Mr. Jackson to Mr. Hay.
Berlin, April 13, 1901.
Sir: I have the honor to report that the embassy has been requested by the Imperial foreign office to use its good offices in the matter referred to herein. It will be remembered in this connection that the German law relating to insurance against disability and old age (see Mr. Coleman’s dispatch No. 182, of October 7, 1890) compels all persons working in a position of dependence upon regular wages, unless the wages exceed a certain amount per annum, to insure themselves against certain liabilities, the insurance to be effected by means of stamps pasted on the insurance cards, one half the cost of the stamp being paid by the employer, the other half by the employee. It will also be remembered (see Mr. Phelps’s dispatcha No. 220, of January 13, 1891) that the members of this mission voluntarily submitted themselves and their households (domestic servants alone being concerned) to the provisions of this law at the time of its going into force, the same course of action, so far as I am aware, having been pursued by those who have joined the mission subsequently and by consular officials of the United States generally throughout Germany.
And now I turn to the case in point. At our consulate at Breslau there are employed (or were employed during the incumbency of Mr. Charles W. Erdman) two German subjects—the one as secretary and the other as messenger—whose cases fall within the provisions of the law mentioned above. Were these two men employed under existing conditions by a German or a nonofficial foreigner, both they and their employers would be compelled to pay for the insurance stamps in the usual manner. Consul Erdman, however, claimed that under Article III of the convention of December 11, 1871, between the United States and the German Empire, neither he nor they were obliged to do so, as they were employees of the consulate, and as he was exempted from taxes of any kind whatsoever. The foreign office, on the contrary, considers it doubtful if the consul is freed from the obligation to contribute toward the payment for the stamps by the treaty. It also says that, even if the two men concerned are considered as officials of the United States, they have no claim to any pension, and German Beam ten under similar conditions are not freed from an obligation to insure. [Page 173] The good offices of the embassy having on one or more occasions been used in the cases of domestic servants employed by American consular officers, the foreign office has now requested the embassy to act in the case in point to the end that the two German subjects in question may not be deprived of advantages which would come to them were they in other employ.
On other occasions the embassy has usually written to the consul concerned, explained the circumstances to him, and suggested his complying with the law. The case in point, however, presents hew features, and after talking it over with Consul-General Mason I decided to submit it to the Department. There have always been uncertainties about the exact meaning of Article III of the convention of 1871 in so far as it refers to consular officers (vice and deputy consuls, etc.) and employees of German nationality, but the general practice has been to exempt such persons from taxation, although, so far as I am aware, no formal decision in the matter has ever been made by the competent authorities. It therefore seems possible that, if the question be made one of principle, the existing practice may be changed to the disadvantage of the parties concerned, and I personally think that this would be quite probable, as I fail to see the reason for the exemption of a German subject from local taxation merely because his employer happens to be an American official. Consequently, in view of the possibilities, I do not feel authorized to act in this matter without instructions, and I therefore refer it to the Department for such action as may be found proper.
I have, etc.,
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