99 or border

distinction to "frontier traffic in the wider sense, concessions which have been extended to include an entire country.1

Mexican Free Zone. The so-called Mexican Free Zone was a strip of land about twelve and one half miles wide, extending along the entire northern boundary of Mexico. It was not strictly a free zone, since goods entering it paid eleven and one half per cent of the regular tariff, the balance being paid if they were conveyed to any other part of Mexico. It was originally established along a part of the northern boundary in 1858 and extended in 1885 across the entire frontier of the North in order to discourage the emigration of Mexicans to the United States. Formerly there were much higher federal and state taxes in Mexico than in the United States, the result being that the cost of living in the Mexican towns along the border was more than in the neighboring Texan towns. At first all foreign goods entering the Zone were exempted from all duties, excepting State and Municipal taxes, but when the United States raised its customs duties, the rate payable on entering the Free Zone was gradually raised to eleven and one half per cent of the regular Mexican tariff rates. The Mexican government in 1891 decided that goods manufactured in the Zone should pay duty when imported into the interior. This provision practically put an end to manufacturing in the Free Zone since the advantage of low cost of raw materials was balanced by the two high tariff walls by which the Zone was hemmed in. Consequently the Free Zone was abolished with the institution of the Mexican tariff of 1905. Later efforts of frontier towns have failed to effect its restoration.

Treaty Ports. Treaty ports are ports open to commerce by virtue of international agreements. Such ports per

1 Concerning special provisions in European countries for frontier traffic, see GREGORY, Tariffs, 5, 411-424.

mitting trade between the Occident and certain Oriental centers in China and Japan have been secured through numerous treaties since the middle of the nineteenth century. The first treaty ports in China were by virtue of the Nanking treaty of 1842 between the Celestial Empire and Great Britain. These concessions were also granted to other nations, article III of the treaty of 1844, between the United States and China, stipulating that "the citizens of the United States are permitted to frequent the five ports of Kwangchow, Amoy, Fuchow, Ningpo and Shanghai, and to reside with their families and trade there, and to proceed at pleasure with their vessels and merchandise to and from any foreign port and either of the said five ports to any other one of them." At present Chinese treaty ports number over forty. Japan was also opened to foreign commerce through treaty ports, her commercial treaty of 1854 with the United States paving the way by opening the ports of Simoda and Hakodadi to American commerce. But since 1899, Japan has been recognized as on an equality with the other civilized powers, and her entire country has been thrown open to foreign countries.

BIBLIOGRAPHY

A. Consult bibliographies of Chapters V, VII, and VIII.

B. U. S. Tariff Commission Report on Free Zones in Ports of the United States, 1918; U. S. Treasury Department, Customs Regulations of U. S.; Consular Regulations of U. S.; Special Consular Reports, XXXV, 1905 (Warehouses in Foreign Countries); Monthly Summary of Commerce and Finance, February and September, 1905 (Mexican Free Zone); U. S. Statutes at Large; U. S. Tariff Acts of 1909, 1913 and 1922 (Administrative Provisions; Warehousing); Foreign Tariff Notes; Commerce Reports; Board of General Appraisers Annual Report; Compilation of Customs Laws and Digest of Decisions Thereunder (Acts 1883-1913); Digest of Customs Decisions (irregularly); Appeals pending before U. S. Courts in Customs Cases (Quarterly); U. S. Tariff Commission Report upon Revision of Customs Administrative Laws.

C. American Warehousemen's Association Annual Proceedings; "Free Ports," Encyclopædia Britannica; "Warehousing," in Palgrave.

D. Goss, Tariff Administration; GREGORY, Tariffs, 370-397; KOEHLER, Importers First Aid; ROSENTHAL, Technique in Importing and Exporting; CLAPP, Port of Hamburg; RUSH, Port of New York; MACELWEE, Ports and Terminal Facilities, 275-303; FRIEDMAN, Problems of Reconstruction, 245-267 (free ports); TAI, Treaty Ports in China; Koo, Status of Aliens in China, 229–265; MORSE, Trade and Administration in China, Ch. 8; SEE, Foreign Trade of China (treaty ports, Index); HIGGINSON, Tariffs at Work (bonded warehouses and free ports); U. S. Chamber of Commerce, Final Report of Committee on Free Zones.

