ships by Finland, and stated that in view of the very favorable treatment granted by the United States to Finnish imports, which are largely admitted into the United States free of duty (as in the case of wood pulp, hides and skins) it was obviously unreasonable that Finland should discriminate against the United States. The Minister stated he believed his Government would welcome such an arrangement, but that it would have to be considered by a Committee in Helsingfors and that because that Committee was probably dispersed during the summer and because the Minister for Foreign Affairs was absent there might be some delay. He stated that he would urge early action but that he desired to study the note for two or three days before making detailed recommendations to his government.

(3) In handing the Minister draft note I stated that Department would cable the text to you to hand to the Finnish Government. Please hand a copy as soon as possible to the Minister for Foreign Affairs and endeavor to expedite favorable action so that Minister in Washington may be authorized to enter into the proposed exchange as soon as possible. Please telegraph important developments.

611.60 d 31/24

Memorandum by the Under Secretary of State (Grew)

GREW

[WASHINGTON,] October 30, 1924. The Finnish Minister left with me today the appended revised draft as a counter proposal of the Finnish Government for an exchange of notes to establish a modus vivendi for reciprocal mostfavored-nation treatment. I said that we would study the matter and, if necessary, would request him to come again to the Department to explain any points in the revised draft which might not be clear. With respect to the consular provisions, the Minister said that these had been incorporated in the draft as they would tend to commend the document to Parliament which, without them, might not favor the proposed procedure.

[Enclosure]

J. C. G[REW]

Revised Draft for an Exchange of Notes Between the Finnish and American Governments

SIR: I have the honor to make the following statement of my understanding of the agreement reached through recent conversations held at Washington on behalf of the Government of the United States and the Government of Finland with reference to the treatment which the United States shall accord to the commerce, navigation, citizens, corporations and Consuls General, Consuls, Vice Con

suls and Consular Agents of Finland and which Finland shall accord to the commerce, navigation, citizens, corporations and Consuls General, Consuls, Vice Consuls and Consular Agents of the United States.

These conversations have disclosed a mutual understanding between the two Governments which is that in respect to import and export duties, light, harbor, port and tonnage dues and all other charges affecting commerce and navigation, as well as in respect to transit, warehousing and other facilities, and the treatment of commercial travelers' samples, and in respect of any taxes, imposts or charges of whatever denomination, the United States will accord to Finland, and Finland will accord to the United States, its territories and possessions, unconditional most-favored-nation treatment; and that in the matter of licensing or prohibitions of imports or exports, each country, so far as it at any time maintains such a system, will accord to the commerce of the other treatment as favorable, with respect to commodities, valuations and quantities, as may be accorded to the commerce of any other country.

It is understood that

No higher or other duties shall in any case, be imposed on the importation into or disposition in the United States, its territories or possessions, of any articles the produce or manufacture of Finland than are or shall be payable on like articles the produce or manufacture of any foreign country;

No higher or other duties shall, in any case, be imposed on the importation into or disposition in Finland of any articles the produce or manufacture of the United States, its territories or possessions, than are or shall be payable on like articles the produce or manufacture of any foreign country;

Similarly, no higher or other duties shall be imposed in the United States, its territories or possessions, or in Finland, on the exportation of any articles to the other or to any territory or possession of the other, than are payable on the exportation of like articles to any foreign country;

The citizens and corporations of the United States, its territories and colonies, shall be accorded in Finland, and the citizens and corporations of Finland, shall be accorded in the United States, its territories and colonies in every respect a treatment not less favorable than that which is accorded to the citizens and corporations of the most favored nation.

The Consuls General, Consuls, Vice Consuls and Consular Agents of the United States and Finland, in the territories and colonies of the other, shall enjoy all of the rights, privileges, liberties, favors, exemptions and immunities that are enjoyed by consular officers of the same rank and quality of the most favored nation.

Every concession with respect to any duty, charge or regulation affecting commerce and navigation, or treatment of citizens and corporations, or concerning the rights and privileges of Consuls General, Consuls, Vice Consuls and Consular Agents now accorded, or that may hereafter be accorded by the United States or by Finland, by law, proclamation, decree or commercial treaty or agreement, to any third country will become immediately applicable without request and without compensation to the commerce, navigation, or treatment of citizens and corporations, or concerning the rights and privileges of Consuls General, Consuls, Vice Consuls and Consular Agents of Finland and of the United States and its territories and possessions, respectively:

Provided that this understanding does not relate to

(1) The treatment which the United States accords or may hereafter accord to the commerce of Cuba or any of the territories or possessions of the United States or the Panama Canal Zone, or to the treatment which is or may hereafter be accorded to the commerce of the United States with any of its territories or possessions or to the commerce of its territories or possessions with one another.

(2) The treatment which Finland actually accords or may hereafter accord to Esthonia; the treatment in regard to the employment of pilots which Finland actually accords or may hereafter accord to Sweden in respect to navigation north of 59 degrees north latitude; the treatment which Finland actually accords or may hereafter accord to Russia in regard to fishing and sealing in the Arctic waters of Finland; nor the treatment which Finland accords to France in Article 6 of the Treaty of Commerce concluded between Finland and France July 13, 1921.

