The Secretary of State to President Harding
My Dear Mr. President: The importance to the United States of establishing a satisfactory system of treaties of commerce and navigation already has come to your attention. With the new states established as a result of the Peace Conference as well as with former enemy countries, the United States has no treaties of commerce and navigation. The same situation exists with respect to Bulgaria, Greece, Rumania, Russia and Sweden in Europe, six of the ten countries of South America, five of the Central American countries, Canada, Newfoundland and Mexico in North America, and Australia, India, New Zealand and the Union of South Africa. Treaties of commerce and navigation are in force between the United States and about thirty countries. The treaty in force with Great Britain was concluded in 181588 and is therefore more than a hundred years old, the treaty in force with France was concluded in 1822,89 and the treaties with several other countries are nearly as old. These treaties as well as treaties of somewhat more recent date with other countries are unsatisfactory at the present time, both because they contain provisions which have become obsolete and because some problems which are of the highest importance in present day commerce were almost unknown at the time the old treaties were negotiated.
An important question which has arisen in connection with the conclusion of new treaties or the revision of old ones relates to the most favored nation clause as applied to commerce and navigation. The policy of the United States, as you readily will recall, to which there have been but few exceptions, since the foundation of the Government has been to stipulate for a conditional most favored nation clause, whereas an unconditional clause has been popular with European countries for the past sixty or more years. Under the conditional clause favors which either party to the treaty grant to a third country accrue to the other party to the treaty when the favor to the third country is granted freely, but do not accrue if [Page 128] the favor be granted for a consideration unless the other party to the treaty proffer an equivalent consideration: under the unconditional clause all favors granted by either party to third countries accrue to the other party irrespective of questions of consideration or equivalents.
There is an opinion among many that for the future the United States should adopt the unconditional form of most favored nation clause in its treaties of commerce and navigation. I have been giving considerable study to this question recently and a decision with respect to it is desirable in view of the importance to the United States of establishing a complete and insofar as possible consistent system of commercial treaties with other maritime countries.
I desire to bring to your attention a letter on the subject from Mr. W. S. Culbertson of the Tariff Commission and a letter from Senator Lodge with whom I have discussed the questions presented by Mr. Culbertson.