Mr. Gresham also discussed the question whether the payment by a government of a bounty on the exportation of an article of its produce or manufacture could be considered in the light of a discrimination which might warrant another government in laying, in spite of a most-favored-nation clause, an additional or countervailing duty. He answered this question in the negative, on the ground that the payment of bounties was a domestic measure which could no more be considered a discrimination than could the imposition of a protective or practically prohibitive duty for the purpose of encouraging domestic manufactures. Report of Mr. Gresham, Sec. of State, to the President, Oct. 12, 1894, "The German government has protested against that provision of the "In the interests of the commerce of both countries and to avoid even Also the government of Denmark, on the strength of Art. V. of the The American interpretation of the most-favored-nation clause is be lieved to accord with the interpretation put upon the clause by foreign powers-certainly by Germany and Great Britain. Thus, as the clause permits any internal regulations that a country may find necessary to give a preference to native merchants, vessels, and productions,' the representatives of both Great Britain and Germany expressly declared, at the International Sugar Conference of 1888, that the export sugar bounty of one country might be counteracted by the import sugar duty of another without causing any discrimi nation which could be deemed a violation of the most-favored nation clause.'" (Mr. Olney, At. Gen., Nov. 13, 1894, 21 Op. 80, 82.) As to the London Sugar Bounties Conference of 1888, see For. Rel. 1888, II. 686-688, 706–708, 710, 711, 715-717, 721, 726, 732, 733, 737, 745, 771, 772, 775, 789, 792, 796. The passage above quoted from Mr. Olney's opinion of Nov. 13, 1894, is embodied in a note of Mr. Sherman, Sec. of State, to the German chargé d'affaires ad interim, Sept. 22, 1897, For. Rel. 1897, 178. April 13, 1897, the minister of Austria-Hungary at Washington protested against a clause in the new tariff bill then pending, imposing an additional duty on sugars imported from bounty-paying countries. He referred to previous correspondence, and particularly to Mr. Gresham's report of October 12, 1894, and the President's recom mendation in his annual message of 1894 of the repeal of the addi- (For. By Article VII. of the convention adopted by the International Sugar Bounties Conference of 1888, the contracting parties agreed to lay a countervailing duty on sugars imported from any country paying a bounty, either direct or disguised, on their exportation. This was known as the penal clause of the convention. The convention, however, never became effective. By act of the British Parliament, entitled the "Indian tariff act (1894) amendment bill," a countervailing duty was imposed on Russian sugar imported into India. Against this duty the Russian government, by a note of June 12, 1899, protested on the grounds (1) that no bounty, direct or indirect, was paid in that country on the exportation of sugar, and (2) that, even if such a bounty were paid, the imposition of a countervailing duty would infringe the mostfavored-nation clause in the treaty between the two countries of January 12, 1859. Lord Salisbury, July 15, 1899, replied that the Russian system, under which the excise duty on sugars is repaid in case of exportation, created an "artificial stimulus" which had the same effect as "a bounty of a more direct character," and that the same opinion was disclosed in the legislation of the United States and in the records of the then recent conference at Brussels. In this relation, Lord Salisbury maintained that it was the intention of the most-favored-nation clause "that goods shall enjoy equality of treatment, but not preferential advantages as compared with goods of the most-favorednation;" and that, where an artificial preference was produced by the direct legislative act of a government which was a party to a mostfavored-nation stipulation, the other government might "redress the balance of trade which has thus been artificially disturbed," the remedy being in the hands of the other government to discontinue the bounty or the legislative act producing the artificial stimulus. He offered, however, if the Russian government should be unwilling to accept this view, to give notice of the termination of the treaty. In the Brussels convention of March 5, 1902, a penal clause similar to that in the unratified convention of 1888 was embodied. To the convention of 1902 Russia was not a party, nor was she represented in the conference by which it was framed. In a communication to the British government, July 8, 1902, it was stated that Russia would consider the application by that government of the countervailing duty to Russian sugars as a violation of the treaty of 1859. For this view the same reasons were given as in 1899. July 30, 1902, Lord Lansdowne, besides referring to the fact that Lord Salisbury's note of July 15, 1899, had not been answered and that the Indian countervailing duties had meanwhile continued in operation, cited the records of the Brussels conference as proving that Russia paid an indirect bounty and also called attention to the fact that by Article VII. of the convention of 1902 provision was made for an international commission to determine the question of bounty in each case, so that if Russia should become a party to the convention she would have the benefit of the examination authorized by that article. He also reiterated the views expressed by Lord Salisbury as to the operation of the most-favored-nation clause. The Russian government, in reply, contended, by a memorandum of September 24, 1902, that under the British government's interpretation of that clause the merchandise of countries which granted to exported produce favorable railway rates or maritime freights might be subjected to higher customs duties; that countervailing duties might even be imposed because goods were subject to lower taxes in one country than in another, or because the natural conditions of industry in a particular country were specially favorable; that, on the same principle, it would be necessary to lower the duties on goods which had to pay an export duty, or if, as in the case of England, there were no import