The Ambassador in France (Edge) to the Secretary of State

No. 676

Sir: The latest incident in connection with the French protests and criticisms of the new tariff bill is a rather disquieting letter I received yesterday from M. Flandin, the French Minister of Commerce, in direct charge of tariff and customs matters. I am enclosing a copy and translation of his letter, together with a copy of my reply.

As M. Flandin indicates, and as I have already advised the Department in previous despatches, he has been very helpful in preventing actual legislative reprisals on the part of the French Parliament. He clearly suggests, however, in the letter enclosed, that if raises, particularly on laces, which furnished such an acute situation here, are contemplated by the Tariff Commission, he will be helpless in his efforts to prevent unfortunate results.

I am drawing this specially to the attention of the Department as I feel it is of such importance that some consideration should be given to this matter if a possible tariff war is to be prevented. It is only necessary to go back to the French motor tariff legislation to [Page 250] realize that if the lace schedule, for instance, should be raised above existing law, it would probably be a signal for retaliation all along the line. I am presenting the situation as it apparently exists on this side and have the honor [etc.]

Walter E. Edge
[Enclosure 1]

The French Minister of Commerce (Flandin) to the American Ambassador (Edge)

My Dear Ambassador: I read with surprise, in this morning’s “La Journée Industrielle,” the following news item dated Washington, July 1st:

“The Senate has voted Mr. Bingham’s resolution ordering the Tariff Commission to make an investigation into the cost of production in the United States and abroad of laces, various fabrics, etc.”

You know with what calm I set out to study the situation created for French economy by the publication of the new American customs tariff, nor are you unaware that I have encountered great difficulty in having my point of view shared in parliamentary circles: many representatives of agricultural and industrial circles demanded purely and simply that, as regards American imports, the general tariff be substituted for the minimum tariff.

If the item quoted above, destroying the happy effect of your recent efforts, should be confirmed, I fear I should not be able any longer to resist the pressure being brought to bear against me.

Knowing how much you yourself are endeavoring to reach a conciliatory solution, I wanted, my dear Ambassador, to inform you, in a strictly friendly and private way, of the unfortunate repercussion on French opinion of the decision of the Senate, and beg you to believe in my most friendly sentiments.

P. E. Flandin
[Enclosure 2]

The American Ambassador (Edge) to the French Minister of Commerce (Flandin)

My Dear Minister: I have your letter of July 2nd and hasten to reply thereto. At the outset, permit me again to emphasize the deep appreciation I feel for the generous and helpful cooperation you have given in your desire to alleviate criticism of the new tariff.

I am of the opinion that you are unnecessarily disturbed over the [Page 251] reported action of the United States Senate directing the Tariff Commission to investigate production costs of laces, cloths, etc. It is now very simple under the new law to obtain a cost of production investigation by the United States Tariff Commission, and it can be obtained by a request of the President, either House of Congress, or any interested party. As you, of course, understand, the Tariff Commission is charged with the responsibility of investigating production costs either for the purpose of raising or lowering duty to a maximum of 50% over or under existing rates. Therefore, it is impossible to prevent interested parties from asking the Commission to investigate tariffs that may be considered too low any more than to investigate tariffs that may be considered too high. The result of the Tariff Commission’s inquiry must be based upon the actual facts, irrespective of the wishes of the applicant.

The mere fact that Senator Bingham requested the Tariff Commission to make this investigation is evidence that the rates as passed were lower than some members of the Senate desired, thus demonstrating that real consideration has been given to the French protests against higher tariffs.

I had an informal conference yesterday with Ambassador Claudel at which time I renewed my assurances given you and others that I would gladly refer to the State Department requests for review by the Tariff Commission of the new rates on any commodities in which French exporters were particularly interested and where they believed the rates unjust. Of course, I must repeat that the result of such inquiries, whether the rates should be lowered, increased, or remain as specified, is entirely a matter which must be controlled by the facts adduced.

Both France and the United States have adopted a policy of protection. The tariff is supposed to represent a fair estimate of the difference between the cost of production in competing countries. If the Tariff Commission finds the duty is greater than the difference in cost, it naturally recommends a reduction in tariff. If, on the other hand, it finds the tariff insufficient to represent the difference in cost, it just as naturally recommends an increase. I am afraid speculation as to the final recommendation of the Tariff Commission would be resultless but I repeat that, based on the well known formula and policy of protection, the reorganized Tariff Commission is given increased authority over the old law to reach decisions fair and equable to both countries.

With further assurances of my desire to cooperate in every possible consistent manner, I beg to remain,

Sincerely yours,

Walter E. Edge