to the development and progress of international commerce. Moreover, their application has led to a number of diplomatic controversies and has complicated the negotiation of the commercial treaties which the United States has desired to conclude in order to establish its commercial relations with foreign countries on a mutually satisfactory and permanent basis. During the negotiations of the Conference you will of course keep the Department closely advised of important developments, including the substance of any new proposals that may be seriously considered. The Department will endeavor promptly to instruct you in relation to such points as may develop. It may be that certain of the governments participating in the Conference will be disposed to extend in some directions the scope of the matters dealt with. As indicated above, the Department is of the opinion that in view of the declarations of the Economic Conference in relation to export duties, the scope of the Conference may be extended to deal with them. But the Department is inclined to the view that in principle it would not be advisable to extend the scope of the Conference in other directions for example in relation to questions affecting import duties and commercial treaties. Apart from the fact that certain inquiries pertaining to these matters are being conducted by the League of Nations pursuant to the conclusions of the Economic Conference, the Department believes that no useful purpose will be served by the injection of such controversial matters into the present Conference. The Conference is more likely to succeed if its objectives are definitely limited. Before signing an agreement you will of course report the full text to the Department for consideration. I am [etc.] 560.M2/37a : Telegram FRANK B. Kellogg The Secretary of State to the Chief of the American Delegation (Wilson) [Paraphrase] WASHINGTON, October 17, 1927—5 p. m. 1. Department's instruction No. 65, October 6, 1927. As presumably proposal will be made that scope of draft agreement be expanded to include topics mentioned in quotation from Economic Conference report, you are instructed further as follows: 1. In view of the detriment the American public has suffered through foreign export duties and other measures of a monopolistic nature, this Government would in principle favor addition of new article, toward end of Convention preferably, to be based on first paragraph of passage quoted from above report; article might take following form: 14 "Each contracting State agrees to refrain from employing export duties, quotas, or other measures applicable to exportation of goods in such manner as to defeat the application of the principles laid down in the present agreement and particularly in article 1 thereof." If, as we hope, the Conference adopts modification of article 5 along lines desired by the Department, then reference to "exceptional or imperative circumstances" in first paragraph of quotation from report would obviously not be necessary; refer to your instructions on article 5. Likewise, first sentence article 4 covers matter of health regulations. The words "applicable to exportation of goods" are believed to be necessary in order to rule out measures which are strictly internal. 2. The so-called raw materials question involves question of export duties. Complete information on the general subject will be found in documents left at the consulate by the delegation to the Economic Conference in relation to the limitation and monopolization of trade. Export duties have been and are being imposed in order to restrict exportation so as to bring about monopolistic prices; rubber control is a case in point. Of course, monopolistic measures may take some form besides export control, and then would be, naturally, quite beyond scope of present discussions. 3. The Department does not wish to have the controversial question of raw materials injected into the Conference if it would jeopard, as seems possible, the primary purpose of the Conference instead of resulting in a constructive step forward toward solution of raw materials problem. Department does not desire you to introduce immediately any proposal, but wishes you to observe carefully the tendencies in the Conference and to cable us your advice as promptly as is practicable. You may wish to sound out, discreetly, your French and Italian colleagues, as the French and Italian delegates to the Economic Conference were especially interested in subject of raw materials. Department will be glad to have you cable comment in regard to text of any proposal on this subject which has likelihood of being seriously pressed. You will then receive additional instructions as may be appropriate. 4. Suggestion has been made (for example, the view expressed by the British in correspondence with this Government on rubber restriction) 15 that export duties and import duties alike operate as restrictions upon freedom of commerce. As it is possible that sug gestion be made that insertion of clause quoted above is not consistent with proposed separate article on import duties discussed in Department's instruction No. 65, October 6, the Department calls attention to fact that, while export and import duties may have restrictive or even prohibitive effect, duties on exports may cut off supplies of particular commodities, raw materials in particular, which may be of vital necessity to foreign countries and which are not available elsewhere in sufficient quantities for their needs, while on the other hand the restriction of importation into a given market through duties on imports is rarely, if indeed it is ever, a vital matter to the country of origin, which still possesses alternative outlets. The material differences which exist between effects of import and export duties, as well as fact that latter appear to be much less firmly embedded in the economy of countries than import duties are, are thought sufficient to warrant their separate treatment. 