flattery the more potent by far for its hidden intent. "I am poor, Señora, therefore you who are rich and benevolent will help me with no further urging. I do not suggest the manner of your help, Señora, for you are all-wise, all-seeing. I kneel waiting, I smile toward you, confident." So it reads, being interpreted. And he lays softly before you his battered hat-crown down, to be sure, but what of that?-and his little canvas bag of broken rice.

And when you have given, is there the ungracious Occidental appraisement of your gift, or is there any touch of abasement, any travesty of unworthiness or exaggerated gratitude? No, of a surety. It is received with eyes that are raised to yours before they are lowered to your offering. The gentle "Gracias, Señora,"

and the silver sibilance of Spanish blessing, seem first for the giving, and afterward for the gift. A moment more, even, he kneels, that you may know he does not hasten from you, having taken bounty at your hands.

And then, as you watch him going gently down the dusty, sun-white road, you are somehow not quite sure which one it was that gave and which received in that little tableau staged so finely; not quite sure but that it well might profit you yourself, should you seek out some shrine of many steps, and there betake you, in all your Western ungraciousness and rhythmless haste, all your unleisure of heart and unfaith of spirit, to say with your little Eastern brother of the road, "Pobresoy muy pobre!"

M

UCH water has run under the bridge since August, 1914. Our thoughts have been swept from national into international currents.

In former years we as a nation moved too sluggishly in the great stream of foreign affairs. We regarded diplomacy as beyond the shores of our every-day life. It was for experts alone. Our commercial policy was at times haphazard and experimental. We seldom thought it through in the light of world politics. But now, when the world is full of change, it is natural to consider modifying our traditional position. We have come to see that our foreign policy may be of even greater importance than our domestic policy, for in defense of the former we may be called upon to give billions of dollars, our lives, and the lives of our sons. Under the dramatizing influences of war we have come to realize the need of publicity, education, and general interest in foreign affairs.

The Constitution of the United States makes secret diplomacy difficult, if not impossible. All treaties must be ratified by the Senate before they become effective.

The establishment of the United States Tariff Commission is not by any means unrelated to the problem of publicity in our foreign commercial policy. Both the text of the law creating the commission and the debates attending its enactment show that the elected representatives of the people may expect the commission to gather and supply facts upon which to rear a sound, democratic commercial policy. In introducing the bill to create the commission, Mr. Rainey, its author, reviewed some of the commercial results of the war and added, "We have here no board, no group of men devoting their time exclusively to the consideration of

these great world questions." Senator Simmons pointed out in detail the breadth of the power granted the commission in the field of foreign affairs: "tariff relations. between the United States and foreign countries"; "commercial treaties"; "preferential provisions"; and "conditions, causes, and effects relating to competition. of foreign industries with those of the United States." Senator Gallinger's amendment, giving the commission power to investigate "economic alliances," was adopted, and Senator Weeks's suggestion that the commission have power "to investigate the Paris Economy Pact and similar organizations in Europe" was subsequently adopted by the framers of the bill.

THE PARIS ECONOMY PACT

In September, 1916, when Congress enacted the law creating the Tariff Commission, the resolutions of the Paris Economic Conference were fresh in the public mind. In June of the same year the representatives of Great Britain, France, Italy, and Russia had met at Paris and embodied in the now famous resolutions a commercial policy which is worthy of analysis as one of the early products of the war.

The resolutions adopted at the conference propose an economic war during an indefinite period (called the "reconstruction period") following the peace conference. Most-favored-nation treatment was to be refused to the countries of present enemies; that is, these countries were to be discriminated against: but recognizing that discrimination is a sword which cuts both ways, compensatory outlets were to be given to any ally whose commerce was injured. In addition to this plan to restrict the markets of the Central powers, the Allies proposed to deprive German indus

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tries of raw materials by conserving for themselves "their natural resources" and establishing "special arrangements to facilitate the interchange of these resources." The commerce of the "enemy powers" was to be submitted to "special treatment," and their goods-let us not forget that this is to be after peace has been signedwere to be subjected "either to prohibitions or to a special régime of an effective character." "Special conditions" were also to be imposed on Teuton ships; more "navigation laws," we may suppose. As if these restrictions were not enough to remind us of the fiercest days of trade conflict in former centuries, we have revived the practice of excluding foreigners from all retail trade in the medieval town; the subjects of the Central powers were to be prevented from exercising in the countries of the Allies "industries or professions which concern national defense or economic independence."

