Consul-General Mason to the Secretary of State.

[Extract.]

On February 22 the German Reichstag, by a vote of 228 to 81, adopted the treaty of commerce with Russia, the last of the seven similar treaties which the imperial chancellor has negotiated, since the enactment of the tariff law of December, 1902, with Italy, Belgium, Roumania, Switzerland, Servia, Austria-Hungary, and Russia, respectively. The conclusion and acceptance of these conventions is regarded as the most important governmental act of recent years, and marks an epoch in the history of German economic legislation.

There is transmitted as an exhibit with this report an unofficial but accurate, clear, and well-arranged compendium, prepared and published by the Central League of German Industrials for the information of its members, under the title of “The German Treaty Tariff.”a In this compilation is shown the new tariff taw of December 25, 1902, with each article of import in order as classified under that act, and the duty to which each article will be subject under that autonomous schedule unmodified by any treaty or other concession. In the next parallel column is shown the tariff rate on each article as it is modified for certain specified countries by one or more of the seven treaties which have just been adopted. In the final parallel column is shown the autonomous duty rate on each article under the old tariff of July 15, 1879, and, finally, the same rates as modified by treaties and concessions hitherto enacted and now in force. It is under this latter tariff, with its various modifications, that German import trade has been conducted during the past ten years, and will continue to be governed until the new tariff law, modified for certain countries by the treaties cited, shall come into effect—probably during the month of March, 1906. The reason for this year of further delay is that certain of the commercial treaties made under the Caprivi administration had a uniform duration of ten years, and could then be terminated at any time after a year’s notice, or “Kündigung,” from either party to the convention. Accordingly, it was deemed judicious to postpone such notice of termination until the seven pending treaties with the European countries named should be secure. This having been achieved, one year has still to elapse before the new treaties and the tariff act on which they are based will go into effect.

The publication of this compilation of the treaty tariffs enables one to see at a glance their effect on the import duties on goods coming into Germany from each of the seven treaty nations, the advantages which each thereby secures over the countries having no such special convention with Germany, and gives an easy and direct comparative exhibit between the rates under the new autonomous tariff schedule and the one now in force. It has been followed by meetings, discussions, protests, and predictions, in which the representatives of many diverse industries and interests have endeavored to foresee and portray the conditions under which their special form of business will be [Page 454] placed by the new schedule. Naturally the complainants, those who foresee danger, are much more voluble and eloquent than those who are satisfied with the new duties. Even the agrarians, in whose interest the whole schedule of rates on agricultural and food products was enacted, are still unsatisfied and regret that the minimum rates to which the grain duties might be reduced by treaty were not made higher. Manufacturers of machinery and many other forms of iron and steel are dismayed over the restrictions left on their trade by the treaty with Russia, in which country they have expected, with the return of peace, to find an important increase in the demand for their products. And throughout the whole of industrial Germany there is an apprehension lest the increased duties on cereals and other food products which will come in with the new tariff will either render living so costly and difficult that the efficiency of labor will be impaired or compel the payment of enhanced wages that will in effect increase the cost of manufactures to a point which will weaken Germany’s power of competition in foreign markets. How far these apprehensions are well founded, time and actual experience under the new schedule can alone determine.

At present it is not practicable within the limits of a report of this character to more than briefly summarize the more important changes which will be introduced by the new tariff and treaties and which will have a direct relation to German import trade from the United States in the event that after March, 1906, the advantages of the most-favored-nation clause shall be denied to our country and that meanwhile no reciprocal trade treaty or other convention affecting duties on imports shall be concluded between the United States and Germany.

some changes under the new tariff and treaties.

The following table will show in respect to forty-six of the principal articles of German import from America (1) the present maximum or autonomous duty as now paid under the tariff of 1879; (2) the same duties as now modified and reduced by existing treaty concessions; (3) the new autonomous duties that will go into effect next year, and (4) the amounts to which each of these rates of duty will be reduced on merchandise coming from certain of the seven European countries which have just concluded treaties of commerce with Germany. The figures show in all cases, unless otherwise specified, the amount in American currency of duty per double centner (100 kilograms or 220.4 pounds):

[Page 455]

Tariff duties of Germany: Maximum under present law, reductions by treaty, autonomous duties to go into effect in 1906, and reductions granted to certain European countries on forty-six articles of imports, expressed in American currency per 100 kilograms (220.4 pounds).