5. It seems to Department that questions of free circulation of capital and of artificial control of exchange operations are outside scope of the present Conference. In Department's view it is preferable that these questions should not be made subject of seriously considered additional provisions, but if proposals of this nature are pressed, you will cable comment and recommendations. 6. Department of Commerce has approved these instructions. KELLOGG 560.M2/34: Telegram The Chief of the American Delegation (Wilson) to the Secretary of State GENEVA, October 17, 1927-7 p. m. [Received October 17-4:25 p. m.] 1. First session, morning. In view of cordial reference to presence of American delegation, I thanked the President (Colijn, Netherlands), expressed interest of my Government in finding solution of difficulties, and assured Conference of earnest cooperation of American delegation. Acknowledgement was also made by Egypt, only other nonmember state. Second session, afternoon, devoted to general statements bringing out especially on the part of Great Britain a warning against undue expectation of complete accomplishment of the entire task at this time. Smaller countries expressed general reserve awaiting action [of] neighbors and stronger states industrially. I made no statement. WILSON 560.M2/37: Telegram The Chief of the American Delegation (Wilson) to the Secretary of State GENEVA, October 18, 1927-10 p.m. 4. Third session, morning, general discussion continued. Roumanian delegation introduced following text either to be included in article 1 or as special declaration: "It is understood that the present agreement does not apply to export and import, each state reserving the right to determine its own customs tariffs." Since this is in some respects similar to your desires as outlined in criticism of article 1, contained in your 65, October 6th, I consulted Roumanian delegate after session, pointed out difficulty for us to urge acceptance of an article mentioning "export duties" and mentioned our desire to specify right to counteract dumping and bounties. Roumanian delegate suggested that if I would introduce, as substitute for his resolution, the following text he would immediately withdraw his and support ours. Text follows: "It is understood that the present agreement does not apply to customs tariffs, each state reserving the right to establish customs duties in accordance with its own necessities." Does Department feel that this text is sufficient for our needs? If so, it gives a convenient way to enter this question with full support of another nation. Urgent reply requested. Dutch delegation stated that if they surrender the right to impose restrictions, they would be giving up their only weapon against nations of excessive tariffs. Therefore, the cooperation of Dutch delegation in this convention could only be expected if the convention includes a declaration against excessive tariffs which constitute another handicap to free intercourse. Fourth session afternoon. President announced that he intended to form very small committees of rapporteurs. He had grouped the articles of similar nature into four groups and would form eventually four such committees as follows: Group 1. Articles 1, 6, 9 and 10. He added that there would be debate and explanation of amendments in plenary session; that all amendments would then be returned to small group for classifying and reporting back to the Con ference with recommendations. He then opened discussion on article 1. Amendments were proposed by Italian and British delegations both tending to emphasize reciprocal character of contractual obligations. Since document C.I.A.P.1, page 20, paragraph 2, assumes obligations could only be held to extend to contracting states, a principle corroborated in paragraph 1 of discussion article 6, on page 24, I offered no objection to this interpretation. Extended discussion followed as to rights of noncontracting states under mostfavored-nation clauses which was inconclusive. This I believe is not a question which can be settled by this Conference. Discussion of point 6 followed. Some doubts were cast by French and British delegations as to necessity for this article. I stated that we considered this article necessary and reserved the right to offer an amendment and explain it subsequently. Debate on article 9 was inconclusive and reverted to the previous discussion on rights of noncontracting states under most-favorednation clause, since certain states feared obligation to grant concessions to such noncontracting states. Great Britain made the only tangible proposal, namely, that the number of states in blank should be double the number of those holding permanent seats on the Council and states listed in appendix should be those holding permanent seats. I desire more time to shape views for recommendations on this subject. It may be advisable to await report of reviseurs before making recommendations. Article 10 was not specifically discussed. President announced that at plenary session tomorrow articles 2 and 3 will be taken up, adding that reviseurs would begin work in group 1 after morning plenary session. WILSON 560.M2/39: Telegram The Chief of the American Delegation (Wilson) to the Secretary of State GENEVA, October 19, 1927-2 p. m. 5. Fifth session, morning. I offered an amendment striking out word "third" in third line article 6 making brief statement embodying second paragraph your criticism, page 12, instruction 65, and pointing out that this amendment was in accord with interpretation contained page 24 document C.I.A.P.1. President then called for debate on second group (see my 4, October 18, 10 p. m., reporting fourth session), article 2, some discus |