As

This economic alliance was not, according to the resolutions, to be temporary. In the spirit of exclusive nationalism the Allies decided "to take the necessary steps without delay to render themselves independent of enemy countries in so far as regards raw materials and manufactured articles essential to the normal development of their economic activities." This self-sufficiency was to be achieved by subsidies, enterprises controlled by government, scientific and technical research, customs duties, and "prohibitions of a temporary or permanent character."

The Paris resolutions proclaimed Germany a people with whom the Allies. would have no dealings. But what kind of peace can that be in which the Allies are grouped in one economic camp and their enemies in another?

MITTEL-EUROPA

The union of Central Europe presents a more comprehensive proposal for a trade war after the war than do the Paris resolutions. There exists in this grouping of Germany, Austria-Hungary, Bulgaria, Turkey, and captured territory under the

control of Prussia, made effective by preferential customs duties, loans, transportation control, and all the other subtle means of economic penetration, an alliance organizing all of the worst features of combative nationalism. Given an opportunity, this greater Prussia will be as unscrupulous and as ruthless in its use of discriminations, prohibitions, and boycotts as it has been in its military operations. "Middle Europe," as conceived by the Pan-Germans, is an actual fact, made doubly dangerous by the breaking up of Russia, and it to-day menaces the peace of the future world. If it is permitted to remain, dominated by the brutal military power of Prussia, the world can not expect a durable peace.

A VOICE FROM THE PAST

In a time like the present, when all relations of men and nations have been thrown into the melting-pot of war, the experiences of the past are frequently a valuable warning as to what to avoid, as well as a safe guide to the next step forward. When men began to seek a way out of the chaos of the Middle Ages, progress centered about towns or city states. Despite their narrowly exclusive policies, -their market dues, their tolls, their selfish attitude toward foreigners, their conflict with the surrounding country, these were an advance in both political and economic life over the decaying feudal society about them. Town life was a stimulus to freedom. Only when economic needs outgrew the narrow confines of the towns did their policies become obstacles in the way of development. On the continent of Europe the district under the rule of a prince began gradually to construct for the larger area a political and economic system such as the town had had in its sphere. Its authority became the arbiter between town and town and town and country. Within its confines it made trade freer, unified currency, and modified the local restrictions on industry. But while it was transforming and unifying its life at the expense of the towns, it

was erecting barriers against the outside. world, and adopting against other districts the restrictions which it had condemned in the towns.

The nation in its turn became the enemy of local exclusiveness within its borders and the champion of its people against rival peoples. The seventeenth and eighteenth centuries are famous for their nation-making. Cromwell, Colbert, and Frederick the Great were the constructive statesmen of the era. Here again the large unit of society became the unifier and transformer of the political and economic life of the people. Town restrictions and state boundaries, as in the case of the American colonies, became intolerable in an age when transportation was developing and trade was seeking wider fields. Around the nation centered the great forces of race unity, literature, language, political ideals, and national customs.

The nation, like the medieval town, has been an important factor in the upward movement of the world's life. Although we may condemn some of its policies and practices, we are not warranted in condemning a political and social organization which has made possible so much that is noble in civilization.

But the nations of the seventeenth and eighteenth centuries followed, as the cities had done before, policies of exclusion against other nations. They enacted navigation laws to destroy the shipping prestige of their rivals, they prohibited certain imports, they prohibited the export of raw materials in order to encourage production and export trade, they granted bounties on export trade, they subsidized shipping, they monopolized coastwise and colonial trade, and they exaggerated the importance of foreign markets.

Nor have nations ceased to resort to these practices, almost every one of which can be amply illustrated from modern life. Exclusive, combative, national policies have, unfortunately, not been left to rest in the records of other days. Trade wars, still resorted to, have again proved futile. Prohibitions, retaliatory duties, and boycotts have reacted with fatal effect on the

markets of their authors. The more highly industrialized a nation, the more it suffers from them.