(3) Prohibitions or restrictions of a sanitary character or designed to protect human, animal or plant life.

It is understood that the present arrangement, with the exception of the stipulations concerning customs duties and navigation, shall not become operative until both parties have notified each other that the necessary legislative measures have been carried out, but that the stipulations concerning customs duties and navigation shall be applied after the expiration of thirty days from the day I shall have received your confirmation of this arrangement. The arrangement shall, thereupon, be in force until the ordinary Treaty of commerce, navigation and consular representation to be concluded, shall have come into force, unless, prior to that time, either contracting party shall have given notice of its intention to terminate the same, in which case this arrangement shall cease to be in force three months after the notice of termination.

I shall be glad to have your confirmation of the accord thus reached. Accept, Sir, etc.

'League of Nations, Treaty Series, vol. xxix, p. 445.

The draft for an exchange of notes between the United States and Finland, which was handed to the Minister of Finland by the Under Secretary of State on July 31, 1924, related only to the treatment of commerce. By the counter-draft presented to the Under Secretary of State by the Minister of Finland on October 30, 1924, the scope of the modus vivendi, as is indicated by the language of the preamble, would be enlarged so as to provide also for the treatment to be accorded to "navigation, citizens, corporations and consuls general, consuls, vice-consuls and consular agents". The counter-draft provides in its twelfth paragraph that the stipulations concerning customs duties and navigation shall be brought into effect thirty days after the exchange of notes shall have been made, and that with the exception of these stipulations the arrangement shall become operative after each party shall have notified the other that the necessary legislative measures have been brought into effect.

Specific stipulations in regard to the subjects which the Government of Finland proposes to add to the arrangement are introduced throughout the counter-draft. With most of these proposals the Government of the United States is sympathetic and it will be glad to consider them when negotiations for a general treaty of friendship, commerce and consular rights are resumed between the United States and Finland. The United States is constrained, however, to request that, in the proposed modus vivendi, Finland will not insist on them. It is the hope of the United States that the proposed modus vivendi may become operative at an early date, but that it will within a short time give place to a long-term general treaty.

The particulars in which the counter-draft differs from the draft submitted to the Minister of Finland by the Under Secretary of State may be considered in order as follows:

The Government of Finland proposes to apply the stipulation in the second paragraph for unconditional most-favored-nation treatment to navigation and to "taxes, imposts or charges of whatever denomination", as well as to commerce, to transit, warehousing and other facilities, commercial travelers' samples and the licensing and prohibition of importations and exportations.

"This paper bears the annotation: "Original handed to the Minister of Finland, March 17, 1925, by Mr. Evan Young, Chief of the Division of Eastern European Affairs. W[allace] Mc[Clure]."

See telegram No. 16, Aug. 1, 1924, to the Minister in Finland, p. 86. T Supra.

The United States prefers that the treatment to be accorded its vessels in ports of Finland and that to be accorded Finnish vessels in ports of the United States should be on the basis of national rather than most-favored-nation treatment. Under the laws of the United States certain charges on navigation, known as alien tonnage taxes and light money, which do not apply to vessels of the United States are chargeable on vessels of foreign countries. By stipulations of treaties, vessels of many maritime countries have been placed on an equality with vessels of the United States with respect to these charges. Apart from an agreement by treaty, the President is empowered by Act of Congress to suspend and discontinue by proclamation the collection of alien tonnage taxes and light money on the vessels of foreign countries, and also the collection of discriminating duties on goods imported in vessels of such countries, when he has received satisfactory proof from foreign governments that no discriminating duties of tonnage or imposts are levied in their ports on the vessels of the United States or on the goods imported in them. The method prescribed by the Act of Congress is considered as exclusive of all other methods for the suspending of alien navigation charges except stipulation by treaty. The Government of the United States is, therefore, not in a position to accord by exchange of notes national treatment to Finnish vessels in ports of the United States. It is ready, however, to recommend to the President the issuance of his proclamation according national treatment to Finnish vessels in ports of the United States upon the receipt of formal assurances from the Government of Finland that the discriminating charges against vessels of the United States in ports of Finland have been discontinued and that no discriminating tonnage or import dues are imposed or levied on American ships or their cargoes in the ports of Finland. A copy of a proclamation which the President issued in regard to the vessels of Germany is enclosed.8

In reference to internal taxation it is necessary to mention that in the United States both the Federal Government and the State Governments have the power to levy taxes. It is within the power of both Federal and State Governments to levy discriminating taxes upon aliens. By a treaty, which under a provision of the Constitution is the supreme law of the land, the United States may and does assure to the nationals of other countries the same treatment in respect to taxation in the United States as is enjoyed by nationals of the United States or by nationals of the most favored nation. Such an assurance could not well be given by the United States otherwise than by treaty. The provision in the counter-draft that stipulations in regard to taxation will remain inoperative until appropriate legislation is passed

"Not printed.