Paris Peace Conf. 184.01102/266
Captain John Karmazin to Professor A. C. Coolidge63
Subject: Custom Tariff Bill for the Czecho-Slovak Republic.
As the whole system of laws of the former Austro-Hungarian monarchy were taken over and made effective (for the Czecho-Slovak Republic) the customs tariff of 1835 applies to their entire domain. All commercial treaties existing between the Entente powers and the Austro-Hungarian monarchy were abrogated during the war and hence the autonomous customs tariff of 1906 became effective. On the other hand all commercial treaties with neutral states and with the countries of the Quadruple Alliance remained effective. The Czecho- [Page 361] Slovak State became an ally of the Entente and therefore cannot give any greater advantages in customs duties to the neutral countries of the former Austro-Hungarian monarchy than to the allied countries of the Entente. Upon its very origin and union with the Entente the Czecho-Slovak State abrogated its treaty relations with the countries of the Quadruple Alliance. But even towards neutral countries it is impossible to preserve as effective the treaties of the former Austro-Hungarian monarchy if thereby there are not obtaining such advantages as accrue to the countries of the Entente. Because the Czechoslovak State as a new juridical entity cannot merely on its own part renew agreement[s] formerly negotiated between Austria-Hungary and the countries of the Entente, which were abrogated by the war, as pertains to all foreign countries subject to customs duties there remains but one position to be assumed namely, to place on the basis of the autonomous customs tariff of 1906 until such time when new commercial treaties can be negotiated with individual states. Because there might be a dispute as to what rates apply to various countries, the Committee on Finance has deemed it necessary to incorporate in the law a description of the frontiers of the state.
If the autonomous customs tariff of 1906 is to be effective as the basis for assessing duties at the frontiers it must be elastic. It is a requisite of the present moment that the government be in a position to apply this customs tariff for various economic and political purposes. In the first place in order that it can either reduce the amount of the duty or rebate it entirely on essential goods where the duty would increase the price to the common detriment. The economic interest must in such cases take precedence over the fiscal law. This principle enunciated in Section (3) of the bill was given precedence by the Committee on Finance over the regulations in Section (2) as being of greater general importance.
Section second (2) of the bill gives the government authority to use the customs duties for purposes of valuta. Through the payment of the duty the government desires to obtain foreign valuta, either here or abroad, and at the official rate in francs. By section (2nd) of the bill it is empowered that the tariff rates on certain classes of goods especially luxuries, stated in crowns, shall be deemed to have been fixed at a like amount of franc standard.
After the formal motion by Dr. Englis who had charge of the bill, the Committee on Finance modified it in the following respects.
- 1.
- The bill in general speaks of the franc standard. This might be taken to refer to the standard of the Latin Union in so far as its unit of value is called a franc in the individual states therefore in Switzerland and France. As long as there was in peace times in the various states of the Latin Union a gold standard, there was no difference between the French and the Swiss standards. But [Page 362] today it is otherwise. They have no common Franc standard, but only a French and a Swiss one, between which there is a considerable difference on exchange. Therefore it cannot be simply stated that the duty in a given case shall be paid in the franc standard, but it must be stated in which. For economic and political reasons it was decided to specify the French franc for this purpose.
- 2.
- The bill stipulates that the payer can pay either in gold or paper francs. The stipulation that it is elective to pay in gold francs is illusory so long as the gold franc will be at a premium over the silver franc.
- 3.
- The bill requires that for certain classes, of goods the duty shall be paid exclusively in francs and excludes the possibility of making payment in Czecho-Slovak stamped notes according to the current value of the franc on exchange. The Czecho-Slovak government has no interest in obtaining a greater income through the aforesaid customs duty but it is interested through this means in securing foreign circulating medium. They believe that this effort, however, might lead to an increased demand for francs, and of all foreign exchange at the present time francs are circulating in the Czecho-Slovak Republic in the smallest amount in comparison to other media. They further believe that the result of this would be the further increase in the price of the francs and the corresponding decrease in the value of the crown, which would increase the cost of the imported goods. However they believe that this effect would certainly be an unwelcome one when they consider that the purpose of Section (2) is solely intended for securing valuta. The Committee of Finance is therefore choosing a middle course. Though they have permitted the payment of franc duties in stamped crowns, such payment however will be at the current rate of exchange as fixed by the Minister of Finance, but who has the authority to fix this rate somewhat higher than that which rules in the open market. In this way they believe there will be an incentive to make payments in francs rather than in crowns and yet there is a means to limit the rise in value of the francs in the open market due to the demand for paying customs duties.
- 4.
- The Czecho-Slovak government bill takes measures only for the obtaining of francs. But the government may have an interest in securing other foreign media, and sometimes a much greater interest. Recognizing this contingency the Committee on Finance has permitted the payment of duties not only in Czecho-Slovak stamped crowns but in the media of other foreign states as well subject to a special order of the Minister of Finance and according to the official rate of exchange as established by him. This rate of exchange will regulate the inflow of the media of the various countries.
The Third paragraph of Section (2) has been restated by the Finance Committee in other words but its effect has not been altered. The title of the law has been changed and an enabling paragraph added.
In connection with the consideration of this law the Committee on Finance calls attention to the fact that today the real body charged with its enforcement is the Commission for export and import which not only regulates its application, but collects as a fee for entry permits for imports an ad valorem duty of ½% based on the value of the imported goods. And beside this a duty will be collected on the border in accordance with the autonomous custom tariff then in reality a double duty will be charged. Because the ad-valorem charge made for the entry permit is sufficient large, and it was recommended that rulings of the Export and Import Commission be brought into harmony with the enactments of this law. This request has been formulated in a special resolution designed [designated] by (J).
The attention of the Committee on Finance has been directed to the following. If the necessity should arise to reduce or to rebate the duty in cases involving the import of essential goods, that the analogy, the same course should apply to the collection of the fee collected by the Commission as this fee also increases the price of such goods, and this especially in reference to such goods needed for daily use by the masses, particularly food stuffs. This request has been formulated in a resolution designated by (II).
The Committee on Finance recommends:
- A.
- That the National Assembly pass this bill in the form adopted by the Committee on Finance and [give?] it its constitutional sanction.
- B.
- That the National Assembly adopt the following
resolutions:
- I.
- The government is requested to bring the administrative policy of the Commission on Export and Import into harmony with the enactments of this law.
- II.
- The government is requested to reduce the ad-valorem fee for import permits in cases involving the importation of goods essential for the daily use of the masses of the population, especially food-stuffs.
- Transmitted to the Commission by Professor Coolidge under covering letter No. 178, March 24; received March 26.↩