5. A free zone usually provides return cargoes for vessels which bring goods into a country; this permits the quoting of lower freight rates, and the establishment of more direct, regular and frequent sailings between the free port and many other parts of the world.

6. The existence of bonded warehouses does not make free zones unnecessary; before being put into a bonded warehouse, goods must first be submitted to examination, assessment, and liquidation of the entry. The compliance with all the customs formalities takes time; it gives rise to many annoyances, both when the goods are entered and when later it may become necessary to remove them from one bonded house to another. The greater expense attached to the keeping of the goods in a bonded warehouse is also an item of some importance in making the system less desirable than that of free zones.

Arguments against Free Zones. The opponents of free zones argue that:

1. The geographic location of the principal American ports differs materially from the location of such ports as Antwerp, Hamburg, London, Copenhagen or Singapore; these are situated at the converging and redistributing points of different trade routes while our ports are not so located. Much of the European entrepot trade is also due to the fact that Europe is split into many independent national units, a condition which does not exist here and which would have made the creation of free zones on the North American Continent much more desirable than it is at present. New York is now, without having a free zone, a consignment market for many goods shipped to different parts of the United States, just as London and Antwerp are consignment markets for different parts of Europe.

2. The existing facilities provided by bonded warehouses, bonded manufacturing warehouses and drawbacks make the creation of free zones unnecessary in the United States; free zones would only add to the expenses of protecting the customs revenue without benefiting the country.

3. The legality of creating free zones in the United States has been questioned by some, on account of the clause in our Constitution to the effect that "no preference shall be given by any regulation of commerce or revenue to the ports of one state over those of another."

REFERENCES

BÄCHER, E. L. Export Technique. Course in Foreign Trade.
Chap. VIII.

Vol. IX,

CHAMBER OF COMMERCE OF THE UNITED STATES. Free Zones.
CLAPP, E. J. The Free Port as an Instrument of World Trade (in E. M.
Friedman's, American Problems of Reconstruction).

CLAPP, E. J. The Port of Hamburg, Chap. III.

FISK, G. M. International Commercial Policies, Chaps. IX, X.

GREGORY, T. E. G. Tariffs: A Study in Method, Chap. X.

HIGGINSON, J. H. Tariffs at Work, Chaps. IV, V.

KIDD, H. C. Foreign Trade. Pp. 203-220.

MACELWEE, R. S. Ports and Terminal Facilities, Chap. XVII.

SAVAY, N. Principles of Foreign Trade, Chap. XXXI.

UNITED STATES TREASURY DEPARTMENT. Customs Regulations of the United States prepared for the Instruction and Guidance of Customs Officers, 1915.

UNITED STATES TARIFF COMMISSION. Information Concerning Free Zones in the Ports of the United States.

ZIMMERMANN, E. W. Ocean Shipping, Chap. V.

CHAPTER X

GOVERNMENTAL TRADE-PROMOTING INSTITUTIONS OTHER THAN THE DEPARTMENT OF COMMERCE

Government and Private Business.-American business men, as a rule, object to the Government directing commercial activities; they resent what has been often termed in this country official interference in private affairs; they resent it even if the directing is undertaken with the ostensible purpose of lending assistance and of conferring benefits. Most American business men prefer meeting their own problems, making their own decisions, fighting their own battles and reaping the results of their own initiative and enterprise. The impress which bureaucratic control has made upon our country during the War has not been very deep; however, this control in one form or another still exists and the business interests of the country are striving to emancipate themselves from it. This does not mean that American business men are unappreciative of the ever-increasing amount of information which is being gathered and disseminated through governmental channels, neither does it imply that they are averse to accepting governmental advice; but it does mean that American business men refuse to become parties to organizations wielded by bureaucratic regulations and directed by public officials. There is a deep-rooted feeling in our business circles that official organs should refrain from performing such functions as are being carried on or may be efficiently discharged by private agencies.

The Congress.-The legislative branch of the National Government exerts a far-reaching influence upon foreign

trade through its power of enacting laws. The majority of legislative acts have a direct or indirect bearing upon commercial relations, either encouraging or restricting them; into this group fall laws establishing customs duties, regulating banking business, promoting shipbuilding and shipping, extending the services of various governmental tradepromoting agencies, as well as a large number of other measures, which affect the various manifestations of the economic life of the nation. The preliminary work of preparing bills is entrusted by the House of Representatives and the Senate to their standing committees.

The President.-The President's jurisdiction over foreign trade is exercised: (1) through his right of appointing with the advice and consent of the Senate, the chief executive officers of the various governmental departments dealing directly and indirectly with the regulation and promotion of commerce; (2) through the authority which he has of concluding commercial treaties, subject to the ratification of the Senate and the approval of the House; (3) through his power of issuing ordinances and proclamations.

The Fordney-McCumber Tariff Act gives the President much broader powers than those he had heretofore possessed, both in the establishment of reciprocal tariff relations with other countries and in the application of the duties; rates were made flexible, leaving it within the discretion of the President to apply the exact rate.

The Department of State. The Department of State is concerned primarily with political questions involving the sovereign interests of the nation. Its methods, when it deals with other nations, are those of diplomacy and its language is that of ambassadorial and ministerial dignity and calmness. There is little in the procedure of the Department of State to suggest its close connection with counting rooms, warehouses, factories and stores of those who buy and sell in the world's markets; and yet, the majority of present-day political questions involving state action are

commercial in character. Trade questions give rise to the greatest number of international misunderstandings and disagreements, and they require all the knowledge, tact and good will which national leaders may possess in order to arrive at amicable settlements of disputes.

Office of the Economic Advisers.-The State Department needs a central economic organization and this need is supplied by the Economic Adviser's office. This office furnishes the Department with data and comments pertaining to the various phases of American foreign trade; it compiles statistics and prepares reports covering such problems as tariff and customs regulations, commercial treaties, shipping, banking and exchange. The Economic Adviser's office investigates cases of discriminations against American business men, and assists in every possible way in the arrival at correct decisions when formulating the country's economic policies. The office possesses numerous files on foreign trade; these are used primarily in the interest of the Department, information or advice not being furnished, as a rule, to private individuals or companies, this being the function of the Department of Commerce. During the War, Economic Advisers, known then as Foreign Trade Advisers, were entrusted with much important work made necessary because of restrictions placed upon the sea-borne trade by the belligerent nations; after the conclusion of peace one of their important duties became the preparation of data for use in negotiating commercial treaties.

In order to be able to advise the Department properly, the office, besides maintaining close relations with the diplomatic and consular service, is in touch with American business men, with various commercial organizations, and with other Departments and Bureaus of the Government which are interested in economic matters. The Economic Adviser seeks to cooperate with other governmental agencies in order to avoid duplication of work and confusion of functions; he takes or advises action only with respect to those