Merchandise. Present tariff (adopted in 1879). New tariff law of 1902 (to go into effect in 1906). Difference.
Maximum. Reduced by treaty. Autonomous. Reduced by treaty.
Wheat $1.19 $0.83 $1.78 $1.30 $0.58
Rye 1.19 .83 1.66 1.19 .47
Oats .95 .67 1.66 1.19 .47
Barley .53 .47 1.66 .95 .71
Corn .47 .38 1.19 .71 .48
Wheat flour 2.50 1.74 4.36 2.42 1.94
Malt .95 .85 2.44 1–37 1.07
Potatoes Free. Free. .59 1.24 (a)
Hops 4.76 3.38 16.66 4.76 11.90
Dried apples, pears, apricots, and peaches .95 .95 2.38 .95 1.43
Dried prunes 2.38 1.19 1.19
Fresh apples in barrels Free. Free. 2.38 1.19 1.19
Sausages 4.76 4.04 16.66 9.52 7.14
Lard 2.38 2.38 2.97 2.38 .59
Salted meats 4.76 4.04 10.71 8.33–9.25 2.38–1.46
Butter 4.76 3.80 7.14 4.76 2.38
Cheese 4.76 4.76 7.14 3.57–4.76 3.57–2.38
Eggs .71 .47 1.42 .71 .71
Margarine 4.76 3.80 7.14 4.76 2.38
Wood alcohol Free. Free. 4.76 Free. 4.76
Cows and oxen, per head 2.14 2.14 4.28 1.90 2.38
Horses, per head 4.76 4.76 21.42–85.68 7.14–28.56 14.28–57.12
Hogs, per head 1.42 1.19 4.28 2.14 2.14
Shoes, coarse 11.90 11.90 20.23 20.23
Shoes, medium 16.66 15.47 28.86 23.80 5.06
Shoes, fine 16.66 15.47 42.84 35.70 7.14
Lumber, rough 1.42 .47 .95
Lumber, dressed 2.38 2.38 2.38 2.38
Sewing machines 5.71 5.71 8.33 2.85 5.48
Sewing machines, power 5.71 5.71 4.76 1.90 2.86
Electrical machinery:
a. Under 500 “kilograms (1,102 pounds) per 100 kilograms 2.14 2.14
b. 500 to 3,000 kilograms (1,102 to 6,614 pounds) 1.66 1.42 .24
c. More than 3,000 kilograms 1.42 .95 .47
Machine tools:
a. 250 kilograms (551 Bounds or less), per 100 kilograms 4.76 2.85 1.91
b. 250 to 1,000 kilograms (551 to 2,205 pounds) 2.85 1.90 .95
c. 1,000 to 3,000 kilograms (2,205 to 6,614 pounds) 1.90 1.42 .48
d. 3,000 to 10,000 kilograms (6,614 to 22,046 pounds) 1.42 1.19 .23
Over 10,000 kilograms .97 .97
Telegraph instruments, telephones, electric lighting and power apparatus 14.28 b.95–9.52 (b) 1.67
Railway and street cars 2.38 .71 1.67
Motor cars and motor bicycles, each:
a. 50 kilograms (110 pounds) or less, each 35.70
b. 50 to 100 kilograms (110 to 220 pounds), each 28.56
c. 100 to 250 kilograms (220 to 550 pounds), each 21.42
d. 250 to 500 kilograms (550 to 1,110 pounds) 14.28 9.52 4.76
e. 500 to 1,000 kilograms (1,110 to 2,220 pounds) 9.52 5.95 3.57
f. 1,000 kilograms and over 4.76 3.57 1.19

some effects of the new rates.

It needs but a glance at this list to show how important will be the concessions granted to one or more of the seven treaty nations, and how formidable will be their competition in the German market against similar goods coming from countries which, for want of a reciprocal treaty or other convention, will be subject to the autonomous or unmodified tariff in exporting goods into Germany.

As an example of this may be cited the schedule relating to dried apples, pears, peaches, and apricots, on all of which there is at present a duty of 4 marks (95 cents) per 100 kilograms (220.4 pounds), and in all of which a very large and important import trade from the United States has been built up. Under the new autonomous schedule these [Page 456] goods will be dutiable at 10 marks ($2.38) per 100 kilograms (220.4 pounds), while imports from Italy, Roumania, Austria-Hungary, and Servia (the European countries which notably produce a surplus of these dried fruits), will come in under a uniform duty of 95 cents per double centner (220.4 pounds), an advantage of $1.43 in favor of the treaty favored product. Will the superior dried fruits of our Pacific States, with their long journey to Bremen and Hamburg, be able to stand this new competition?

Take fresh apples in barrels, of which there were imported into Germany from the United States 5,835 tons in 1902, 17,806 tons in 1903, and 14,924 tons in 1904, which, under the present tariff, are admitted free of duty. Under the new tariff all apples in barrels will be dutiable at 10 marks ($2.38) per 100 kilograms (220.4 pounds) except those coming from Italy, Belgium, Servia, Roumania, and Switzerland, the duty on which will be $1.19, or half that imposed by the autonomous tariff. Another important and very obvious feature of paragraph 47, which fixes the duty on such fresh fruits, provides that apples, pears, and quinces unpacked, that is, piled loosely in bulk or carried in bags, may be imported free from September 25 to November 25, and during the remainder of the year at the nominal duty of 2.50 marks (60 cents) per 100 kilos. This will enable the great cargoes of fruit that come by canal boat and rail from Austria, the Tyrol, Italy, and Switzerland to enjoy a decisive advantage over apples of American origin, which are now imported uniformly in barrels.

