Treaty of Mutual Friendship (1897)

The Treaty of Mutual Friendship (口冘椑阿相好盟約, Kow-lom-be-'ar-sjang-hu-mrjang-'jawk) is a treaty signed by the Organized States and Themiclesia mainly over commercial relationships. Themiclesia's recent devastation due to a flood and subsequent epidemic in its industrialized regions created an immediate need for capital, which the country lacked and sought to raise by providing more favourable terms to foreign investors. The treaty came into force in 1898 and was modified by the Treaty of Mutual Friendship (1920) and again the Treaty of Mutual Friendship (1928).

The Themiclesian government intended not only for the treaty to bring short-term relief in the form of capital, but also to seek increased volume of commerce with the Organized States and by extention a closer diplomatic relationship. Moreover, the government hoped that land grant would promote industrialization in more remote areas and condition a more mature and expert workforce. The treaty was subject to criticism by some commentators, who thought terms were too lenient to the Organized States; however, supporters have cited the net-positive industrial output that they link to Columbian capital directly.

Flood and epidemic

In 1894, the Ga river delta in Themiclesia was the site of a considerable portion of Themiclesia's manufacturing industries. The Ga breached its banks on Aug. 20th, 1894, and the flood water immediately killed 1,352 and destroyed more than 20,000 houses. The silt carried by the water also contained cholera pathogens, which spread very quickly in the aftermath of the flood. By mid-1895, over 22,350 had died to the epidemic, most of them factory workers and their families. Fearful of the disease, many more fled the area, and a large number of businesses defaulted as a consequence. This triggered a chain of insolvencies amongst creditors and insurers in 1896, and that year Themiclesia's industrial output decreased more than 25%. The failures of financial institutions also created a scarcity of available credit that the government detected as reduced registration in businesses.

The effects of the flood were also felt in the rural areas. Primary-sector goods that were bound for processing in the industrialized coastal regions were in diminished demand, which caused a depression in the countryside. A significant portion of land in the countryside was owned by the gentry, whose income were adversely affected by the events in the Ga river delta. Their voice played an important role in motivating the government to adopt measures in response to the crisis.

Treaty negotiations

The foreign minister at the time, Kaw, set his sights abroad for the imminently-needed infusion of capital and began studying options for inviting foreign investors and industries to appear in Themiclesia. He considered the Organized States the natural source for capital, since its economy was expanding; furthermore, Kaw also propounded that the Organized States should be allied with his country. As much as he hoped that the OS economy would actively seek targets abroad in which to invest, he was concerned that funds may not be as forthcoming in the short term as the desperate situation demanded.

He therefore sailed to the OS in early 1897 and met the president and his cabinet to discuss plans to involve the OS government in goading their businesses to invest in Themiclesia. As commercial interests were highly influential in the OS government at the time, they were able to outline the preferences of OS investors to Kaw quite clearly. Due to existing commercial relationships, the adjustments required were not extensive in scope or scale. After some brief negotiations in the Themiclesian government, a consensus surfaced between the two parties, and the treaty was signed in September, 1897.

Treaty terms

The Themiclesian government provided land and access to businesses that the president of the OS "recommended", which generated much attention in the OS. The government also waived taxes on industrial output entirely. While the treaty was silent on the matter of local labour, many local magistrates in Themiclesia welcomed foreign investment, as it meant commercial importance and increase in local revenues; they therefore, in the treaty's operation, quite enthusiastically emboldened locals to take up employment in OS-owned businesses. The treaty stipulated that the OS was to send a limited number of managers and staff, so as to create maximal employment for Themiclesians, especially in managerial and technical positions. The treaty also prohibited OS businesses from entering into contracts that would be "illegal in the OS, or any of them".

In relation to the government, Themiclesia permitted the Organized States to send one soldier for every ten Themiclesians employed by an OS-owned business, for the "purpose of maintenance of local security". The treaty officially banned said soldiers from departing from the site of the industries to which they were assigned, though this, in practice, was rarely enforced. The immediate vicinity of these new industries were also given limited extrateritorial prerogatives, such as settlement of civil disputes under OS common law. Technically, Themiclesia also had the right to expel any Columbian soldier that misbehaved, as long as he was pardoned; this right has never been exercised directly, though several soldiers were indeed recalled at the government's behest.

Effects and response

In the first year of its effect, the president of the OS recommended over 1,000 businesses to Themiclesia, and the amount of capital and employment they brought was considerable. After the trough of 1895~96, the Themiclesian economy showed signs of recovery in 1899. Census figures were not collected on commercial operations until the 1910s, so precise analyses of early-wave investments are not possible; however, historical economist A. R. Brown has said, "these investments were both timely and opportune." Columbian investments accounted for an increasing portion of capital invested throughout the 1900s and 1910s, which further fueled the industrialization of the Themiclesian economy. In 1920, over 60% of Themiclesians were working in factories or industrialized agriculture, compared to 15% in 1870.

As the treaty did give the Themclesian government the power to choose where these businesses could set up their production facilities, on the condition that reasonable transportation be present, the government was able to deconcentrate the industries to a handful of cities and regions in the interior. These new factories brought capital to depressed rural areas, which some believe may have staved off a rebellion.

Abrogation

Though the treaty continued in force until 1929, no more businesses were "recommended" by the president of the OS since 1926; this is in part due to the surfacing signs of stress in the OS economy, which led some businesses to consider stemming the exfluence of capital from the OS. Certain practices of the Columbian government, particularly in intervening in foreign states (though that did not happen in Themiclesia), generated resentment in the Columbian public regarding intensive ties with foreign states. As early as 1927, the Columbian government contacted Themiclesia's foreign office to commence discussions for a treaty that would replace the present one; the withdrawal of troops from Themiclesia, which may have numbered more than 5,000 at one point, also began that year.

The new treaty reflects the Columbian desire to have fewer political and commercial obligations with foreign states. In addition, the power of the president to "recommend" businesses to Themiclesia, where they received a range of privileges, was also seen as a source of corruption. In Themiclesia, the government also encountered shortages of available land to settle Columbian businesses. The maturing Themiclesian economy also seemed to be "outgrowing" government tutelage, as domestic businesses entered competition with foreign ones in the international market, according to some scholars. On Jan. 1st, 1929, the 1897 treaty was abrogated and replaced by the new treaty.