duties to lower, then to pay a bounty. This principle, so the memorandum affirmed, Russia altogether rejected. She maintained that the most-favored-nation clause did not fetter the right of either party to adopt such domestic legislation as it might deem useful for the development and encouragement of national industry. In conclusion, the Russian government offered to submit the question to arbitration. November 20, 1902, Lord Lansdowne, replying to the Russian memorandum, stated that, with regard to such forms of encouragement as the reduction of railway rates, etc., it would be the duty of the international commission, to be established under the Brussels convention, to decide whether such internal measures were or were not in effect equivalent to bounties." He denied, however, that a rebate or a bonus might be claimed on sugar subject to an export duty in the country of origin, since "the remedy in this instance also would obviously lie in the hands of the exporting state." He further stated that His Majesty's government did not consider the question at issue one proper to be submitted to arbitration. The course they had taken was, he declared, dictated solely by a desire to secure equality of conditions" for those engaged in the production and refining of sugar; and as other states did not hesitate to impose high and prohibitive tariffs for the protection of their trade in their own markets, His Majesty's government failed to see with what reason the Russian government could "complain of a measure not of favor, but of simple and elementary justice to British trade." In conclusion, he renewed the offer to denounce the treaty of 1859. In a memorandum of January 14, 1903, the Russian government, adhering to its previous position, remarked that it might, if it thought fit to do so, alter its legislation, but that it could not be required to do so in order to avoid the application of penal measures which violated the most-favored-nation clause. The memorandum also maintained that the opinion prevailed in the sugar bounties conference of 1888 that the enforcement of the penal clause in respect of bountyfed sugars would necessitate the denunciation of commercial treaties based on the most-favored-nation principle. In conclusion, the memorandum, referring to the statement that the Brussels convention would be applied to Russian sugar only in case the international commission should find that bounties resulted from the Russian system, observed that the question must still be considered an open one, concerning which a further exchange of views should be suspended till the decision of the commission. Correspondence with the Russian Government Respecting the Interpretation of the Most-Favored-Nation Clause in Connection with Countervailing Duties on Bounty-Fed Sugar; Parliamentary Papers, Commercial, No. 1 (1903). See, also, Correspondence relating to the sugar conference at Brussels, It appears that Denmark declined to sign the convention of 1888, owing For a return of most-favored-nation clauses in existing treaties of com- Where a tax is imposed on all sugar produced, but is remitted on all sugar exported, and the exporter obtains from his government, solely by reason of such exportation, a certificate which has an actual value and is salable in the open market, the remission of the tax is in effect a bounty which subjects the sugar, on its importation into the United States, to an additional duty to the entire amount of the bounty, according to the act of Congress of July 24, 1897, 30 Stat. 205. Downs v. United States (1903), 187 U. S. 496. (5) MISCELLANEOUS CASES. $ 769. "It may fairly be considered then as the rational and received interpretation of the diplomatic term gentis amicissima' [mostfavored-nation] that it has not in view a nation unknown in many cases as was the United States at the time when the older treaties containing the phrase were used] at the time of using the term, and so dissimilar in all cases as to furnish no ground of just reclamation to any nation." Mr. Jefferson, Sec. of State, Report to the President, Mar. 18, 1792, 7 Jefferson's Works, 584; 1 Am. State Papers, For. Rel. 255. See Lawrence's Wheaton (1863), 493; Visser, La Clause de "La Nation la plus favorisée" dans Traités de commerce (Revue de Droit Int. tom. IV., deuxième série, pp. 66, 159). "Indeed, we are infinitely better without such treaties [i. e., treaties of commerce] with any nation. We can not too distinctly detach ourselves from the European system, which is essentially belligerent, nor too sedulously cultivate an American system, essentially pacific. But if we go into commercial treaties at all, they should be with all, at the same time, with whom we have important commercial relations. France, Spain, Portugal, Holland, Denmark, Sweden, Russia, all should proceed pari passu. Our ministers, marching in phalanx on the same line, and intercommunicating freely, each will be supported by the weight of the whole mass, and the facility with which the other nations will agree to equal terms of intercourse, will discountenance the selfish higglings of England, or justify our rejection of them. Perhaps, with all of them, it would be best to have but the single article gentis amicissima, leaving everything else to the usages and courtesies of civilized nations." (Mr. Jefferson to Presí dent Madison, Mar. 23, 1815, 6 Jefferson's Works, 453.) "Though treaties which merely exchange the rights of the mostfavored nations are not without all inconvenience, yet they have their conveniences also. It is an important one, that they leave each party free to make what internal regulations they please, and to give what preferences they find expedient to native merchants, vessels, and productions. And as we already have treaties on this basis, with France, Holland, Sweden, and Prussia; the two former of which are perpetual, it will be but small additional embarrassment to extend it to Spain. On the contrary, we are sensible it is right to place that nation on the most-favored footing, whether we have a treaty with them or not, and it can do us no harm to secure by treaty a reciprocation of the right." Report of Mr. Jefferson, Mar. 18, 1792, 7 Jefferson's Works, 587; 1 Am. The provision in Art. III. of the treaty between the United States and Great Britain of 1794 for the equalization in certain cases of the |