[Inclosure 2 in No. 94.]
Mr. Pitkin to Señor
Costa.
Legation of the United States,
Buenos Ayres, January 30,
1891.
I have the honor to remind your excellency that before my return to this
legation from the United States, Mr. Secretary Fishback, then in charge,
addressed on the 10th instant, and under instructions from my
Government, a protest to your excellency against the levy of taxes and a
patent charge, each esteemed onerous, upon and in discrimination against
branches, resident here, of life-insurance companies established in the
United States. These levies and charge are by virtue of enactments just
promulgated by His Excellency the President of this Republic. These
companies—the Equitable and New York life-insurance companies—through
said branches and under the declaration in the Argentine constitution
(article 16) that “equality is the basis of taxation and public
charges,” entered the Republic; acquired by charter a character coequal
with native companies in the same sort of enterprise as juridical
persons; entered into solemn covenants alike as to the Government and
citizens here; and reposed faith in the further warrants presented in
article 20 of said constitution assuring to foreigners in this territory
all the civil rights of its citizens, the pursuit of their avocations,
and exemption from extraordinary forced contributions, in article 4 of
said instrument in guaranty of equitable and proportional levies upon
the population, and in article 9 of the treaty concluded between our
respective powers on the 27th day of July, 1853, whereby, “in whatever
relates to the acquiring and disposing of property of every sort and
denomination in any manner whatsoever, as also in the administration of
justice, the citizens of the two contracting parties shall reciprocally
enjoy the same privileges, liberties, and rights as native citizens, and
they shall not be charged in any of those respects with any higher
imposts or duties than those which are paid or may be paid by native
citizens, submitting, of course, to the local laws and regulations of
each country respectively.” In so far as the new enactments of the
Argentine Congress relate to life-insurance companies of the United
States acting under registered right of domicile in this Republic and
appear to be in consonance neither with the recited treaty stipulation
nor with the constitutional pledges of equality in levy enforced, I deem
it proper to renew to your excellency the respectful protest
communicated by Mr. Secretary Fishback, of this legation. No charge
appears to have been alleged, nor, I venture to assert, could be
maintained, that these companies have during their tenure here been
guilty of any act in prejudice either of their charters or of the rights
of Argentine citizens and thus merited a penalty such as the enacted
discrimination might import. Were the burden imposed upon all companies
of kindred character, the particular companies mentioned might forbear
to participate in a remonstrance against its equal while oppressive
weight; but, having earned a foothold here in strict compliance with the
Argentine laws, having sufficed every requirement common to all similar
resident companies in discharge of federal and provincial patents and
other annual public obligations, having contracted with Argentine
citizens that have numerously chosen to repose especial confidence in
them as companies whose probity and solvency are everywhere
unchallenged, and having relied upon as exact a good faith in the
prescripts of this Government as they inflexibly exhibit in the payment
of their policies, they are now menaced with exactions the enforcement
whereof they allege will dismiss them from the Argentine field. His
excellency the minister of hacienda stated in his communication of the
18th ultimo to the Argentine Congress in relation to the tax bill in
question that the tax of 2 per cent on gold and paper deposits in the
private banks is explained by the necessity and advisability of driving
all this local capital into the National Bank and the Provincial Bank of
Buenos Ayres. The same discrimination against the insurance companies of
my country represented in branches here will, I am persuaded, result in
their being constrained to do forthwith for themselves what your
excellency’s Government is empowered to do in terminating their business
in this country. I find upon due inquiry that the companies in whose
behalf I speak would entertain no objection whatever to the penalties
prescribed against a dishonest or evasive compliance with the
requirements in relation to periodical exhibits of their annual
business, because their invariably correct conduct would never subject
them to such hazard, nor an urgent objection to a deposit in guaranty,
which, under the executive classification, would by reason of the
world-wide rank of these companies be doubtless rated at the highest
figure recited in the law ($100,000); but the same classification would,
it may be presumed, logically fix their annual national patent at
$10,000, a tax not only excessive in itself, but the more inequitable,
not only because levied solely upon other than native companies, but
also because superadded thereto and with like discrimination are a
national tax of 7 per cent levied upon their premiums [Page 4] and 4 per cent upon additions from premiums
received to surplus and reserve funds, and yet again the patents imposed
by the provinces, which also may at any moment assess premiums. The
gravity of the new provisions furthermore appears in the fact that the
aggregated tax paid by the Equitable and New York life-insurance
companies in home taxes on buildings and in taxes on premiums, patents,
licenses, tines, and fees in all other parts of the world to which they
have extended their agencies averages less than 1 per cent of their
income in premiums. Up to the date of the recent enactments they were
paying 1 per cent, or more than said average rate, on premiums received
at this capital, as also their respective patents of $1,500 and
$1,000.
The new legislation not only appears to retain the old tax of 1 per cent
under the stamp act, but in the particulars mentioned exacts not less
than 11 additional per cent on premiums, and also a patent, which,
measured by the premiums of said companies here in 1890, would subtract
a further tax of 5 per cent—a total of 17 per cent, which, I submit,
will prove in effect prohibitory.
If this presentment be, as it seeks to be, correct, the law enacted will
work instant and irreparable injury to said companies now in occupation
of numerous offices established at great expense throughout the
Republic; disband a considerable force of agents diligent in serving
Argentines who seek or hold the polices of said companies; seriously
interrupt the proper discharge of existing contracts as to the payment
of premiums and sums assured at maturity; forbid an extension of the
present advantage secured by these companies under their mutual system
to policy holders, in marked contradiction, as lam advised, to the
especial profit derived by shareholders under the system maintained by
native companies; and arrest an equal participation in honorable and
practical service to the general prosperity of a Republic whose
hospitality has been not only proverbial but hitherto illustrated in its
laws, and with whose people those of the United States desire the
heartiest fellowship.
With these views, I tender, etc.,