Mr. Gresham to Senhor Mendonça.

Sir: I have had the honor to receive your note of the 24th ultimo, in which you inform me that your Government, in view of the abrogation of the commercial arrangement between the two countries by the tariff law of the 28th of August last, has directed you to communicate to me the fact that, “in virtue of the stipulation contained in the notes exchanged between the negotiators of the said international agreement, and dated January 31, 1891, it (the Government of Brazil) deems it necessary” definitely to inform me of “its intention and decision to consider at an end said commercial agreement, in accordance with the stipulation therein contained regarding its duration, so that the termination of said agreement shall begin to take effect on the 1st day of January of the year 1895.”

In concluding your note you express the assurance that “the cessation of our reciprocity agreement will in nowise affect the commercial relations between our two countries, considering that their mutual interests and spirit of cordial friendship now rest on a firmer basis than a written contract.”

This satisfactory and well-founded assurance, in which the President directs me to say that he fully concurs, would seem to render any comment on your note superfluous, if it were not for your previous statement that your Government, notwithstanding the abrogation of the arrangement in question by the act of August 28, deems it necessary, in accordance with the stipulations contained in the notes exchanged on January 31, 1891, to give notice of its intention to consider the arrangement as terminated on and after the 1st of January next.

By section 104 of the act of August 28, section 3 of the act of 1890, under which the commercial arrangements with Brazil and certain other countries were negotiated, was repealed; but it was also provided that nothing in the repealing section should be held to abrogate or affect such arrangements, except where they were inconsistent with the provisions of the new law. Notice, therefore, of an intention to terminate those arrangements was not contemplated by the new law; [Page 80] and, so far as they were inconsistent with the provisions of that law, such notice was rendered unnecessary by the fact of their immediate termination.

Your note, however, seems to imply that the United States and Brazil had contracted an obligation not to terminate the arrangement between them in any manner whatsoever except that stipulated in the communications exchanged on January 31, 1891. There is no disposition on the part of this Government to avoid the question thus raised.

The circumstances under which the late commercial arrangement between the United States and Brazil was negotiated are disclosed in the official correspondence that preceded its conclusion. It appears that on the 3d of November, 1890, the Secretary of State of the United States notified the minister of Brazil in Washington that, by the third article of the tariff law then recently enacted, provision was made for the admission into the ports of the United States, free of duty, of sugar, not above No. 16 Dutch standard, molasses, coffee, tea, and hides; and that in the same section it was declared that these remissions of duty were made “with a view to secure reciprocal trade with the countries producing those articles.” It was also stated that, whenever the President should become satisfied that “reciprocal favors” were not granted to the products of the United States in the countries referred to, it was made his duty to impose upon the articles above enumerated the rates of duty set forth in the section above cited. In view of these facts, the Government of Brazil was invited to enter into a reciprocal arrangement, and the Secretary of State, in concluding his note, said:

In the happy event of an agreement between the two Governments, the same can be notified to each other and to the world by all official announcement simultaneously issued by the Executive Departments of the United States of America and the United States of Brazil; and such an agreement can remain in force so long as neither Government shall definitely inform the other of its intention and decision to consider it at an end.

The minister of Brazil, in his response of January 31, 1891, enumerated certain articles which the Government was prepared to admit either free, or at reduced rates of duty, and announced that he held himself ready to agree “upon a time when an official announcement of this legislation may be simultaneously issued by the executive departments of the two Governments with the understanding that the commercial arrangement thus put in operation shall remain in force so long as neither Government shall definitely, at least three months in advance, inform the other of its intention and decision to consider it at an end at the expiration of the time indicated; provided, however, that the termination of the commercial arrangement shall begin to take effect either on the 1st of January or on the 1st day of July.”

In a note of the same date the Secretary of State accepted the terms that were offered, but the arrangement did not go into effect till the 1st day of April, 1891, which was the date fixed in the act of Congress for the free admission of sugars into the United States.

It is manifest that the arrangement thus concluded rested wholly on legislation adopted by the United States of America and the United States of Brazil, respectively, and that the terms of this legislation were well known to the executive departments of both Governments, and were recognized by them as the basis of their action. So far, therefore, as the arrangement may have been considered as an international agreement, it was made subject to the terms of that legislation.

It is not suggested that the third section of the act of 1890 assumed to conifer on the Executive Departments of this Government any power [Page 81] to bind Congress in its future action as to the laying of duties and the raising of revenue. It merely provided that, on and after January 1, 1891, the President “whenever and so often” as he should be satisfied that countries exporting certain specified articles to the United States, imposed “duties or exactions upon the agricultural or other products of the United States,” which, in view of the free admission of the specified articles into the United States, he might deem to be “reciprocally unequal and unreasonable,” should “suspend” by proclamation the free entry of those articles, which should then become subject to certain fixed rates of duty. It is obvious that this act did not contemplate the creation of a condition of things which it would not be within the power of this Government, or any other government that might be affected at any time, to alter.

The Constitution of the United States, like the constitution of Brazil, points out the way in which treaties may be made and the faith of the nation duly pledged. In the United States treaties are made by the President, by and with the advice and consent of the Senate; in Brazil they are made by the President, subject to the approval of the Congress. Of such provisions in each other’s constitutions governments are assumed to take notice. “The municipal constitution of every particular state,” says Wheaton, “determines in whom resides the authority to ratify treaties negotiated and concluded with foreign powers, so as to render them obligatory upon the nation;” and it is, he declares, “consequently an implied condition in negotiating with foreign powers, that the treaties concluded by the executive government shall be subject to ratification in the manner prescribed by the fundamental laws of the state.” (Elements of International Law, Dana’s ed., pp. 337, 338.)

Of all subjects in relation to which the treaty-making power has been exercised, it may be said that there is none of greater importance, or of greater delicacy, than that of taxation. As the power to tax is an essential power of government, any attempt to contract or restrict it by the exercise of the treaty-making power has always been regarded in this country with jealousy, and in a few cases in which reciprocity treaties have been ratified and carried into effect by the United States, they have encountered criticism and opposition on that ground.

In view of these well-known principles of law and matters of fact, it can not be supposed that it was intended, by the simple exchange of notes on January 31, 1891, to bind our Governments as by a treaty, to certain duties or remissions of duty on the specified articles, beyond the time when the Congress of the United States might, in the exercise of its constitutional powers, repeal the legislation under which the arrangement was concluded. By the terms of that legislation the President, so long as it was enforced, was invested with power to suspend its provisions touching the free entry of the specified articles, under certain conditions the existence of which was to be determined by himself. It is to be assumed that the stipulation in the notes referred to, in relation to the termination of the arrangement with Brazil was made with reference to that power, and that it was intended by the Executive merely as a declaration of the manner in which he would, in the particular case, exercise the special power conferred upon him. No other effect, it is conceived, can reasonably be ascribed to the stipulation.

It is needless to say that this Government desires to cultivate with Brazil the most liberal and extensive commercial relations. Its disposition in this regard is sufficiently attested by its present tariff legislation, [Page 82] in which the great bulk of the articles exported by Brazil to the United States is on the free list. While our imports from Brazil, from 1890 to 1893, increased to the extent of nearly $17,000,000 in value, our exports to Brazil in 1893 show an increase of less than half a million dollars over those in 1890. These facts are not referred to in a spirit of complaint, but in the hope that our commercial relations with Brazil, while they may in no wise be affected by the termination of the reciprocity arrangement, may exhibit in the future a constant and mutual expansion.

Accept, etc.,

W. Q. Gresham.