DIPLOMACY 131 



the cost of production and hoped soon to become masters 

 of the situation. 



The Convention put a stop to the Cartels by fixing 

 the surtax at a maximum of 2s. 6d. per cwt. This was 

 more than enough to keep out competition, and the 

 British delegates feared that a Cartel might be formed 

 to exploit even this reduced surtax ; but the situation 

 was critical, and it was better to accept the compromise. 

 Subsequent experience has shown that half that surtax 

 suffices to keep out competition. The large surtaxes, 

 therefore, can have had no other object than to enable 

 producers to raise prices in the home market. This is 

 why excessive surtaxes must always be regarded as a 

 form of State aid calculated to stimulate production 

 and exportation with the result of disturbing the natural 

 course of the world's industry and trade. There is 

 nothing to prevent the same system being applied to 

 iron, steel, cotton or woollen goods or any other article 

 of commerce. 



The details of the Convention were summarized by 

 the writer in the Economic Journal (Journal of the 

 Royal Economic Society) for March, 1904, from which 

 he makes the following brief extracts. 



The first Article of the Convention declares that the 

 contracting parties undertake to suppress direct and 

 indirect bounties on the production or exportation of 

 sugar, and proceeds to define, as follows, some instances 

 of the way in which such advantages may result from 

 State legislation. 



(a) Direct bounties granted to export. 



(b) Direct bounties granted to production. 



(c) Total or partial exemption from taxation granted 



for a part of the manufactured product. 



(d) Advantages derived from excess of yield. 



