Mr. Hay to Mr. Pioda.
Washington , November 21, 1898 .
Sir: Your communication to this Department under date of the 26th of September, 1898, was duly received and has been carefully considered.
Your note of the 29th of June, 1898, claimed for Swiss products, without compensatory concessions, the benefit of the concessions recently made by the United States to France in return for specific compensations granted by France. My predecessor found himself unable to accept the construction of the most-favored-nation clauses of the treaty of 1850 between the United States and Switzerland which your Government had presented in the note referred to. In his response under date of July 29 he maintained that construction which had been uniformly given to such clauses by the Government of the United States for nearly a century, namely, that they were intended to constitute a mutual security against gratuitous preferences which might from various motives of policy be given to the commerce of another nation and were never intended as a surrender of the right of either nation to independently adjust the interests of its special commerce with any other country by special and mutually compensatory contract.
In this view I am forced to concur, not only by the language of the treaty, which does not deny that right, but by long-continued precedents affirming that construction. Article X of the treaty in question expressly refers to the granting of “any favor in commerce.” That which is obtained only for an adequate price is in no proper sense “a favor.” It is a purchase, a relation of buying and selling, however important may be the mutual advantage of the transaction. The plain object of the clauses in question is to secure equality of treatment, not superiority over all others by exceptional treatment.
In 1817, when a similar question arose upon a claim made upon this Government by France, John Quincy Adams, one of the masters of international law, then Secretary of State and afterwards President, declared in respect of the French claim, that “the most-favored-nation clause only covered gratuitous favors, and did not touch concessions for equivalents.” President Monroe, in his message to Congress of [Page 747] 1821, reaffirmed this view, saying: “If this should be so construed as that France should enjoy, of right and without paying the equivalent, all the advantages of such conditions as might be allowed to other powers in return for important concessions made by them, then the whole character of the stipulations would be changed. She would not only be placed on the footing of the most favored nation, but on a footing held by no other nation.”
In succeeding Administrations of this Government down to the present time the like rulings have been declared and made public. They have also been affirmed by the Executive Department of Justice. It is also to be noted that in 1887 the highest tribunal of this country, the Supreme Court of the United States, upon an appeal to it by claimants under the treaty with Denmark, gave judgment according to this interpretation of the most-favored-nation clause.
Having in view this unbroken line of precedents from an early period in the history of the United States, and the publicity of the record, we might be permitted to suppose that all nations having like commercial conventions with the United States must be aware of the meaning which has been uniformly attributed to these clauses by this Government. This construction is quite as much for the advantage of other contracting governments as it is to the United States. It is established upon considerations of reason and justice, and upon the recognized national need of freedom in adapting international contracts to the differing conditions of international trade with different countries. Manifestly, Switzerland has the most-favored-nation treatment so long as she may have the same privileges on terms equivalent to those granted to the other country.
The second ground of reclamation by the Swiss Government is stated as follows in your note of the 26th of September:
It is not, furthermore, only the text of the treaty which speaks in favor of the claim raised, but also the declared wish of the plenipotentiary of the United States of America who was charged with the negotiations.
In support of this statement you inclose a copy of the message of the Federal Council to the Federal Assembly, accompanying the treaty of 1850 when referred to them for approval.
This message represents that the American plenipotentiary who conducted the negotiations in effect agreed to that interpretation of the treaty for which the Swiss Government now contends, and signified it by withdrawing a stipulation from the projet which would have been inconsistent with, such interpretation. It further appears that the Swiss Government ratified the treaty under the distinct representation that its construction was the same that it now claims.
In order to ascertain if the convention was also ratified by the Government of the United States under circumstances which necessarily implied a knowledge of that understanding, an examination has been made of the original correspondence of the American negotiator with his Government, and of its connection with its ratification.
As the result of this investigation, it appears that the Executive department was advised by its plenipotentiary of the alleged understanding, that the dispatch indicating it was communicated by the President to the Senate in connection with the treaty submitted for ratification, and that the treaty was ratified without amendment of the clauses in question.[Page 748]
Under these circumstances we believe it to be our duty to acknowledge the equity of the reclamation presented by your Government. Both justice and honor require that the common understanding of the high contracting parties at the time of the executing of the treaty should be carried into effect.
It is also my duty to advise you that the foregoing recognition of the equity of the claim of your Government compels us at the same time to regard the Articles VIII, IX, X, XI, XII, of the treaty as henceforth constituting an exception to the otherwise uniform policy of the United States. This policy has been to treat the commerce of all friendly nations with equal fairness, giving exceptional “favors” to none. Should this Government continue to give to Swiss products gratuitously all advantages which other countries only acquire for an equivalent compensation, it would expose itself to the just reproaches of other Governments for its exceptional favoritism. We desire that our friendly international policy should be maintained in its uniform application to all our commercial relations.
It may, therefore, be necessary, in case the Governments of the United States and of Switzerland should not be able to agree upon some practicable arrangement of the matter in question, that the President should communicate to your Government notice of his intention to arrest the operation of the treaty of 1850, or of the clauses of said treaty numbered from VIII to XII.