Mr. Hay to Mr. Buck.
Washington, May 7, 1902.
Sir: Referring to the Department’s No. 399, of April 12, 1902, the Department being of opinion that perpetual leaseholders still enjoy the same immunities in respect to all taxes and other charges on their estates as stipulated by their leases and as existed prior to the revision of the treaties, you were instructed to make proper representations to the Japanese Government in support of the view that the question in all its bearings should be referred for final settlement by the proposed arbitration, in order to terminate all further controversy relative to the imposition of charges and taxes of whatever style and character.
There appears, however, to be some misapprehension in relation to the actual attitude of the United States Government in respect of the controversy. The United States Government has not, indeed, made any protest to the Japanese Government with regard to and of these taxes or charges, although it has expressed doubt of the validity of both the house tax and of the income tax, so far as the latter is levied or assessed on that portion of income derived from rentals of perpetual leasehold estates. These doubts it still entertains, but before it had reached any definitive opinion on the questions the Department was advised of the proposed arbitration between Japan and other interested States. In view, however, of the expectation that citizens of the United States should enjoy equal treatment with the nationals [Page 717] of other States, resulting from the effects of the arbitration, the Government of the United States, without becoming a party thereto, is willing to abide the result thereof.
But in view of its impartial friendship toward all the arbitrating States, and in order to settle finally all controverted questions, it is its opinion that it would be better that all questions which the parties to the arbitration wish to include should be referred. The reference of these questions the United States Government is willing to leave to be determined by them, but not being itself a party to the arbitration, it would not, at present, urge or ask the reference of any question, except so far as such reference is requested by one or more of those States. If there is no question raised for reference other than that of the house tax, your advice will be confined to the reference of that tax.
I am, etc.,