The decisive advantage of $2.85 per double centner (220.4 pounds) duty on sewing machines, as compared with the autonomous rate of $8.33, is granted only in the treaty with Switzerland, which ought thereby to find an important outlet for its surplus machines in Germany. The increased rate on shoes will have the effect of raising the import duty on an average stock of men’s, women’s, and children’s shoes to about 25 cents per pair, instead of about 14 cents under the present tariff. Importers of shoes from Italy, Switzerland, Belgium, and Austria-Hungary will have an advantage of $5.06 and $7.14 per 100 kilos (220.46 pounds) in medium and fine shoes, respectively, over importers of similar goods from the United States. This, however, is not a heavy handicap, and if the increase shall be shared by the American manufacturer and his German customers it ought not to be fatal to the continued sale of American shoes to Germany.

the question of reciprocity.

Under a treaty of commerce and navigation concluded between the United States Government and the King of Prussia on May 1, 1828, and proclaimed on March 14, 1829—which treaty was taken over and continued by the German Empire after its organization in 1870—imports from and to both countries have enjoyed hitherto the advantages of Article IX of that treaty, the so-called “most favored nation clause,” under which it was agreed that “if either party shall hereafter grant to any other nation any particular favor in navigation or commerce, it shall immediately become common to the other party,” etc. Under this long-standing agreement American wheat, corn, and other dutiable merchandise has come into Germany at the lowest rates [Page 457] of duty which had been granted by this country to Russia, Austria, or any other nation.

This was further supplemented by a commercial agreement concluded between the Governments of Germany and the United States under date of July 13, 1900, whereby the duties fixed by the Dingley tariff law of July 24, 1897, were specially modified in regard to certain articles of German origin, argols, brandies, still wines, vermuth, paintings, drawings, statuary, etc., when imported directly from this country to the United States. Under these conditions the reciprocal commerce between our country and Germany has developed to its present imposing proportions, the exports from Germany to the United States during the year 1904 having had a declared value of $106,909,600, while those to Germany from the United States amounted to $216,841,800. As a source of merchandise imported into Germany the United States leads all countries, the second on the list being Russia, with $184,116,800.

The all-important question which intimately concerns the future trade between the United States and Germany is whether the present amicable arrangement, namely, the most-favored-nation clause, which has withstood all mutations of tariff laws in both countries for nearly three-fourths of a century, will be allowed to stand under the new situation that will be created in Germany a year hence by the enforcement of the new tariff law and the commercial treaties which have been based upon it. Germany has a similar convention with Argentina, and one of the most absorbing issues now before the Bundesrath and the public is whether both these agreements shall be denounced and terminated with the life of the present tariff of 1879. On this question public opinion is sharply divided, and the discussion holds a leading place in the daily and periodical literature of the day.

On the one side are the agrarians, and in general, the high protectionists of all walks and professions, who insist that as Germany buys annually from the United States more than twice as much merchandise as our country buys from Germany, the present arrangement is, in view of the high duties imposed by the present Untied States tariff, unfair to Germany and unduly favorable to the United States. They therefore insist that the most-favored-nation privilege shall be withdrawn and the United States compelled to either make a new and comprehensive treaty of reciprocity with Germany or have its cereals, shoes, machinery, and other manufactured goods subject to the full duties of the new tariff. In that case American wheat and rye, for example, would pay each 47 cents per 100 kilograms (220.4 pounds) more duty than similar grains from Russia, Roumania, Austria-Hungary, and Servia.

On the other hand, the commercial and industrial classes generally, the manufacturers who appreciate the importance of cheap goods for their workingmen, and especially the great merchant steamship companies of Bremen and Hamburg, whose prosperity hangs upon their direct freight and passenger traffic with the United States—these, like most government officials and the majority of educated men in the various liberal professions, who appreciate the value of close and friendly relations between the two countries, are opposed to a drastic policy that might lead to reprisals and, moreover, increase the cost of bread.

[Page 458]

No one can read the elaborate discussion of this subject which is now going on in the German press without reaching the conclusion that what the best intelligence and statesmanship of Germany hopes for is that out of the pending situation may come a new, broad, and carefully drawn treaty of amity and commerce which shall promote a normal and increased reciprocal trade while conserving and protecting the true interests of both nations.

Frank H. Mason.
  1. The German treaty tariff is on file in the Bureau of Statistics, Department of Commerce and Labor, where it may be consulted by interested parties.
  2. Free from August 1 to February 14.
  3. According to weight.
  4. According to weight.