Let us be concrete. In 1888, France and Italy engaged in a trade war. For two years each country applied retaliatory duties against the other, and then for eight years further each country applied its maximum duties to imports from the other. Both suffered seriously. By the end of the decade Italian imports to France had declined fifty-seven per cent., and French exports to Italy showed a decrease of fully fifty per cent.

More serious was the trade war between France and Switzerland in the early nineties. This war lasted for two and a half years. France applied to Swiss goods her maximum rates, which were approximately forty per cent. higher than her minimum rates. Switzerland in turn applied to French goods punitive duties. ranging upward to one hundred and fifty per cent. The Swiss also, by changes in railway rates, assisted in diverting their Marseilles business to Genoa, their Havre and Dunkirk trade to Antwerp and Rotterdam, and the whole of their transatlantic silk trade to England via Belgium and Holland. In addition, they canceled their literary convention with France, which meant not only a serious financial loss to her, but the diminishing of French cultural influence, to the advantage of German thought and literature.

France's losses in this trade war were heavy. The diversion of Swiss commerce to other countries lost to her millions of francs in railway receipts, ocean freight, and commissions. Austria, Italy, and the United States gained at her expense in the sugar trade; Spain in the wine trade; Italy in the silk trade; Germany and Belgium in metal goods; and the United States in leather. Germany received half of the trade lost by France in ready-made clothing and one third of that lost in woolen goods. Not until seven years after the close of the trade war did French exports to Switzerland equal again the exports of the normal years before the trade war.

Russia and Germany engaged in 189394 in a brief, but costly, tariff war. Russia's attitude had been hostile to German commercial interests. In 1893 she framed a double tariff, the minimum rates to be granted in return for most-favored-nation treatment, the maximum rates to be used for punitive purposes. Negotiations with Germany failed, and the punitive rates went into effect. Germany retaliated. Russia raised her tariff rates still higher, and increased by twenty-fold her harbor dues on German shipping. Germany was quick to see the danger of the situation. Her industrial interests feared the result of the most-favored-nation treatment enjoyed by French goods. Russia, furthermore, was able to avoid much of the force of the German rates by shipping her grain to Austria-Hungary. After a few months of this warfare an agreement was reached, but not until both countries had suffered.

Germany again resorted to a tariff war in and after 1897, when Canada granted English goods preferential treatment in her markets. She claimed to be entitled, under her treaties with Great Britain, to the Canadian reduced rates. Germany wished, in addition to gaining the specific advantage of lower rates in Canadian. markets, to defeat this important step toward British imperial preference. She applied her general tariff to Canadian. goods, and after several years of negotiation Canada applied a surtax on German goods. Germany's losses in the trade war were greater than Canada's. Her exports to Canada fell off fifty per cent., and her goods were replaced by English and American goods.

fare after peace is declared that they become dangerous. The very conception of such plans has made it clear that the military struggle must go on to a point where all major problems can be settled at the peace conference. They constitute a warning against an inconclusive peace. They lead to the conviction that a permanent peace can be achieved only after a decision in the field. If we can look forward only to a bitter trade conflict after hostilities cease, with the Allies on one side and the Central empires on the other, we may expect that conflict to culminate in a second world war.

THE IDEA OF "LETTING THINGS ALONE"

Some who agree that boycotts, prohibitions, discriminations, and trade wars are bad policy assert that the way out is for nations to adopt the system of "natural liberty" preached by Adam Smith, Jeremy Bentham, and their followers. They say, "Let commerce take its natural course, remove restrictions, adopt free trade, let competition have free play, and let governments keep their hands off-laissezfaire."

These ideas have been wholesome as a protest against authority and regulation. Many times have they served effectively against outworn institutions; often have they afforded a standard by which to measure cause and effect in economic life. It is when they have been urged as a positive policy that they have frequently misled. The most woeful failure of this practice. of laissez-faire has been, perhaps, in industry, where persons, pleading their divine right to run their own affairs, have established a system of exploitation under which society is still struggling.

Unfortunately, the problems of commercial policy are not so simple as they appear to those who regard free trade as a "harbinger of a Utopia." International problems cannot be solved by a single formula. Equality of treatment of nations in different stages of development does not necessarily result in equality and fairness; it may even result in most vicious