File No. 811.73/18.
The Secretary of State to the French Ambassador.
Washington, July 7, 1915.
Excellency: The Department has received and given very careful consideration to your excellency’s note of May 28 wherein, by instructions from your Government, you again invite attention to the matter of the taxation by the authorities of the State of Massachusetts of the Compagnie Française des Câbles and to the request of the company that these taxes be remitted.
The Compagnie Française des Câbles appears to be successor in interest to the Compagnie Française Télégraphie [du Télégraphe] de Paris à New York, to which permission to land its submarine cable on the shores of the United States was granted by the President of the United States in 1879.3 Your excellency calls attention to the facts that the treatment accorded in France to American cable companies is the same as that enjoyed by French companies; that the French administration, in a general way, places at the disposal of the several companies wires connecting their land stations with their respective offices; that when available, such wires are laid without charge, but that when laid at the request and for the exclusive use of the companies, such companies pay the cost of laying but are in no case assessed for the use thereof. Your excellency further states that the City of Paris, whose underground conduits are used for the wires of those companies, collects no taxes for the use of such conduits. Your Government deems it proper, therefore, to invite attention to these facts and to the provisions of paragraph six of the conditions upon which the Government of the United States permitted the landing of the French cable at Cape Cod, which conditions stipulated [Page 394]for a certain equality of treatment of the Governments of the United States and France and of their respective citizens, with reference to the cable in question; and to express the hope that this Government will take steps looking to the remission of the taxes imposed by the authorities of the State of Massachusetts upon the Compagnie Française des Câbles.
It seems appropriate in replying to your excellency’s note to invite consideration of two points which seem to have particular bearing on the matter in question; namely, first, the purpose of the conditions upon which the landing of the French cable at Cape Cod was permitted and the significance of the terms used in the memorandum of those conditions; and, second, the nature of the taxes imposed by the State of Massachusetts upon this company.
It is believed that, upon a careful examination of these conditions in the light of the correspondence with reference thereto which passed between the Secretary of State and the French Minister, particularly the note addressed by the Secretary of State, on October 27, 1879, to the Minister and a similar note dated September 22, 1875, which was referred to in the former as explaining fully and explicitly the character of reciprocity which the conditions were designed to effect, it will be apparent to the French Government that the object sought to be accomplished by these conditions were of a two-fold character; namely, first, that of preventing the formation by the company of a monopoly of submarine telegraphic communication between the United States and France; and, second, that of guaranteeing to the Government of the United States and to its citizens the use of the cable on terms of equality with those enjoyed by the French Government and its citizens, a certain preference being required in the transmission of the messages of the two Governments over those of their private citizens. Paragraphs 1 and 2 of these conditions were directed towards the accomplishment of the first of these purposes while the remaining paragraphs were intended to effect the second.
The Secretary of State, in the above-mentioned note of September 22, 1875, said:
He [the President] will not prohibit or object to the landing of a “cable” connecting the United States with other countries, which allow citizens of the United States, individually or collectively, or associated with those of other nationalities, cooperated or otherwise, freely to land Câbles on their shores, and to connect the same with lines operating on the land, and which grant entire facility for the transmission by their land lines of messages to and from the cable line, so that messages transmitted or to be transmitted by the cable line shall have the same facilities and be charged no higher rates for transmission and delivery by the land lines, and shall be delivered in the same manner, as messages originating in the country and transmitted only over the land line. Government messages (as well those of the United States as those of the country connected by the cable with the United States) should be entitled to precedence of transmission by the cable, and also by the land lines of the country connected by cable with the United States, and be delivered without delay.
Paragraph six of the conditions in question, to which your excellency refers as having particular bearing on the matter now under consideration, provides:
That a citizen of the United States shall stand on the same footing, as regards privileges, with the citizens of France.
It seems evident, therefore, that the purpose of this paragraph was to guarantee to American citizens the use of the cable on terms of equality with those enjoyed by the citizens of France. It will be observed in this relation that the matter was considered by this Government entirely from an international standpoint and that questions such as that of the taxation of the property of the cable companies, which, in the United States, would have involved a consideration of the rights of the States through which the lines of the company might pass, were not made subjects of the correspondence. The Department is therefore unable to perceive that the conditions to which the French company consented when it landed its Câbles on the shores of the United States have any bearing upon the present request of the Compagnie Française des Câbles that it be exempted from the taxes imposed by the State of Massachusetts.
To concede that these conditions are properly to be construed as obligating the Government of the United States to accord to the cable company in this country the same treatment accorded it by France would be to make the regulation of purely domestic matters in the United States dependent on the action of the French authorities. Such was obviously not the purpose of the conditions, which merely indicated this Government’s views as to the proper method of conducting such Câbles when established and indicated its willingness to permit the landing on its shores of any Câbles to be conducted in accordance with such views.
The Department has received from the tax commissioner of the State of Massachusetts a copy of the act of the Legislature of that State which requires the levying of the taxes to which the Compagnie Française des Câbles objects and has the honor to enclose a copy4 thereof for the information of your Government. This law which apparently became effective on April 10, 1913, provides:
that underground conduits, wires and pipes laid in public streets * * * and poles, underground conduits and pipes together with the wires thereon or therein laid in or erected upon private property or in a railroad location by any corporation, * * * shall be assessed to the owners thereof in the cities and towns in which they are laid or erected.
It will be observed that the tax authorized by this law is not a tax based upon the use of the telegraph lines but one to be assessed upon the value of the conduits and other property of all corporations operating telegraph lines within the State of Massachusetts; that it applies uniformly to all corporations, American as well as foreign; and that there is, therefore, no probability of discrimination such as the French Government apprehends might result. On the other hand, should it be found possible by the Government of the State of Massachusetts to make an exception in the application of the law in favor of the Compagnie Française des Câbles there would then seem to be presented for consideration the further question as to whether the making of such an exception would not constitute a discrimination against other companies similarly situated. Should the Compagnie Française des Câbles consider that any tax levied against it by the authorities of the States through which its lines pass is illegal, discriminatory or confiscatory, it has access, of course, to the appropriate courts for a proper adjudication of the question.[Page 396]
Your excellency is doubtless aware of the fact that matters regarding the taxation of physical property are, generally speaking, within the competency of the respective States wherein the property is situated. The inability of the Federal Government, therefore, to comply with the French Government in this matter by requiring, as a matter of grace and favor, a remission of the taxes of which the Compagnie Française des Câbles complains is to be attributed to no lack of appreciation on its part of the benefits derived by it through the transmission by the company of the official messages of this Government without cost, which however, appears to be a compliance by the company with its agreement to accord to the Government of the United States, in return for the privilege of landing its cable on the shores of this country, like treatment with that accorded to the Government of France.
The situations of the two Governments with regard to this matter seem to differ in that while the land lines used by the several companies in France appear to be owned by the French Government, which permits their use by these companies without compensation, the corresponding lines in the United States are the private property of the respective companies and, as such, are in the same category as other private property with respect to the matter of taxation.
While recognizing no legal right in the Compagnie Française des Câbles to claim exemption from taxation of its property in the United States, the Department has, in recognition of the services rendered by the company to the Government of the United States and as an evidence of its desire to comply so far as possible with the wishes of your excellency’s Government in the matter, taken pleasure in laying the views of the French Government before the Governor of the State of Massachusetts and in expressing to him the hope of the Department that the authorities of Massachusetts will give them most friendly consideration and will bear in mind the benefits reaped by the Government of the United States. The Department will be glad to communicate with your excellency with regard to the views of the Governor of Massachusetts in the matter as soon as his reply is received.