E. HOWE, F. C., "The Free Port an Agency for Development of American Commerce," Annals, May, 1915; CLAPP, E. J., "Foreign Trading Zones in Our Ports," Am. Econ. Rev., June, 1922, pp. 262–272; "Administrative Provisions of Tariff Act of 1909," Journal of Accounting, September, 1909; "Administrative Features of Tariff of 1913," Jour. Pol. Econ., November, 1914; The Protectionist, November, 1913.

SUGGESTIVE TOPICS AND QUESTIONS

1. Nature and working of credit systems in regard to imported goods before the adoption of the American bonded warehouse system. (Goss, 26-51; Monthly Summary of Commerce and Finance, October, 1903.)

2. What stipulations are found in the Treaty of Versailles concerning free zones in German ports? Art. 328 of the Treaty.

3. To what extent is the bonded warehouse system actually utilized for imports? Monthly Summary of Foreign Commerce for last December, and also the current number.

4. Prepare report on the organization and operation of the Free Port of Hamburg (CLAPP; MACELWEE, 291-301); or the Copenhagen Free Port (Tariff Commission Report on Free Zones, 77-85).

5. What changes in laws concerning transportation in bond and warehousing of merchandise were recommended by the Tariff Commission? To what extent have these been enacted into law? Report upon Customs Administrative Laws, 20-21, 131-148; Tariff Act of 1922. 6. Make a map showing the customs districts as now arranged. By what authority are they constituted? Report upon Customs Admin. Laws, 34-44.

7. How would bonded warehouses and warehouse business probably be affected by the establishment of free zones? MACELWEE, 282–284; FRIEDMAN, Reconstruction, 256-257, 264; CLAPP, Port of Hamburg; Tariff Commission Report on Free Zones, 71, 83, and passim.

CHAPTER XI

COMMERCIAL TREATIES: THEIR NATURE, FORM, AND CONTENTS

Definitions. International compacts are recorded in a variety of forms and under a great diversity of titles, according to the circumstances of the case or the purpose in view. The form adopted in a given case is determined partly by custom and partly by convenience. The terms "treaty" and "convention" are used more or less synonymously and are applied to the more formal compacts between two or more nations, concluded by their authorized agents. Less formal engagements are often designated as agreements, modus vivendi, etc. These are common in dealing with subordinate or special subjects affecting commercial relations and not infrequently embody determinations of the highest importance. They are sometimes effected by a mere exchange of notes between the secretary of state (or foreign minister) of the country in which the negotiation is conducted and the ambassador of the other country. A modus vivendi usually provides for the temporary extension of treaty provisions, in whole or in part, after the treaty itself has been abrogated and is usually intended to be replaced later by a more detailed or more permanent compact.1

A commercial treaty is an international agreement relative to trade. Such a treaty may be very general in character, as was the case in most of the early commercial treaties of the United States, which were usually designated as treaties of

See U. S. Tariff Commission Handbook of Commercial Treaties, especially pp. 859-862.

amity, commerce, and navigation." Sometimes, on the other hand, a commercial treaty is more special in character and deals only with one subject from which it derives its particular name. Thus we speak of consular treaties, trademark treaties or conventions, and the like.

Commercial treaties are in most cases bilateral, that is, they are negotiated between single nations. While peculiar problems, conditions, and relations make this type of treaty essential in dealing with many matters, it is increasingly recognized that nations have many interests in common which can be safeguarded more effectually by agreements to which all or many countries are signatory. Consequently, more and more multilateral treaties and conventions are being concluded. They deal with such matters as postal service, cable and radio telegraphs, protection of copyrights, trademarks, patents, and other forms of industrial property.

one governing the com

treaties are of very ancient origin; mercial relations between Rome and Carthage dates back to the year 509 B.C. But they did not play an important rôle in commercial politics until within comparatively recent times. In the Middle Ages it was necessary to secure by means of treaties the right to trade in foreign countries, just as in the last century similar privileges were obtained by treaty in Japan and China. Beginning with the latter part of the twelfth century numerous commercial treaties governed the commercial relations of the Italian city republics with each other and with states bordering on the Mediterranean. During succeeding centuries, with the development of trade and the growth of nationality, commercial treaties became more frequent among the Western European countries. After the fall of Constantinople into the hands of the Turks in 1453 the commercial relations between the East and the West were regulated by the so-called Turkish "capitulations" or grants