Mr. Hay to Mr. Buck.

No. 414.]

Sir: I have to acknowledge the receipt of your dispatch No. 651, of the 9th ultimo, on the subject of the arbitration of the house-tax question and of all subsidiary questions.

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The United States Government, animated by feelings of impartial friendship toward Japan and all the other powers interested in the complete and final settlement by arbitration of the question known as that of “the house tax,” is of the opinion that it would be conducive to the promotion of harmonious relations in the future between the Japanese Government and the other powers if, at the same time, all subsidiary questions of taxation, as well as that of the house tax, should be embraced in the scope of the arbitration, so far as each question may be raised by any of the interested powers.

Citizens of the United States are urging their Government to become a party to the arbitration, but in view of the attitude this Government has assumed and of the assurances of the Japanese Government, it is, in the opinion of the Government of the United States, desirable that the several questions agitated by any one of the interested powers and which any of them wishes to have included in the arbitral arrangement, should be thus embraced. The fact that the reference is made can not prejudice the final decision of the question, whether there is or is not any just ground to claim exemption from any species of taxation, while the refusal to make the reference, by leaving any such questions open, may render them the subject of future agitation and irritation inconvenient to the relations of the Japanese Government with the other interested Governments on account of the complaints of their subjects.

You may communicate the substance of this instruction to the Japanese Government.

I am, etc.,

John Hay.