The Consul in Chargé at Beirut (Knabenshue) to the Secretary of State

No. 334

Sir: I have the honor to refer to my despatch No. 251 of March 3, 1921, relative to my negotiations with the French High Commissioner in order to cause the discontinuance of the collection of new [Page 931] taxes from foreigners which had been levied contrary to Capitulatory exemptions.

The most important taxes were those on petroleum and benzine, levied by the various Municipalities throughout Syria.

The general principle involved as put forward by me as Doyen of the Consular Corps, and also on behalf of the large American oil interests here, was accepted by the French authorities, and these taxes were immediately stopped as regards the Municipality of Beirut. However, with the greatest difficulty, and after considerable correspondence and personal interviews with the officials concerned, it was only on May 7, 1921, that I finally succeeded in causing the Haut Commissariat to send instructions in the matter to their Counsellors in the respective administrative zones (A copy of such instruction is enclosed). Even this did not prove sufficient, for considerable delay ensued before the instructions were communicated to the various Municipalities, and this was done only after my repeated strong representations in the matter. So far as I am aware, all the Municipalities have now received the instruction.

The next step in the proceedings is to be the submission to the Consular Corps of a proposal from the French High Commissioner that the Capitulatory powers accept, at least temporarily, the imposition of certain taxation upon foreigners. A French committee is at work on the text of the proposal and it is believed that it will be ready shortly. I will transmit the proposal to the Department with my observations.

In the meantime, I have the honor and gratification in reporting that through my incessant efforts, American citizens and other foreigners residents in Syria are not being obliged to pay any of the new taxes instituted since the beginning of the war.

I have [etc.]

Paul Knabenshue

The French High Commissioner ad interim in Syria and the Lebanon (De Caix) to the Counselors in the Administrative Zones

Department of Finance
No. 2042/D.F./8

The Consular Corps has laid before me various complaints against the subjection of foreign nationals to the payment of certain taxes or dues not consented to by the Foreign Powers, and particularly the tax on petroleum which is being collected in Beirut, Latakia and Aleppo.

No matter how much equity may be in favor of collecting these taxes or dues, it should be taken into consideration that as long as [Page 932] the regime of mandate is not as yet sanctioned, the capitulations continue to exist.

I am therefore obliged to admit the legal status of these complaints and to allow every advantageous measure to give them satisfaction.

In view of the above, I have the honor to ask you to suspend immediately the collection of every state or municipal tax from foreign subjects, the collection of which taxes are not approved of by the Foreign Powers. All the taxes created since the outbreak of the war are included in this category, as well as the removal of the taxes put into effect since that same date. The taxes which had been originally accepted will continue to be collected at the pre-war rate.

It is in the province of your office to send me a list of these taxes in order that propositions for their acceptance may be made to the Consular Corps.

These propositions should reveal the fact that they are of public utility and general interest, as well as the character of remuneration for a service rendered, as in that case their application on the foreigners will be considered as equitable.

Robert de Caix