that the views of this Department expressed in this letter should not be made public.

I am [etc.]

H. L. Stimson

[Enclosure]

Memorandum

1. A list of sections of the Bill deemed contrary to the treaties: Paragraphs 369, 371, 812, 1402, 1640, 1649, 1686, Section 303.

2. A quotation from the German Treaty showing what the United States has promised to Germany in this regard and a list of similarly situated treaties.

“Art. VII … 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.

. . . . . . . . . . . . . .

“Any advantage of whatsoever kind which either High Contracting Party may extend to any article, the growth, produce, or manufacture of any other foreign country shall simultaneously and unconditionally, without request and without compensation, be extended to the like article the growth, produce, or manufacture of the other High Contracting Party.”

Countries with whom the United States has similar treaties of Friendship, Commerce and Consular Rights:

• Hungary⁴⁰
• Honduras⁴¹
• Latvia⁴²
• Estonia⁴³

38. Chairman of the Senate Finance Committee.
39. Treaty signed December 8, 1923; Foreign Relations, 1923, vol. ii, p. 29.
40. Foreign Relations, 1925, vol. ii, p. 341.
41. Ibid., 1927, vol. iii, p. 101.
42. Ibid., 1928, vol. iii, p. 208.
43. Ibid., 1925, vol. ii, p. 70.