Part X.—Economic Clauses

Notes to Part X, Articles 264 to 312

Appealing to President Wilson’s speeches and the pre-armistice agreement, the German delegation demanded that the economic provisions of the treaty should be based on the principle of “the complete equality of Germany with other nations”. It was in the interest of the Allies to keep Germany solvent, especially as its strength had been greatly impaired by the illegal blockade ( Foreign Relations, The Paris Peace Conference, 1919, vi, 850). Germany therefore insisted on immediate admission to the League of Nations, with the economic rights and obligations set forth in the German league draft (p. 69) and proposed an unrestricted grant for a number of years of mutual most-favored-nation treatment instead of the one-sided rights attributed to the Allies in the draft treaty, together with special provisions for the territories to be transferred. In the present unsettled state of the world all nations should retain full freedom as to tariffs, which in Germany’s case would facilitate the payment of reparation. Questions as to the certificates of vessels, navigation, unfair competition, industrial, artistic, and literary property, and international railway traffic could be settled through the League of Nations or by an international conference. Germany agreed not to discriminate against Allied goods going by rail or vessel, but rejected interference with its own internal railway and commercial arrangements. Germany could not accept any obligation to surrender railway material to Poland because it had taken no railway material from Congress Poland.

The Allies replied that the pronouncements of President Wilson relative to equality of trade conditions applied to the permanent settlement of the world after the League of Nations had been fully constituted ( Foreign Relations, The Paris Peace Conference, 1919, vi, 972). The illegal acts of Germany had placed many of the Allied states in a position of economic inferiority, and therefore for a period of five years reciprocity had to be denied to Germany. In order, however, to enable Germany to establish such customs tariffs as it deemed necessary, the Allies had limited to six months the period for which Germany must maintain generally the most favorable rates of duty which were in force on July 31, 1914.

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The treaty restoring friendly relations between the United States and Germany signed at Berlin, August 25, 1921 and in force on November 11, 1921 with retroactive effect to July 2, 1921, stipulates that “Germany undertakes to accord to the United States and the United States shall have and enjoy … all the rights and advantages” stipulated for its benefit by this part of this treaty, “notwithstanding the fact that such treaty has not been ratified by the United States”. The rights and advantages of nationals of the United States specified in the joint resolution of Congress, approved July 2, 1921 (p. 18), were specifically mentioned in an understanding included in the Senate’s resolution of advice and consent to ratification of October 18, 1921. The Senate in that resolution made a further condition “that the United States shall not be represented or participate in any body, agency or commission, nor shall any person represent the United States as a member of any body, agency or commission in which the United States is authorized to participate by this Treaty, unless and until an Act of the Congress of the United States shall provide for such representation or participation”.

This part is, ipsissimis verbis, an annex, technically a schedule, of the treaty restoring friendly relations as printed by the Department of State in Treaty Series 658, but not as printed in 42 Stat. 1939.